As many of you are aware the government crunches the numbers for the always anticipated unemployment rate. However, what is interesting is that the media and government report the U3 unemployment rate instead of U6 for obvious reasons when you take a look at the chart below. The markets certainly prefer to digest an 8.3% unemployment rate versus a 15.3% rate. If the government and media reported the "real" unemployment rate of 15.3% it would be political and financial market chaos.
With all of that being said the chart below sums up the real problem with the economy that approximately 15.3% (or maybe more) of the population needs full time work. This is the root of the problem that must be fixed before this economy can get out of the rut is has been in for years.
You may also notice that when unemployment rises the gap between U-3 and U-6 also rises. We still have a very large spread between U3 and U6 versus what we had before the credit meltdown in 2008.
U3: Official unemployment rate per the International Labor Organization definition. It occurs when people are without jobs and they have actively looked for work within the past four weeks.
U6: U5 + Part time workers who want to work full-time, but cannot due to economic reasons.
Fortunately, all the unemployment rates have declined around 2% from the highs that occurred in 2009 which has certainly helped the real estate market and overall economy a bit. However, we still have a ton of room for improvement before the economy can really begin to heal and allow many of our fellow U.S. citizens a higher probability of getting a coveted job.
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