Tuesday, January 31, 2017

WARNING Trump Mulls Switch to New (and Higher) U.S. Unemployment Rate

Reports Jeffrey Bartash:
If President Donald Trump gets his way, the U.S. unemployment rate could jump to 5.7% from 4.7% overnight.
No, it’s not because the president plans to throw a bunch of people out of work. The White House reportedly might designate a different unemployment rate as the official one instead of the figure that’s been in use since World War Two. That’s according to a report in the Washington Examiner.
Switching to a different and higher unemployment rate would suggest the labor market is not as sound as it appears, ostensibly putting more pressure on Washington to take action to improve job creation. At least that’s the theory.


Such a change would not be hard technically. The Labor Department already calculates six unemployment rates, known by the designations U1 through U6.

The U3 measure of unemployment.

The official unemployment rate that’s widely reported in the media, known as U3, includes people out of work as well as those actively looking for jobs. The U3 rate stood near a nine-year low of 4.7% in December.
Yet the official rate excludes Americans who’ve gotten so discouraged trying to find a job that they’ve given up. A person is lumped into that category if they’ve looked for a job in the past 12 months but not in the past four weeks.
Known as discouraged workers, these people are included in a different jobless rate called U5 that registered 5.7% in December — a full percentage point higher than the official unemployment rate. That’s the rate the Trump White House could re-designate as the official figure.

The U5 unemployment rate.

This is really goofy stuff. I am much more interested in the unemployment trend rather than the difference in calculations between U3 and U5. And the trend is clear with both measures, we are in the boom phase of the Fed created boom-bust cycle/

Both numbers are published and can be looked up. but Trump's thinking about shifting reporting suggests the potential for a slippery slope where changes in all kinds of data calculations may not be far behind.



  1. Government is always changing how it counts and calculates all sorts of things. There are many points data is not comparable between but the comparisons happen anyway.

    We got stuck with the double nickle (and some of are still stuck with it) as the NMSL for so long because the government changed how they counted traffic fatalities the same year Nixon imposed it. This plus the gas crisis created an illusion, a myth, that is still widely believed today.

  2. The more honest measure is U5 so this is another good change.

  3. What system is the Shadow Stats guy using? That's probably the truth despite RW's outlook on how we are not in a recession.

  4. Could be Trump signaling to the Fed. The real unemployment is still high so quit raising rates.