Economic Review

5/11/09

Was Last Friday’s unemployment rate a good number…what are you kidding me?

If you would have listened blindly to media mouthpieces last week, you may actually think that the latest data regarding the unemployment rate was a positive. Comments asserting that the rate of increase in the amount of unemployed has slowed and that the latest Initial Claims report has slowed almost has people thinking that the worst is over and fresh hiring is around the corner. Reality is however that last Friday’s number was horrific. The only reasons why the rate of increase in joblessness has decreased from the previous month is that the outright unemployment number has gotten significantly larger (so the denominator in the equation is larger and the percent increase naturally becomes smaller given equal job losses) and that the rate of increase over the past couple of months was simply exorbitant. The rate of last months increase in unemployment clearly surpassed that of October to November of 2008 and the unemployment rate has increased some 78% since last year.

So in case you’re stupefied by the information you may be hearing around you about how positive the report was, you should be, because it simply wasn’t.

Stephan Kudyba (MBA, PhD) THE MARKET DOCTOR

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