Adventures in Smarshland

February 22, 2009

How Bad is Unemployment?

Filed under: Economics,Lies, Damn Lies, and Statistics,Politics — smarsh @ 11:30 pm

I’m making a new category for my posts because of this.  The category will be call “Lies, Damn Lies, and Statistics”.  This goes under the sub-category of lying through failure to recognize the denominator.  Speaker Pelosi’s either failed grade-school math, or more likely, is purposeful distorting job market data.  The following graph I believe is accurate in the facts it displays:

Epic Statistics Fail

What is conveniently left out was that during the time between these recessions the size of the labor force increased as well.  Primarily this occurred through growth in the population of working age individuals.  If this chart had gone back further to the recessions of Jul ’74, Mar ’80, and Jul ’81 it would be even further distorted by the change in the percentage of working age individual participating in the labor force (primarily driven by the increase in women’s participating in the work force).  Here are two graphs that illustrates the demographic changes.

Civilian Labor Force

Civilian Labor Force (#,000's)

Labor Force Participation Rate (Percentage)

Labor Force Participation Rate (Percentage)

Clearly the labor market is hurting badly, but we have seen two post WWII recession that have seen worse unemployment.  If you also consider the runaway inflation of the 1970’s recessions you could make an argument that recession was far worse seeing as current inflation is almost zero.  The 1982 recession saw peak unemployment of 10.8 percent.

Unemployment Rate (Percentage)

Unemployment Rate (Percentage)

For a source of official recession dates you can go to the National Bureau of Economic Research (NBER) Business Cycles website

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