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Sure the unemployment rate fell from 10.2% in October to 10% in November, but the November data (and the December number when it is reported) are hopelessly skewed by seasonal adjustments. And another statistical adjustment, known as the birth/death adjustment, assumed 800,000 new jobs were created this year by the birth of companies compared to the number of jobs lost due to the death of companies.
Really? If it were not so sad, it would be funny.
Beyond the adjustments, the number does not include people who want a full-time job but are only working part time, or those who have been unemployed for more than a year and still have not found work, because it is determined that they must no longer be looking for jobs. If you take these people into account, the real unemployment number is closer to 20%.
So the official unemployment number doesn't even come close to telling the whole story. And the temp agency Manpower Inc. just reported that they expect to see more job losses in Q1 2010. My guess is the headline number hits 12% by year-end.
Lesson for investors in 2010: Unemployment and the size of the workforce drive national income, and that will be lower in 2010 than in 2009, which will kill off any chances of sustainable economic growth. Invest accordingly.
Next: Lie #5: The Housing Market Is Recovering
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