By John Crudele
New York Post
July 18, 2013
Keith Hall believes the US economy is a lot sicker than the 7.6 percent unemployment rate would lead you to believe.
And he should know.
Hall was, from 2008 until last year, the guy in charge of Washington’s Bureau of Labor Statistics, the agency that compiles that rate.
“Right now [it’s] misleadingly low,” says Hall, who believes a truer reading of those now wanting a job but without one to be more than 10 percent.
The fly in the ointment is the BLS employment-to-population ratio, which is currently at 58.7 percent. “It’s lower than it was when the recession ended. I think that’s a remarkable statistic,” says Hall, a senior research fellow at the Mercatus Center at George Mason University in Fairfax, Va.
That level tells Hall the real unemployment rate is actually about 3 percentage points higher than the BLS number. If the jobless rate is unacceptable at 7.6 percent, it’d be shockingly bad if he is right and the true rate is 10.6 percent.
How could they be so different? I asked the former number-cruncher.
No surprise here. I’ve been saying it for years. Hall confirms that the jobless rate that makes the headlines — called the U-3 by BLS — doesn’t take into account people who have stopped looking for work but does count as employed folks who have worked as little as an hour during the preceding month.
A broader (and more accurate) measure of the state of US labor — called U-6, which includes the underemployed — jumped sharply in June to 14.3 percent from 13.8 percent the month before.
Hall reckons there are millions of U-6 people on top of the 4.5 million long-term unemployed.
Longtime readers of my column understand all of this. But I thought that having someone of the ex-BLS head’s status discuss these points — and add others — might be useful to understand why the economy — to put it in layman’s terms — still sucks.
“This has been a very slow, very bad recovery,” he says. “And I think the numbers have really struggled as a result. In fact, I’ve been very disappointed in the coverage of the numbers.”
The former BLS bigwig is convinced the Federal Reserve understands the true state of the economy. But he says he’s never discussed any of this with the Fed, although he wouldn’t be surprised if the statistics gatherers at the central bank and at BLS have compared notes.
“They are smart guys and understand data,” he says of the Fed economists.
That may be so, but the Fed, and particularly Chairman Ben Bernanke, are acting rather strange these days. One minute Bernanke is suggesting that his highly controversial and very dangerous money-printing operation, called quantitative easing, will be tapered off in the near future because the economy is doing better.
The next minute Bernanke is talking about how QE will continue if the economy isn’t strong enough to stand on its own. The Fed chief often points to the housing and the stock markets as evidence of economic improvement, although those are nonsense indicators.
The stock market is only rising because Bernanke is printing so much money. And housing is improving, with prices rising sharply in spots, because big-time investors who can’t find anywhere else to park their assets profitably are scooping up big-city real estate by the bundle.
There are other problems with numbers coming out of BLS, according to Hall. And they will just add to the confusion.
All parts of Washington’s data-collecting machine adjust to smooth out the bumps caused by the seasons of the year. But the recession that started five years ago was so severe and the recovery so anemic that the seasonal adjustments have been thrown off.
The former BLS head would like to see other changes, such as the Fed’s “tendency of not wanting to rely on data they don’t produce.”
In a couple of weeks we’ll all be anxiously waiting for the BLS to tell us what the job market did in July. We might as well look for answers in the next must-read work of fiction to hit the bookstores.