Political  Calculations

According to Nomura Global Economics, there has been a rather dramatic divergence between the "real" and "official" unemployment rate in the United States since 2009. FT/Alphaville's Cardiff Garcia explains (HT: Tyler Cowen):

A chart via Nomura to keep in the back of your head as you eagerly anticipate this Friday's BLS employment situation report in the US.

In the grey line, Nomura economists have adjusted the unemployment rate for the number of discouraged workers who have left the labour force and therefore count as unemployed in this alternative measure.

(And yes, they do take into account demographic trends by age group that would influence those leaving, the largest of which is retiring baby boomers. So the right way to understand the alternative 10.3 per cent rate is that it includes those who have left the labour force but not those who, for structural reasons, would have left it anyways.)

Similar variations of this adjusted unemployment rate make headlines now and again. Our colleague Ed Luce, for instance, noted in December that "if the same number of people were seeking work today as in 2007, the jobless rate would be 11 per cent".

But what is striking about the broken line above isn't where it now ends — at 10.3 per cent — but rather the lack of any meaningful, sustained improvement for more than two years.

 Nomura: Official and Demographically-Adjusted (Including Labor Force Exits) U.S. Unemployment Rate, 2001-2011

For those interested in how Nomura calculated its demographically-adjusted unemployment rate, Garcia followed up his initial reporting with more information from Nomura in an update (just scroll down!)

Our question arising from Nomura's chart though has to deal with the "official" U.S. unemployment rate: Why did it stop paralleling Nomura's adjusted unemployment rate in mid-to-late 2010?

Political Calculations

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