A lot of experts like to hype unemployment numbers that represent record lows…
The total unemployment rate hovers under 4%. In April, reports sourcing the U.S. Bureau of Labor’s latest numbers showed a 6.6% unemployment rate for African-Americans and a 4.8% rate for Hispanics.
But these numbers don’t tell the whole story, as pundits and analysts so often point out. Just scratching the surface of BLS numbers show how complex the American work world is, what poor indicators generic unemployment numbers are, and how deceptive surface-level judgments can be.
The first fundamental reality of unemployment is fairly simple: Low unemployment can mean more people are getting jobs. Or it can mean more people are giving up on looking for work.
That alone reveals the inadequacy of trying to read the financial tea leaves using basic unemployment statistics. You just can’t claim to know what’s happening beneath the surface from these basic numbers.
And as for the African-American and Hispanic unemployment rates…
Some skeptics are quick to point out that these numbers don’t include persons who are incarcerated. Again, that’s not exactly an accurate reading of unemployment numbers.
Last, the unemployment numbers also don’t tell readers much about generational changes. Studies and surveys of younger U.S. career professionals show a deep and profound skepticism in younger Americans. They’ve seen firsthand the disloyalty of American corporations to workers, citing widespread ‘economic uncertainty’ among the cohort.
These workers may be getting jobs, but base unemployment statistics fail to reveal the context, including temporary stop-gap positions, underemployment, and malaise that comes with market skepticism.
Given all of these underlying realities — and many more — trumpeting economic success with a base unemployment number can be overly simplistic and even deceptive.
In light of available analysis, it seems that it’s easier to laud an unemployment statistic rather than try to dig beneath it to find out what’s happening on Main Street. In economic terms, caveat emptor. Buyer, beware…
What do you think is a better benchmark of economic strength? How do you change your trading strategies based on the unemployment rate? Share your thoughts below.
