December’s unemployment report

Happy Friday to everyone!

I wanted to comment on Friday’s announcement of December ’08 unemployment figures. The absolute number of jobs lost was 524,000. Those lost jobs caused the unemployment rate to jump up to 7.2%, a 16-year high. In addition the media outlets are all reporting the total number of jobs lost in 2008 as 2.6 million, “…the most since World War II ended in 1945.” This of course makes for a dramatic headline, but is not particularly interesting information. Why? The population of the U.S. is much larger now than it was in 1945. From www.census.gov the population of the U.S. in 1945 was approximately 140 million people. As you all know the census is conducted every 10 years at the end of the decade. So the population in 1945 was not specifically known. However, in 1940 the population was 131.7 million people and in 1950 it was 150.7 million people. Taking the median point gives us a figure of 141.2 million. So a loss of 2.6 million jobs in 1945 would have been an increase in unemployment of 1.84%. Whereas, the current U.S. population is around 305 million people. So 2.6 million jobs lost in 2008 is an increase in unemployment of 0.9%. As you can all read, this is an increase in unemployment of less than 1.0%. So why the fuss? So why the bluster? Shock sells. Hopefully you all know this. The bigger question, of course, is: Are you shocked?

In the next posting I want to address this question directly.

Jason