Rise in Unemployment Rate Likely

A recent Gallup poll finds that the unemployment rate reported by the Federal Bureau of Labor and Statistics has been understating the unemployment rate. Gallup (and others) believe that shortly after the November mid-term elections the BLS will start to show the unemployment rate tick up. I am not at all suggesting this is some type of election year conspiracy, it's just that at some point the numbers cannot be managed anymore.

Please see the article by Gallup here. From the article:

Unemployment, as measured by Gallup without seasonal adjustment, increased to 10.1% in September -- up sharply from 9.3% in August and 8.9% in July. Much of this increase came during the second half of the month -- the unemployment rate was 9.4% in mid-September -- and therefore is unlikely to be picked up in the government's unemployment report on Friday.

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The government's final unemployment report before the midterm elections is based on job market conditions around mid-September. Gallup's modeling of the unemployment rate is consistent with Tuesday's ADP report of a decline of 39,000 private-sector jobs, and indicates that the government's national unemployment rate in September will be in the 9.6% to 9.8% range. This is based on Gallup's mid-September measurements and the continuing decline Gallup is seeing in the U.S. workforce during 2010.

It is interesting that both Gallup and ADP (which tracks only private company payroll data) see the same trends. Unfortunately, these trends are not picked up by the BLS and therefore the unemployment rate will most likely face a downward adjustment after the fact. This is standard operating procedure for the BLS. They revise their numbers every January and July.

This data from Gallup (and ADP for that matter) are just another way to suggest that this has been no ordinary recession. While the NBER has said the recession ended last summer (due largely to increased government intervention), the unemployment picture suggests we still have a long way to go.

It will be interesting to see how this chart from Calculated Risk changes in the coming months. I don't think we have seen the peak unemployment rate for this recession.



At last month's Audit Finance Committee meeting we looked at our Earned Income Receipts and they have been declining for two straight years. In addition to that worrisome development, we have seen a significant decline in Real Estate Transfer tax over the past 3-4 months. At Thursday's meeting we will go over the more recent Real Estate transfer tax receipts and talk about what, if anything, the trends mean.

Thanks for reading.

James