Unemployment numbers a “Big Lie”, according to Gallup CEO
Two views of the U.S. labor market
ERIN E. ARVEDLUND, INQUIRER STAFF WRITER
POSTED: Monday, February 9, 2015, 1:08 AM
The chief executive of the Gallup polling service calls the current 5.7 percent unemployment rate a big lie.
Jim Clifton unsettled the financial world last week with a controversial blog post, writing: “If you, a family member, or anyone is unemployed and has subsequently given up on finding a job – if you are so hopelessly out of work that you’ve stopped looking over the past four weeks – the Department of Labor doesn’t count you as unemployed.”
Clifton says the unemployment rate figure is misleading.
“While you are as unemployed as one can possibly be, and tragically may never find work again, you are not counted in the figure we see relentlessly in the news . . . right now, as many as 30 million Americans are either out of work or severely underemployed,” Clifton added.
The U6 figure, which counts the underemployed, may be a better gauge of the labor market’s health. That stands at 11.1 percent, vs. around 17 percent in 2010.
Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott, is more optimistic. And if his thesis pans out, the Federal Reserve will hike interest rates this year.
“Our base case is a rate hike in September or December,” says LeBas, who works in Center City.
LeBas’ read on the latest jobs numbers: January’s employment report overcame the headwinds of a slumping oil market, the dollar, and postholiday employment cuts to post a strong jobs showing. Nonfarm payrolls grew by 257,000 for January, much better than the consensus of the economists.
“Before long, the U.S. economy is going to run into a problem that was unimaginable just six months ago: We might run out of people to employ,” LeBas added. He cited the unemployment rate among those with a bachelor’s degree or higher, which fell to 2.8 percent, according to the January report.
“That would have been unthinkable just 12 or 18 months ago. But it also means that wage pressures among skilled workers will almost certainly rise further in the coming year.”
Average hourly earnings bumped up 0.5 percent for January, reversing December’s dip, as the number of hours worked remained unchanged. For a full year, wage growth at that rate would be enough to add $25.2 billion in spending to the U.S. economy.
“We’ve been holding a September 2015 first rate-hike expectation for some time now,” LeBas added, noting that it was far more likely than a 2016 rate hike.