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Reply #41: U3 and U6 Unemployment during the Great Depression [View All]

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DemReadingDU Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Nov-06-09 08:31 AM
Response to Reply #39
41. U3 and U6 Unemployment during the Great Depression

5/12/09 U3 and U6 Unemployment during the Great Depression

A frequent meme propounded in the economic blogosphere is that U6 unemployment, running near 17% now, is a truer measure (and there are good reasons to believe it is), so that means we have unemployment already approaching Great Depression levels of 25%. Left out of the comparison is the fact that U3 and U6 measurements didn't exist during the 1930s. So, is the 25% unemployment peak for the Great Depression a fair comparison to U6 unemployment today?

Nelson Andrews compared historical versions of unemployment statistics with the modern U3 and U6 versions, published as "Historical Unemployment in Relationship to Today" , has an answer. He writes:
http://www.scribd.com/doc/13282170/Unemployment-1930s-v...

Based on that research, he was able to generate a mathematical formula to calculate U3 and U6 unemployment for the entire period since 1900. He found that at the peak of the Great Depression, U3 was 25.2%. U6 was 37.6%.

If Nelson is correct, the notion in the blogosphere that current U6 unemployment levels are close to those of the Great Depression appears to be false, and indeed, far off the mark. Using Nelson's methodology, our currrent U3 and U6 unemployment are both very close to the figures in 1930, which is bad enough. But they are less than half of the unemployment that existed at the peak of the Great Depression.

http://www.economicpopulist.org/?q=content/u3-and-u6-un...


That was interesting



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