Yesterday's post triggered a number of disbelieving emails about this statement...
"And as bad as that is, the really bad news is that measuring unemployment the correct way (ie. the way it was done in the 1970s vs. the modified formula now used) shows that the US unemployment rate has actually shot past the 20% mark! One out of five Americans is unemployed."
It used to be that the figures told you the number of people who were truly out of a job. Now The official unemployment statistics only record the number of people who have recently lost their jobs. After a certain period of time, they are not considered 'unemployed'.
The 'official' US unemployment rate now stands at 9.4%.
But as I said, that figure does not reflect the total number of Americans who are truly out of a job. I don't have an online reference for you that 'over 20%' statistic, however I invite you to check out this op-ed column by Bob Herbert in the Saturday New York Times.
Herbert notes that for every job opening in the USA, there are more than five unemployed actively seeking work vying for those jobs. That is unprecedented and nearly double what we saw at the depths of the 2001 recession. The official ranks of the unemployed have doubled during this recession in the United States to 14 million and if you take into account all forms of labour market slack, the unofficial number is bordering on 30 million, another record.
Herbert cites the Center for Labour Market Studies at Northeastern University which estimates that the real unemployment now stands at 18.2%.
FYI, that is actually higher than the posted rate at the end of the 1930s - a time when they didn't play these 'rabbit-out-of-a-hat' games to lower the official unemployment statistics.
Bank Failure Friday
As faithful readers know, bank failures in the US always seemed to carried out on Friday afternoons. There have been so many regular failures week after week that Friday has jokingly come to be called 'Bank Failure Friday' in many economic blogs.
I have taken a break from posting the failures this past month (last post was on June 5th to report Bank Failure #37), but that doesn't mean the failures have stopped.
As of last week, the total number of Bank Failures in the US for 2009 was up to 45.
This week will see a cascade of failures, a record week for 2009. Perhaps it is because of the July 4th weekend, but the FDIC has jumped the gun and a wave of failures was announced yesterday.
Here's the damage for this week's tally so far:
Bank Failure #46: Rock River Bank, Oregon, Illinois
Bank Failure #47: First State Bank of Winchester, Winchester, Illinois
Bank Failure #48: John Warner Bank, Clinton, Illinois
Bank Failure #49: First National Bank of Danville, Danville, Illinois
Bank Failure #50: Elizabeth State Bank, Elizabeth, Illinois
Bank Failure #51: Millennium State Bank of Texas, Dallas, Texas
Bank Failure #52: PrivateBank and Trust Company, Chicago, Illinois
That's 7 and counting. We'll see if the total is run up some more as the day progresses.
Crushing Weight of Canadian Debt
You've already seen posts on this site about the worrisome levels of Canadian Household Debt, and now you will see those concerns come to fruition.
A new report from Equifax Canada says that more than half a million Canadians have fallen behind on their various credit payments, fuelling a 19% rise in the average national delinquency rate in the one-year period ending May 31, 2009.
The credit bureau called the double-digit jump "alarming" and notes much of the trouble stemms from missed payments on credit card bills and for sales finance purchases of items such as furniture and electronics. Equifax defines delinquent bills as those that are at least 90 days overdue.
The Equifax report is only the latest study to suggest that increasing numbers of Canadians are struggling to pay their bills.
Rising delinquencies in the areas identified by the Equifax Report are a portent of cascading debt problems. Consumers tend to miss payments on those unsecured credit products before they fail to pay back collateral-backed loans such as mortgages, bank loans and lines of credit.
We will see if the dominos continue to fall in that direction.
The Equifax data follows a Bank of Canada report last month that suggested climbing debt levels have put households under increased financial strain amid the recession. The BOC report also said that households are increasingly vulnerable to "adverse shocks" such as higher unemployment.
We look forward to the next round of Canadian employment figures.
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