Comments on: Unemployment: U-6 data versus the Great Depression http://www.creditwritedowns.com/2009/04/unemployment-u-6-data-versus-the-great-depression.html a finance news and opinion site Sat, 20 Mar 2010 23:59:54 +0000 hourly 1 By: Edward Harrisonhttp://www.creditwritedowns.com/2009/04/unemployment-u-6-data-versus-the-great-depression.html#comment-4717 Edward Harrison Mon, 13 Apr 2009 14:56:44 +0000 http://www.creditwritedowns.com/?p=7794#comment-4717 John,I would agree that U-6 is probably more similar to the unemployment numbers from before the 1990s. What you are pointing out is that we have a systemically higher rate of unemployment going into this downturn than existed pre-1929. The bearish view would be that this means we will see some serious fall-offs in aggregate demand as more people become unemployed. The correct time frame for comparison will be 1930 to 2008. Let's see where we are by the end of the year because 1931 and 1932 were the real difficult years. John,

I would agree that U-6 is probably more similar to the unemployment numbers from before the 1990s. What you are pointing out is that we have a systemically higher rate of unemployment going into this downturn than existed pre-1929. The bearish view would be that this means we will see some serious fall-offs in aggregate demand as more people become unemployed. The correct time frame for comparison will be 1930 to 2008. Let’s see where we are by the end of the year because 1931 and 1932 were the real difficult years.

]]> By: Johnhttp://www.creditwritedowns.com/2009/04/unemployment-u-6-data-versus-the-great-depression.html#comment-4712 John Sat, 11 Apr 2009 16:38:07 +0000 http://www.creditwritedowns.com/?p=7794#comment-4712 If anything the current U-6 number is much closer to the way Depression era unemployment was calculated. What your chart fails to show is this: Unemployment was 3.2% in 1929 and did not reach 8% until the end of 1930, and only reached 15.9% by the end of 1931. In short, it took 26 months after the 1929 market crash for unemployment to reach that level--yet we are already there! If we start our chart with the Oct of 2008 market crash, our U-6 is already ahead of the 1931 mark...and this in just six months time! If anything the current U-6 number is much closer to the way Depression era unemployment was calculated. What your chart fails to show is this: Unemployment was 3.2% in 1929 and did not reach 8% until the end of 1930, and only reached 15.9% by the end of 1931. In short, it took 26 months after the 1929 market crash for unemployment to reach that level–yet we are already there! If we start our chart with the Oct of 2008 market crash, our U-6 is already ahead of the 1931 mark…and this in just six months time!

]]> By: Donhttp://www.creditwritedowns.com/2009/04/unemployment-u-6-data-versus-the-great-depression.html#comment-4685 Don Mon, 06 Apr 2009 22:29:57 +0000 http://www.creditwritedowns.com/?p=7794#comment-4685 Die Nervosität bei Vekselbergs Getreuen war in den letzten Tagen mit Händen zu greifen. Als ob sie geahnt hätten, dass in letzter Minute erneut ein Hindernis auftauchen würde, das die Übernahme der Kontrolle bei Sulzer gefährdet. Verunsichert hatte sie das hartnäckig kursierende Gerücht, Sulzer-Präsident Ulf Berg, den Vekselberg an der morgigen Generalversammlung abwählen lassen will, plane ein letztes Störmanöver.Und zwar wolle Berg Vekselbergs Aktienpaket – der Oligarch hält 31 Prozent an Sulzer – das Stimmrecht aberkennen, und zwar mit der Begründung, Renova habe das im Mai auslaufende Stillhalteabkommen verletzt, weil sie aktiv einen neuen Sulzer-Präsidenten gesucht und in Jürgen Dormann dafür auch einen Kandidaten gefunden habe.Die Schreckensvision ist inzwischen realistischer geworden, als Vekselberg lieb sein kann. Denn kurz nach Börsenschluss liess das Eidgenössische Finanzdepartement eine Bombe platzen: Es hat ein Verwaltungsstrafverfahren gegen Vekselberg, Ronny Pecik und Georg Stumpf eröffnet. Das Departement verdächtigt das Trio, beim Aufbau einer grossen Beteiligung an Sulzer vor zwei Jahren die Meldepflichten der Börse verletzt zu haben. Die Nervosität bei Vekselbergs Getreuen war in den letzten Tagen mit Händen zu greifen. Als ob sie geahnt hätten, dass in letzter Minute erneut ein Hindernis auftauchen würde, das die Übernahme der Kontrolle bei Sulzer gefährdet. Verunsichert hatte sie das hartnäckig kursierende Gerücht, Sulzer-Präsident Ulf Berg, den Vekselberg an der morgigen Generalversammlung abwählen lassen will, plane ein letztes Störmanöver.

Und zwar wolle Berg Vekselbergs Aktienpaket – der Oligarch hält 31 Prozent an Sulzer – das Stimmrecht aberkennen, und zwar mit der Begründung, Renova habe das im Mai auslaufende Stillhalteabkommen verletzt, weil sie aktiv einen neuen Sulzer-Präsidenten gesucht und in Jürgen Dormann dafür auch einen Kandidaten gefunden habe.

Die Schreckensvision ist inzwischen realistischer geworden, als Vekselberg lieb sein kann. Denn kurz nach Börsenschluss liess das Eidgenössische Finanzdepartement eine Bombe platzen: Es hat ein Verwaltungsstrafverfahren gegen Vekselberg, Ronny Pecik und Georg Stumpf eröffnet. Das Departement verdächtigt das Trio, beim Aufbau einer grossen Beteiligung an Sulzer vor zwei Jahren die Meldepflichten der Börse verletzt zu haben.

]]> By: Edward Harrisonhttp://www.creditwritedowns.com/2009/04/unemployment-u-6-data-versus-the-great-depression.html#comment-4682 Edward Harrison Mon, 06 Apr 2009 20:15:50 +0000 http://www.creditwritedowns.com/?p=7794#comment-4682 Don, thanks for the feedback. You are probably right that the two look similar. You should also note that I used 30-month periods that are not exactly analogous i.e. 2006 was still a growth period. Watch these graphs become MORE similar as time goes by. A good analogy might be 1930-1932 vs. 2008-2010. Don,
thanks for the feedback. You are probably right that the two look similar. You should also note that I used 30-month periods that are not exactly analogous i.e. 2006 was still a growth period. Watch these graphs become MORE similar as time goes by. A good analogy might be 1930-1932 vs. 2008-2010.

]]> By: Donhttp://www.creditwritedowns.com/2009/04/unemployment-u-6-data-versus-the-great-depression.html#comment-4679 Don Mon, 06 Apr 2009 17:09:42 +0000 http://www.creditwritedowns.com/?p=7794#comment-4679 Not the easiest graph to read. It seems like it works against the upshot* of your post by overemphasizing the directional correlation and deemphasizing the differences in magnitude and amplitude (how big and how fast the change was in 29-32 versus the current one). IOW the first glance interpretation of the illustration is "those two paths look pretty similar" instead of "in the time it took our unemployment rate to double theirs had increased sixfold."I hope the feedback was helpful. I enjoy your posts and am a regular reader. Thanks for the hard work that goes into the site.*"The long and short of this comparison is that the crash in employment levels during the Great Depression was much worse than it is today." Not the easiest graph to read. It seems like it works against the upshot* of your post by overemphasizing the directional correlation and deemphasizing the differences in magnitude and amplitude (how big and how fast the change was in 29-32 versus the current one). IOW the first glance interpretation of the illustration is “those two paths look pretty similar” instead of “in the time it took our unemployment rate to double theirs had increased sixfold.”

I hope the feedback was helpful. I enjoy your posts and am a regular reader. Thanks for the hard work that goes into the site.

*”The long and short of this comparison is that the crash in employment levels during the Great Depression was much worse than it is today.”

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