The good news: The number of people collecting unemployment insurance benefits is dropping.
The bad news: The reason for the decline is that their unemployment benefits ran out. The people are still unemployed. Now, they don't have any income to pay their bills or put food on the table.
The good news: The economy only contracted by 1% this last quarter, less than economists had forecast.
The bad news: The reason the decline was less than expected is because, while consumer spending declined even more than expected, and our industries continued to cut both inventories and jobs, our federal, state and local governments and the health care industry all went on a spending spree.
The good news: Official U3 Unemployment is still under 10%, barely rising to 9.7% this month.
The bad news: Real U6 Unemployment has already reached 16.8% and it's still climbing.
Source: The U.S. Bureau of Labor Statistics, Labor Underutilization page: http://www.bls.gov/news.release/empsit.t12.htm
U6 unemployment has been rising a lot faster than the official U3 rate. Why is the 2nd number so much higher than the first, and rising so much faster? And why should we care about U6 anyway? Well, during the Great Depression, and for decades afterward, the way they calculated unemployment was simple: If you were over 14 and didn't have a full-time job or go to school full-time, you were unemployed. Over 90% of the people who were considered to be unemployed then are still counted as unemployed in the U6 today. However, the current way of counting the official U3 unemployment rate has put in few exemptions to make the numbers look better. Here are just a few examples of people who are officially NOT unemployed according to the U3:
1. After you lost your job as a corporate accountant, you found that there were over 100 applications for the one job opening posted in the paper, which was for a fast-food cook, so you haven't applied for a job in the last month.
2. You had to take a part-time job flipping burgers 20 hours a week at $7.25 per hour, to try to survive, after you were laid off from a $50K per year corporate job.
3. You are attending school part-time to try to get the skills to re-enter the job market after the only company in the industry you were working at went under.
4. You are under the age of 18 and aren't in school.
5. Your unemployment benefits ran out, but you still haven't gotten another job.
6. After you lost your house, even though you're still looking for a job, you no longer have a valid address.
7. You were unable to actively look for a job due to sickness in the family.
I could list literally thousands of other situations in which the unemployed aren't counted, but you get the picture. When the economy's good, there aren't many people in situations like the above. However, when things start going bad, real unemployment increases pretty fast. That's when the U3 keeps the gov't from having to admit just how bad the economy really is.
Even more bad news: The percent of the population who participate in the work force has declined by 3.2% between December, 2007 and May, 2009. That means that nearly 6 million people who would ordinarily work just decided not to participate in the work force at all. They aren't even counted in the U6 numbers, because they aren't looking for a job. This means that working moms who lost their jobs have just become housewives, people have been forced to take early retirements, people who lost their jobs are living off their savings until the market improves, etc.; if they were all counted among the unemployed, as well as all of the other people who no longer count, we just hit 20% unemployment. And another 358,000 dropped out of the work force just this month. Remember that, even though they aren't counted, nearly all of the people who aren't counted will be returning to the work force once they think that jobs are available.
Since the official unemployment rate includes less than half of the people who need a job, even if businesses did resume hiring, there would be a lot of suffering in the job market for a long time to come. But we aren't likely to see businesses putting out a lot of "help wanted" signs anytime soon. Other than the government and health care, every segment of the economy is still shrinking. Official unemployment may hit 12%, and real unemployment may hit 25% before this sinking ship finally hits the bottom.