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July 8, 2011 / Political Fluency

The Rising Unemployment Percentage

Persons are classified as unemployed if they do not have a job, have actively looked for work in the prior 4 weeks, and are currently available for work. – Department of Labor

The release of unemployment numbers well below forecast that increased the Department of Labor’s unemployment rate to 9.2% have been explained by a number of factors.

But there is an intuitive one that cannot really be measured so it is rarely discussed.

Take a look at the unemployment rate for the past 18 months:

Notice the dip in the last month of 2010 and the first quarter of 2011 where unemployment declined for 4 straight months. Not only were rosy pictures of the job market starting to flourish with talking heads on television, but also in the homes watching them.

The unemployed who did not actively look for work in the prior 4 weeks and maybe even throughout the first quarter of 2011 are now actively looking for work in the second quarter of 2011. They were simply not part of the statistic in the first quarter and are now being counted as unemployed by the Department of Labor in the second quarter as they became encouraged as the unemployment rate was declining.

Chart Note: The X-axis is the month the report came out and not the month of unemployment. For example the first month is February 2010, but that is the unemployment rate for January 2010. Likewise the last bar to the right on the graph is June 2011’s unemployment rate that came out July 2011.

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