Financial Researcher Believes that Unemployment Numbers Should Not be Trusted

Charles Hugh Smith, a contributing editor at, believes that unemployment numbers in America are higher than reported.

He broke down some of these numbers in a post at his blog.

Smith argues that the “official” unemployment rate of 12 percent is nearly half of the “real-world” unemployment rate.

The financial researcher raised a valid point about the manipulation of statistics to fit political narratives:

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As always in the wonderful world of statistics, especially politically potent ones, it depends on what you measure, what you don’t measure / act as if it doesn’t exist, and how you measure what you do measure.

Smith pointed out that the “Bureau of Labor Statistics (BLS) doesn’t actually count the number of people who are employed / unemployed; they rely on a sampling survey of employers, which is more like an election poll than an actual measurement.”

In addition, he explained how business stats are also off the mark:

Secondly, they estimate the number of new businesses which are “born” and existing businesses that “die”, and then guesstimate the number of additional employees this real-time churn generates. This birth/death model is notoriously inaccurate, as it ignores little things like pandemics and is often magically revised to create or eliminate hundreds of thousands of presumed jobs.

On the other hand, State unemployment offices compile and calculate the number of unemployment claims they receive and process. Smith notes that “These are real numbers, not guesses like the BLS estimates.”

Fellow financial researcher Wolf Richter chipped in with his own post regarding state and federal unemployment, which painted a not so bright picture.

According to the BLS, the employed workforce was around 152 million in February. With 32 million people filing unemployment claims, that brings the total unemployment rate to 21 percent.

Smith asked a valid question when talking about these numbers:

How do we arrive at a 12% unemployment rate?

He called attention to some of the relief that gig and contract workers have had to turn to recently:

We ignore the 14.3 million contract / gig workers who are currently drawing emergency Federal unemployment via Pandemic Unemployment Assistance (PUA),and the 936,000 in the Pandemic Emergency Unemployment Compensation (PEUC) program.

For Smith, the 21 percent unemployment doesn’t tell the full story.

He mentioned how “previously full-time workers who have had their hours cut to part-time aren’t counted in unemployment statistics, even though their employment status has changed for the worse.”

In addition, he highlighted that “there are the millions of workers who were recalled to work as businesses re-opened whose employment is up in the air as the expected return-to-normal has failed to materialize.”

As far as misleading statistics are concerned, Smith makes an interesting point about the small businesses closing:

An entire class of workers has been glossed over: small business owners who have closed their businesses. Those owners who incorporated and paid unemployment insurance on themselves as employees of the corporation qualify for unemployment, but many small business owners didn’t pay themselves as employees, and their status is uncertain.

Times like these should make us question the official narrative surrounding economic affairs. Mainstream commentators always brag about how we’re living in the best of times, but the on the ground reality tells us otherwise.

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