Financial Advisor Helps Explain Unemployment Numbers

Online, October 28, 2010 (Newswire.com) - In July some 42,000 jobs were added to the private sector in the United States. While this is certainly better news than job losses, financial advisor Dennis Tubbergen explains it is necessary to put this information in its proper context to better understand the impact such a figure truly has on the unemployed.

Tubbergen is CEO of USA Wealth Management, LLC, a federally registered investment advisory company. In his monthly newsletter update Moving Markets, Tubbergen discusses many financial topics, but unemployment numbers for the U.S. remain one of his primary concerns.

For instance, The Fort Wayne Journal Gazette reported on July 30, 2010 that the number of jobs in the United States that were lost from December 2007 to December 2009 totaled 8.5 million.

"Adding only 42,000 jobs each month will require years to 'undo' the damage that's been done - over 16 years at this pace," explains Tubbergen. "So, while any report of increased employment is good, increases of this size are the equivalent of using the proverbial garden hose to douse a monster wildfire."

But, according to Tubbergen, there is another variable to be considered: The number of new workers entering the labor force each month. Economists have been stating for the past several years that it takes the creation of about 150,000 new jobs a month just to break even with population growth.

Tubbergen points to a Bloomberg Businessweek.com article posted online July 15, 2010 in which Peter Morici, a business professor at the University of Maryland in College Park, is quoted as saying, "To make a dent in the unemployment rate, you need to go over 150,000," in new jobs per month.

"So, assuming that math is correct, when the private sector adds 40,000 jobs in a month, the number of unemployed goes up by 110,000," calculates Tubbergen

To throw a few more statistics into this unpleasant mix, the current measure of unemployment is known as U3. U6 and SGS are two other measures worth noting that are not often used. U6 includes those who are unemployed, as well as those who have not looked for a job in the last 4 weeks but have in the last year. SGS is a measure of unemployment that includes long-term discouraged workers in addition to those already defined. While this definition and figure was removed from official existence by the government in 1994, it is still presently estimated by economist John Williams of Shadow Government statistics.

"According to data published by Williams on July 2, 2010, the U6 unemployment rate was over 16 percent," states Tubbergen. "And the SGS unemployment figure was just shy of 22 percent."

Not good news for the economy.

For more information on Dennis Tubbergen's views, visit www.dennistubbergen.com.

The opinions expressed herein are those of the writer and not necessarily those of USA Wealth Management, LLC. This update may contain forward-looking statements, including, but not limited to, statements as to future events that involve various risks and uncertainties. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual events or results to differ materially from those that were forecasted. Therefore, no forecast should be construed as a guarantee. Prior to making any investment decision, individuals should consult a professional to determine the risks, costs, benefits and fees associated with a particular investment. Information obtained from third party resources is believed to be reliable but the accuracy cannot be guaranteed.