CHART OF THE DAY: Guess How Ugly The Unemployment Rate Would Be At 2000 Participation Levels

button more charts
button chart prev
button chart next

The decrease in the participation rate in the U.S. economy has left our understanding of what the real unemployment rate is a little cloudy. The latest unemployment report showed huge revisions, but little reality, as to where we really stand.

Albert Edwards of Societe Generale has put together this chart to provide a little context. It shows what the U.S. unemployment number would look life if we were at the peak participation rate of 67%, which occurred around 2000.

At that participation rate, unemployment would be about 4 percentage points higher than the current headline figure of 9%. Edwards says that 4% is the equivalent of 6.7 million more unemployed people.

So if the participation rate increased 3% (from its current 64% to 67%), unemployment would actually be 13%. That gap is partially made up of long-term, structurally unemployed construction workers left behind after the housing bust, and is a significant number.

Don’t miss: 20 facts that will make you really mad if you stop and think about them for a while >

From Societe Generale:

chart of the day, unemployment adjusted for participation rate, feb 2011

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at