Last week we were treated to some more unpleasant news - unemployment is now at 10.2%. Keep a few things in mind when you hear those statistics.

 

First, all governments and administrations prefer that the economic numbers published reflect positively on their actions and policies. So they desire that the statistics look good - or not as bad as they could be - or that they are improving.

 

Second, this can be accomplished through a number of means. One is to just lie. Let's assume that is not what is going on. Another way to get better numbers is to adjust the way the statistics are calculated. That is much more likely. Am I suggesting that the unemployment numbers are probably worse than what the official government statistics are reporting? Yes.

 

Keep in mind that just defining whether someone is unemployed or not is problematic. Quick quiz - which of these people should be considered as unemployed?

 

- Sally graduated from college six years ago and has worked in accounting at a bank with increasing responsibilities ever since. The bank fails and she loses her job. Should she be considered as unemployed?

 

- Six months later Sally is still looking for a job and moves back in with her parents because she's broke. Should she be considered as unemployed?

- One year after losing her job Sally gives up on a career in accounting and takes a job as a server at a restaurant. Should she be considered as unemployed?

 

- Bob, an engineer, has been out of work for six months and has been unsuccessfully looking for a job in engineering. He has been staying home with the young kids as his wife pursues her career in financial management so they can get rid of daycare expenses. Should he be considered as unemployed?

 

- Bob gives up looking for a job and decides to stay home with the kids for good. They cut their family expenses. Should he be considered as unemployed?

 

Okay, perhaps that was a bit long, but it does illustrate the problem. Defining who is and who is not unemployed is not a straightforward proposition. And even if it were, you have the challenge of drawing a representative sample since you cannot call everyone up and see who's employed and who is not.

 

Therein lies one opportunity for "massaging" the statistics.

 

Some economists such as John Williams of "Shadow Government Statistics" have made career out of scrutinizing government economic reporting and methodology and are convinced that such numbers are calculated in a very different way now than they were in 1980, for example. Mr. Williams has the unemployment number around 20%. Could he be right? Perhaps.

 

What's my point?

 

1 - Be very careful attaching a great deal of significance to economic reporting, especially month to month numbers.

 

2 - We all have responsibilities - to our families and to ourselves. Whatever numbers come down the chute - accurate or not - we need to execute those responsibilities. From a financial standpoint that means planning, budgeting, and perhaps looking for additional income sources as a resource against an economy in trouble.

 

Article Source: http://EzineArticles.com/?expert=Craig_Bennett