But the problem, says CEO of Richmond Asset Management in Hong Kong, Graham Bibby, is that the level of unemployment in the U.S. is probably worse than the Fed thinks it is, with the jobless rate probably closer to 16 percent when you look at other measures not used to compile the official number.
“For example, if you have been unemployed for 12 months, given some other criteria, and you haven’t been to the unemployment exchange, you haven’t been to interviews, you haven’t been looking at job adverts etc., you drop off the official unemployment numbers because you are not viewed as actively looking for employment. But technically, you are not employed,” Bibby said on CNBC Asia’s “Squawk Box”.
“Then there are statistics at the short-end such as how long you have to be unemployed before you are considered unemployed, and if you get a part-time job when you were looking for a full-time job, you also drop off the statistics. So the stats are quite a lot higher then they look,” he added.
The Top Decile Drives The Economy
There they go again. Any student of statistics knows that averaging is pointless because when it comes to things like money and cancer survival rates, there is no such thing as an “average” person. According to U.C. Berkeley economics professor Emmanuel Saez, the top decile (for 2010) includes all families with annual income above $108,000. Since they earn approx 50% of all income, the top ten percent is what matters.
Just who is in this top decile? We can make an educated guess based on the most recent BLS report of the employment status of the civilian population 25 years and over by educational attainment.
There are 48.4 million individuals in the civilian labor force with a Bachelor’s degree and higher. 75.5% of them are working. The unemployment rate is 4.1% for this group. 48,404,000/311,591,917 = 15.5 percent of the population. Might this be the group buying iPhones, paying more for hotels, and clogging up all the parking lots I tried to get into this past weekend?
Take a look for yourself.
The unavoidable conclusion is that the top decile powers the U.S. economy. The rest can only pray that there is such a thing as the “trickle down” effect.
For more eye-opening stuff, see Figures 1, 2, and 3 at the back of the Dr. Suez’s paper.
[pdf width=”100%” height=”900px”]https://s3.amazonaws.com/wc-pdf/saez-UStopincomes-2010.pdf[/pdf]