Framing the Dialogue

U6

As I was doing some research on unemployment numbers I came across a gem of a news story.  This economist was disparaging the President about his U6 unemployment numbers,

“U6, the broadest measure of unemployment and underemployment from the Bureau of Labor Statistics. (No data available before 1994.) You can still argue that presidents really don’t have that much influence on the economy. But…supporters eagerly claimed that downward stretch…coinciding with the worst excesses of the housing bubble.”

This seems like a clear argument for using the U6 unemployment number as the best measure of true unemployment which I tend to agree with.  The interesting thing about the argument is that it is from non other than Paul Krugman the liberal (self-labeled), Nobel prize winning economics professor and New York Times contributor.  He wrote that piece in 2008 exactly one month before the presidential election as a criticism of President Bush and capitalism.  His short, hit piece included a nice chart showing the high rate of U6 unemployment and attributed it to people who “live by the business cycle, die by the business cycle.”  As an amateur economist I had no idea what he was talking about. 

The interesting part is that the U6 number Nobel Prize-winning, liberal, New York Times writing, economist Paul Krugman was using to lambaste President Bush was 11 percent (up from 8 percent the prior year and before the housing/financial crisis).  The current U6 unemployment is hovering around 16 percent nearly three years into President Obama’s presidency.  Perhaps Mr. Krugman should now herald Obama’s U6 number, eat a little crow, or as I often (actually never) say,

 “live by big government, die by big government.”

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