Economy: While a less-than-expected 151,000 new jobs were created in August, the unemployment rate remained at 4.9% -- a level that Federal Reserve and Wall Street economists have deemed "full employment." Sorry, it ain't so.
Just last Tuesday, Fed Vice Chairman Stanley Fischer made the unequivocal statement that the U.S. job market is "very close to full employment," so several interest-rate hikes to quell nascent inflation would be in order.
"I don't think you can say one and done and that's it," Fischer told Bloomberg TV. A few days earlier, Fed Chair Janet Yellen had also said that the strong job market and improving U.S. economy had bolstered the case for interest-rate hikes.
But it's all based on a wrong idea of "full employment." As we've noted before, the 4.9% unemployment figure that Fed officials and others mention may be the most misleading statistic in use today. In fact, it's downright deceptive.
It doesn't describe those who have given up looking, such as the 10 million men who have mysteriously abandoned the workforce. In our monthly IBD/TIPP Poll, we routinely ask Americans "how many members of your household are currently unemployed and are looking for employment now." That's the basic, functional definition of being unemployed.
Get instant access to exclusive stock lists and powerful tools on Investors.com. Try us free for 4 weeks.
And we get an answer starkly at odds with the one the Labor Department gets: In our September poll, 17% said one or more people in their household had no job but were looking for one. We'll do the math: There are just over 118 million households in the U.S. So, at a minimum, there are at least 20 million people without jobs in the U.S. That compares with Bureau of Labor Statistics data showing only 7.8 million people unemployed -- or 4.9% of the workforce.
Based on our data, we get a rather different "unemployment rate" of about 12.6% -- give or take a percentage point.
Nor are we alone in having a much higher number. Gallup has been tracking unemployment for years. Its "underemployment" measure, which adds the unemployment rate plus the share of adults who are working part time but want to work full time, now stands at 13.2%.
Gallup CEO Jim Clifton doesn't mince words, calling the main U.S. unemployment rate "The Big Lie."
A better measure comes from the Bureau of Labor Statistics' alternative U6 unemployment gauge. It may sound wonky, but it includes those who are unemployed, underemployed or just marginally attached to the workforce. As of August, it stood at 9.7%.
The point is, by the most realistic job measures available, Fischer and the rest of the full-employment herd seem to be wrong. Whether interest rates need to rise is open to debate, but the U.S. is definitely not at full employment. Not even close.
RELATED: