Quantitative Easing Explained

Many economists have worked hard to figure out what things need to be done to not only get the economy moving, but also to get companies to hire so our unemployment problems will ease.    This VIDEO does a wonderful job explaining the way the Fed and “the Ben Bernanke” will use Quantitative Easing to “help” our economic recovery and what it really means to us.

A little deeper digging reveals some important truths about jobless rate in New England.  The Bureau of Labor Statistics has alternative measures of labor under utilization.  U-6 is actually the unemployment number no one likes to talk Going Out of Businessabout.  These are the carpenters, plumbers, and electricians who are self-employed and NEVER collected unemployment.  These are the small business people who have quietly gone out of business because they can no longer keep their doors open. 

But these people are STILL unemployed or very underemployed.  And they are not represented in the “official government” unemployment numbers.

THE “OFFICIAL RATE” is defined as U-3, total unemployed, as a percent of theUnemployment civilian labor force (This is the definition used for the official unemployment rate that is quoted in the media).

THE TRUE RATE OF UNEMPLOYMENT is defined as U-6, total unemployed, plus all marginally attached workers, plus total employed part-time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers.

When we take a look at the numbers in New England, it gives us a very different picture than what the press and the government actually talks about.

            State                                        U-3                    U-6

           Connecticut                              9.2 %                  15.7%

           Massachusetts                         8.5%                   14.3%

           Maine                                           8.2 %                  15.2%

           New Hampshire                      6   %                    11.8%

            Rhode Island                          11.3%                 19.2%

            Vermont                                   6.2 %                  12.5%  

It looks like we have a long way to go before we will have the job increases we need, and quantitative easing may not be our answer.     Until we have a stable job market, the housing market and new construction will not recover to healthy levels.