1 Oct 13 2009 @ 1:00pm by Matt Smith in Capital Markets, Economy, Global Energy, Random

Things that make me go hmm

This one really gets my goat, does my noodle in, and twists my melons. And it goes by the name of  ‘the underemployment rate’. So, the story begins….the underemployment rate includes those people who are unemployed, those who are working in a part-time job (but wish they had a full-time job), and those who are so discouraged that they have (temporarily, hopefully) stopped looking. So it is basically the unemployment rate (a portly 9.8%) plus a few people here or there working part-time in a coffee shop and sort-of-looking for a proper job, plus those who just can’t be bothered at all. Right? Wrong.  underemployment

While the current unemployment rate is 9.8%, the underemployment rate is nearly double at 17%. This is reaching pandemic proportions, as baby boomers are forced to retire later as their pensions have just been halved, 18% of  18-24 year olds are unemployed, and 7,000 people a day are facing the expiration of their unemployment insurance. 

And that isn’t even the biggest doozie on deck: since the start of the recession in December 2007 we have seen 6.8 million people lose their jobs in the US – just shy of the population of Hong Kong.

The crux of the problem arises when we build our energy burrito; the ingredients just don’t add up. Energy demand is driven by consumption. Consumption is driven by spending.  And spending is driven by income – income earned in a job.  And consumer spending makes up approximately 70% of GDP in the US. With such a drag on GDP, how can we expect energy demand to not only recover (without such espresso shots as cash for clunkers and $8k first-time homebuyer rebates), but also spur itself on to significant growth?

Put simply, we can’t. And the punchline? Sorry, there isn’t one. 

1 Comment on this post:

  1. Bradford says:

    What you failed to mention is that none of the unemployed, underemployed, or just screw it people are governmental employees or governmental recipients. They never get laid off. Since they, city, county, state, and federal employees, welfare recipients and retirees, generate no new wealth and effectively make up 50% of the population, the 17% figure actually is 34% of all real wage earners. In addition, all of the above new non-workers now go to the other side. The reality of the situation is that today, approximately 35% of the population in the U.S. pays all of the bills for everyone. If that doesn’t scare the hell out of you, let me borrow some of your medication.

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