Increasing unemployment and increasing debt

U3 or the Civilian Unemployment Rate (UNRATE), U6, the Total unemployed (U6RATE), Total Public Debt as Percent of Gross Domestic Product (GFDEGDQ188S), 1993 to 2013. Quarterly measured in percentage.

The chart above shows three series: the U3, Civilian Unemployment Rate (UNRATE, black line), U6, the Total unemployed (U6RATE, blue line) and Total Public Debt as Percent of Gross Domestic Product (GFDEGDQ188S, pink area curve in the background). All data is measured in percentage terms and sampled quarterly.

There are three periods of interest in this presentation. Before March 2001, from December 2001 to November 2006 and July 2009 onwards. As the chart indicates, these periods span before the Early 2000′s recession, post Early 2000′s recession to the onset of The Great Recession, and post Great Recession . For each period I’ve calculated how much higher U6 (broad unemployment) was on average across compared to U3 (the narrow measurement of unemployment) as well as presented the nation’s debt to GDP ratio.

Clearly the gap between U6 and U3 – how much broader unemployment is above the narrow rate reported by the media – has actually sharply increased, even as the nation’s total debt load surges.

The table below summarises the chart.

Period on average U6 was greater than U3 by average debt/GDP ratio
Pre Early 2000′s recession 77.44% 64.20%
Post Early 2000′s recession 72.26% 61.36%
Post Great Recession 77.69% 95.58%

We see across the three periods in question, U6 is larger than U3 before the Early 2000′s Recession and Post Great Recession by roughly the same percentage.

Does stimulus really work?

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