Wednesday, Jul 15, 2009
UK: 7.6% US:9.5% Eurozone:9.2%
Telegraph: Britain's unemployment rises by a record
Many people seemed surprised by the recent resilience of the UK housing market and the Pound. However, when you look at the unemployment stats in the title, the reason for the resilience becomes clear. We are doing better than everyone else. It is relatively easy, if you have the data and the right models to calculate the unemployment number that will cause the housing market to accelerate its rate of decline. The magic number is 2.75 million unemployed. It is not quite as easy to calculate when we will reach 2.75 million unemployed but not many people would argue with early October.
Posted by flashman @ 01:39 PM (2259 views) Add Comment
23 Comments
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1. mark wadsworth said...
Flashman, seeing as your job is dealing with magic numbers, where does 2.75 million come from?
2. krustyatemyhamster said...
UK: 7.6% US:9.5% Eurozone:9.2%
Don't have any evidence to back this up, but could the difference be due to the 'hidden' unemployed we have in this Country - those on sickness benefits?
3. Baracudaz said...
Lies, damned lies, and statistic
4. Backingermany said...
To compare apples with apples you need to compare people in work. In UK you only count unemployed when they are claiming unemployment benefit, but all the umemployed Brits I know don.t!
5. flashman said...
Mark: its nothing too fantastical. I (well, someone else actually) took some data and stirred it into the pot (number of total households; historical number of people moving in a year (representing equilibrium); number of additional people needing to move per additional 1000 unemployed, historical housing supply data points that correspond to house price moves). Interest rate forecasts were left out of the mix because their effect is pretty elastic and they cant be predicted very well anyway.
6. flashman said...
krusty: I take your point but all the governments lie, so the figures are probably sound for comparative purposes
7. wdbeast said...
krustyatemyhamster@2
I share your scepticism, but I think it is more likely due to the number of people incorrectly claiming incapacity benefit.
According to the BBC article http://news.bbc.co.uk/1/hi/uk_politics/7223687.stm
Approx 1.8m people are on incapacity benefit that shouldn’t be (2008 figs, but all I could find).
If these figures are correct, it would mean our true unemployment rate is already 12.6%!
Scary!!!
8. seanb303 said...
http://www.howitends.co.uk/how-many-people-work.php
9. flashman said...
wdbeast and krusty: In the US, the Department of Labor uses a system (the birth/death model) that has undervalued the 2009 unemployment figures by up to 30%. They also remove so called “discouraged workers” from the totals, which takes away a further 3% from the figures. They are all at it.
10. mark wadsworth said...
Flashman, yes I thought it'd be something like that, you could just in "mortgage availability" and "interest changes" into the mix as well and then muck about with weightings like Altman's Z-score (if people still use it), but the "unemployed being forced to move" is the joker in the pack...
We know that this government will do just about anything to prevent people being repossessed, which is why they intend to pay people's mortgages if they get made redundant. I know there's one scheme that only has had half a dozen approvals so far, but there are plenty of other bits and pieces, and seeing as the govenment owns most of the banks, it can quite simply ask them to delay repossession proceedings until ... well, until after the next General Election, so that sh*t hits the fan on The Tories' watch.
11. inbreda said...
Whatever the unemployment rate might actually be, could the resilience of the housing market be partly due to government funding of mortgages for those that become unemployed?
12. flashman said...
mark: Yes it's quite similar to the workings of the Z score in that it has something a bit like a grey zone and distress zone.
I think it's best to keep it simple because market forces always overwhelm government machinations. It's all very well offering to pay peoples mortgages for them but most people wont want anything to do with (or be eligible for) a scheme like that. If you can’t get another job why prolong the agony or add stigma to the mix? We all know that when it comes to it, the government will parade 100 families who have benefited from their largesse while 200,000 frantically call their estate agents
As I said on previous post, mortgage availability is set to increase from September but I see that as a good thing. The housing market needs better volume to ease it into the next leg down.
13. mrmickey said...
In the old Soviet Union there was no such thing as unemployment everybody had a state supplied job, can you see any similarities.
14. c'mon correction said...
After people have been on the books for so long, most get refered onto companies such as this:
http://www.workinglinks.co.uk/
Anyone seeking employment through one of these (and there are other ones) companies, AREN'T included in the UK employment stat. My wife used to work for this company, there are many (thousands I should add, in the south wales valleys I know for a fact) people that have been unemployed since leaving school and they are in their mid-thirties- !!!!!!!!!!!!!!! -who are NEVER picked up on the official stats.
Oh yeah, they still get benefits and allowances by all kinds of different streams, that you never hear about in the media.
15. stillthinking said...
While I think there are many unemployed who don't show up in the figures while claiming, I think the real hidden unemployment is those who are unemployed but don't get money.I think that people who don't receive benefits don't bother signing on, thats where the numbers get hidden.
Anybody who had been saving up for a minimum housing deposit, with over 16K saved, doesn't qualify for unemployment benefit. If your wife or husband earns 500 pounds a month, you don't qualify. If you are an unemployed contractor you don't qualify. Self-employed, don't qualify. If you have worked abroad in the last four years (strictly speaking two but the way its calculated essentially means 4), you don't qualify.
These are the ones I am aware of , and I am sure there are others. There is no point going down to the DSS if there is no payment associated with it, you may as well just tough it out on your own, which is what I think a great many people are currently doing. Oh yes, training course, any training you do, you don't qualify. Try and start a company which goes belly up, don't qualify.
For some of these you do requalify after 6 months, but I think the reason is just people don't bother becoming a statistic for nothing. Considering how expensive social insurance it is, its a pretty cr*p insurance scheme.
16. flashman said...
The American government officially calls the type of people being referred to by c'mon correction @ 12 as "marginally attached to the labor force". The other category they use is "discouraged workers". Together these categories manage to take away more than 3 million people from the unemployment stats. The birth/death fudge they use dwarfs these schemes by further underestimating the monthly unemployment stats by up to 30%. The Germans are, if anything, worse (real figure circa 19%).
As I said before, they are all at it to a similar degree, so the official figures are still useful for comparative purposes.
17. Backingermany said...
@seanb303: brilliant link. Just as I thought:
"The inactivity rate for people of working age was 20.8% at the beginning of 2008 or some 7.86 million. The unemployment figures would look rather less good if the number of economically inactive people (excluding students) who are claiming State benefits and unemployed people who are seeking work were combined as they once were."
18. a saver said...
Wdbeast @7 How can 1.8 million people be incapacitated? That sounds all wrong for a population of 58 million, some of whom are too young/old to work? Maybe someone could tell us the statistical probability of this actually being true...
19. peeping tom said...
Looks like we'll be in for a lot more 'quantitative easing'. After all what harm can a bit more Mugabenomics do?
20. flashman said...
a saver:
"it is more than 2 million if all the incapacity benefit claimants—those on income support receiving the full range of incapacity benefits—are included"
I got this from a government publication. Amazing isn't it?
21. bellwether said...
I sense that it is professionals/quasi professionals who have taken the brunt of the intial job losses. The legal profession for example is culling in a way it never has and is failing to take in new starts, I've seen some business cut back by up to 25% and those who are employed are down to 4 day weeks.
As this is a crisis of credit it makes sense that it ripples out from banks and then to those most closely conneted eg lawyers as property and corporate deals start to dry up. Ditto anyone connected with construction, although there is a lag there as many projects that were underway before the crisis hit that need to be completed.
The bulk of people ( outside the public sector) are however employed in shops and restuarants and there have been no significant job losses there yet but this has to happen as the higher earners are crippled, compromised or scared. This would infer a delayed secondary explosion in unemployment. Maybe this is why the UK figures are relatively low thus far
Not something I've thought that much about till now but might be something in the idea.
22. Billy67 said...
do the unemployment figures already include the school/college/university leavers? these people are our future and they are entering, hopefully, a once in a lifetime situation that will one day be cleaned up. They need strong leadership and motivation!!
23. Seanb303 said...
hey back in germany
wie gehts
wo in deutschland bist du?