The new unemployment figures present their usual mix of good news and bad, but the ratio is improving. For one thing, the unemployment rate declined, from 9.5 percent to 9.4 percent -- although that's largely because of some 400,000 workers who gave up trying to find a job and have now been classified as "leaving the labor force." As I've said in the past, the more important numbers to look at are the U-6 figures, which take into account not only the unemployed, but also people who have been discouraged from finding a job plus people who are working part-time because they can't get full-time jobs. Right now, that figure stands at 16.3 percent of the labor force -- down from 16.5 percent in June. In fact, from June to July, every unemployment indicator either remained the same or declined slightly, suggesting that we may have hit the peak of our unemployment problem. That's different, of course, from creating new jobs, which is the real test of the administration's policies. The administration still expects the standard unemployment measure to hit 10 percent before a real change occurs.
-- Tim Fernholz
