I am from Europe and I must say I find these US statistics quite troubling. Payroll apparently dropped by 101,000 in December and the unemployment rate remained at 6% ? The explanation was apparently that many (desperate ?) people "stopped looking for jobs" and are simply not counted anymore. What kind of practice is this ?

The BLS also computes a range of alternative measures of labor underutilization. Some indeed show an increase between november and december (by about 0.2%). Don't count on the American media to report / comment on this though... Can you imagine: what kind of world would this be if journalists were expected to do more than write around news alerts?

"What kind of practice is this?"

A major part of unemployment statistics is the number of people applying for unemployment benefits. Benefits and rules vary from state to state, but in general benefits can be collected for only 26 weeks. (A one-time thirteen week extension is in the works.) In order to collect benefits, a person must make weekly reports to their unemployment office detailing their efforts to find a job. After 26 weeks there is no longer much incentive to contact the unemployment office since the jobs advertised there are primarily low paying manual labor. Most good jobs are not found through the unemployment office. If you no longer contact the office, they assume you have stopped looking for work and you are no longer counted as unemployed.

Re stimulus, Steuerle remarks that the (fiscal) stimulus may already be larger than the underlying recession.

Jack wrote:

"In order to collect benefits, a person must make weekly reports to their unemployment office detailing their efforts to find a job. After 26 weeks there is no longer much incentive to contact the unemployment office since the jobs advertised there are primarily low paying manual labor."

From Comstock Partners Inc. - 01/10/03:

Adding to the malaise, a declining labor force participation rate indicates that the true unemployment is higher than the 6.0% shown by the official figures. The labor force participation rate topped at 67.4% in early 2000 and dropped to 66.3% by December 2002. This means that about 2.3 million people dropped out of the labor force during that period and are no longer counted as unemployed. If these people were still in the labor force, the unemployment rate would now be 7.6% rather than the official 6.0%.

http://www.comstockfunds.com/index.cfm?act=Newsletter.cfm&CFID=3296189&CFTOKEN=31833481&category=Comstock%20Daily%20Comment&newsletterid=907&menugroup=Home&aol=1

Isn't there some survey based measure of unemployment? If so, I haven't seen them mentionned for a while. Hint?

Note - The stronger productivity growth, the stronger must be GDP growth to add to employment and limit any tendency to deflation.

4% productivity growth and 4% GDP growth means no need for companies to hire additional workers.

Not to worry - Once I collect my tax free stock dividends I'll be spending like crazy. Duh.

Also - Why does the press keep reporting how important stock dividends are to older Americans? Dividends on 100,000 dollars in a taxable S&P account came to about 1,700 dollars in 2002. How many older Americans have 500,000 and more in taxable stocks as opposed to taxable bonds? Bond holders get no tax break. Preferred stock and REIT holders get no tax break. CD holders, are you kidding?

Am I right?

High productivity growth will help when GDP grows fast enough to generate substantial new job creation. GDP must grow above 4 or 4.5% for some time then.

Aren't there an additional 1.5 million people incarcerated now than in 1980? So doesn't this mean that our current 6% unemployment matches the 8+% of the 80's? (Other factors - number of people not counted because they quit looking, or underemployed, etc. probably even out...)

Is it possible this is affecting the accuracy of demand estimates? The economy is performing at such-and-such a rate, but Christmas retail sales came in below expectations, etc...

Productivity in the fall rose at 5.1%, while GDP rose at 4.0%. So, there was need for 1.1% fewer hours of labor. However, the press and wall street economists generally seem to have been ignoring the relationship.

Brad DeLong and Paul Krugman have been pointing out the problem with "slow" GDP growth for quite a while, but many analysts continue to ignore it.

Stephen Roach has been arguing the the FED and Administration are targeting the stock market in policy. Is it dangerous for us to try to "artificially" raise stock prices?

Since the S&P is still trading at high p/e ratios, even after 3 yerars of bear market, should the Fed or Administration be trying to push stocks higher rather than waiting until investors push stocks higher because valuations are more attractive?

Wall Street bulls argue that low interest rates justify high price/earnings ratios, but buying stocks at high p/e ratios has always been a rather poor strategy other than for short term speculation. If Stephen Roach is right about the Administration targetting the stock market, I suggest a real stimulus package for the economy, especially for the middle class, would be a far better approach.

Why does the press keep reporting how important stock dividends are to older Americans?

What they're saying is that half of all dividends go to seniors. This may actually be true.

What they're leaving out is that half of all dividends go to about 5 individuals, who happen to be over 65.

Half of all dividends go to seniors, but of course not all seniors get dividends. What is the income of those getting the dividends and thus benefitting from the Administration plan, compared to those seniors who don't?