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New data on the 'real' unemployment rate

Pablo Martinex Monsivais / AP

White House press secretary Sean Spicer today was asked if President Trump stands by his unsubstantiated claims last fall that America's real unemployment figure could be upwards of 42% and, if not, what figure the Administration would use as an employment baseline.

Spicer punted, instead saying: "Too often in Washington we get our heads wrapped around a number, a statistic... For too long it's been about what number are we looking at rather than what face are we looking at."

The reality, however, is that employment numbers matter a lot. Not just for political talking points, but also for determining economic policy. Moreover, today we got updated data from the Richmond Fed, which regularly calculates an alternative unemployment rate that is higher than the official figure of 4.7%, but still well below Trump's 42% doomsday.

It's called the NEI:

Source: Richmond Federal Reserve

NEI differs from the traditional unemployment figure in two major ways:

  1. It counts not only those who are actively seeking work, but also the broader group of people out of the labor force.
  2. It weights that latter group based on their labor force attachment. For example, someone casually seeking work is weighted more than someone who is contently retired, or a college student.

The Richmond Fed reported an 8.4% NEI in December 2016, which is basically the same number as the prior month and down 0.2% since December 2015. When including workers who are only part-time for economic reasons, the figure climbs to 9.5%. That's also unchanged from the prior month, and down 0.3% from the year-earlier period.