Unemployment Rates Are Likely Worse Than Reported, Says Veteran Financial Advisor Dennis Tubbergen

Online, February 2, 2010 (Newswire.com) - The President is saying that another multi billion dollar stimulus package is needed to kick-start the economy and keep unemployment from rising.

The problem is that the last stimulus package didn't deliver the results that were promised, and unemployment is very likely worse than published numbers would indicate, according to Dennis Tubbergen, a financial advisor with nearly 25 years in the field.

Tubbergen weighs in with his opinion on the most recent unemployment figures on his market commentary blog, www.Dennistubbergen.com.

The original $787 billion stimulus package was created to keep the official unemployment rate at no higher than 8 percent. Obama got the stimulus package that he wanted, but the official reported rate is already 10 percent, and Tubbergen believes that the real rate is even higher because of "seasonal bias adjustment."

The Bureau of Labor Statistics explains Seasonal Bias Adjustment like this:

The seasonal fluctuations in the number of employed and unemployed persons reflect not only the normal seasonal weather patterns that tend to be repeated year after year, but also the hiring (and layoff) patterns that accompany regular events such as the winter holiday season and the summer vacation season. These variations make it difficult to tell whether month-to-month changes in employment and unemployment are due to normal seasonal patterns or to changing economic conditions. To deal with such problems, a statistical technique called seasonal adjustment is used. This technique uses the past history of the series to identify the seasonal movements and to calculate the size and direction of these movements. A seasonal adjustment factor is then developed and applied to the estimates to eliminate the effects of regular seasonal fluctuations on the data.

However, the seasonal bias adjustment system was not created to adjust accurately for a prolonged economic downturn such as has occurred over the past few years. Therefore, the unemployment figures that are released by the government are most likely not accurately calculated, and in fact are higher than have been reported, Tubbergen believes.

Tubbergen explains on his blog that he believes that the unemployment rate will remain at least as high as it currently is for the next several years, and may well go higher. If that happens, the U.S. economy, which is dependent on consumer spending, will continue to sputter.

And now, some people in congress are asking for another stimulus package, even though many believe that the first stimulus package failed to achieve what it was meant to in terms of reducing unemployment.

Those who are interested in learning more about Tubbergen's insights into the financial market may visit www.dennistubbergen.com.

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