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Warren Buffett Says We're Already In A Recession

Economic Poll  

36 members have voted

  1. 1. What are your thoughts on whether we're in an economic recession

    • Yes, I agree with Buffett ... we're already in a recession
      18
    • No, we're a long way off from a recession
      6
    • Not in a recession ... yet ... but we're headed into one
      9
    • Not sure
      3


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I'm feeling good enough to hardwood my stairs next week!

This "Recession" is nothing compared to the .com and Enron bust.

And Stagflation is a mindset that can be beat. Start spending, y'all!

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I'm feeling good enough to hardwood my stairs next week!

This "Recession" is nothing compared to the .com and Enron bust.

And Stagflation is a mindset that can be beat. Start spending, y'all!

I think the country is dipping a toe in it. But you can't tell that in Houston, spending is going full force in the areas I frequent. Keep it up H-town!!!!

We continue to remodel, landscape, dine out and support the local. economy.

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Guest danax

Wall St. already believes it, that's a lot of the reason why the market's been down this year, and is heading lower for sure.

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Wall St. already believes it, that's a lot of the reason why the market's been down this year, and is heading lower for sure.

My retirement portfolio has lost 5% this year already. The bad part is that when I looked at my elections, NONE of them (bonds included) are doing well any more. That is down from 22% returns from some of the choices I had last year.

Dammit!

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Another Buffett article (blog post) on the state of the sinking dollar and why it is occuring:

http://dailybriefing.blogs.fortune.cnn.com...e-gap-solution/

All this coming a man who's class A stocks are trading at $134,000 a share. Since he has been saying all this, its dropped from 140,000 a share.

Edited by KatieDidIt

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Let me hear Greenspan say it, and I will get on the wagon.

Always on the Late Show, Hey TJ "Dallas" and "Knots Landing" are in Re-runs Too!

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Recession has no common sense definition. The definition is actually very strict: two consecutive quarters of negative GDP growth. I think that it is more likely than not that we will get a quarter of negative growth or possibly two or more non-consecutive quarters with intermitent quarters of very slow or no growth. A technical recession is unlikely, IMO.

Another thing to bear in mind is that there are regions of the country that are already in a recessionary slump. Other parts of the country, like Texas, aren't in bad shape.

And on top of that, the push/pull of housing vs. exports means that labor markets may not be in all that bad of a shape as compared to something even like the 2000/2001 non-recession (which, btw has since been revised into technical oblivion).

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Always on the Late Show, Hey TJ "Dallas" and "Knots Landing" are in Re-runs Too!

I don't like Barnake at all. What do I give a hill a beans what Warren Buffett and his Billions have to say, HE ain't hurtin' for money. I understand that Greenspan is gone, but he does pop his head up from time to time. I can't blame him for being out of the game, too much pressure, and I think Andrea Mitchell told him to spend a little more time with her.

I think only certain businesses are going into a recession, not the economy as a whole. I.E. car business, housing market. Mark, you know as well as I that the oil business is BOOMING!!!

Coog, you got a link for Greenspan ?

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Greenspan is the one who told everyone to get Adjustable Rate Mortgages before he started raising interest rates again. Afterr that, he's not really a good voice to listen to.

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If we are in a common sense recession, then why is unemployment practically non-existant?

Probably helps to know what definition the US uses to define "employed".

Who is counted as employed?

Not all of the wide range of job situations in the American economy fit neatly into a given category. For example, people are considered employed if they did any work at all for pay or profit during the survey week. This includes all part-time and temporary work, as well as regular full-time year-round employment. Persons also are counted as employed if they have a job at which they did not work during the survey week because they were:

On vacation;

Ill;

Experiencing child-care problems;

Taking care of some other family or personal obligation;

On maternity or paternity leave;

Involved in an industrial dispute; or

Prevented from working by bad weather.

So, if a person works ONE HOUR in a week at minimum wage, the government says you are employed. By way of contrast, France considers one unemployed if they have worked a total of less than 78 hours in the previous 4 weeks. In actuality, the US unemployment rate is a farce. We condescendingly deride France's unemployment rate, when the reality is that we are giving a false rate to make ourselves look and feel better.

Additionally, the US does not count those who do not fit their strict definition of who is actively seeking employment. This results in an artificially low unemployment rate as well, since those who are so discouraged from not finding a job that they stop looking are not counted. In hard economic times, these discouraged workers soar, yet the rate remains unchanged. In 2004, during our supposedly great economy, the percentage of EMPLOYED Americans was 86.3%, while France's was 86.7%. Yet, France's official unemployment rate was 7.4% to our 4.6%.

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Come on Red. Forget the stats, becuase we all know they are lies and can be manipulated.

How about your world? During the .com/Enron bust I knew tons of people out of work. Bodies were everywhere.

I can't think of a single person looking right now.

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Greenspan is the one who told everyone to get Adjustable Rate Mortgages before he started raising interest rates again. Afterr that, he's not really a good voice to listen to.

Greenspan's speech about the ARM was meant for those who planned to stay in their homes for a 2 to 3 year only period, if they were to stay longer then they were to refi to a fixed rate mortgage. An ARM was never meant for subprime lending advances. The ARM drastically changes for those who can't make or haven't made on time payments as the risk goes up for the lender with these people. Greenspan isn't the cause for the housing ARM decline. Over zealous lenders and mortgage brokers are to blame for giving credit challenged people, who will sign ANYTHING without reading it to get into a house, loans without explaining the rules to them fully.

Oh, btw, the .com bust forced me to leave Austin because all the Dellionaires cashed in their stocks and moved on, Austin's economy dried up for a time, but has regained within the last couple of years, and the family and I are thinking about going back in a few years.

Edited by TJones

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I guess there are a few Mortage Brokers out of work. Poor babies.

NPR was saying this morning that some of these punks were getting a $20K bonus for each risky loan.

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yea, yea, yea, but even an ill-conceived stat, as long as its used consistenty, shows trends... and today's trend is unemployment is virtually zero.

Probably helps to know what definition the US uses to define "employed".

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yea, yea, yea, but even an ill-conceived stat, as long as its used consistenty, shows trends... and today's trend is unemployment is virtually zero.

Let me ask this then. Did the government change the math in the last few years as to HOW they come up with the % of the unempoyment rate, or is it the same equation they have been using for the last 50 years ?

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yea, yea, yea, but even an ill-conceived stat, as long as its used consistenty, shows trends... and today's trend is unemployment is virtually zero.

Not true. You missed the part about the discouraged workers not being counted at all. This group grows drastically during recessionary times (as does part-timers), causing the unemployment rate to actually drop while the true number of unemployed goes up. The reality is that the unemployment rate is virtually useless, as a 5% rate during a down economy and a 5% rate during a good economy can be millions of workers different.

Of course, this means little unless you are one of the unemployed, or the wrong guy (or gal) is president. THEN, you'll pay attention to the definition.

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Not true. You missed the part about the discouraged workers not being counted at all. This group grows drastically during recessionary times (as does part-timers), causing the unemployment rate to actually drop while the true number of unemployed goes up.

According to the BLS, the workforce participation rate has only been fluctuating within a span of 1.1% since 1989. And it is for all intents and purposes unchanged since 2003.

While I'm not about to claim that your criticism of the employment measurement methodology is entirely without merit, it isn't exactly a slam dunk, either. A lot of the effect that you describe, as evident from this table chronicling the previous 13 months, is among younger workers. This reflects that they tend to drop out of the labor force and go to college when employment opportunities dry up.

Edited by TheNiche

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the push/pull of housing vs. exports means that labor markets may not be in all that bad of a shape

I know that the weak dollar is good for anyone in the export business, but I've seen no evidence to suggest that manufacturing jobs have ratcheted up due to increased exports. And certainly not to the extent that would offset job losses in the construction and banking industry tied to the mortgage issue.

Perhaps I'm way off base, but as a percentage of the economy, how much manufacturing do we do for export anymore that could absorb job loss in other sectors?

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Let me ask this then. Did the government change the math in the last few years as to HOW they come up with the % of the unempoyment rate, or is it the same equation they have been using for the last 50 years ?

Let me ask you something.

Do you believe that we have an unemployment problem in the United States today?

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You know, I was tempted to look at the 14% drop in the stock market, the drop in housing prices and sales, drops in construction, the mortgage crisis, skyrocketing foreclosures, the rising inflation rate, the rising unemployment rate, and the plummetting dollar, and think, hey, maybe Warren Buffet is right. But, then I saw saw some dude on an internet forum say that the economy was great, and decided, what the hell does Warren Buffet know anyway?

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I know that the weak dollar is good for anyone in the export business, but I've seen no evidence to suggest that manufacturing jobs have ratcheted up due to increased exports. And certainly not to the extent that would offset job losses in the construction and banking industry tied to the mortgage issue.

Perhaps I'm way off base, but as a percentage of the economy, how much manufacturing do we do for export anymore that could absorb job loss in other sectors?

I've queried a lot of very competent people what they believe to be the core comparative advantages where international trade is concerned. The responses I've come up with pretty consistently talk about: 1) ultra-high-tech (i.e. not just computer assembly), 2) aerospace, 3) biotech/pharma, 4) oil & gas (upstream and downstream), and 5) agriculture.

Don't get me wrong, there's still a trade deficit (and I tend to believe that that is the long-term natural state for the U.S.), but it has declined 27% in two years, and that is contributing significantly to the net change in GDP. The back-story is that while the rate of import growth has pretty much leveled off, export growth is driving the trend. Its pretty hard to prove up the employment impacts, though, on account of that the success of these industries have secondary impacts within other sectors of the economy that exceed the direct impacts.

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Let me ask you something.

Do you believe that we have an unemployment problem in the United States today?

Answer my question first, and I will GLADLY answer yours, please.

Red, I think Warren is feeling a recession, and those that are also playing the stockmarket heavily, unless they are knee deep in oil and gas or pharmacutical stocks. Didn't anybody learn anything from the .com bust that you should not rely so much on tech stocks ? Wasn't it Enron's "broadband" stock futures that became their Achilles heel ?

Banks are hurting because they didn't learn from their S&L mishaps of the 90's. You don't give credit challenged people money they can't pay back. Flippers of houses are getting just as bad as the bad credit folks because alot of them have decided to just walk away from a house "mid-construction", or have finished and can't afford the 2, 3 or 4 mortgages.

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I know that the weak dollar is good for anyone in the export business, but I've seen no evidence to suggest that manufacturing jobs have ratcheted up due to increased exports. And certainly not to the extent that would offset job losses in the construction and banking industry tied to the mortgage issue.

Perhaps I'm way off base, but as a percentage of the economy, how much manufacturing do we do for export anymore that could absorb job loss in other sectors?

Manufacturing jobs? What manufacturing jobs? They don't call it the rust belt for nothing. We lost our manufacturing base to the Chinese and Japanese, years ago. That's why some think that the high cost of oil won't affect our economy as much as in the 1970's (because we don't have to haul around parts and pieces of everything we make and sell in this country, burning up oil, driving up prices, on everything.) It's all done overseas now, limiting the benefit we get from the dollar decline.

Edited by BryanS

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I am not aware of any recent changes that would significantly impact ones ability to use the unemployment rate to identify trends.

Feel free to nitpick in your next post.

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My retirement portfolio has lost 5% this year already. The bad part is that when I looked at my elections, NONE of them (bonds included) are doing well any more. That is down from 22% returns from some of the choices I had last year.

Dammit!

Stay the course. Keep a steady hand on the tiller and keep contributing. It may get a lot worse before it gets better. Look at this as an opportunity to buy/invest more shares at a cheaper price. When life hands you lemons, make lemonade. Some say take a "flight to safety" and invest in gold, other commodities. But those charts look like the NASDAQ composite circa 2000. No, thank you.

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I am not aware of any recent changes that would significantly impact ones ability to use the unemployment rate to identify trends.

Feel free to nitpick in your next post.

So, the equation hasn't changed in the past 50 years, correct ?

No, I have no problem with the jobless rate if the equation is still the same one that they have been using to find the percentage over the past 50 years. I don't beleive there is a real lack of jobs to be had, if corporate America would quit sending jobs over seas. the problem is, who is willing to fill them. Flipping burgers and digging ditches is alot better than begging on the street corner, or waiting on the porch for that Government cheese, but it seems that begging pays a little better, but what is your self-esteem and sense of accomplishment worth ?

However, I do fear what will happen in the coming couple of years to the unemployment rate if a Democratic Pres. gets in office and passes their tax reform bills to tax those making over $200k a year almost 60%. They forget to take in effect that alot of them making over $200k are small business owners who have employees and benefits to pay. I do like Obama's plan to 86 corporate tax breaks for those companies who DO outsource jobs overseas. I find that to be a fantastic idea. <---(this is the nitpick, but not directed towards you.)

Edited by TJones

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Hillary and Obama sure are using it. Ohio has 8% unemployment, but maybe Red should tell them it don't mean nuttin.

Unemployment, unfortunately, feels different when you are fully employed.

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Stay the course. Keep a steady hand on the tiller and keep contributing. It may get a lot worse before it gets better. Look at this as an opportunity to buy/invest more shares at a cheaper price. When life hands you lemons, make lemonade. Some say take a "flight to safety" and invest in gold, other commodities. But those charts look like the NASDAQ composite circa 2000. No, thank you.

Well, the way our retirement plan is set up (457) I do not have a choice but to either keep investing or not. I can change my elections between various funds, but they're all crap right now. I did load a little more towards bonds since they seem to be doing better than anything else, but ...

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You know, I was tempted to look at the 14% drop in the stock market, the drop in housing prices and sales, drops in construction, the mortgage crisis, skyrocketing foreclosures, the rising inflation rate, the rising unemployment rate, and the plummetting dollar, and think, hey, maybe Warren Buffet is right. But, then I saw saw some dude on an internet forum say that the economy was great, and decided, what the hell does Warren Buffet know anyway?

I know right! What does a billionaire know anyway? That hack!

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Well, the way our retirement plan is set up (457) I do not have a choice but to either keep investing or not. I can change my elections between various funds, but they're all crap right now. I did load a little more towards bonds since they seem to be doing better than anything else, but ...

457s won't allow investments in commodities or precious metals anyway. Skew a little more toward cash equivalents and bonds and hang on. Mine sucks too right now. My IRAs and 401k both. Been through it before, and I have to be honest, it's unnerving. The only thing that makes it easier is to save as much cash as possible. You won't make any return to speak of, but if you can swing 10 to 15K in a savings or money market, it's a major cushion. I rode out the last wave of joblessness that way.

All you folks who don't know anyone who has been out of work must not know anyone in management in financial services, because it's been that way now for the past 7, 8 years. No job is safe in banking, insurance or investments.

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Manufacturing jobs? What manufacturing jobs? They don't call it the rust belt for nothing. We lost our manufacturing base to the Chinese and Japanese, years ago. That's why some think that the high cost of oil won't affect our economy as much as in the 1970's (because we don't have to haul around parts and pieces of everything we make and sell in this country, burning up oil, driving up prices, on everything.) It's all done overseas now, limiting the benefit we get from the dollar decline.

Sorry Bryan, I just caught this and couldn't let it go. Yes, the Japanese competition has had a big part in the Big 3's demise. But, it is the UAW that holds an even larger part in their demise. The UAW basically kept biting the hand that fed them, so what does the Big 3 do ? MODERNIZE the whole show in an effort to reduce the amount of bloodsucking UNION workers draining their profits with shoddy workmanship and unecessary wage increases. The workers lost pride in their work because they became brainwashed and consumed with what their so-called "Union Leaders" were telling them. We discussed this alot in another thread, I will try to find the link to it. Sorry to get off topic a bit, but this does kind of fall into the topic of WHO can do the work we need done HERE in America, instead of outsourcing it. I bet there are a whole slew of folks in Detroit, Flint, Lansing and Saginaw that would love to have their $22 an hour jobs back right about now ?

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457s won't allow investments in commodities or precious metals anyway. Skew a little more toward cash equivalents and bonds and hang on. Mine sucks too right now. My IRAs and 401k both. Been through it before, and I have to be honest, it's unnerving. The only thing that makes it easier is to save as much cash as possible. You won't make any return to speak of, but if you can swing 10 to 15K in a savings or money market, it's a major cushion. I rode out the last wave of joblessness that way.

My 401k is in O.K. shape, not great. I had to move some stocks around in order to thwart off a serious drop in my main stocks. I will tell you that they WERE Automotive business stocks, but some quick thinking on my part<----not what usually happens for me) got me through it.

Crunch I think the only alternative is to make some other type of investment for a quick turnover profit, should bad times present themsleves. I have thought about writing a couple of children's books. I can even do my own illustrations, and NO Red, they aren't friggin' stick figures. Crunch, I recommend rebuilding street rods and selling them for profit. BTW, Mark, are you ready to buy, I am ready to sell. :D

OOPS, crud, sorry for the double post !

Edited by TJones

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All you folks who don't know anyone who has been out of work must not know anyone in management in financial services, because it's been that way now for the past 7, 8 years. No job is safe in banking, insurance or investments.

Well you can't blame that on the economy.

Speaking of stats, today the ADP employment report comes out, and it's usally a good barometer of the Govt. report which comes out Friday.

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Sorry Bryan, I just caught this and couldn't let it go. Yes, the Japanese competition has had a big part in the Big 3's demise. But, it is the UAW that holds an even larger part in their demise. The UAW basically kept biting the hand that fed them, so what does the Big 3 do ? MODERNIZE the whole show in an effort to reduce the amount of bloodsucking UNION workers draining their profits with shoddy workmanship and unecessary wage increases. The workers lost pride in their work because they became brainwashed and consumed with what their so-called "Union Leaders" were telling them. We discussed this alot in another thread, I will try to find the link to it. Sorry to get off topic a bit, but this does kind of fall into the topic of WHO can do the work we need done HERE in America, instead of outsourcing it. I bet there are a whole slew of folks in Detroit, Flint, Lansing and Saginaw that would love to have their $22 an hour jobs back right about now ?

I don't necessarily disagree. We lost our base, due to competition. Part of that is how we handled labor (as you state), the serious lack of quality controls, and Detroit thinking that cars like this were actually a good idea:

76-Pacer_Curt.gif

My point is, we really don't manufacture much of anything anymore in this country, for one reason or another. Some advocate that a falling dollar is a good thing because exports get cheaper, imports become more expensive. Problem is... if everything you buy is made in another country, outside of the US, then you end up paying more for those goods, and that puts a strain on people here at home.

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My point is, we really don't manufacture much of anything anymore in this country, for one reason or another. Some advocate that a falling dollar is a good thing because exports get cheaper, imports become more expensive. Problem is... if everything you buy is made in another country, outside of the US, then you end up paying more for those goods, and that puts a strain on people here at home.

As demand for labor increases so as to increase industrial production, unemployment is made lower (ceteris paribus), the labor market tighter, and wages higher. But the wages don't buy as much. It is almost a wash.

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Well you can't blame that on the economy.

Actually I attribute it to M&A activity, but mostly the relentless pursuit of share price at the expense of all else. How do you think we got to the credit crisis? You can't seriously be suggesting that everytime a bank or invesment house lays off 5, 10, 15 thousand people, it's not related to the economy. Financial services is at least a third of the entire US economy.

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Crunch I think the only alternative is to make some other type of investment for a quick turnover profit, should bad times present themsleves. I have thought about writing a couple of children's books. I can even do my own illustrations, and NO Red, they aren't friggin' stick figures. Crunch, I recommend rebuilding street rods and selling them for profit.

Children's books! :lol: Why didn't I think of that? You'll be joining the illustrious ranks of Madonna, Princess Fergie and, I'd imagine, more than a few unpublished pervs.

Street rods only if I can get my own show. Are there any photogenic mechanics left with the apropriate amount of tattoo work, who aren't already pimpin rides?

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Hillary and Obama sure are using it. Ohio has 8% unemployment, but maybe Red should tell them it don't mean nuttin.

Funny thing is, I would actually think that if Ohio is OFFICIALLY reporting an unemployment rate of 8%, then things are REALLY bad there. Understanding that the system of reporting is flawed doesn't mean you still can't use the stats.

In fact, using Red's theory, since the official report is saying 8% unemployment things could be a LOT worse considering that many folks might have just stopped looking for work and are therefore not being counted. The way I read it, that means Ohio's true unemployment rate is prolly in the double digits now.

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Funny thing is, I would actually think that if Ohio is OFFICIALLY reporting an unemployment rate of 8%, then things are REALLY bad there. Understanding that the system of reporting is flawed doesn't mean you still can't use the stats.

In fact, using Red's theory, since the official report is saying 8% unemployment things could be a LOT worse considering that many folks might have just stopped looking for work and are therefore not being counted. The way I read it, that means Ohio's true unemployment rate is prolly in the double digits now.

I did not check in at The Big Picture yesterday. Too bad because one of the top entries is a link to a little piece called 'The Misleading Jobless Rate' complete with chart porn.

You would be correct about double digits, and not just Ohio.

http://www.nytimes.com/2008/03/05/business...amp;oref=slogin

Edited by crunchtastic

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Per the NYT article:

There are only two possible explanations for this bizarre combination of a falling employment rate and a falling unemployment rate. The first is that there has been a big increase in the number of people not working purely by their own choice. You can think of them as the self-unemployed. They include retirees, as well as stay-at-home parents, people caring for aging parents and others doing unpaid work.

The second possible explanation

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Hmmm....seems as if the guy who creates the unemployment rate agrees with me. Imagine that.

The extent to which it is apparent that he may agree with you is extremely limited. You've said a lot of things. And all this guy said was that this number by itself doesn't mean much.

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