If you want information on the unemployment rate, the obvious place to get it is from the government, right? For example, recent numbers reveal unemployment nationally at 7.2%, the highest level in 16 years, with some 11 million Americans out of work. That sounds bad enough -- but just looking at the headline numbers doesn't necessarily give you the full picture.
You see, the most commonly followed unemployment gauge excludes some people. Those who have given up looking for work, for instance, are not counted. Think of all those folks in Michigan, for example, who have been let go from jobs at Ford
Fortunately, if we want to gather more data on the state of employment in the U.S., there are other resources available to us. For example, we might look to the companies that cut many, if not most, of America's paychecks: Automatic Data Processing
ADP is in a good position to know what it's talking about, too -- it provides payroll and other services for nearly 600,000 employers globally, and it serves more than 80% of the Fortune 500 companies and 90% of the Fortune 100. It's fair to say that it has its finger on the pulse of U.S. employment.
Meanwhile, its competitor Paychex has noted that "Over the past six months, we experienced [the number of] companies going out of business increasing 12%, new business starts declining 13%, checks per client decreasing 1.5%, and we saw lower levels of new hire reporting."
There are other places to look for economic clues, too. Consider retailer reports, for example. According to The New York Times, sales at retailers were down some 2.2% over the holiday season. That might not sound like much, but it's the biggest drop in several decades. Even if sales perk up a little in the months to come, retailers will remain wounded, as November and December sales typically make up as much as 40% of their annual take.
We investors and amateur economists can get more insights by looking at which retailers are doing better and which worse. For instance, Nordstrom
Meanwhile, at the other end of the spectrum, Family Dollar
So next time you see a report from a single source, even the government, look around for corroborating data, which you can find in all kinds of places. Of course, any way you look at it, unemployment clearly seems to be up -- but if it's up significantly more than the headline figures show, then the recession might already be worse than many people think.
Longtime Fool contributor Selena Maranjian owns shares of Wal-Mart and Paychex. Paychex is a Motley Fool Income Investor recommendation. Wal-Mart and Paychex are Motley Fool Inside Value recommendations.The Motley Fool is Fools writing for Fools.