Expect the Unemployment Rate to Increase

The economic crisis is almost over say the cable news talking heads. Recovery is just around the corner say the experts. Don’t listen to either one. How can we tell? Let’s take a look at the employment picture. Below is a chart of the unemployment (seasonally adjusted) through April 2009. As of the end of April, the unemployment rate stood at 8.9%.

As reported on Calculated Risk, “White House Expects 10% Unemployment Sometime This Year” is likely a gross misstatement. Can anyone say 12% and rising? Let’s look at our chart again but this time with a little forecasting thrown in…

The unemployment forecast is based on a single series ARIMA model using data through April 2009. According to my model we’ll be above 10% by the end of July, and we could go as high as 12% by the end of the year. And not to brag, but the forecast came in at 9.3% for May. The actual unemployment rate came in at 9.4%. In addition, there are plenty of people taking pay cuts out there just to keep their job (Click here for a post on Mish’s blog). Contractors at Microsoft (MSFT) here in Seattle had the pleasure of taking a 10% shave as well. What does this mean for the economy? It’s likely going to be a long while before people start spending again.

Comments

[Dave Wrixon:]

Even a child with a ruler could work out that the curve is not going to stop anywhere near 10%. What do they do in the White House apart from hangout and chewgum?

Jun 24 07:39 AM

[H. T. Love:]

Figure out ways to deceive all into believing they are helping.

HardToLove


On Jun 24 07:39 AM Dave Wrixon wrote:

> Even a child with a ruler could work out that the curve is not going
> to stop anywhere near 10%. What do they do in the White House apart
> from hangout and chewgum?

Jun 24 08:27 AM

[MarkitWacha:]

Tea Party , July 4. Don't miss it if you're unemployed.

Does this forecasting model work with data from neighboring countries? How is Mexico doing, if we're this bad? It must be worse.

Jun 24 08:57 AM

[ksmithdc:]

Interesting read, thanks.

Jun 24 10:06 AM

[trader_murf:]

Thanks, what I suspected all long. I like the charts, things are always more recognizable on charts. And there are a whole lot of people nearing the outer limits of the 72 weeks allowed by the federally extended UIB that some states like NY accepted that will fall off the radar as no longer officially unemployed. And hey, I graduated college into unemployment in the 1970's and even then UIB were never extended for 72 weeks. I understand the party line about employment being a lagging indicator but I still don't get the part about buying a new car and getting a mortgage and all the goodies to put in a house, plus paying the bills without a job.

Jun 24 10:50 AM

[semperpax:]

It's our fault for electing the idiots who are ruining this country. And they keep getting elected because they know how to lie better than their opponents. I wonder if New Zeland is accepting immigrants.

Jun 24 11:41 AM

[Neil459:]

Now that the economy is solved they are working on health care. No time to look back. This is the best talking president we have ever had. He doesn't have time to get bogged down with details.

On Jun 24 07:39 AM Dave Wrixon wrote:
> Even a child with a ruler could work out that the curve is not going
> to stop anywhere near 10%. What do they do in the White House apart
> from hangout and chewgum?

Jun 24 11:43 AM

[Neil459:]

Not sure who your "our" is but we can blame this on the CEOs that believe in "green" and "global warming", the uneducated, the racists, the caring, and the young. They all put common sense aside and went for feeling.

On Jun 24 11:41 AM semperpax wrote:
> It's our fault for electing the idiots who are ruining this country.
> And they keep getting elected because they know how to lie better
> than their opponents. I wonder if New Zeland is accepting immigrants.

Jun 24 11:47 AM

[Mel Shapiro:]

Skateboard....


On Jun 24 07:39 AM Dave Wrixon wrote:

> Even a child with a ruler could work out that the curve is not going
> to stop anywhere near 10%. What do they do in the White House apart
> from hangout and chewgum?

Jun 24 03:10 PM

[Fred Voetsch:]

"It’s likely going to be a long while before people start spending again."


And let's not forget about the debt that most people are dealing with along with the fact those who were doing pretty well and had money to invest are now down 40% from two years ago.

"The new normal" seems to be the phrase of the week and it sure is more accurate than "green shoots" but I have to wonder if things aren't still on a rather severe downward course, given all the data I have seen lately suggesting we are simply in a phase of relief in the the middle of a true depression.

Gene Inger calls this a "controlled depression" and that seems about right. I think the powers-that-be have managed to keep the financial structure fom imploding but the cost will be a longer despression with little opportunity for a recovery because all the failures are still alive and kicking while those who didn't fail are literally paying for their sins.

Jun 24 03:30 PM

[Boxed Merlot:]

From New Zealand's immigration website:

There are four main entry categories available for people wishing to migrate to New Zealand: Skilled Migrant, Work to Residence, Family, and Business. Doesn't sound much different than our, (the US's) requirements. Except that they probably enforce their laws. Maybe if we gave them a Statue or something they'd be more compassionate like us.

On Jun 24 11:41 AM semperpax wrote:

> It's our fault for electing the idiots who are ruining this country.
> And they keep getting elected because they know how to lie better
> than their opponents. I wonder if New Zeland is accepting immigrants.

Jun 24 06:32 PM

[Shalom Hamou:]

The most dangerous for employement us still the upcoming Liquidity Trap:

See:

Are We in the Keynes' Liquidity Trap, Yet?
blog.yield-curve.net/2...

Jun 25 07:51 AM