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.
