December 6, 2009

10%

Unemployment unexpectedly fell to 10% this month, as if that's somehow supposed to be comforting to the over 15 million unemployed Americans.

The real issue, is whether that drop of 0.2% is sustainable.  Is it a seasonally adjusted number?  After all, going into the Christmas shopping season, layoffs should be expected to slow down in anticipation of increased need.

It's good news if unemployment has crested but a lot of economists think that the current number is a bit of a respite from the rising rate.  The most percipitious drops in unemployment have probably passed. But that doesn't mean that a rosy economic recovery and jobs are just around the corner.  If unemployment drops even at 0.2% per month, that means by next November the U.S. unemployment rate would still be at 7.6%.  that's not a healthy number and it's also not a likely number.  Forecasting out unemployment a year from now a realistic range is 8% to 11%, likely in the lower half of that range.

The question to ask yourself on behalf of the country, is whether that eventual number is a number that you can live with.

2 comments:

  1. I charted out the numbers, and IF we have stabilized, statistically speaking the unemployment numbers are expected to come in between 9.8 and 10.5. Dropping to 10 is nothing but normal fluctuation in a process.

    That's of course if we're stabilized. There are only so many jobs we can lose so I'm hoping we are stabilized. But this could sit between 9.8 and 10.5 forever.

    Roosevelt is lauded for stabilizing the unemployment at 14% with no new improvement until the war.

    ReplyDelete
  2. To be honest, I think your numbers are quite realistic. Maybe not forever, but for a significant amount of time. A couple of years? Very possibly, yes.

    ReplyDelete

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