Economists: 9.8% Unemployment Ahead

Economists: 9.8% Unemployment Ahead


They were polled and that’s their number. Personally, I think 9.8% is a rosy prediction. More on that later.

From USA Today:

The unemployment rate will peak at 9.8%, according to their median forecast, up a full percentage point from the prior survey in January. Twenty-one economists predict the unemployment rate will top out at 10% or higher, according to the survey of 51 economists by USA TODAY April 16-22.

Economists also predict the jobless rate will rise for a longer time. Two-thirds say it won’t stop rising until 2010 or later, vs. 51% in January.

The unemployment rate in March was 8.5%, the highest in a quarter-century. The rate of underemployment — adding in part-timers who wanted full-time work or those who had stopped looking for a job — hit a record 15.6%.

So yes, I don’t think we’ve hit bottom yet. Why? Well, I’ve pointed out a few times now that the sub prime mess was only the beginning and a lot of other loans are just start to default. So the pain is far from over and that could have a similar cascading effect through the economy it did last fall. Not nearly as bad, but similar.

Also, we can’t ignore that underemployment number of 15.6% because that’s the true gauge of our collective financial health. If that many people want full time jobs, but can’t get them, we’re looking at a serious reset of the economy. Because that number isn’t likely to change to terribly much. In fact, I bet it’ll get more stable, even if the unemployment number goes down. Why? Because businesses will only be offering part time work because that’s all they can afford. So perhaps the 8.5% will peak and then start to go down, but we have to keep our eye on that underemployment number.

Your thoughts?

  • kranky kritter

    Wait, I thought you just told us that we were on the right track? LOL.

    BTW, if you are going to keep shopping that scary “underemployment” number, the least you could do is provide historical figures that allow us to compare current times to other times. Otherwise, it’s fairly meaningless expect to scare folks.

    For at least several months now, the rate of growth in UEC numbers has been suggesting that the peak would probably come in the 9.5 to 11.5 range. This illustrates why its important to understand basic at-a-glance data analysis. It helps you to contextualize the prognostications of economists named Rose E Scenario. It’s a virtual given that many prognosticators were told to report “any number you want as long as its less than 10.”

  • Donna Thomas

    The underemployment number is higher not because people are working part time but because they haven’t taken enough part time jobs. Yes, it is difficult to have more than one part time job because of scheduling conflicts but there are alternatives which would decrease that underemployment rate. For example a social employment site like YaaZe allows users looking for a job to highlight their hours of availability and in turn gives the employer with an ease of a click the opportunity to hire someone who fits their needed shifts. The problem exists because of scheduling conflicts. Eliminate that conflict and you’d see the rate fall with people taking on 1+ part time jobs.

  • J. Harden

    Luckily, now that GM is owned by the federal government, they can put a lot of pople to work building shitty cars that no one buys. Government doesn’t require silly, evil “markets” — they require only guns.

    Alternatively, in my stimulus-happy-place, we should all achieve underemployment so as to spend much more time at Disney World. We are on the right track Kranky, calm down and give it time.

  • wj

    The economy, having a lot of inertia, will likely continue to tank for another year or so. Even though the country may arguably be heading in the right direction now, it’s going to take a while to slow the fall, let alone start back up.

    So yes, unemployment will continue to rise. Probably at least thru next winter. And there will continue to be a lot of us working part time when we might prefer to work more.

    And there will continue to be people who are totally mystified why these things are happening and the public persists in thinking that the country is now on the right track. But the public looks to be just a tad smarter than the self-proclaimed leaders of the opposition.