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| Economy |
| 15% unemployment next year? |
| 2009-11-06 |
| Unemployment is a lagging indicator on the health of the economy. Productivity rises when layoffs occur, which leads to bigger profits and investments, which leads the way out of a recession. Right? But this time around, unemployment is a leafding indicator. It started dropping in December 2007, six months before the recession began in the third quarter of 2008. It last four quarters (or one year). Unemployment seems to have leveled off. But might it rise sharply again next year? In July, Louis Woodhill wrote that 14% unemployment is possible next year based on federal statistics on private investment. Woodhill is an engineer and software entrepreneur, and is on the Leadership Council of the conservative Club for Growth. He cited a 38% drop in "real nonresidential fixed investment," which he defined as private business investment -- PBI -- in the first quarter. This followed a 22% drop in the fourth quarter of 2008. "The unemployment rate a year ago was 5.5%. Because the potential labor force is growing, we need employment to increase by 1% annually to keep the unemployment rate from going up. The 37.9% investment decline reported by the BEA can be expected to eventually produce a reduction in total employment of about 8.5%. Accordingly, we can expect unemployment to rise to about 14% within a year unless the downward slide of PBI is reversed," Woodhill wrote. So how did "real nonresidential fixed investment" do in the second quarter (April through June) and the third quarter (July through September)? Not well. From the government: "Real nonresidential fixed investment decreased 2.5 percent in the third quarter, compared with a decrease of 9.6 percent in the second. Nonresidential structures decreased 9.0 percent, compared with a decrease of 17.3 percent. Equipment and software increased 1.1 percent, in contrast to a decrease of 4.9 percent. Real residential fixed investment increased 23.4 percent, in contrast to a decrease of 23.3 percent." Looks like that 14% may become 15%. We shall see. |
| Posted by:Fred |
| #8 15% unemployment would be an improvement in some parts of the country, actually. |
| Posted by: Cornsilk Blondie 2009-11-06 23:16 |
| #7 He may be referring to the French model that hasn't worked either. The problem here is right now according to IBD The underemployment rate — which includes discouraged workers and part-time staff that would like to work full time — climbed to 17.5%, the highest on records going back to 1994. you already have 17% above the unemployed who are working less than 5 days a week, part time. Business would not hire even with a 4 day work week but would simply increase the hours of work of the existing staff and avoid the additional expenses - unemployment, workers comp, other mandated health and employee benefits dictated by the state that come with new employees. |
| Posted by: Procopius2k 2009-11-06 22:39 |
| #6 I already missed Redneck Jim's "vibrant" joke, Large Snerong7311, so it's obvious I'm thinking slowly tonight. Could you translate, please? |
| Posted by: trailing wife 2009-11-06 21:46 |
| #5 It is obvious that 4 day weeks are the solution to increased productivity. Doesn't make sense that some work 5 day weeks and others live in benefits from that work. |
| Posted by: Large Snerong7311 2009-11-06 19:21 |
| #4 Can't be 10.2%, but, but, but our leader said it wouldn't! Where's some more Koolaide? |
| Posted by: JohnQC 2009-11-06 12:24 |
| #3 I don't know if the UE number will go to 15 percent or not. What I do know is what I see: Business is up at the moment, but we are still working 32 hours. We expect to continue to be busy, but we also expect business will drop off sharply and intermittently. IOW: It will be assholes and elbows for weeks at a time and then it will dead as Joe Biden's upper brain functions for weeks at a time. No loss and no gain,and we suspect it will be this way for many, many more months to come. And when the rest of the stimulus is spent in 2010, it will have a profound impact, but not on the economy. The bullsh*t meter will spike, though. Maybe that's a lagging indicator. Dunno. |
| Posted by: badanov 2009-11-06 09:39 |
| #2 10.2% official number just out - the actual number is much higher |
| Posted by: Frank G 2009-11-06 08:47 |
| #1 Blow the tanks...take er down...bring on the crash. Where do I report to for my |
| Posted by: Besoeker 2009-11-06 07:11 |