Thursday, September 09, 2010

Double Digit Unemployment Rate early next year?

by Calculated Risk on 9/09/2010 06:44:00 PM

From Ethan Harris, Bank of America North American Economist, and others, Growth recession, Sept 3rd:

"[F]or most of 2010 and 2011, employment growth is not expected to keep up with the rise in the labor force, which means the unemployment rate heads north. We expect a steady increase to 10.1% by the second quarter with a slow fall slightly below 10.0% by the end of 2011."
From Ed McKelvey, Goldman Sachs senior economist today:
"[W]e expect payroll gains to slow to 25,000 per month (ex Census workers) and the jobless rate to drift up to 10% over the next half year."
With growth slowing in the 2nd half (and into 2011), this means the unemployment rate will probably tick up too (unless the participation rate falls further). I've been expecting the unemployment rate to stay elevated, and probably increase further - and the main reason is the same as for the BofA and Goldman analysts: the general slowing economy.