Unemployment Projections Through 2020
By Mike Mish Shedlock Nov 13, 2009 10:40 am
It ain't pretty any which way you look at it.
John Mauldin touched upon this theme in Unemployment: Welcome to the New Normal.
Mauldin's analysis stopped short of making actual projections as to when full employment would return, or the detailed path it would take to get there year by year. However, I thank him for providing a nice starting point for discussion.
In Scarred Job Market Expected to Weigh on Economy, the Wall Street Journal offers this look at how long it would take to return to employment levels before the start of the recession. Please consider the long road back:
Click to enlarge
The Wall Street Journal states:
On average, the economists don't expect unemployment to fall below 6% until 2013...
On average the economists -- not all of whom answered every question -- expect the unemployment rate to peak at 10.2% in February. But even once the employment situation stops getting worse, economists expect recovery to come slowly. "It could take until 2014-15 before we see a 5% handle on unemployment again," said Diane Swonk at Mesirow Financial.
6% by 2013?!5% by 2015?!
Really?
Mapping Unemployment
To map unemployment projections year-by-year from now through 2020 there are a huge number of variables to take into consideration.
Factors Affecting Unemployment Projections
- Current Hiring Trends
- Demographics
- Working Age Population Growth Projections
- Boomer Retirements
- Participation Rate
- Part-Time Employment
- Drivers For Jobs
- Housing
- Commercial Real Estate
- Global Wage Arbitrage
- Outsourcing
- Double Dip Recession
- Productivity
- Manufacturing
Let's start our analysis with a look at monthly job growth trends from 1999 through 2009. John Mauldin posted the following chart, I filled in averages and outlined previous recession periods in blue.
Monthly Job Growth 1999-2009
The chart is courtesy of the Bureau of Labor Statistics. Annotations are by me, numbers are in thousands.
The areas in deep blue mark recessions. The last recession ended in November 2001. The economy shed jobs for the next 21 months. Is there any reason for it to be different this time?
- At the height of the Internet bubble, with a nonsensical Y2K scare on top of that, the economy managed to gain 264,000 jobs a month.
- At the height of the housing bubble in 2005, the economy added 212,000 jobs a month.
- At the height of the commercial real-estate bubble with massive store expansion, the economy added somewhere between 96,000 and 178,000 jobs per month, depending on where you mark the peak.
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Copyright 2009 Minyanville Media, Inc. All Rights Reserved.
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Reply
2009-11-13 10:52:09
$100 trillion shortfall in Social Security and a dying tax base.....
purdy well adds up to a country with one foot in the grave.
2009-11-13 13:45:31
We Can Handle The Truth
Mish,
Great article. Please post scenario "number two". Better yet, "best" case, "nominal", "pessimistic". You can even sneak in "pessimistic" on the same graph.
We can handle the truth. It will help us plan.
My apologies if this is a double post, the 1st one seems to have gotten lost in the Internet.
Must be the spies, Toddo is concerned about.
Great article. Please post scenario "number two". Better yet, "best" case, "nominal", "pessimistic". You can even sneak in "pessimistic" on the same graph.
We can handle the truth. It will help us plan.
My apologies if this is a double post, the 1st one seems to have gotten lost in the Internet.
Must be the spies, Toddo is concerned about.
2009-11-14 06:17:23
The age of leisure?
There is no arguing that the developed world has been hit with a massive increase in the supply of labor and this is likely the root cause of the financial crisis rather than a symptom.
We need to accept the fact that wage arbitrage is going to mean a decline in incomes in the western world relative to those in the developing world. Viewed in this light it may be a positive thing - a reduction in global inequality, however unemployment is leading to greater inequality within the developed world itself.
Rather than allowing the burden of unemployment to fall on a small portion of the population (and the fear of unemployment reduce the consumption of the rest), would it not make more sense for each of us to work less hours so that income could be shared more equally? This could allow us more time for leisure and cultural pursuits, to spend with family and friends without the fear of hunger and homelessness. There may be an additional benefit in reducing the excess income which has previously been wasted on bidding each other up on houses and other financial assets thereby creating dangerous bubbles.
This could be the dawn of an age of leisure that many have dreamed would be brought about by technological progress. In a way it has and perhaps all we need to do is embrace it rather than fight it.
We need to accept the fact that wage arbitrage is going to mean a decline in incomes in the western world relative to those in the developing world. Viewed in this light it may be a positive thing - a reduction in global inequality, however unemployment is leading to greater inequality within the developed world itself.
Rather than allowing the burden of unemployment to fall on a small portion of the population (and the fear of unemployment reduce the consumption of the rest), would it not make more sense for each of us to work less hours so that income could be shared more equally? This could allow us more time for leisure and cultural pursuits, to spend with family and friends without the fear of hunger and homelessness. There may be an additional benefit in reducing the excess income which has previously been wasted on bidding each other up on houses and other financial assets thereby creating dangerous bubbles.
This could be the dawn of an age of leisure that many have dreamed would be brought about by technological progress. In a way it has and perhaps all we need to do is embrace it rather than fight it.
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