If no 2nd half recovery = extremely bad

Discussion in 'Economics' started by kxvid, Apr 7, 2009.

  1. kxvid


    According to my calculations, we will likely reach 12% unemployment by year end. 12% is the rate we will arrive at assuming that things stay as bad as they are from now on until year end. I actually think that is optimistic, and don't see much of a chance for a 2nd half 2009 recovery.

    12% unemployment is roughly 29% if unemployment was calculated the same way today as it was during the depression. Which works out to be much worse than the depression. We are crashing at a faster rate than during the depression. Peak depression era unemployment of 24.9% wasn't reached until 4 years after the stock market crashed in 1933.

    Do you agree of disagree and how bad do you think this is going to be. Do you think America will be changed forever due to the economic events that are unfolding?
  2. Agree...

    I think it will be bad, even if we have the expected H2 recovery. I would argue that the big changes have to be made to fundamental assumptions about trend US unemployment and trend US growth for the next decade or two... How about from 3%-ish to 1%-ish for GDP growth and from 5-6%-ish to 8-9% for trend unemployment rate?
  3. US? I'd say global trend growth. Who are emerging markets going to export to over the next 10 years if US and European consumers go into starvation mode?

    Trade deficits (Western world) and surpluses (emerging markets) are a zero sum game.
  4. Completely agree re global trend growth (if China and the rest of the EM world haven't been able to create large-scale domestic demand during the good years, despite a truly titanic effort, I am skeptical about what they can do now). The original question was about the US, however...
  5. I know the govt has changed the way they calculate unemployment rate..............but how can you tell 12% now is really 29%???

    I hope it gets better soon.
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