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EJ
01-07-09, 03:34 PM
http://www.itulip.com/images/soupline.jpgJobs crash arrives on schedule

July 2, 2008 in our state by state U.S. unemployment forecast Housing Bubble Correction Update: Fasten your seat belts, here comes the jobs crash (http://www.itulip.com/forums/showthread.php?p=39709#post39709) we said, “The rate of growth in unemployment in some states may shock you...” In November 2008 we published our industry sector analysis of future unemployment Unemployment by industry: Brace for Impact (http://www.itulip.com/forums/showthread.php?p=59666#post59666) that concluded, “In total we see the US economy losing between seven and 13 million jobs by the end of 2009 representing a 5% to 10% increase in unemployment.” Investors who got sucked into the early year rally (see Beware Relief Rallies Update 1: DJIA 7552 the Debt Deflation Bear Market bottom? (http://www.itulip.com/forums/showthread.php?p=62889#post62889)) took a beating today when the two "surprising" unemployment reports shocked the market, producing a 245 point drop in the DJIA on the news. This story was typical.
NEW YORK (Reuters) - Job losses and plans to lay off workers hammered the struggling U.S. economy in the final month of 2008, according to private reports that could foreshadow surprisingly grim labor market data from the government on Friday.

U.S. private employers shed 693,000 jobs in December, up sharply from the revised 476,000 jobs lost in November and far more than economists estimated, a report by ADP Employer Services said on Wednesday.

"This is shockingly awful," said Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, New York. - Private job losses mount, ominous for payrolls, Burton Frierson, Reuters, January 7, 2009 (http://finance.yahoo.com/news/Private-job-losses-mount-rb-13992819.html)
If job losses continue this year at the December 2008 rate reported today the U.S. may see eight million jobs lost in 2009, near the lower end of our seven to 13 million forecast. From that perspective, today's data could be taken as encouraging, except that a review of our per-industry and per-state forecasts from last year indicate troubling signs that lead us to conclude that the monthly rate of job losses will accelerate rapidly early this year, led by retail trade sub-sector of the services sector that was hammered by weak consumer demand during the usually busy holiday shopping season, and piled onto by the now staggering energy and agriculture sectors that were previously supported by a weak dollar that surged toward the end of 2008, cutting foreign demand for U.S. exports.

Four states are representative of our unemployment growth thesis: Housing Bubble Ground Zero states Florida and California, FIRE Economy (http://www.fireeconomy.com/) employment dependent New York state, and the Energy and Food Inflation state of Idaho. Idaho is among a few states that we called out as potential bright spots in our otherwise gloomy per-state unemployment forecast. The surging dollar forces us to revoke even that small glimmer of promise in the post FIRE Economy collapse.


Forecast July 2008


http://www.itulip.com/images/CAuJuly2008.gif
Ground Zero state
National Unemployment Growth Rank: 4
Macro-economic Vulnerability: High
Unemployment Growth Rate: High
Estimated Post Recession Peak Unemployment Rate: 10%
Future Home Values Rating: Poor

Actual January 2009
http://www.itulip.com/images/CA010809.gif


Reassessment: With unemployment already pushing 8.5% from 6.5% at the time of our previous forecast, we are revising our forecast for CA unemployment to peak at 12% versus 10%.




Forecast July 2008
http://www.itulip.com/images/FLuJuly2008.gif
Ground Zero state
National Unemployment Growth Rank: 2
Macro-economic Vulnerability: High
Unemployment Growth Rate: High
Estimated Post Recession Peak Unemployment Rate: 10%
Future Home Values Rating: Poor

Actual January 2009
http://www.itulip.com/images/FL010809.gif


Reassessment: With unemployment close to 7% from 5.5% at the time of our previous forecast, we are holding to our forecast for FL unemployment to peak at 10%.

Forecast July 2008
http://www.itulip.com/images/NYuJuly2008.gif
Ground Zero state
National Unemployment Growth Rank: 33
Macro-economic Vulnerability: High
Unemployment Growth Rate: High
Estimated Post Recession Peak Unemployment Rate: 8%
Future Home Values Rating: Poor

Actual January 2009
http://www.itulip.com/images/NY010809.gif


Reassessment: With unemployment above 6% from 5% at the time of our previous forecast, we are raising our forecast for NY unemployment to peak at 10% versus 8%.

Forecast July 2008
http://www.itulip.com/images/IDuJuly2008.gif
Energy and Food Inflation State
National Unemployment Growth Rank: 9
Macro-economic Vulnerability: Moderate
Unemployment Growth Rate: Moderate
Estimated Post Recession Peak Unemployment Rate: 7%
Future Home Values Rating: Fair

Actual January 2009
http://www.itulip.com/images/idaho010809.gif


Reassessment: With unemployment rising very rapidly from 3.5% from 6.5% at the time of our previous forecast, we are revising our forecast for ID unemployment to peak at 10% versus 7%.


In addition to the state by state upward revisions to our unemployment forecast, the national picture shows that we are in early innings of the job loss process. Unemployment is a lagging indicator that has since the start of the FIRE Economy era in the early 1980s tended to continue to rise for six months or so after a recession ends. We attribute this to a combination of changes in unemployment reporting as well as the dynamics of monetary policy in the asset price inflation based growth FIRE Economy; business expansion that increases labor demand is a secondary effect of asset price inflation. In the post FIRE Economy era, we expect to see unemployment rates exceed 1980s recession rates, and coincident with the contraction rather than lagging. The rate of growth in unemployment is not likely to slow until stimulus takes effect in 2010.


http://www.itulip.com/images/US010809.gif


Unfortunately, as dreadful as today's employment data are, readers should expect to see unemployment rising in every sector and state of the U.S. economy and see job losses increase to a rates as high as 1 million per month this year. Fortunately, as an iTulip reader you are financially prepared. If you are new here then at least you will be psychologically prepared. Here is our best estimate of where we think out favorite leading unemployment indicator, median duration of unemployment, will be mid year. We will return to this chart for comparison to forecast later this year.


http://www.itulip.com/images/durationunemploy2010.gif
Projected rise in Median Duration of Unemployment by June 2009: 13 weeks from 10.5 weeks currently


Eventually we'll work out way out of this mess, of course. Small private companies not big public companies will, as always, pull the U.S. economy out of recession. Tax cuts targeted at the private business sector of the US economy are urgently needed. Fiscal stimulus must aim to provide a return on investment not merely create jobs, otherwise the nation will be left with more debt but with no greater capacity to pay it.

iTulip Select (http://www.itulip.com/forums/showthread.php?t=1032): The Investment Thesis for the Next Cycle™
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thedanimal
01-07-09, 08:50 PM
The rate of growth of unemployment is not likely to slow until

Great analysis as always, thanks for the update. Care to finish this quoted sentence however? I hate cliffhangers! ;)

metalman
01-07-09, 10:44 PM
[quote=EJ;69807]


http://www.itulip.com/images/durationunemploy2010.gif


in the big pink recession shade hypothetical period 2008-2010 is the political shit sandwich of the century, i'd say. i'd extend the pink well into 2010... but that's just me.

rros
01-07-09, 11:52 PM
Should the chart for the jobs loss projection for the US as a whole read "2011" at the bottom as opposed to "2010"? If 2010 is correct, you seem to be looking at unemployment peak at mid 09' in which case -according to you (lagging indicator)- the recession should be ending soon as we are now 6 months prior to the peak on that chart. If 2011, then the cycle moves 1 year forward and you are estimating the end of this recession at 4Q09.

GRG55
01-08-09, 12:00 AM
Jobs crash arrives on schedule[/SIZE]

...If job losses continue this year at the December 2008 rate reported today the U.S. may see eight million jobs lost in 2009, near the lower end of our seven to 13 million forecast. From that perspective, today's data could be taken as encouraging, except that a review of our per-industry and per-state forecasts from last year indicate troubling signs that lead us to conclude that the monthly rate of job losses will accelerate rapidly early this year, led by retail trade sub-sector of the services sector that was hammered by weak consumer demand during the usually busy holiday shopping season, and piled onto by the now staggering energy and agriculture sectors that were previously supported by a weak dollar that surged toward the end of 2008, cutting foreign demand for U.S. exports...


...In the post FIRE Economy era, we expect to see unemployment rates exceed 1980s recession rates, and coincident with the contraction rather than lagging. The rate of growth in unemployment is not likely to slow until stimulus takes effect in 2010...

...Unfortunately, as dreadful as today's employment data are, readers should expect to see unemployment rising in every sector and state of the U.S. economy and see job losses increase to a rates as high as 1 million per month this year...

The Economic Club of Canada holds an annual Economic Outlook event and invites the chief economists from the Big 5 Canadian Banks to share their views of the coming year. The 2009 event was this morning in Toronto. Attending this year: Sherry Cooper, Chief Economist, BMO Capital Markets; Don Drummond, Chief Economist, TD Bank Financial Group; Warren Jestin, Chief Economist, Scotiabank; Avery Shenfeld, Senior Economist, CIBC World Markets; and Craig Wright, Chief Economist, RBC Financial Group.

The highest estimated forecast for job losses in the USA in 2009 [that I heard] was 4 million, from TD's Don Drummond. The pundits have a ways to go to catch up with iTulip...

Chief Tomahawk
01-08-09, 01:17 AM
Sorry folks. I decided to pull this as anyone visiting whom I talked to while conducting my research may not appreciate having the info posted to a blog. xoxo

we_are_toast
01-08-09, 09:44 AM
As always, very nice analysis.



Small private companies not big public companies will, as always, pull the U.S. economy out of recession. Tax cuts targeted at the private business sector of the US economy are urgently needed.

Why? You believe there will be a sharp increase in unemployment, which will crush demand for products. What would you expect the small businesses to do with the tax cuts? Expand production capacity when they already have excess capacity? Increase inventories?

Seems the government needs to address the demand side 1st. By investing in Alt-E and infrastructure for a new transportation and energy transport system, the government would create jobs, and thus demand across the productive economy, while at the same time saving billions in future budgets.

I really am curious as to why a tax cut for small businesses, at this time, should require such urgency?

LargoWinch
01-08-09, 10:15 AM
Well, I gave ITulip a plug this past weekend. With my host home ill, I ventured to Cheetah's in San Diego.

One dancer said she was just about to buy an '04 car. I told her to wait until August as the glut of new cars was going to squish the pricing in the used car market. She was quite pleased to hear a cheaper price might be in the offing.

To another, we chewed the fat about the economy for awhile (20 minutes). She said she used to make $700+ a night easy, but that's fallen off to $500 and now she struggles to make $300. I told her economics (er following it) is a hobby of mine and supplied her with Itulip, Barry Ritholtz, Calculated Risk, and Michael Shedlock's (aka MISH), as a bevy of mostly free info. Specifically, I told her about EJ's call to sell the market last December and Ka-Poom theory. (Also told her about BR's Bear Stearns and Lehman calls). She asked whether EJ takes questions and wanted to know about when it would be a good time to buy a particular brand of boots. I told her to come onto the blog and post her picture (head shot only, but you can rest assured the rest of her would make most normal guys howl at the moon...) with her comment and she'd get all kinds of attention (and hopefully get the question answered).

Last, I think this was the perfect place to take the pulse of (questionable???) discretionary spending. Monday night, there were 35 women working and 30 guys. The bulk dance price fell from 5 for $100 to 8 for $100, and this was supposedly the top club in SD. I wonder what it will be by March or April?

Now that is what I call "front line info".

Some forecasters - including Faber - will take into account comments and opinions of "Madams" (i.e. heads of less glamorous institutions) to assess current economic conditions.

I think this is a brilliant idea as I am sure they know more than Ben and Jim (Canada's equivalent of Ben) about the state of the economy...

As for me, my situation clearly precludes this sort of "studies", but it is always interesting to hear from the front lines...

BobH
01-08-09, 12:39 PM
EJ, thanks for the update and analysis. However, I believe Fred just recently gave figures of U3 going to 20% on a national basis.

Could you or he give some clarity on this for us? Thanks

Quincy K
01-08-09, 12:59 PM
EJ, thanks for the update and analysis. However, I believe Fred just recently gave figures of U3 going to 20% on a national basis.

Could you or he give some clarity on this for us? Thanks

I believe that Fred stated 20 percent U-6 for 2009 and 26 percent U-6 for 2010.

20 percent U-3 would probably bring the U.S. into a total anarchy and martial law environment. Actually, 20 percent U-3 will probably be very close to those conditions regardless.

BobH
01-08-09, 01:06 PM
No, Fred responded to U3 numbers.

Quincy K
01-08-09, 01:09 PM
Well, I gave ITulip a plug this past weekend. With my host home ill, I ventured to Cheetah's in San Diego.

One dancer said she was just about to buy an '04 car. I told her to wait until August as the glut of new cars was going to squish the pricing in the used car market. She was quite pleased to hear a cheaper price might be in the offing.

To another, we chewed the fat about the economy for awhile (20 minutes). She said she used to make $700+ a night easy, but that's fallen off to $500 and now she struggles to make $300. I told her economics (er following it) is a hobby of mine and supplied her with Itulip, Barry Ritholtz, Calculated Risk, and Michael Shedlock's (aka MISH), as a bevy of mostly free info. Specifically, I told her about EJ's call to sell the market last December and Ka-Poom theory. (Also told her about BR's Bear Stearns and Lehman calls). She asked whether EJ takes questions and wanted to know about when it would be a good time to buy a particular brand of boots. I told her to come onto the blog and post her picture (head shot only, but you can rest assured the rest of her would make most normal guys howl at the moon...) with her comment and she'd get all kinds of attention (and hopefully get the question answered).

Last, I think this was the perfect place to take the pulse of (questionable???) discretionary spending. Monday night, there were 35 women working and 30 guys. The bulk dance price fell from 5 for $100 to 8 for $100, and this was supposedly the top club in SD. I wonder what it will be by March or April?

I left Mexico (Monterrey) two months ago and could see the change in this particular business environment. I was there for five months and the difference in the declining income stream for these girls within that time period was profound.

I am heading back in April for seven months. Can't wait. Disinflation can be a good thing for hobbies such as this. Better if we encounter deflation.

But then again, I think that things are so bad that the correct wording is purely semantics at this point.

FRED
01-08-09, 03:15 PM
EJ, thanks for the update and analysis. However, I believe Fred just recently gave figures of U3 going to 20% on a national basis.

Could you or he give some clarity on this for us? Thanks

Are you referring to my comment here (http://itulip.com/forums/showthread.php?p=66882#poststop)?


http://www.itulip.com/images/U3unemployment1994-2008.gif

U-3 Total unemployed, as a percent of the civilian labor force (official unemployment rate)


Current: 6.5%
2008: 8%
2009: 13%
2010: 20%

That's 13% U3 by the end of 2009, 20% by the end of 2010.

On the low end of the forecast, starting 2009 at 7% plus a 5% rise during the year gets us to 12% by year end. On the high end, 7% plus 10% gets us to 17% by the end of 2009.

rabot10
01-08-09, 03:28 PM
Are you referring to my comment here (http://itulip.com/forums/showthread.php?p=66882#poststop)?


http://www.itulip.com/images/U3unemployment1994-2008.gif


U-3 Total unemployed, as a percent of the civilian labor force (official unemployment rate)


Current: 6.5%
2008: 8%
2009: 13%
2010: 20%

That's 13% U3 by the end of 2009, 20% by the end of 2010.

On the low end of the forecast, starting 2009 at 7% plus a 5% rise during the year gets us to 12% by year end. On the high end, 7% plus 10% gets us to 17% by the end of 2009.

Jump Ball ETA?

BobH
01-08-09, 04:25 PM
Thanks, Fred ... yes, that's the one!

EJ has a 'peak' number for the worst states at 12%. Can you help clarify your differences?

FRED
01-08-09, 04:56 PM
Thanks, Fred ... yes, that's the one!

EJ has a 'peak' number for the worst states at 12%. Can you help clarify your differences?

We will continue to revise the forecast as new data come in.

WDCRob
01-08-09, 05:06 PM
If we have an official unemployment rate of 12-17% by the end of 2009 we will see radical change indeed.

Not least of which will be the way the unemployment rate is measured.

BobH
01-08-09, 05:08 PM
OK, but for today ... which forecast to you suspect is more correct - your 20% or EJ's not higher than 12%?

Obviously, there is a big difference on our economic outlook. EJ's is a very bad recession while yours sets the stag for a depression.

What am I missing here?

FRED
01-08-09, 05:09 PM
OK, but for today ... which forecast to you suspect is more correct - your 20% or EJ's not higher than 12%?

Obviously, there is a big difference on our economic outlook. EJ's is a very bad recession while yours sets the stag for a depression.

What am I missing here?

Are you confusing the year? The 20% forecast is for 2010 not 2009.

Quincy K
01-08-09, 05:26 PM
Are you referring to my comment here (http://itulip.com/forums/showthread.php?p=66882#poststop)?


http://www.itulip.com/images/U3unemployment1994-2008.gif


U-3 Total unemployed, as a percent of the civilian labor force (official unemployment rate)


Current: 6.5%
2008: 8%
2009: 13%
2010: 20%

That's 13% U3 by the end of 2009, 20% by the end of 2010.

On the low end of the forecast, starting 2009 at 7% plus a 5% rise during the year gets us to 12% by year end. On the high end, 7% plus 10% gets us to 17% by the end of 2009.

20 percent U-3 by the end of 2010?

What you are predicting is Armageddon. Default Credit Crisis. Systemic Banking Breakdown. Currency Collapse. Hoarding of Staples. Hyperinflation. Multiple Civil Unrest Episodes(Rodney King). Martial Law. End Game resulting in a New Global Currency Backed by Gold.

20 percent U-3 cannot be allowed to happen.

Specifically for the reasons outlined above.

BobH
01-08-09, 05:29 PM
Maybe I'm misunderstanding EJ's 'peak' unemployment term! He states the worse state peaks at 12% regardless of year!

I did note your 20% in 2010.

Am I misunderstanding EJ's peak term?

rchdenton
01-08-09, 10:56 PM
Seems the government needs to address the demand side 1st. By investing in Alt-E and infrastructure for a new transportation and energy transport system, the government would create jobs, and thus demand across the productive economy, while at the same time saving billions in future budgets.

[/quote]

Isn't it really about maintaining productive capacity that would otherwise be destroyed?

As regards small business - small business create jobs, large business destroys them.

Rajiv
01-09-09, 12:18 AM
Are these the "official" unemployment numbers, or the "actual" unemployment numbers (http://www.shadowstats.com/alternate_data) as per shadowstats?

http://www.shadowstats.com/imgs/sgs-emp.gif

hans007
01-09-09, 05:54 AM
Well, I gave ITulip a plug this past weekend. With my host home ill, I ventured to Cheetah's in San Diego.

One dancer said she was just about to buy an '04 car. I told her to wait until August as the glut of new cars was going to squish the pricing in the used car market. She was quite pleased to hear a cheaper price might be in the offing.

To another, we chewed the fat about the economy for awhile (20 minutes). She said she used to make $700+ a night easy, but that's fallen off to $500 and now she struggles to make $300. I told her economics (er following it) is a hobby of mine and supplied her with Itulip, Barry Ritholtz, Calculated Risk, and Michael Shedlock's (aka MISH), as a bevy of mostly free info. Specifically, I told her about EJ's call to sell the market last December and Ka-Poom theory. (Also told her about BR's Bear Stearns and Lehman calls). She asked whether EJ takes questions and wanted to know about when it would be a good time to buy a particular brand of boots. I told her to come onto the blog and post her picture (head shot only, but you can rest assured the rest of her would make most normal guys howl at the moon...) with her comment and she'd get all kinds of attention (and hopefully get the question answered).

Last, I think this was the perfect place to take the pulse of (questionable???) discretionary spending. Monday night, there were 35 women working and 30 guys. The bulk dance price fell from 5 for $100 to 8 for $100, and this was supposedly the top club in SD. I wonder what it will be by March or April?

This is my first post, but I have to agree.

I went to spearmint rhino in torrance (near los angeles) over the holidays a couple of times with my cousin (who is a regular haha).

He actaully knows a lot of the girls personally at this point and I guess it is "slow". They were running a lot of specials like 4 for $30 etc, free t-shirts , $3 drinks, $1 beers, free cover. Whatever it took.

It definitely is a way to gauge people's discretionary spending. I wish I had discovered this site a lot earlier, I would have just cashed out a year ago and not lost a ton of money. Unfortunately I trusted CNBC... grandma used to watch it with me when I was little...

we_are_toast
01-09-09, 09:48 AM
Dr. Doom and Gloom apparently has turned that frown upside down. He's a downright optimist compared to EJ.

I guess he believes the unemployment numbers of today will fall sharply in the coming months.


WASHINGTON (MarketWatch) -- The U.S. recession will last two full years, with gross domestic product falling a cumulative 5%, said Nouriel Roubini, chairman of RGE Monitor. Roubini was one of the first economists to predict the recession and the credit crunch stemming from the housing bubble. For 2009, Roubini predicts GDP will fall 3.4%, with declines in every quarter of the year. The unemployment rate should peak at about 9% in early 2010, he said. Consumer prices will fall about 2% in 2009. Housing prices will probably overshoot, dropping 44% from the peak through mid-2010. "The U.S. economy cannot avoid a severe contraction that has already started and the policy response will have only a limited and delayed effect that will be felt more in 2010 than 2009," he said.

FRED
01-09-09, 10:08 AM
Dr. Doom and Gloom apparently has turned that frown upside down. He's a downright optimist compared to EJ.

I guess he believes the unemployment numbers of today will fall sharply in the coming months.

How can unemployment peak at 9% in two years when unemployment is already 7.2%, up from 5% a year ago? Doesn't make sense. Roubini needs to sharpen his pencil and run the numbers again.

lakedaemonian
01-09-09, 04:41 PM
Are you confusing the year? The 20% forecast is for 2010 not 2009.

May I ask what 20% using today's unemployment definition methodology equates to the methodology used in the 70's-80's?

FRED
01-09-09, 05:18 PM
May I ask what 20% using today's unemployment definition methodology equates to the methodology used in the 70's-80's?

Up until 1994, the official unemployment rate was U-5:

Total unemployed persons, as a percent of the civilian labor forceStarting in 1995, the official unemployment rate was U-3:

Unemployed persons aged 25 and older, as a percent of the civilian labor force aged 25 and older(See Alternative unemployment measures, BLS, 1995. (http://www.bls.gov/opub/mlr/1995/10/art3full.pdf))

Later U-3 became the official unemployment rate, the definition of U-3 became more like the old U-5 but the definition of "unemployed" also changed.

"Marginally attached workers are persons who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the recent past. Discouraged workers, a subset of the marginally attached, have given a job-market related reason for not currently looking for a job. Persons employed part time for economic reasons are those who want and are available for full-time work but have had to settle for a part-time schedule." - BLS (http://www.bls.gov/webapps/legacy/cpsatab12.htm)
There is no apples-to-apples comparison between unemployment rates reported as standard in the 1970s/1980s and today. If we had to say, the old U-5 is probably between the new U-5 and U-6. We'd tell you what the numbers are but the database is currently down (see Bureau of Labor Statistics (http://data.bls.gov/PDQ/servlet/SurveyOutputServlet)). Perhaps 9% to 10%?

GRG55
01-09-09, 09:13 PM
How can unemployment peak at 9% in two years when unemployment is already 7.2%, up from 5% a year ago? Doesn't make sense. Roubini needs to sharpen his pencil and run the numbers again.

It's not just Roubini. After the BLS jobs report came out today, how many economists were lined up on financial TV to explain why "it's the bottom"? I don't know about you folks, but after one hour of replays tonight I've already lost count...:(

The favourite statistic to quote in support of this position is the comparison of 2.6 million "official" job losses in 2008 vs the worst post-WWII experience of 2.8 million in 1945. Nobody, absolutely nobody [Taleb excepted, maybe?] is ready for the level of job losses in 2009 that iTulip is expecting.

metalman
01-09-09, 10:02 PM
It's not just Roubini. After the BLS jobs report came out today, how many economists were lined up on financial TV to explain why "it's the bottom"? I don't know about you folks, but after one hour of replays tonight I've already lost count...:(

The favourite statistic to quote in support of this position is the comparison of 2.6 million "official" job losses in 2008 vs the worst post-WWII experience of 2.8 million in 1945. Nobody, absolutely nobody [Taleb excepted, maybe?] is ready for the level of job losses in 2009 that iTulip is expecting.

but if they read itulip's analysis it's friggin obvious... inescapable... where's the disconnect? why don't other economists challenge itulip? take on ej mano y mano.

oh, yeh, now i remember... Are We Idiots? - iTulip.com (http://www.itulip.com/forums/showthread.php?t=1205)... not begging for an asshanding.

Rajiv
01-09-09, 10:26 PM
What about the shadowstats "SGS alternative" where


The SGS Alternate Unemployment Rate reflects current unemployment reporting methodology adjusted for SGS-estimated "discouraged workers" defined away during the Clinton Administration added to the existing BLS estimates of level U-6 unemployment.

GRG55
01-09-09, 11:09 PM
but if they read itulip's analysis it's friggin obvious... inescapable... where's the disconnect? why don't other economists challenge itulip? take on ej mano y mano.

oh, yeh, now i remember... Are We Idiots? - iTulip.com (http://www.itulip.com/forums/showthread.php?t=1205)... not begging for an asshanding.

I don't think there is as much deliberate malice among economists, or sheer incompetence in the media as some of us here may believe. A lot of what is now going on in the population at large, and within the media, strikes me as quite normal for humans actually.

The response to all the recent "worst in decades" economic data reminds me of the stories that came out after Chernobyl. Scientists and operations personnel were found wandering in the wreckage, staring at chunks of radioactive graphite from the reactor strewn all about, and not at all comprehending what had happened. All of their training and experience convinced them that such a thing could never happen. Classic cognitive dissonance.

All of our "training and experience" is that a truly severe economic contraction simply cannot happen. After all we have "social safety nets", and regulations, and Keynesian economic theory, and a Federal Reserve headed by someone who is an expert on the Great Depression, and all these other things that were not in place in the 1930's. So how could this possibly be happening?

Verrocchio
01-10-09, 12:52 AM
It's not just Roubini. After the BLS jobs report came out today, how many economists were lined up on financial TV to explain why "it's the bottom"? I don't know about you folks, but after one hour of replays tonight I've already lost count...:(

The favourite statistic to quote in support of this position is the comparison of 2.6 million "official" job losses in 2008 vs the worst post-WWII experience of 2.8 million in 1945. Nobody, absolutely nobody [Taleb excepted, maybe?] is ready for the level of job losses in 2009 that iTulip is expecting.

I've heard this comparison made, too, and couldn't decide if the speaker was mentally lazy or deliberately misleading his audience. The counting issue alluded to above is an issue, of course, but the comparison is useless, as stated, even if the official and real numbers were much closer at both points in time.:rolleyes: National population in the US in 1946 was estimated at 132,481,000, and the July 2008 estimate is 303,824,640. The USA is not yet close to the unemployment problem it experienced in 1945, although it seems to be heading there in a hurry.

Jim Nickerson
01-10-09, 01:00 AM
This will add a bit more to what Verrocchio called to attention. http://www.financialsense.com/fsu/editorials/harding/2009/0109.html 1/9/09



Meanwhile, comparisons to the number of jobs lost in previous periods, particularly to the 1940ís and 1950ís are misleading and fear-mongering. The population and labor force were considerably smaller then, so similar job loss numbers in those decades represented a much larger percentage of the work force.

The loss of jobs in the current cycle, as bad as they sound and have been, has only returned the labor force to its level of February, 2006, a level of employment that had the economy humming along quite nicely thank you.

However, more importantly, the employment picture is not the place to look for early signs of the economy bottoming anyway. Employment is a lagging condition in both directions. Remember how employment remained strong right through last summer, which had economists (and the Fed) saying there would be no recession because employment remained strong, even though as we now know, the recession had begun in December, 2007.

In the other direction, as always the stock market (which always looks ahead six to nine months) will have already recovered significantly before the recession bottoms and the economy begins to recover. And the economy will have already recovered significantly before employment will begin to pick up again.

But as always, investors and TV analysts worry a lot about the employment numbers, not only legitimately about what they are saying about the economy, but uselessly what the jobs numbers are saying about the stock market going forward.

For instance, letís go back and see how the stock market fared after the previous terrible monthly job losses to which the December numbers are being compared.

When that horrible report of September, 1945 was that 2 million jobs had been lost, the stock market had already bottomed in 1944, and was up 35%. After the jobs report it added another 17% over the next five months. When the terrible report in October, 1949 was that 834,000 jobs had been lost that month, the stock market had already bottomed in June and was up 12% when the report came out, and then added another 22% over the next seven months. When the terrible report came out in December, 1974 that 602,000 jobs had been lost that month, the stock market bottomed three days later, and the Dow gained 53% over the next ten months.

By all means market-timing is going to continue to be important if you are to make, and keep, profits from the market. But the jobs picture has no place in timing the stock market.

we_are_toast
01-10-09, 09:20 AM
The vowel endings have it! Obama agrees with Roubini!

This is beyond disappointing to me. The data and analysis for unemployment projections presented by iTulip is very convincing. I see no logical explanation that could conclude that unemployment would peak at 8.8% without a plan and 8% with a plan.

This indicates that the people that President elect Obama has surrounded himself with have won the day. The Plan indicates that if we take the same old steps you would in any Recession (tax cuts, infrastructure spending, unemployment extensions), we can recover the FIRE economy and everything will return to normal. Unless this plan gets changed dramatically toward more Alt-E development and transport, you better have a parachute because we are stepping off the cliff.


Real GDP (billions
of chained 2000 $) Payroll Employment
Without Stimulus $11,770 133,876,000
With Stimulus $12,203 137,550,000
Effect of Package Increase GDP by 3.7% Increase jobs by 3,675,000
Source: Authors’ calculations based on methodology described above and multipliers
described in Appendix 1.
The table shows that we expect the plan to more than meet the goal of creating or saving 3 million
jobs by 2010Q4. There are two important points to note, however:
First, the likely scale of employment loss is extremely large. The U.S. economy has already lost
nearly 2.6 million jobs since the business cycle peak in December 2007. In the absence of stimulus,
the economy could lose another 3 to 4 million more. Thus, we are working to counter a potential
total job loss of at least 5 million. As Figure 1 shows, even with the large prototypical package, the
unemployment rate in 2010Q4 is predicted to be approximately 7.0%, which is well below the
approximately 8.8% that would result in the absence of a plan.

http://www.princeton.edu/%7Epkrugman/romer_stim.png
http://otrans.3cdn.net/ee40602f9a7d8172b8_ozm6bt5oi.pdf

zoog
01-14-09, 05:44 PM
Here's an interactive unemployment timeline map of the USA showing unemployment by state for the past year or so, currently up through November 2008.

http://www.msnbc.msn.com/id/27913794/

As of the November data, California, Oregon, Michigan, South Carolina, and Rhode Island are the worst with unemployment in the 8-10% range. Throughout the post tech bubble recession, Oregon had the highest or second highest unemployment in the country, peaking at 8.5% in 2003. We're already at 8.1% and I have no reason to believe we won't be at or near the top this time too.:(

Scot
01-14-09, 05:55 PM
http://www.princeton.edu/%7Epkrugman/romer_stim.png

So the Obama administration predicts his recovery plan will keep the peak in unemployment around 8% in Q3 2009 after which it drops to 5% by mid 2013.

rabot10
01-14-09, 06:32 PM
Here's an interactive unemployment timeline map of the USA showing unemployment by state for the past year or so, currently up through November 2008.

http://www.msnbc.msn.com/id/27913794/

As of the November data, California, Oregon, Michigan, South Carolina, and Rhode Island are the worst with unemployment in the 8-10% range. Throughout the post tech bubble recession, Oregon had the highest or second highest unemployment in the country, peaking at 8.5% in 2003. We're already at 8.1% and I have no reason to believe we won't be at or near the top this time too.:(

I think that California (the place i love) will be at 14% unemployment at the end of 09 jmho

metalman
01-15-09, 01:24 AM
I think that California (the place i love) will be at 14% unemployment at the end of 09 jmho

like this (http://itulip.com/forums/showpost.php?p=69807&postcount=1)?



Forecast July 2008

http://www.itulip.com/images/CAuJuly2008.gif
Ground Zero state
National Unemployment Growth Rank: 4
Macro-economic Vulnerability: High
Unemployment Growth Rate: High
Estimated Post Recession Peak Unemployment Rate: 10%
Future Home Values Rating: Poor

Actual January 2009
http://www.itulip.com/images/CA010809.gif

Reassessment: With unemployment already pushing 8.5% from 6.5% at the time of our previous forecast, we are revising our forecast for CA unemployment to peak at 12% versus 10%.

goadam1
01-16-09, 10:56 PM
why doesn't Fred answer the question: 12% or 20%? Please don't parse the answer with references to old stat formulas. Do you have different opinions? Have you revised your estimate?

Sharky
01-17-09, 05:38 AM
What will the impact be on unemployment stats when Obama's jobs programs get going? Fewer people out of work in the short term, and more in the long term?

I've noticed a few places that they're starting to talk about "providing or saving" three million jobs -- an obvious political out in the event that unemployment continues up after the program is in full gear.

Also, does anyone else sense an impending change in the way unemployment numbers are calculated? After all, if Clinton can do it, why can't Obama -- especially since he's basically bringing the whole Clinton team back with him. It's a lot easier to win with statistics if you can fudge the numbers.

metalman
01-17-09, 12:02 PM
What will the impact be on unemployment stats when Obama's jobs programs get going? Fewer people out of work in the short term, and more in the long term?

I've noticed a few places that they're starting to talk about "providing or saving" three million jobs -- an obvious political out in the event that unemployment continues up after the program is in full gear.

Also, does anyone else sense an impending change in the way unemployment numbers are calculated? After all, if Clinton can do it, why can't Obama -- especially since he's basically bringing the whole Clinton team back with him. It's a lot easier to win with statistics if you can fudge the numbers.

the idea is flawed... we have a service/fire econ. they ain't suited for road repairs.

numbers fudging is the last refuge of the scoundrel. if the definition of 'unemployment' changes that tells us everything we need to know about obama.

LargoWinch
01-19-09, 10:02 AM
if the definition of 'unemployment' changes that tells us everything we need to know about obama.

...or the fact that he will spend more of US taxpayers money on god only knows what.

More of the same Keysian crap, except that the package is a lot more presentable than during the previous Presidency.

Sharky
01-23-09, 09:32 PM
the idea is flawed... we have a service/fire econ. they ain't suited for road repairs.

Is it really even possible for the government to create new jobs? The jobs would be paid for by either borrowing or new taxes -- but those funds would have been put to work producing jobs in the private sector if they weren't borrowed or taxed.

So where do the new jobs come from? Maybe borrowing from overseas investors?

Or perhaps "new jobs" means something different to the Obama administration than it does to the rest of us?

GRG55
01-23-09, 09:41 PM
the idea is flawed... we have a service/fire econ. they ain't suited for road repairs...

Oh puleeeze. The very thought of Wall Streeters getting dirt under their carefully manicured fingernails. Horrors.

They don't need to be suited for road repairs, metal. The FIRE economy jobs will be saved by nationalizing the financial sector. Voila. Instant public sector employees...and not a single Lunchbucket Larry to spoil the day.

ryph
01-25-09, 01:23 PM
why doesn't Fred answer the question: 12% or 20%? Please don't parse the answer with references to old stat formulas. Do you have different opinions? Have you revised your estimate?

Both.

12% in 2009. 20% in 2010. This jobs update and revisions are all for peaks in the year 2009, not total in this downturn.

metalman
01-25-09, 01:28 PM
Both.

12% in 2009. 20% in 2010. This jobs update and revisions are all for peaks in the year 2009, not total in this downturn.

that is his answer... starting to appear optimistic at this time.

we_are_toast
01-28-09, 09:49 AM
How can unemployment peak at 9% in two years when unemployment is already 7.2%, up from 5% a year ago? Doesn't make sense. Roubini needs to sharpen his pencil and run the numbers again.

Apparently Dr. Roubini got a new pencil but failed to sharpen it.


Roubini said economic growth in China will slow to less than 5 percent and the U.S. will lose 6 million jobs. The American economy will expand 1 percent at most in 2010 as private spending falls and unemployment climbs to at least 9 percent, he added. Given the current 7.2% unemployment, how does a 6 million job loss stay anywhere near 9%? And it would seem to be a real trick for the U.S. economy to expand and still loose 6 million jobs.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ao5mihirSB1Y

sn1p3r
02-08-09, 09:13 PM
Any more changes based on January #?

I noticed the birth/death model correction (manipulation) kept us from getting VERY close to 1 million...

bart
02-10-09, 11:22 PM
There is no apples-to-apples comparison between unemployment rates reported as standard in the 1970s/1980s and today. If we had to say, the old U-5 is probably between the new U-5 and U-6. We'd tell you what the numbers are but the database is currently down (see Bureau of Labor Statistics (http://data.bls.gov/PDQ/servlet/SurveyOutputServlet)). Perhaps 9% to 10%?


Seasonally adjusted
U-5 8.8%
U-6 13.9%


Not seasonally adjusted
U-5 9.7%
U-6 15.4%

FRED
02-10-09, 11:31 PM
Seasonally adjusted
U-5 8.8%
U-6 13.9%


Not seasonally adjusted
U-5 9.7%
U-6 15.4%

Thanks, bart!

wayiwalk
04-23-09, 12:56 PM
A thought just occurred to me related to this discussion of measuring unemployment.

One of the areas which has reduced the unemployment in the last few years has been hiring by state and the federal gov't. And one thing that will slow the increase in unemployment is what the president just signed into law this week - the bill funding volunteerism, which includes stipends of up to $12,000 or so per year.

Remember, anything measured by the gov't is really just subject to how the gov't decides to define that item ( a great example is redefinitions of cpi).

It occurred to me that this type of "stipended work" is really just a dry run for the WPA of the 1930's. It will be very easy to double or triple or quintuple that funding.

Anyone else see that connection?

Sharky
05-14-09, 06:57 PM
http://www.princeton.edu/%7Epkrugman/romer_stim.png

So the Obama administration predicts his recovery plan will keep the peak in unemployment around 8% in Q3 2009 after which it drops to 5% by mid 2013.

With U-3 already at around 9%, even before the end of 2009 Q2, this chart is already looking absurdly optimistic.

metalman
05-14-09, 11:06 PM
ej's forecast 10% when it was 6.5%...




Forecast July 2008


http://www.itulip.com/forums/../images/CAuJuly2008.gif
Ground Zero state
National Unemployment Growth Rank: 4
Macro-economic Vulnerability: High
Unemployment Growth Rate: High
Estimated Post Recession Peak Unemployment Rate: 10%
Future Home Values Rating: Poor

ej's updated forecast 12% when it was 8.5%...




Actual January 2009
http://www.itulip.com/forums/../images/CA010809.gif


Reassessment: With unemployment already pushing 8.5% from 6.5% at the time of our previous forecast, we are revising our forecast for CA unemployment to peak at 12% versus 10%.




and now... 11%...

http://research.stlouisfed.org/fred2/graph/fredgraph.png?&chart_type=line&graph_id=0&category_id=&recession_bars=On&width=630&height=378&bgcolor=%23B3CDE7&graph_bgcolor=%23FFFFFF&txtcolor=%23000000&preserve_ratio=true&&s_1=1&s%5B1%5D%5Bid%5D=CAUR&s%5B1%5D%5Btransformation%5D=lin&s%5B1%5D%5Bscale%5D=Left&s%5B1%5D%5Brange%5D=Max&s%5B1%5D%5Bcosd%5D=1976-01-01&s%5B1%5D%5Bcoed%5D=2009-03-01&s%5B1%5D%5Bline_color%5D=%230000FF&&s%5B1%5D%5Bmark_type%5D=NONE&s%5B1%5D%5Bline_style%5D=Solid&s%5B1%5D%5Bvintage_date%5D=2009-05-14&s%5B1%5D%5Brevision_date%5D=2009-05-14

another update coming?

TheServant
05-15-09, 09:22 AM
Heck, even the "Without Recovery Plan" curve is starting to fall behind the rise in U3. Whoops.

ax
06-01-09, 09:30 AM
Thought this was interesting concerning how auto job losses will be reported:

"The statistical treatment of those workers, which determines when and where they show up in unemployment data, is complicated.

Furloughed workers show up in weekly jobless claims data, but won't be counted in the monthly payroll survey. Because they remain on the payroll while they receive severance payments, the company will report them as employed. However, they may show up in the unemployment figures, which are based on a separate survey of households."

So even though monthly reports may start coming in at 500K or so, we'll be sitting on tens or hundreds of thousands of unemployed that will show up in weekly numbers.

http://www.marketwatch.com/story/quarter-million-jobs-could-be-lost-in-bankruptcy