Looking ahead at the unemployment expected in the future does not make me happy at all, especially these days. To gauge the persistence of the high unemployment, I keep track of forecasters’ projections of unemployment at the end of (last quarter of) 2012. This is usually as far forward as forecasters look and, frankly, anything beyond that is not all that credible to me.
I just received the Blue Chip consensus, which aggregates the forecasts of 52 forecasts and they tell me that expectations for unemployment keep on rising. Back in June the consensus was for 8.0% unemployment in the fourth quarter of 2012 but it rose to 8.1% in July, jumped to 8.5% in August and reached 8.7% in the September consensus. This reflects that the growth expected in 2012 has fallen from the 3.1% rate expected in the June forecasts to just 2.2% in the recent forecasts. The Goldman-Sachs economics team, whose forecasts have fared pretty well in this recession, expects 9.3% unemployment at the end of 2012. Ugghhhh.
Oh – and remember that none of these forecasts show an outright “double-dip” (i.e., return to negative growth). Instead, they just show the consequence of growth that is consistently too slow to soak up new labor market entrants and work off the backlog of unemployed workers built up during the recession. So, it’s not just an outright return to recession that’s scary for those worried about joblessness, sluggish growth is plenty scary too.