Wednesday, December 3, 2008

Depression Level Unemployment

Mish Shedlock has a thoughtful posting about trends in unemployment and their likely effects on the deflationary trajectory of the economy. In Prepare For Depression Level Unemployment Mish estimates:
Given that job losses are accelerating and that unemployment is a lagging indicator (unemployment is expected to rise for some number of months after the economy bottoms), it is not unreasonable to be talking about 10% unemployment sometime in 2010, with 8.5% to 9% or higher extremely likely.

8.5% or higher unemployment is enormously deflationary with the current backdrop of consumer debt and huge numbers of people underwater on their homes.

Unemployment was much higher during the Great Depression, but these are sobering estimates nonetheless.

Source:
"Prepare For Depression Leel Unemployment"
Mish's Global EconomicTrend Analysis
http://globaleconomicanalysis.blogspot.com/2008/12/prepare-for-depression-level.html