Negative job growth for 2009-2010, says OMB

Hotair ^ | 8/30/2009 | Ed Morrissey

[SeekAndFind]

I was thinking about Keith Hennessey’s post of Thursday on the implications of the OMB forecast on unemployment. The OMB forecast says that in the fourth quarter of 2010, the unemployment rate will be 9.7%. Inspired by Hennessey’s work, I decided to write a small spreadsheet. My goal: what does the forecast say about the number of jobs created? Here’s a screen cap of the spreadsheet:

Let me explain each column. The source of this data is the Current Population Survey from BLS. Data projected is italicized. The two bold numbers for unemployment rates are the projections from the OMB economic assumptions. My other assumptions, working left to right:

* Population — estimated to grow on average at 0.8% per year over the next decade according to the Census. I just imposed that on this forecast.

* Labor force population rate (LFPR) — in order to do this, you have to make an assumption about that rate. I looked at the rate coming out of the 2001 recession, which in fact continued to decline for a year and a half after the end in November 2001. It isn’t going to rise rapidly here in my opinion, but I let it slowly rise through 2010. Note that if OMB assumed no change in LFPR or continuing decline, the story of my subject line is worse — you would get net job loss. If you want to make a different forecast for LFPR, go ahead.

* Labor force = LFPR times Population.

* Unemployment rate. My projection had the two 4th quarter numbers given, the annual averages that were also in the MSR (9.3% for 2009, and 9.8% for 2010). The path was just smoothed to make the averages and endpoints work.

* Unemployed = Labor force times unemployment rate.

* Employed = Labor force minus unemployed

* Emp/pop = Employed/Population, the ratio of the over 16 population that is working, or the employment ratio.

What we see here is that at the end of 2010, based on what I think are reasonable assumptions on LFPR and population, there are 152,000 fewer people employed than in the fourth quarter of 2008. The employment ratio stays below 60% through the period. Any effect of the stimulus now has to be “well yeah, we lost 152k jobs, but we’d've lost A LOT MORE if we hadn’t passed that stimulus package!” Hell is the place where you go to become an economist that has to sell that line.

CBO has its own projections, and when I try to run those into the spreadsheet and when I run those in I have to assume something about 4th quarter unemployment (OMB gives you that number, CBO does not.) I do have their estimated average 2010 unemployment rate of 10.2%. I make that to give us a decline of employment over the first two years of the Obama administration in the range of 750-800 thousand workers, versus 152 thousand. Hennessey notes that this new CBO figure is down 2.3 million workers from estimates last March. But the range of difference in terms of jobs is much smaller than that, probably 600,000 or so our of 145,000,000.

[SeekAndFind]

Here is the CBO projection :

http://www.cbo.gov/doc.cfm?index=10521

[MinorityRepublican]

What makes you think that unemployment will go down from 10%? I think it’ll eventually continue and stabilize at around 11% to 12% and our economy will be stagnated.

[freespirited]

If unemployment is 9-10% in the fourth quarter of 2010, RATS are in for a very bad midterm election.

[GOPsterinMA]

Isn’t the real unemployment rate ~16%? That can’t be hidden for much long. Bye bye Dems!

[socialismislost]

Wow, Obama’s policies are really fixing things./s

[bruinbirdman]

"If unemployment is 9-10% in the fourth quarter of 2010 . . ."

. . . Hussein will send everyone who is unemployed a couple thousand.

yitbos

[ThunderSleeps]

I could’ve told them there would be negative job growth, and saved them a lot of trouble. There’s a socialist in the White House, all you need to know.

[goodnesswins]

YEAH...me too....Bob Brinker, the financial guy, was complaining today about the guys in the White House....HE SUPPORTED OBAMA...the idiot!

[ari-freedom]

Any effect of the stimulus now has to be “well yeah, we lost 152k jobs, but we’d’ve lost A LOT MORE if we hadn’t passed that stimulus package!” Hell is the place where you go to become an economist that has to sell that line.

it reminds me of the joke where someone claims he has magical powers that remove all the elephants from the city. There are no elephants in the city. Aha! Clearly he must be doing something, right?

[Verginius Rufus]

Some Democrat flak (first name Julian) was on FNC today saying that Obama needs to take credit for the fact that the economy is improving.

[skikvt]

Negative job growth. Isn’t that the same thing as positive unemployment?

[socialismislost]

I suppose in Reverse Land it is improving. I happen to live on planet Earth. Obama is a tool.

[Tublecane]

“Negative job growth for 2009-2010”

Why do these use terms like this? If it’s negative, it’s not growing; it’s shrinking. How about you say, “Job shrinkage for 2009-2010”?

[Mamzelle]

re: I think it’ll eventually continue and stabilize at around 11% to 12% and our economy will be stagnated.)))

I just hope it doesn't get above 12%

[AFPhys]

In order for OMB to come up with these rosy projections they HAVE TO ASSUME that NEITHER the CapNTax OR the HealthCare bills will impose future penalties on business. In addition, if the Bush Tax Cuts expire, that additional expectation will be a further drag on jobs. I’m not even addressing the structural problems with debt.