Skip to comments.Lost Bet on Unemployment
Posted on 10/08/2012 6:53:36 AM PDT by Kaslin
>On Friday, I lost a bet made in March of 2010 regarding unemployment. I bet that the unemployment rate would not dip below 8% before June 2015.
I crunched numbers many ways and simply decided there is no way the economy could possibly grow enough jobs. It didn't and still won't.
I posted this chart at the time.
At the height of the housing bubble, the economy only added 212,000 jobs a month. I figured we would not come close to that, yet even if we did, that still would not be enough.
A miscalculation got into my way, otherwise known as a plunge in the participation rate. I knew full well the participation rate would drop on account of boomer demographics. But I never expected the plunge we got.
Monthly Job Growth 1999-2009
Were it not for millions dropping out of the labor force, the unemployment rate, even with the September barrage in part-time jobs would still be over 10%.
Had I made a similar bet on employment, rather than unemployment, the bet would still be going on. Interestingly, that bet would not have seemed as good to me at the time because the economy is naturally growing and employment with it.
Total Nonfarm Employment
Employment Just About at June 2005 Level
As you can see, employment has only recovered to a level seen in 2005. That is in spite of the fact the worker population expands every month (at least in theory). Bernanke thinks it takes 100,000-125,000 jobs a month to keep the unemployment rate steady.
I think because of demographics, it probably only takes 75,000 jobs a month.
However, at some point in a recovery, the participation rate starts to rise as discouraged workers return to the work force. Accounting for the return of those discouraged workers to the job force, assume it takes 100,000 jobs a month to hold the unemployment rate steady.
That amounts to 1.2 million per year and 3.6 million in three years (3.9 million since the recession ended).
Month-by-Month Employment Totals (in Thousands)
I think I’d hold off on paying that bet.
Numbers have a way of being “revised” in a month or two.
another factor is the explosion of disability claims.
which further “improves” the job numbers...
The leftist kneejerk reaction to people pointing out the explosion in disability claims is laughable.
Of course they’re going to try to paint those who point this explosion out as “heartless toward the disabled”.
But that’s supposing that nearly every new claim is actually legitimately from someone that is newly disabled.
Simply ask the question - “What catastrophic event occurred this year injured that many people to the point they could no longer physically work? I must have missed that!”
Another factor may be Welfare to Work. Where many who had to seek employment, no longer do. (They can go to school instead)
Poor guy. He lost is his bet, not because of an improved employment situation, but because the employment situation is now hopeless for so many people.