Unemployment 9.6% in 2010; 8.5% in 2011

A poll of economists has been released, and it isn't very encouraging.

Unemployment will average 8.5 percent in 2011 after a 9.6 percent rate next year, higher than previously expected, according to the median forecast in the survey taken from May 4 to May 11. The economy may expand 2.8 percent in 2011, less than estimated last month, after a 1.9 percent rise in 2010.

“The worse the labor market is and the longer that lasts, the more difficult it’ll be for consumers to recover,” said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc., a New York forecasting firm. “The economy isn’t going to come roaring out of the box here.”

The economy will contract at a 1.9 percent pace this quarter, returning to a growth rate of 0.5 percent in the July to September period and 1.8 percent in the final three months, according to the median forecast of 61 economists surveyed.
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President Barack Obama’s $787 billion stimulus plan, which includes tax cuts, infrastructure spending and a goal to create or save 3.5 million jobs, will drain the budget, the survey showed. The federal deficit may jump to 12.2 percent of GDP this year, more than prior estimates. Forecasts for 2010 and 2011 also exceeded last year’s 5.8 percent share.

“The credit market would not take kindly to a further expansion of the budget deficit and it could run the risk of backfiring,” said John Lonski, chief economist at Moody’s Capital Markets Group in New York. Foreign investors don’t like large deficits and an additional increase would shut off the flow of funds into the U.S., he said, pushing up bond yields “and sending the dollar into a tailspin.”

I find this particularly discouraging because economists are generally more optimistic than economic realities. For instance, they rarely anticipate recessions, and are always on the look-out for reasons to declare a recession over.

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I'll add one

most economists do not account global labor arbitrage, offshore outsourcing either in their calculations.

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They're too optimistic!

Imho of course. Why do they think recovery this time around will be unlike the last two and more like prior recoveries?

And that's if the optimistic scenario of +GDP in the 3rd or 4th quarters really unfolds (I think it will but by no means is it a sure bet). And no unforeseen blowback from commodities/dollar/deficit/other that brings on the second half of a "W" downturn by the end of 2010.

And that's from the resident optimist at this site....

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Was it a sucker's rally?

Every once in a while the WSJ has an op-ed that actually tells you something you needed to know.

It's almost as if someone engineered a stock-market rally to entice private investors to fund the banks rather than taxpayers.

Can you see why I believe this is a sucker's rally?

The stock market still has big hurdles to clear. You can have a jobless recovery, but you can't have a profitless recovery. Consider: Earnings are subpar, Treasury's last auction was a bust because of weak demand, the dollar is suspect, the stimulus is pork, the latest budget projects a $1.84 trillion deficit, the administration is berating investment firms and hedge funds saying "I don't stand with them," California is dead broke, health care may be nationalized, cap and trade will bump electric bills by 30% . . . Shall I go on?

Until these issues are resolved, I don't see the stock market going much higher. I'm not disagreeing with the Fed's policies -- but I won't buy into a rising stock market based on them. I'm bullish when I see productivity driving wealth.

For now, the market appears dependent on a hand cranking out dollars to help fund banks. I'd rather see rising expectations for corporate profits.

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WAY too optimistic

I see U3 hitting at least 20% in Oregon in the next 3 months- you can't expect a teacher to retrain for construction to build bridges.
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Executive compensation is inversely proportional to morality and ethics.

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Maximum jobs, not maximum profits.

How many years now

Have we heard about the second half turn around. Eventually we will hit bottom, but this is only just getting underway.
So much damage done by the previous administration and the creation of a never heard before .. jobless recovery .
I think this is where Keynesian theory breaks down. Fiscal policy allowed the corruption, and extreme leverage that no "smoothing" is going to stop this correction.
The time to stop it was before it happened all they are going to do now is prolong the bottom from happening.

It has always been about class warfare.

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Keynesian theory

required temporary government expenditures to only stimulate the domestic economy from where those public funds (taxpayer dollars) originated. i.e. the income must be tied to U.S. citizens, U.S. workers (legal, perm residents) and not be pouring out to stimulate other national domestic economies.

Congress not only did not get the most bang for their buck in terms of creating income, which is the key element of Keynesian stimulus but they also refused to tie those jobs to the above...

hence, we get "green jobs" being created in India...with U.S. taxpayer dollars....we get illegals obtaining construction jobs....and remittances are huge, that's U.S. taxpayer money pouring out and on top of it continues wage repression due to oversupply of labor....

We have Indian Steel, Chinese Steel, now GM going to offshore outsource production, Caterpillar massively offshoring....

probably the worse, IBM, GE offshoring while getting billions in contracts....

and....Obama...putting key members of USINPAC in place in technology positions...they are not interested in U.S. labor, jobs....they promote India's agenda continually and have many vested interests promoting more offshore outsourcing as a business model.

This is beyond pathetic, to me it's criminal.

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A random rant

I'm going to go off on a tangent like R.O. does frequently. (j/k Robert)

But when are we going to regain some freakin rights in the work place again.

    Let me explain elaborate a few points;
  1. The audacity of running a credit check to get a job.
  2. Drug Testing where public safety is not an issue.
  3. Overtime rights. Here is an issue where a company having to work overtime was a punishment to poor management instead of "extra pay" for employees.
  4. Employee input to crappy run industry.

Feel free to add to this list of atrocities.

It has always been about class warfare.

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I've got more

- anyone over the age of 35 is now labeled a dead wood idiot

- people are fired ad hoc, for nothing, there is no correlation to work performance vs. keeping one's job

- discriminatory interviews that are based on race and age, i.e. Indians only hiring other Indians for U.S. jobs.

- scapegoating, bullying in the work place, makes going to work seem like one just returned to junior high school

- demanding people work 60-80 hour weeks on "salary"

- being fired for simply getting sick

- discrimination against single mothers because they believe she will have to take off work more and have higher insurance costs

- general treatment of people as disposable commodities

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