The Unemployment Prediction a Year Ago, Flashback to August 2009
[May 2011 update: Well, fuck. 8.7%. This blows. Nate Silver fail.]
I remember reading a post from Nate Silver a year ago about the relationships between recessions and unemployment. No doubt Nate is a statistical genius. He predicted the 2008 election 49 out of 50 states, a popular vote within 1%.
I’m totally going to steal a chart and bandwidth from 538 now. From: http://www.fivethirtyeight.com/2009/08/why-unemployment-probably-wont-hit-10.html
People do not jump right back into the labor force the moment a recession is over. Oftentimes, indeed, they can’t, because they’ve made somewhat long-term commitments – good luck ditching the army because the local bank is having a hiring fair back at home in Topeka. These effects are fairly strongly lagged, probably by at least 3-9 months, and usually occur only once the jobs picture has gotten to the point where it’s actually pretty darn good – not just when it’s merely improving. Where we’ll see these effects is in, say, January of 2011, when the employment rate might not budge much even if a couple hundred thousand new jobs are created. But the unemployment rate should already be safely clear of 10 percent long before that… By the way, this model is decidedly more optimistic about the velocity of the jobs recovery than are most mainstream observers.
Here’s a monthly interactive unemployment map. http://www.msnbc.msn.com/id/27913794/ While some states have notably surpassed 10%, the “national average” has not peaked 10% as of May.
I don’t know what math MSNBC used for that “national average” (probably by adding all the state averages and dividing them by 50 or something like that), but the U.S. Bureau of Labor Statistics shows something a little less rosy: http://www.google.com/publicdata?ds=usunemployment&met=unemployment_rate&tdim=true&dl=en&hl=en&q=current+unemployment+rate
Looks like Nate made the wrong call on this one. Unemployment did pass 10% briefly for three months. 10.6% in January. 10.4% in February. 10.2% in March. Looks like unemployment is about 1% higher than Nate predicted. It’s currently 9.6%
I still have some faith in Nate. My totally amateur and unprofessional prediction is that unemployment should be better by January 2011 and on a significant decline. I’ll say 7.5%. GDP is currently up a bit and it makes sense to me that unemployment rates should respond to that in 6-9 months. I reserve the right to amend this number in 2 months depending on how the trends are looking.
I don’t think we’re going to have a double dip. But I did believe Paul Krugman in early 2009 when he said the stimulus was the size below what was needed for good Keyensian effect and that the economy was going to sputter along for 2 years. His prediction seems to be coming true. What this means for the 2012 elections, I’m not sure yet.
Andrew Sullivan shows GDP decline and growth over the last several quarters and a rundown of various persons’ analyses here.