Variations of these graphs are going around

[solarbird]

Okay, a second short thing. Remember the bank "stress tests" and the jobs savings projected by the Obama economic recovery plan? They had various assumptions built in. The first is the "stress test," which was supposed to determine capital requirements needed for banks to handle two scenarios - the "baseline" and the "more adverse" environment projections. Here's how that's working out so far, graph courtesy Mish Shedlock from his post, here:


The "baseline" scenario was consensus unemployment; the "more adverse" was a "really bad case" projection. That red dot is where we are. And unless that spikes back down soon, that's ... not good.

You're also seeing another chart going around, this one; the upper curve is the consensus forecast again, the lower curve is the with-recovery-package projection. I haven't verified this data but the upper curve does match the consensus forecast.

Both relate back to a paper I really need to get off my ass and finish reading, "Forecasting the Depression," on how most economists continually misread future trending throughout the Great Depression, and how there would good reasons for that - valid ones. But despite that, you get realities like this:


Chart courtesy American Economic Review, from the paper
"Forecasting the Depression: Harvard vs. Yale,"
by Kathryn M. DOMINGUEZ, Ray C. FAIR, and Matthew D. SHAPIRO.
Now, given how completely the usual suspects have missed this cycle throughout - the parallels are close enough to be disturbing - I am and have been reacting very suspiciously to projections for the better further out. The last time we had one of these, none of the systems behaved as per their usual histories. Keep that in mind.

Comments

[galbinus-caeli.livejournal.com]

One issue with "unemployment" numbers is that they don't track people like me, unemployed, but with a decent severance package.

I haven't worked since February 4, but I am not officially "unemployed" because I qualified for six months pay in my severance package.

How many people like me are out there? Why should we not be tracked just like the poor slub who lost his job tightening lug nuts? (Poor slub is in worse shape, as we still have money to eat and keep the lights on. But he is no more "unemployed" than I am.)

[solarbird]

Right, you should look up the other numbers - not the U-3 (headline) but things like the U-4, U-5, and U-6. You'd definitely be counted in U-6, I'm pretty sure in U-5, and maybe even in U-4. (I always have to look up who is which category.)

Oh, but to actually address the comment

[solarbird]

All these projections are U-3, so as at least you stay with the same kind of number, you can look at deviations from projection and take some meaning from that.

Re: Oh, but to actually address the comment

[galbinus-caeli.livejournal.com]

What I am saying is that I am literally not being counted. The State of Georgia took one look at my severance package and told me to go away for six months. They don't know whether I am employed or not at this point, and won't until my severance is officially dried up and I refile.

I could have been hired the afternoon I left got the letter from them, or still be unemployed until July 22 without them knowing the difference.

Re: Oh, but to actually address the comment

[solarbird]

Yeah, I know. A lot of people aren't "counted" directly but are estimated - c.f. "discouraged" workers, the numbers of which are calculated by telephone survey. (Everyone except those receiving unemployment benefits are survey or otherwise calculated, really.) Similarly, the radically underemployed - people working part time but want/need full time work and can't get it - are estimated the same kinds of ways.

Re: Oh, but to actually address the comment

[galbinus-caeli.livejournal.com]

Thank you for the clarification. So, what is the "real" unemployment rate? What percentage of people who are capable, willing, and desiring, to do full time work are not doing so.

Re: Oh, but to actually address the comment

[solarbird]

That's the U-6 figure (U-6 Total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers), and it's currently at 16.4% (seasonally adjusted). (Non-seasonally adjusted is 15.9%, but seasonal adjustment makes sense in employment. The reported U-3 number is also seasonally adjusted. You can read more about it in the BLS report.

Re: Oh, but to actually address the comment

[galbinus-caeli.livejournal.com]

So basically one person in six who should be working, isn't. That seems about right. And terrible.

[llachglin.livejournal.com]

The thing is, the Depression was a largely unprecedented event and it completely overturned conventional understanding of economics. While many projections about the current economy are in error, there's not a lot of evidence that suggests that we're in similarly unprecedented waters where we have no good economic models and have to invent them as the crisis goes on. Thanks to that, even the bad estimates aren't likely to be as bad as those shown in these images. One reason people make so many Great Depression and Japan analogies is that those examples are sufficiently similar to produce realistic models of what's happening this time around.

My concern is that remarkably few commentators understand these other models and the bearing they have on economic analysis. Those who do seem to understand have been skeptical about the stress tests from the beginning and have a much more realistic view about the depth of unemployment that will remain even if the recession as narrowly defined eases some time in the next several months.

[silussa.livejournal.com]

And they wonder why people are inclined not to spend money. Looking at those graphs, I'm certainly not inclined to.