Submitted by Yi-Wyn Yen01.09.2009
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This prediction is closed and has been judged.
Judgment made on February 6, 2009: Unemployment rose 7.6% for January. The prediction was wrong (thankfully), and the majority of the TIS community got this right. -- The Industry Standard
Original prediction: The unemployment rate rose to 7.2% for December with 524,000 jobs lost, the highest in 15 years. Total job losses in 2008 reached 2.6 million, the most since 1945 when 2.8 million were out of jobs at the end of World War II.
Here's a look at the monthly unemployment rate in the U.S. since the financial crisis started unraveling in September:
September 2008 6.1%
October 2008 6.5%
November 2008 6.7%
December 2008 7.2%
Analysts say the U.S. is on track to reach a 10% unemployment rate this year. The Labor Dept. is expected to report January data within the first week of February.
Prediction: As companies report quarterly earnings this month, expect more layoffs to happen and the January unemployment rate jump to 8%.
Price History
Prediction Statistics
| Betting Closes: | Feb 09 2009 | Current Consensus: | 0.74% | Total Bets: | 47 |
| Today's Change: | -13.45% | ||||
| Life Time High: | 52.50% | ||||
| Life Time Low: | 0.74% |
Comments
The detailed Dec labor report for those who want to check it out.
A net increase of 0.8% translates to approximately 1.2M net reduction in non-farm payroll. According to interview with co-founder of PIMCO, it is projected for a net loss of 3M jobs in 2009 (excluding any jobs provided via stimulus proposed by Obama) to raise the unemployment numbers to 9% in the next 12 months. Even in the notorious month of December for layoffs, it only was able to reach a little over 500K. So, IMHO, 1.2M net job loss might be tall order for January (which from historical trend is not an active month affecting unemployment).
That said, there are businesses (catering to consumers) that were possibly holding on to the last hope of a good 2008 holiday shopping season (which did not occur) and may now be at risk of closure or significant cost cutting measures resulting in additional job losses.
According to latest CBO estimates on unemployment (dated 1/11/09), it shows a number under 8% for 1Q09. Federal bailout and potential stimulus package should also slow down/delay labor cost cutting measure.
Here is the actual CBO publication
I am rather surprised that the consensus is inching up. See the U-3 vs U-6 excerpt from the Bureau of Labor.
Note that U-3 is the official reported unemployment data (showing 7.2% in Dec 08). U-6 although may be more factual but is not the official metric used as criteria for this prediction. U-3 excludes "all marginally attached workers and those employed part time for economic reasons" with definition as follows:
Marginally attached workers are persons who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the recent past. Discouraged workers, a subset of the marginally attached, have given a job-market related reason for not looking currently for a job. Persons employed part time for economic reasons are those who want and are available for full-time work but have had to settle for a part-time schedule.
A sobering look at job losses.
Layoffs Keep Growing—Is Your Firm On the List?
http://www.cnbc.com//id/28750173
The Labor Department often revises the actual unemployment rate after they release their initial figure, so we need to watch this during judgment.
@Garrick, IMO, I believe that the prediction should be judged on the initial of January number (on February). Any revisions comes in March or later should matter not. Otherwise, bets would be frozen until March unnecessarily.
@Yi-Wyn. there are numerous announcements of layoffs in the news but as far as this prediction is concerned, the ones that matters are the ones occurring in January 2009. Most layoffs occurs in phases over time.
Miserable Monday: More Than 40,000 Layoffs
Major Companies From Communications to Retail, More Americans Lose Jobs
Again, as already noted by David, it's the timing of the actual layoffs
which occur in January which actually matters.
/John
URL: http://www.abcnews.go.com/Business/CEOProfiles/story?id=6731375&page=1
Latest jobless claims numbers came in at around 588,000 which is far from the 800,000 needed to bump unemployment to 8%
I agree with David on when this should be judged. The numbers I provided were the initial numbers that come out at the start of the month vs. the revised ones from the Labor Dept.. I'm assuming people are betting on the stats I've used, so it wouldn't be fair to change it midway.
According to this, consensus of ADP Employment Change for Jan '09 is showing a -525K (relative to -693K in Dec '08). This is a precursor to the LBO reported metric. If the consensus is on track, then the unemployment rate increase should be less than 0.5% (which would put the rate under 8%).
Current consensus for the Jan '09 unemployment rate is 7.5%
Today, ADP reported decrease of 522,000. Nonfarm payroll now stands at 112,702,000. The decrease represents under 0.5% (522K/112,702K). It is now a given (99%+) that the rate will not hit or break 8% for January.
Wow! Pelosi said 500M jobs loss every month DOH!!!!
Looks like the numbers for January are posted - 7.6% unemployment rate in January. http://www.bls.gov/news.release/pdf/empsit.pdf
Stepping in Jan 09, we have the highest layoff rate since 2002:
http://www.wealthalchemist.com/Blog/2009/02/january-2009-layoffs-highest...
More on job loss prediction:
http://www.wealthalchemist.com/Blog/2009/01/job-loss-prediction-2009-201...
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