Q: Charles,
As always, great newsletter.
Do you have a view of where U.S. unemployment might top out? Or of a value that it will certainly reach?
A: My view is that, from an employment perspective, this will certainly be worse than anything since the Great Depression. Here’s the latest graph from the Fed’s website:
I think the rate will exceed anything on this graph meaning that 11% would not surprise me. I also think that people will once again be shocked at how “jobless” the recovery is. That’s because real GDP growth will be overstated due to understated inflation reporting (for a review of the systematic understatement of the CPI, see my June 2007 editorial, Whatever Math Is Right For Them). It won’t be that the recovery is so jobless. It will be that the recovery isn’t a real recovery.