Where might U.S. unemployment top out? « plumbreport.com – Chip Plumb

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Q & A:

June, 2009

Q: Where might U.S. unemployment top out?

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:

civilian_unemployment_rate

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.

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©2009 PlumbReport.com

The opinions as to portfolio allocation and specific investment vehicles contained herein are solely the opinions of the author and are not intended to be specific recommendations which would be suitable for every investor. The suitability of any specific investment or recommendation is dependent upon many subjective factors and characteristics of the individual investor including, but not limited to, particular investment objectives, risk tolerance, investment horizon or timeline, net worth, overall portfolio allocation and income needs. Specific investments may be suitable for some investors and yet unsuitable for others due to different needs and objectives. All readers should carefully consider their individual objectives and needs and should consult with their investment and financial advisor as to the suitability of any particular investment. The author specifically disclaims any liability or responsibility for any losses, which may result from any investment or allocation referenced herein.