USA Today reports that in their survey of economists, the median forecast of peak unemployment for the downturn was 9.8 percent. The economists surveyed have consistently underestimated the severity of the downturn as the article notes in pointing out that their median estimate 3 months ago was 8.8 percent. At this point, it is almost impossible envision a scenario where the unemployment rate does not cross 10.0 percent. Since we already know the weekly unemployment filings for the last 6 weeks, it is virtually certain that April unemployment will hit 9.0 percent. The economy is still losing jobs at a rate of close to 700,000 per month. It will not stop losing jobs overnight. Even if the economy, lost no additional jobs between April and the end of the year, then the unemployment rate would still rise to about 9.5 percent by December. If it loses 1.6 million jobs (200,000 per month), then the unemployment rate will be 10.5 percent by December. At this point, this is probably about as optimistic a scenario as can be believed. It is also worth noting that because the labor force is much older at present than in the early 80's, this implies an unemployment rate that is inflicting far more pain than did the rate at the peak of 1981-82 recession.
--Dean Baker
