Why Unemployment (Probably) Won't Hit 10 Percent

by Nate Silver @ 5:49 AM
In spite of last week’s better-than-expected jobs report, many intelligent observers seem convinced that the unemployment rate, which fell nominally to 9.4 percent last month, will nevertheless almost certainly hit 10 percent or higher before the situation really rights itself. Here’s the New Republic’s Noam Schieber making the case. Here’s the White House. Here’s Intrade, where you can make about 2:1 on your money if the unemployment rate is below 10 percent in December.
Although it’s foolish to try to predict economic indicators, I think these observers are probably wrong: the recession likely does not have enough gas left to get us to 10 percent unemployment.
Principally, I think these analysts may simply be underestimating how much impact last week’s numbers should have on our expectations for going forward. After four straight months in which the rate of job losses had declined, the number jumped abruptly upward in June, accelerating to what was then reported as a net of 467,000 lost jobs. It wasn’t clear whether the jobs situation was still improving fairly rapidly, was improving but only slowly, or in fact the momentum was entirely sideways or was even getting worse: LinkHere