Goldman foretells an unemployment nightmare

Worst-case scenario for Democrats: A jobless rate over 10 percent all the way into 2011

Published December 3, 2009 2:58PM (EST)

Just in time for President Obama's jobs summit, Reuters columnist James Pethoukoukis gives us a glimpse at Goldman Sachs'  economic outlook, compiled by ace forecaster Jan Hatzius. (Found via Calculated Risk.)

The key line:

...(2) a peaking in unemployment in mid-2011 at about 10 3/4 percent.

The unemployment rate sits at 10.2 percent right now. The prospect that it might remain above 10 percent for another year and a half is, as Pethokoukis rightly points out, a massive political disaster in the making for Democrats.

Other forecasts have predicted that unemployment would peak in the first quarter of 2010 and then start to slowly fall, but an article published today in Bloomberg News ranks Hatzius as the most accurate economic forecaster on Wall Street, so his doom-and-gloom cannot lightly be ignored.

On a happier note, there appears to be real momentum on the weekly jobless claims front, with new filings for benefits falling for the fifth straight week to the lowest point in more than a year, and with the four-week moving average dropping like a rock. But that's a slender thread upon which to hang, when faced with the scenario foretold by Hatzius.

By Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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Goldman Sachs How The World Works Unemployment U.s. Economy Wall Street