Saturday, April 10, 2010


There is a general trend that economists completely fail to predict when recessions occur, how deep they will be, and when the recovery will happen. Typically experts do little more than expect a continuation of the recent past. In fields where prediction of the political or economic future go, educated people with only a passing knowledge of the subject do just as well as experts at making predictions(which is admittedly a horrible job)

So I am going right ahead and making a prediction of my own. Sure, my prediction that spring 2007 would be a great time to buy stocks never worked out. That hasn't stopped me from having strong--if uneducated--opinions about the future though.

My prediction is this: employment reached a minimum at some time in the past three months. Unemployment rates will recover from this point on. The rate of this hiring will be approximately the same as the rate of job loss was in the past two years, meaning that in 2012 unemployment rates will be back down to normal levels.

I base prediction this on a few things. Mostly though I make this prediction because this is what usually happens. Looking at past recessions the rate of unemployment drop after the recession is about the same as the rate of rise at the start. Sure this recession might be different, we might be in another great depression, but the most likely assumption is that it is a completely normal recession, which will be followed by a completely normal recovery.

I however am not going soft on two issues: oil, and housing. Oil prices will stay high, housing prices will continue to drop until they hit inflation adjusted 2000 prices. I have no idea where the hiring will happen, just that it will happen somewhere.

There are many other people who share my opinion. Here are a few articles supporting a strong recovery:

Why So Glum? Numbers Point to a Recovery

Polls say the economy is heading in the wrong direction. Markets say it's back on track. This time, the markets are right

How America pulled itself back from the brink—and why it's destined to stay on top

News of America’s death is greatly exaggerated. In reality, the U.S. is on the verge of a demographic, economic and social revival.

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