5.8 C
Tuesday, December 5, 2023
HomeI’m utterly confused

I’m utterly confused


Related stories

Latest Cuts Leave OPEC with Fewer Options

Last week, OPEC and its partners from OPEC+ agreed to deepen and extend their production cuts into the first quarter of 2024. The move, almost unanimously seen as a means to propping up oil prices, did not have the desired effect. After an initial jump...

Caixin Manufacturing PMI. China, 03:45 (GMT+2)

At 03:45 (GMT+2), November data on Caixin Manufacturing PMI will be published in China. The indicator is compiled from the enterprises’ responses about their purchasing activities and supply situations. At the same time, the attitude of purchasing mana...

US Water Systems Targeted By Iran-Linked Cyberattacks In Multiple States

US Water Systems Targeted By Iran-Linked Cyberattacks In Multiple States Authored by Tom Ozimek via The Epoch Times (emphasis ours), Multiple federal agencies are warning that Iran-linked hackers have been targeting U.S. water systems and...

Powerful Storm Could Cover Millions In US East With Snow 

Powerful Storm Could Cover Millions In US East With Snow  Meteorologists are monitoring weather models that show a powerful storm might unleash thunderstorms, torrential rains, and snow across two dozen states in the central and eastern US...

Is A New Oil Price War Looming?

U.S. crude oil production broke another record in September, putting additional pressure on the OPEC+ group, which looks to keep oil prices above $80 per barrel by controlling "market stability." The underwhelming OPEC+ meeting last week showed that th...

Today’s Financial Times makes a claim that makes my head spin:

Of the 45 economists surveyed between December 2 and December 5, 85 per cent project that the National Bureau of Economic Research — the arbiter of when recessions begin and end — will declare one by next year.

While most of the economists expect the coming contraction to be shortlived — with gross domestic product growth still registering a 1 per cent gain by the end of next year — more than half are bracing for the unemployment rate to rise substantially from its current 3.7 per cent level to between 5.5 per cent and 6.5 per cent.

A handful of economists pencilled in an even more dire outcome, with the unemployment rate either closing in on or exceeding 7 per cent.

If you go to the link, you’ll find that the RGDP forecast is for 2022:Q4 to 2023:Q4. The median forecast for the unemployment rate in December 2023 is 4.5%. Oddly, that forecast doesn’t seem to match the consensus view that unemployment will peak at about 5.5%, and that the peak will likely occur in late 2023 or early 2024.

But that’s not what concerns me. Rather, in what universe could the US experience 1% RGDP growth in 2023 and end the year with 4.5% unemployment? What am I missing?

Some context might be useful. While the 4th quarter data for 2022 won’t be available for a few weeks, it’s pretty clear that RGDP growth for 2021:Q4 to 2022:Q4 will come in right around 1%, the same figure as being forecast for 2023. But 2022 was a boom year, with an amazing 4.5 million jobs being created. The unemployment rate fell from 3.9% in December 2021 to 3.5% in December 2022. And now we are being told that RGDP growth will continue at the same pace in 2023, and yet unemployment will shoot up to 4.5%? Really?

Companies are desperately short of workers. When I traveled over the holidays, I found service to be a complete disaster at one business after another.

Just to be clear, it would not surprise me at all if the unemployment rate did rise to 4.5% in 2023. What would surprise me is if this increase occurred during a time when RGDP was increasing at a 1% rate. What am I missing? Is AI going to suddenly cause a productivity surge in 2023?

I would not be at all surprised if there were a recession in 2023. After all, recessions often occur when anti-inflation policies are implemented.

I would not be at all surprised if there were no recession in 2023. A consensus of economists is currently predicting a recession, but the consensus of economists has been consistently wrong about every single recession over the past 40 years.

I suppose I could be accused of wimping out, refusing to put my reputation on the line. OK, so here’s my almost worthless forecast. I predict that America will experience its first ever mini-recession in 2023. The first “recession” we’ve ever had where the unemployment rate rises by less than 2 percentage points from the previous cyclical low. Whether that outcome would deserve to be called a “recession” is a question I’ll leave to others (i.e., the NBER). I don’t care.

PS. Today’s jobs report is very good news. I’m surprised that stocks aren’t up even more.


- Never miss a story with notifications

- Gain full access to our premium content

- Browse free from up to 5 devices at once

Latest stories


Please enter your comment!
Please enter your name here