Goldman Sachs forecasts nightmare 2010 economic scenario for Dems

November 21, 2009

Trust me, these are not the kind of numbers that the White House and congressional Democrats want to see. Goldman Sachs is now forecasting unemployment to rise all next year, peaking at 10.5 percent. The firm expects the economy to grow at just 2.1 percent. Also, the budget deficit will be a few billion bigger at $1.6 trillion. If correct, these stats absolutely confirm the collective freakout happening right now among Ds on Capitol Hill, such as calling for Geithner to resign. Economist Jan Hatzius:

Until hiring resumes in earnest, the jobless rate is apt to keep drifting up. This is less tautological than it sounds, as net changes in unemployment mask significant flows into and out of the pool of unemployed workers. However, most research finds that stronger hiring rather than reduced layoffs is the key driver of changes in unemployment early in a recovery. Unfortunately, none of the indicators of labor demand—job vacancies, help-wanted indexes, and consumers’ perceptions of job availability— shows any significant sign of life. The best that we can find is that respondents to the Michigan confidence survey, who have a decent track record for forecasting one-year changes in unemployment, are looking tentatively for stabilization.


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Saturday morning links…

Princeton and Columbia cancel free speech
What makes nations rich or poor? With world poverty map.
McCain gets sane on climate bill. Meanwhile, EU president wants Copenhagen to give us “global management”
Related, Aussie skeptics run TV ad

Posted by Maggie’s Farm | Report as abusive

Obama and the Dems are trying to install European Socialist economics in the US. If they succeed (as is likely), we will get European style unemployment rates. This means 10 to 15% overall and 20 to 30% unemployment among young people. Goldman Sachs’ prediction for next year is a floor not a peak.

Posted by Bob Sykes | Report as abusive

[…] Economic worst case scenario is likely to unfold […]

Posted by Communist Panic | Be John Galt | Report as abusive

So you bash Goldman in one post, and two posts later you are holding up their word as gospel. It doesn’t take a genious to see that the first two quarters of 2010 will be ugly and a real recovery timeline looks like 4-5 yrs minimum (ie 2015). It’s not a dem or rep issue, it’s just what it is. Blame game doesn’t help – it actually hurts because it ties the hands of gov’t from doing what it thinks is right to do what the public thinks is right. Given that the average household has higher debt ratio than gov’t, the idea of giving in to populist pressure is cowardly, and it’s the gameplan of reps – and is forcing the hand of dems trying to stay in power. If you want a strong solution that will ensure a healthy recovery, it’s gotta be bi-partisan and there has to be the expectation/realization that it will take time (years) to play out. Dumping on Obama alone for saving what most believed would be a depression and not turning it into robust growth in ten months… WOW, get your heads checked. You can argue about what you’d like to see happen next, but it’s hard to listen to you bashing going from depression to growth in less than a year.

I’ve read you love the tricle down effect from tax cuts to small businesses, but it’s safe to say that any kind of effect from that trickle down is at least two years in the making; I think that’s why they chose to prop up the banks and come up with the poor stimulus, because it would play out sooner then that. Just a thought, but I think Timmy the Kid was scared out of his mind about banks failing and that’s why he jumped on saving them.

And as for the tough love and jacking Fed rates now and forcing the value of the USD… it really doesn’t help anyone besides the Chinese. And pardon me for saying, but they’ve been anything but cordial considering the unique relation between your two nations. Free trade moved too fast and didn’t give America time to alter it’s economy properly.

Also wanted to add that Americans should probably expect some serious service cuts next year a la California in an effort to bring down the deficit. Tax revenues won’t be higher and I’d expect around $500B of cuts. OUCH! It won’t be pretty and there will be a lot of angry people. Bottomline is this administration is in a no-win situation and should embrace it and just do what’s right, to hell with re-election pressures. If America had more politicians interested in doing right than dancing for their constituents at election time, one could actually see impactful changes that will help the country rather than meaningless fluff that does nothing.

Wow, I really rambled! Oh well, just some ideas I wanted to put out there.

Posted by Not_American | Report as abusive

Their only argument will be that things would have been worse if they hadn’t been in charge. How well will that go over?

Posted by Brad Templeman | Report as abusive