Why University of Michigan's economic forecast is unsettling for Barack Obama
A national economic forecast released this morning by the University of Michigan suggests that the U.S. unemployment rate will remain relatively unchanged through 2012.
That's surely disquieting for President Barack Obama, who will be forced to defend his record during his 2012 reelection campaign in the face of a discouraging employment outlook.
U-M economists project that the U.S. unemployment rate will average 9.3 percent in 2012. The rate currently stands at 9.6 percent.
The economy is expected to add some 1.5 million jobs in 2011 and 2.4 million jobs in 2012, U-M reported.
But unemployed workers who had given up on looking for jobs -- and, thus, weren't counted as part of the unemployment rate -- will start looking for work again, and that will keep the unemployment rate high. Population growth also puts pressure on the unemployment rate.
"The labor market has begun to stabilize and employment is expected to increase in every quarter of the forecast period," U-M economist Joan Crary said in a statement. "However, with output growth forecast to remain sluggish, employment stays below its 2008 peak through the end of 2012."
The unemployment rate drives perception about the state of the economy -- and that spells concern for Obama as Americans remain skeptical about the nation's economic prospects.
A poll conducted Nov. 14-16 by Gallup found that 59 percent of Americans believe the economy is getting worse, and 34 percent believe it's getting better.
Obama can take solace in the fickle nature of economic forecasts, however.
U-M's economic forecast won't sit well with President Barack Obama, shown here speaking at U-M's spring commencement ceremony.
Melanie Maxwell | AnnArbor.com
For example, in November 2009 U-M economists predicted that Michigan would post an average unemployment rate of 15.8 percent in 2010 and 15.4 percent in 2011.
That was way off.
Michigan's employment outlook is improving. Statistics released Wednesday by the Department of Energy, Labor and Economic Growth indicated that Michigan's unemployment rate was 12.8 percent in October, marking the first time it had slipped below 13 percent since March 2009.
Michigan's highest unemployment rate in 2010 was recorded at 14.3 percent in January.
U-M will release its economic forecast for Michigan on Friday morning.
Contact AnnArbor.com's Nathan Bomey at (734) 623-2587 or nathanbomey@annarbor.com. You can also follow him on Twitter or subscribe to AnnArbor.com's newsletters.
Comments
CuriousOneMi2
Fri, Nov 19, 2010 : 10:38 a.m.
What kind of drugs are being used by AA residents? A 13% jobless rate in Michigan is atrocious and reporting is suggesting you should be happy since it is not 15%? Maybe the decline the labor force of Michigan has something to do with the "decline" in joblessness. Regarding Obama, he likely can not win re-election. The nation's disomfort index will likely be around 11 in 2012 (joblessness of 9.3-9.5% and inflation near 1.5-1.7%). It was around 7.5 when Bush left office. Amazingly, Obama makes Bush look like an economic guru -- which he clearly was not. Didn't you AA residents vote for Bernero in the recent governor's race? Didn't you have enough of career politicans like Granholm and Michigan's atrocious economic performance? Granholm and Obama like to redistribute the economic pie instead of growing it.
runbum03
Thu, Nov 18, 2010 : 7:45 p.m.
When assuming the Presidency, Obama said he had a full plate without adding any economic problems to it. Then he said he would work "tirelessly." Now reports are that Obama watches the Sports channel all day long. Who can blame him?
CynicA2
Thu, Nov 18, 2010 : 7:20 p.m.
No secret to me, but others are clearly trying to figure it all out. Not everyone here is omniscient, as some apparently, think they are.
CynicA2
Thu, Nov 18, 2010 : 5:06 p.m.
The Buffett article thanks the government for keeping the economy from going over the edge into the abyss- and many would agree that it did. Growth and jobs creation are different issues entirely, resulting from an entirely different set of policies, which the article does not address. Also, there are several different calculations of Unemployment (U1, U2, U3, etc) used by economists and those who calculate the unemployment rates. They range from very narrowly defined to very broadly defined, and the number gets bigger as they get broader. The number reported to the media each month is one of the narrower definitions, which politicians like because it's a smaller number. If you use one of the broader measures, unemployment in Michigan is more than twice the number reported to the media.
braggslaw
Thu, Nov 18, 2010 : 4:10 p.m.
I guess we have a different interpretation.
braggslaw
Thu, Nov 18, 2010 : 2:53 p.m.
I think Buffet's comments have more to do with saving private industry during the Mortage induced catastrophe (see GSE's Sallie and Freddie a prime example of government screwing up the economy) than they have to do with public works projects, health care, etc. Buffet and most rational people understand that private companies drive growth and create wealth, not bloated govt.
dshk528
Thu, Nov 18, 2010 : 2:50 p.m.
I'm not sure how they are calculated either, but I've always heard it is simply the number of people collecting unemployment. So, anyone that is not collecting, is not counted, as well as anyone under-employed, and looking for a better paying job, is also not counted. The unemployment numbers are very skewed!! I think it just makes the government officials feel better!!
redwingshero
Thu, Nov 18, 2010 : 2:29 p.m.
I'm not sure how they are calculated, but I always heard that when they ask people if they are "still looking for work", if you said yes, then you get counted, if you say no, you would not be included in the total. If that is the case, the true unemployment number would be severally skewed, and lower than what it truly is. Perhaps one of the staff/moderators could provide the answer to the readers.
PformrPfizer
Thu, Nov 18, 2010 : 1:52 p.m.
I had to leave the state to find work - was on unemployment for 6 months, but came off the books when I accepted a job and moved away in July. Wonder if I'm still being counted as a Michigan resident but no longer unemployed? Does anyone know how the unemployment rates are calc'd?
Top Cat
Thu, Nov 18, 2010 : 1:35 p.m.
The lack of economic recovery is the direct and predictable result of the anti-growth and anti-jobs policies of Obama's adminstration. Their sole objective was to grow government and the Dependency State. All the shots across their bow, including the last election, have not registered. Any Republican, other than Palin or Gingrich, will comfortably defeat Obama in 2012.
redwingshero
Thu, Nov 18, 2010 : 1:12 p.m.
I'd have to agree 81wolverine- I use UofM's RSQE (i think it's research seminar on quantiative economics) for our forecasts at my work. If people aren't looking for work, they don't get counted in the un-employment numbers right? I have heard there is a difference for the overall statistic if you are "out-of-a-job and looking" vs. "out-of-a-job not looking".
Cash
Thu, Nov 18, 2010 : 1:11 p.m.
Don't worry, Nathan. LOL I think the President of the United States is a bit more aware of the picture than any blog writer is....
81wolverine
Thu, Nov 18, 2010 : 12:02 p.m.
U-M economists are usually pretty darn accurate. I wonder whether the October numbers were skewed due to a large group of people dropping out of the 'looking for work' rolls due to lack of jobs. I also wonder whether people moving out of the state to look for work is having an effect on the unemployment rate. It would be interesting to see some numbers on population changes.