Friday, September 4, 2009

‘Animal spirits’ still on track to rise

The 0.2 percentage point increase in the unemployment rate is not enough to throw rising “animal spirits” or confidence off track.  Americans are still depressed by an unemployment rate higher than adaptation level but they are getting used to it.  Given the forecasted path of unemployment shown in the graph I expect the current cycle to peak in early 2013 and then for a walloping fiscal debt crack-up to send us to the bottom of the current, still developing depression.  Even with a much more bearish forecast for the unemployment rate the qualitative conclusions hold.  Unemployment is forecast to rise for the next year.


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