8.1%

The Lehmann Letter ©

The unemployment rate climbed to 8.1% last month, its highest since the tail end of the 1981-82 recession. You can read the Bureau of Labor Statistics’ release at
http://stats.bls.gov/news.release/empsit.nr0.htm

The unemployment rate was 7.6% in the previous month and 7.2% in the month before that. There is a real danger it will exceed 10% before the end of the year.

That would ruin the President’s hope that he can cut the deficit in half by the end of his first term. Why? Because his budget assumes unemployment will rise to 8.1% this year and fall slightly to 7.9% next year. Since unemployment is climbing rapidly and we’ve already reached 8.1%, it appears that the economy will do worse than the President anticipated. That means lower tax revenues and bigger deficits.

© 2009 Michael B. Lehmann