Ten Economic Questions for 2011

[ProSense]

Ten Economic Questions for 2011

by CalculatedRisk

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4) Economic growth: After I took the "over" for 2011 back in November, a number of analysts have upgraded their forecasts. As an example, Goldman Sachs noted Friday:

The US economic outlook for 2011 has improved further with enactment of the fiscal compromise, as well as a stronger trend in recent data. As we forewarned, we are revising up our forecasts to incorporate this news and now expect real GDP to rise 3.4% in 2011 and 3.8% in 2012 (up from 2.7% and 3.6%) ...

It does appear GDP growth will increase in 2011, although GDP growth will probably still be sluggish relative to the slack in the system. How much will the economy grow in 2011?

5) Employment: The U.S. economy added about 87 thousands payroll jobs per month in 2010 through November. This was extremely weak payroll growth for a recovery. How many payroll jobs will be added in 2011?

6) Unemployment Rate: The post-Depression record for consecutive months with the unemployment rate above 9% was 19 months in the early '80s. That record will be broken this month, and it is very possible that the unemployment rate will still be above 9% in December 2011. This high level of unemployment - and the number of long term unemployed - is an economic tragedy. The economy probably needs to add around 125 thousand payroll jobs per month just to keep the unemployment rate from rising (payroll jobs and unemployment rate come from two different surveys, so there is no perfect relationship, and the rate also depends on the participation rate). What will the unemployment rate be in December 2011?

7) State and Local Governments: How much of a drag will state and local budget problems have on economic growth and employment? Will there be any significant muni defaults?

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[OHdem10]

1. I cannot answer your question, but by chance did you see the

piece on 60 Minutes tonight. It sounded as if in the
next year many states budgets are in such dire straits
we will be facing another collapse. My Gosh, it sounded
as if this could be worse than the Bank Debacle.

Do not mean to sound so gloomy.

[ProSense]

2. Didn't see the piece

but I have read about it. Still, I question any report that uses Chris Christie to make its point.

It's also interesting considering some of these states, like NJ, are turning down federal infrastructure funding.

[golfguru]

3. Bailouts of states will be the next 800 lb gorilla on back of federal budgets

I just saw report yesterday that 2 dozen states had higher unemployment
last month (November) over the previous month.