At the beginning of 2007, Karl Case was interviewed by Scott Van Voorhis, of the Herald.
Unfortunately, the column is no longer available on the Herald’s site (or, at least, for free), but I copied and pasted this paragraph for an entry I posted on January 11, 2007.
Combined with an already-large drop in housing starts, [a drop in housing prices] could put a measurable dent in the nation’s economy. The housing cool down, in turn, could lead to the loss of 1.4 million jobs by the end of 2008, pushing up the national unemployment rate to 5.8 percent, Case’s report estimates.
So, how’s “Chip” doing with his prediction?
The jury’s still out.
The unemployment rate ended 2007 at 5.0%. More Americans are employed today than at the beginning of the year. (The total number of Americans in the job pool increased, which is why the two figures do not contradict one another.)
Meanwhile, (average) wages increased 3.4% from one year to the next.
As always, however, there are warning signs on the horizon. The December jobs report was anemic, at best – there were only 18,000 jobs added during the month, while economists (ugh) had forecasted 70,000. (My guess? The December jobs report, much like the August jobs report, will be an anomaly. Also, adjusted upward, when final data is released, later this month.)
We have another whole year to go before we’ll know if his prediction will come true.
I think a 5.8% unemployment rate still seems too dramatic, at this point. Don’t underestimate the power of the Federal Reserve. Lowering interest rates and pouring billions of dollars into the US economy will have some benefit.