WSJ Job Loss Forecast Slightly Better – Unemployment Rate Forecast Remains Bleak

By Juli Morris on July 14, 2009 in Labor Market Dynamics.

Economists surveyed by the Wall Street Journal in July predict that the U.S. economy will lose an average of 70,000 jobs per month over the next twelve months, less than the 86,000 average monthly losses they forecast in June. This is the fourth consecutive survey predicting declining monthly losses. Despite the declining losses, the outlook for the unemployment rate looks increasingly dire:

On average, the economists forecast an unemployment rate of at least 10% through next June, with a decline to 9.5% by December 2010. "The mother of all jobless recoveries is coming down the pike," said Allen Sinai of Decision Economics. But he doesn't favor more stimulus now, saying "lags in monetary and fiscal policy actions" should be allowed to "work through the system."

This month's Wall Street Journal survey of economists, conducted July 2-7, reveals that economists' view of the employment outlook has again improved over the past month. Each month the WSJ asks economists to estimate the average monthly change in nonfarm payrolls over the next twelve months. That is, the monthly changes the BLS reports each month, for the next twelve months, divided by twelve.