Tuesday, January 20, 2009

Intrade Predictions for the Dec. 2009 Jobless Rate

Probabilities above are for the December 2009 U.S. jobless rate, from futures contracts traded on Intrade: The Prediction Market. Based on these contracts, there is only a 1 out of 8 chance of an unemployment rate above 9.50% in 2009, suggesting that there's probably almost no chance that in 2009 we would be anywhere even close to the 10.8% jobless rate of 1982, and zero chance of reaching the unemployment rates of the 1930s and the Great Depression.

And yet according to Obama, "I don't think that any economist disputes that we're in the worst economic crisis since the Great Depression." Trading on Intrade suggests otherwise.

Update: The WSJ consensus forecast for the December 2009 unemployment rate is 8.6%, based on the average forecast of 55 economists.

18 Comments:

At 1/20/2009 8:44 AM, Blogger Jeff Lehner said...

This comment has been removed by the author.

 
At 1/20/2009 8:45 AM, Blogger Jeff Lehner said...

"I don't think that any economist disputes that we're in the worst economic crisis since the Great Depression."

I'll bet you didn't know you weren't an economist, Dr. Perry!

 
At 1/20/2009 9:21 AM, Anonymous Anonymous said...

This is where the art of painting a narrative comes in to play. The scene is set, the actors in place. Then at the proper moment the props (facts) are brought in to show just how great of a job they did (doing nothing) to employ the "record unemployed".

Part drama but mostly comedy.

 
At 1/20/2009 10:00 AM, Anonymous iamnorth@gmail.com said...

"...suggesting that there's probably almost no chance that in 2009 we would be anywhere even close to the 10.8% jobless rate of 1982, and zero chance of reaching the unemployment rates of the 1930s and the Great Depression. "

So... betting on (predicting) an event affects the outcome of said event?

By flashing Intrade Predictions, are you suggesting that money managers and policy makers should consider Intrade an oracle of wisdom and advice before making decisions and setting policy?

I would seriously stop reading what you post, but the rare gem of truth and insight makes it worth suffering through stuff like this... or your "historic to current" product comparisons... etc.

 
At 1/20/2009 10:03 AM, Blogger Bruce Hall said...

With Michigan presently at 9.6% [November, 2008] unemployment which is slightly above the "improbable" level for the nation in December, 2009, what do you see as the level 12 months from now?

 
At 1/20/2009 10:10 AM, Blogger Terry Maynard said...

I believe this Intrade "bet" reflects the generally optimistic view of the financial sector--things will be better tomorrow. Even most financial sector-linked economists are buying into this, reflected in their overly optimistic estimates of the next economic report--unemployment, GDP, whatever.

Unfortunately, the economy is driven by forces that these prognosticators choose to ignore. We will see official unemployment in excess of 10% by the end of 2009, and real unemployment (U6) will be in the upper teens.

Maybe we'll get an economic turnaround in 2010, but I don't think we'll see real improvement in employment until 2011. It is rough out there.

 
At 1/20/2009 10:14 AM, Blogger Mark J. Perry said...

I'll go with the consensus
WSJ forecast survey of 8.6% for the Dec. 2009 jobless rate.

 
At 1/20/2009 10:27 AM, Blogger Mark J. Perry said...

Terry: If you are correct, then you can make a lot of money betting on Intrade against the optimistic consensus.

 
At 1/20/2009 10:40 AM, Blogger RebelRenegade said...

Intrade predictions for the US slipping into a Depression in '09 currently at 56.3%

Intrade

That's something I'd like to short.

 
At 1/20/2009 11:10 AM, Anonymous iamnorth@gmail.com said...

"Update: The WSJ consensus forecast for the December 2009 unemployment rate is 8.6%, based on the average forecast of 55 economists."

If I may add to my earlier comment, are these the same 55 economists who never saw *this* recession coming? or are these the 55 who may have seen it coming but to whom no one listened?

I agree that times are not as bad as what is being portrayed in the media. There are definitely jobs to be had in the economy and companies are hiring. The problem is that those who are unemployed seem to not want the types of employment available.

 
At 1/20/2009 12:35 PM, Blogger RebelRenegade said...

iamnorth>

IIRC, even doom and gloom predictor Roubini is calling for less than 10% unemployment at the peak of this recession.

 
At 1/20/2009 1:05 PM, Blogger Michael said...

Isn't InTrade just speculative gambling? To me - and presumably Obama - the state of the economy is something that should measured with more concrete evidence.

Also, because a bunch of gamblers online think something is or isn't going to happen doesn't make it so. What if the people who are on InTrade happen to all believe the same things due to social backgrounds, economic conditions or a myriad of other preconditions? Does that mean it is correct? No. It just means that's what a small portion of people think.

 
At 1/20/2009 3:22 PM, Anonymous poor boomer said...

Professor Perry says:

Terry: If you are correct, then you can make a lot of money betting on Intrade against the optimistic consensus.


YES! This is a perfect example of how it takes money to make money.

I would put a lot of money on a contrarian bet here...if I had money...which I don't...so I expect a year from now to complain about how I was correct and could have made a lot of money if only I had had money to begin with.

 
At 1/20/2009 3:25 PM, Anonymous poor boomer said...

Question:

Will the current methodology be tweaked to massage the unemployment data?

 
At 1/21/2009 6:57 AM, Blogger @sethstorm said...


There are definitely jobs to be had in the economy and companies are hiring. The problem is that those who are unemployed seem to not want the types of employment available.

That and the requirements may be a bit too picky.

 
At 2/21/2009 2:34 PM, Anonymous Anonymous said...

Intrade is an unforgiving mistress. Odds have now more than doubled.

 
At 6/27/2009 8:15 PM, Blogger Sabor said...

A few more months of the Obama regime has changed people's economic expections for the worse. Check the latest Intrade price on an unemployment rate above 10% by year end. It's over 80 now.

 
At 11/06/2009 7:31 PM, Anonymous Anonymous said...

Pretty amazing to look at the January 2009 comments and how the Obama haters were either... 1) Ridiculing him for saying that unemployment was going to get much worse (which it did! What an jerk he is for seeing the future so well!), or... 2) blaming him for the high unemployment numbers 5 months into his presidency. Just goes to show that some people will always be motivated by ideological prejudice rather than sound reasoning. You have no credibility.

 

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