As the unemployment rate hovers at 9.7% I wanted to interject my view of the economic outlook from a stoop in the small town of Watertown, Wisconsin. When I was working as a Graduate Assistant for the Marquette Golden Angels we had Jon Fisher come in and speak at the Marquette Business Plan Competition Banquet in mid April, 2008. During the speech, Jon made reference to this chart:
Jon had the thesis that we were heading toward unemployment of 9% by April of 2009. At the time, unemployment was hovering around 5%. His assertion intreagued me enough that I passed the statistics along to my Econ Stats professor who supported Jon’s findings. As unemployment raced upwards over the next year, Jon ended up within .1% of the actual unemployment number 1 year later, a very impressive prediction. A report published by Ben Bernanke on April 2, 2008 pointed to a “somewhat higher” unemployment, not quite the findings that could have helped us prepare for such a massive unemployment spike.
Where to next?
In August of last year, Jon said we would top out 10.4% unemployment and start heading back down. In October we peaked at 10.2% and since have come down to 9.7%. I don’t deny that unemployment will continue to decline, but I do believe it is going to be a long downhill road to recovery. In larger cities it is easy to be optimistic about unemployment turning around because you can see people gaining jobs. As larger cities begin to see points of optimism I would like to direct attention to the small county where I am working, Jefferson County, Wisconsin. A county of 9,700 that recently lost a Briggs and Stratton Plant (530 jobs) and quite a few more jobs at a furniture manufacturer amid smaller job losses across the board. In a county like this it is easy to see where jobs have gone and where new jobs are going to come from. The manufacturing jobs have gone abroad and are not coming back in the immediate future. If housing starts pick up this could get Jefferson back to a sustainable level. Without a pickup in the housing market the only way jobs will come back are if manufacturing labor becomes affordable enough for someone to start a plant in Watertown which will take a change in mindset by the previously gainfully employed manufacturers. This isn’t a problem unique to Watertown, it is echoed in small towns throughout the country. I don’t have any stark opinions but I am patiently optimistic and I am interested to see what Jon predicts next.
