Unemployment and the Stress Tests


This is, obviously, nothing new, but Felix Salmon is right to remind us that the “adverse” scenario for Tim Geithner’s stress tests — that is, the worst case doomsday projection — used an unemployment rate of 8.9% for 2009.  The reality, though, is already much gloomier: we’re only up to May and the actual unemployment rate is 9.4% and still heading north.

One number doesn’t represent an entire economy.  But this one is pretty important, and Treasury’s forecasters weren’t even in the right ballpark.  It makes you wonder how realistic the rest of their assumptions were.

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