‘No Way’ Unemployment Stays at 10%: Economist
Expect to see job growth in the Jan. 8 jobs report and say goodbye to 10 percent unemployment in the New Year, John Herrmann, president of Herrmann Forecasting, told CNBC Tuesday.
Despite some economists' speculation unemployment will linger at 10 percent or even dramatically increase in 2010, Herrmann said his models do not reflect the pessimistic prediction.
“No way,” said Herrmann. “I think they are totally completely wrong; models do not bear this out. Our models were saying we were going to grow jobs before the Jan 8 report that we get that next week, and we are absolutely tracking that.”
Unemployment rates peaked at 10.2 percent in October and will dip to 9.9 percent in the next jobs report, Herrmann said. His firm forecasts the U.S. adding 70,000 jobs, he said.
Richard Hoey, Chief Economist for BNY Mellon, said he shares Herrmann’s optimism regarding employment, but is more cautious about when the unemployment rate will scale back from 10 percent.
“I have a little bit more caution about the next couple of months, I think it may take a while to emerge," said Hoey. "But, the strength in the economy is real, this is a sustained economic expansion.”
Both economists said they see hiring growing strongly next summer.
According to a report by Careerbuilder.com, 20 percent of employers plan to hire full time employees again in 2010, up from 14 percent a year ago.
The surge in hiring is a result of large-cap companies cutting jobs too heavily in late 2008 and early 2009, Herrmann said.
Once the larger companies start rehiring in 2010, midsize and smaller companies will follow, he said.
Hoey said he also thinks there will be an easing in the credit market, allowing for smaller companies to begin rehiring. While companies may of made cuts appropriate to last year’s economic climate, this year is a time for expansion, he added.
“Over and over again we have seen the pessimists and skeptics about the economy coming up with new reasons with why it can’t expand,” said Hoey. “And what I see is a world where there were tremendous fears in the corporate sector of a much worse economic outcome than the one that we’re actually going to get.”