2011 predictions reviewed

1. U-3 unemployment will climb above 10 percent. The real unemployment rate will be much higher, but it will be masked by a decline in the Labor Force Participation rate below 64 percent. The employment-population ratio will fall below 58 percent for the first time since 1984.

Incorrect.  A close miss, but still a miss. The U3 unemployment rate peaked at 9.8 percent in 2011.  It was, as expected, masked by a decline in the Labor Force Participation rate to 63.9 percent.  Even so, the employment-population rate only fell to 58.1 percent in July before recovering to 58.5 percent in November.

2. Real GDP growth for 2011 will fall short of the 3.4 percent predicted by Goldman Sachs. It will remain positive in initial reports throughout the year, but the final quarter will eventually be revised down into negative territory. The legitimacy of GDP as a valid metric for economic growth will increasingly be called into question as the positive numbers are belied by actual conditions.

Correct.  The first three quarters of 2011 were all below 2%, so this one can be called even though the initial Q4 report isn’t out yet.

3. The 2011 federal deficit will exceed the projected $1.27 trillion despite the Republican House majority. This will likely be the result of emergency spending required for an economic or military crisis.

Correct.  The deficit in the fiscal year of 2011 was $1,295 billion.  And the only reason it is that close was the delay in bumping up the debt ceiling, which has already been reached again.  So much for the oft-heard assumption that a Tea Party-inspired Republican House would solve the spending problem.

4. More than 230 banks will fail or be seized by the FDIC. This will represent around 1.2% of total deposits. Bank of America will be effectively nationalized to prevent it from failing.

Incorrect.  Not even close.  Only 92 banks failed this year, none of them giants.  Bank of America’s stock took a hit, but it is still staggering around, hemorrhaging red ink.  I suspect the flat stock market prevented this from getting out of hand.

5. TOTLL will decline below $6.3 trillion on an unadjusted basis. (Below $5.9 trillion adjusted.)

Incorrect again.   The Fed managed to keep bank lending propped up; TOTLL is still holding tight at $6.9 trillion, although it is still below peak.

6. The two government sectors will not be able to maintain their present rate of debt expansion which presently averages around $450 billion per quarter. As the financial and household sectors continue to decline, all sectors credit market debt outstanding, (Z1), will fall below $50 trillion for the first time since 2007.

Incorrect, unless Federal debt falls more than $762 billion in Q4.  Although its rate of growth did slow down considerably during the first two quarters, federal debt outstanding leaped 4 percent in the third quarter alone and exceeded $10 trillion for the first time thanks to the debt ceiling hike.  The state and local sector is a bit of a mess, since some serious revisions in the last Z1 report suddenly show that a sector which has been showing flat for three years growing 23.8 percent in from Q2 to Q3.  Z1 itself showed $1.3 trillion in growth from Q2, but most of that was historical revisions and is now at $53.8 trillion.  The numbers look increasingly sketchy, but regardless, my prediction of a sub-50 all sectors Z1 was wrong.

7. The national median existing-home price will fall below 160k from the present 170,600.

Correct.  Home prices fell to 156,100 in February.  As of the November report, they presently stand at 164,200

8. There will be a serious Euro crisis, most likely brought about by a sovereign default or a nation announcing it will be leaving the Euro. Italy is the most likely candidate.

Correct.  Greece has technically defaulted even though it’s being spun as a “restructuring”, and although no nation has announced that it is leaving the Euro yet, there is definitely a serious Euro crisis taking place, as the IMF-led overthrow of the governments of Greece and Italy demonstrates.

9. One U.S. state and at least three major cities (100k population plus) will attempt to file for bankruptcy or federal bailout. (It’s unclear if states can file for bankruptcy and public employee unions will oppose the city filings.)

Incorrect.  One big county and one state capital too small to count as major aren’t enough.

Bonus: Sitemeter-recorded visits to the blog will increase from 2,370,028 visitors in 2010, (197,502 per month) to 2,750,000.
Correct.  2,828,490 visitors in 2011 exceeded projections, especially considering that this doesn’t count the 305,835 visitors to the new Alpha Game blog.  Combined, that shows an increase in blog readership somewhere between 19 and 32 percent over the course of the year.  Combined pageviews for 2011 were 4,600,960; since it’s an election year in 2012, there would appear to be a reasonable chance to exceed 5 million on VP alone.

Overall, the score is 4-4, with the bonus tipping the balance in my favor, 5-4.  Not very good, and I’m disappointed with the Z1 revisions rendering the historical statistics potentially useless now.  That was a little worse than last year’s 5-3 scorecard.  In light of another mediocre performance, I’ll have to think about whether I’m going to bother making any quantifiable predictions for 2012, other than to say that I expect it to be more chaotic and contractionary than 2011 was.