Thomas Mackel, chairman of the Richmond Federal Reserve Bank, says the severe recession could push the unemployment rate above 9 percent.
The rate hit 6.7 percent in November, with non-farm payrolls plunging by 533,000. "That number blew me away," Mackel told Bloomberg.
"I think unfortunately, we'll see this unfold in a more horrendous fashion as time goes on. The consumer is now pulling back in a dramatic way."
The result: "This time next year, I think we're looking at an unemployment rate probably 2.0 to 2.5 percentage points higher than now," Mackel says.
He sees economic conditions becoming worse than many anticipate. "If you begin to analyze things that you're hearing, you recognize that there's blood on the street," Mackel says.
"People are losing their homes, they've maxed out on their debt, there's inequality of wages. All these things evolve into a tsunami of devastating economic conditions."
Even the government sector of the economy will get hit, Mackel says.
"There will be layoffs in the public sector because tax revenues will be diminished. Many cities are in a serious budget crisis."
Bottom line: "It will take a miracle to turn this around," he says.
Many others agree. "We are caught in a downward spiral in which employment, incomes and spending are collapsing together," Nigel Gault, chief economist for IHS Global Insight, told The New York Times.
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