Different to normal
One of the big surprises of the credit crisis is that far fewer people lost their jobs than had been forecast. The economy contracted by as much as 3.5 per cent in 2009, whereas the contraction in the corporate sector was even sharper at over five per cent. Unemployment, which always reacts to output development with some lag, picked up by around 140,000 persons in the summer of 2010 compared to the outset of the crisis. Judging by the normal behaviour of enterprises (who demand labour) and persons (who supply labour), we expected in June 2009 that unemployment would rise by 166,000 persons in that year and by more than another 280,000 in 2010. Fortunately, this did not materialise. But why not?
In order to analyse where the sharp differences lay, the DNB June and December 2009 forecasts for a number of variables were lined up against the final realisations. What first stands out is that in June 2009 we had factored in a much larger economic contraction (-5.4 per cent) than we eventually experienced. In December 2009 the forecast for economic growth in 2009 and 2010 was already less negative, and the anticipated increase in unemployment was considerably smaller, but nonetheless still too high in 2010 at around 100,000.