The Campaign Spot

Geithner’s Failure to Imagine a Real Worst-Case Scenario

Somehow, I find the results of Treasury Secretary Tim Geithner’s “stress test” results less than reassuring. One reason: “To take one example, the adverse scenario envisions the U.S. jobless rate gradually rising from 6.9% at the end of 2008 to 8.9% at the end of 2009.”

The news today?

“Nonfarm payroll employment continued to decline in April (-539,000), and the unemployment rate rose from 8.5 to 8.9 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today.”

So we’ve already hit one of the characteristics of the worst-case scenario. If unemployment rises at all, for the rest of the year, we’re worse than the official “in case of emergency break glass” expectation.