New CBO projection: 2.3 million more people unemployed next year than expected

A back-of-the-envelope calculation by former Bush aide Keith Hennessey translates CBO’s revised projected unemployment rate into a “big bad number.” How bad? It’s an average of almost 200,000 more jobs lost every month for the entire year.

Consider it a minor adjustment to those “created or saved” numbers that no one knows how to calculate anyway.

There is no disagreement, however, about the net directional effect of the two. CBO and OMB project a weaker economy in the remainder of 2009 and in 2010 than they projected at the beginning of this year before enactment of the stimulus.

How much weaker?

Based on CBO’s forecast for the average unemployment rate in calendar year 2010, 2.3 million fewer people will be employed on average next year than they projected in January.

For comparison, in July there were about 140 million people employed in the U.S.

Next year’s reality will depend heavily on when the economy turns up and how quickly growth returns. A new projection of fewer people employed next year should not surprise anyone. But 2.3 million is a big bad number.

Exit question: CBO’s projected average unemployment rate next year is 10.2 percent. How many jobs would we be talking about if they used the “real” unemployment rate, which includes discouraged workers and those who are working less than they’d like? According to the chairman of the Atlanta Federal Reserve, that one currently stands at … 16 percent and counting.