Grim outlook on jobs

Unemployment rate likely to stay near double digits through the year, report says

February 12, 2010|By Janet Hook and Christi Parsons | Tribune Newspapers


As President Barack Obama continues to promote efforts to create jobs, the urgency of the issue was underscored by a report issued Thursday by his Council of Economic Advisers.

The economy will generate about 100,000 jobs a month this year, the report said, but the ravages of the recession went so deep that the country likely will not see the unemployment rate fall below 6 percent until 2015.

With the economy continuing to recover only slowly, unemployment is likely to remain at or near double digits for the rest of the year, it said.

"Indeed, it is possible that the rate will rise for a while as some discouraged workers return to the labor force before starting to generally decline," the report said.

The recession, the worst economic crisis in more than half a century, cost the economy about 8.4 million jobs.

Even though the economy has begun to expand, businesses have been reluctant to begin rehiring workers - a pattern that many economists expect to see continue for the rest of this year.

As a result, the millions of jobs lost during the last two years are not likely to be replaced before 2013. Grim as the jobs forecast was, the report credited government intervention - some of it begun under Obama's predecessor, George W. Bush - with averting a far bigger catastrophe.

"One thing we have to keep in mind is how much worse things were a year ago," said Christina Romer, chairwoman of the Council of Economic Advisers.

Last January, when Obama took office, "the American economy was truly in freefall," Romer said. The nation's gross domestic product - the total value of all goods and services - was falling at an annual rate of more than 6 percent, she noted, and jobs were disappearing at the rate of almost 800,000 per month.

"Now we're at a point where unemployment is largely stable, [and] we even saw the number tick down in January," she said.

The report indicates that some jobs lost during the recession might not come back at all.

"As we being to recover from the recession, we will see a new and much-changed labor market," it said. That includes construction and finance industries, which grew abnormally before the recession and won't easily rebound to past levels. Similarly, "many former workers in traditional manufacturing will need to transition into new, growing sectors," the report said.

The administration is counting on the health care sector to continue to add jobs, as well as substantial new employment in clean-energy industries and advanced manufacturing.

Based on the projections, unemployment will average 8.2 percent in the year that Obama runs for re-election. And the economy could very well have fewer people working in November 2012 than when Obama took office last year, something that Democratic strategists see as a weapon that Republicans will use to hammer at the administration's record.

The report implicitly blamed the economic woes, especially of the middle class, on the Bush administration, saying that the recession "followed a sustained period of rising inequality and stagnation in the living standards of typical American workers."

Republicans were quick to describe the document as propaganda masquerading as governing.

"The Obama administration's report is full of blame for the policies of years past, praise for its own failed policies of the past year and promises about their ideological agenda to grow government," said Republican House Whip Eric Cantor of Virginia.

"Instead of praising themselves and blaming others, a greater focus on small businesses and smart solutions to reduce uncertainty and create jobs would be welcomed and is long overdue," Cantor said.

Tribune Newspapers reporter Don Lee and The Associated Press contributed to this article.

Discuss this story and others in our talk forums Most recent business talk forum topics:

More news talk forums: Local | Nation/World | Business | Health/Science | Computers/Technology

Note: In-story commenting has been temporarily disabled due to technical issues. We are working to correct the issue and will bring back this feature in the future. In the meantime, please use our talk forums to discuss stories.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.