Recovery In Sight, But Jobless

Although the recession appears to diminish, the unemployment rate should continue to rise and exeed 10% within a year. These forecasts give reason to fear of a slow growth and rising poverty, blurring a bit more optimistic message of Obama's administration. The persistence of high unemployment to the midterm elections of November 2010 and beyond could be a serious problem to the president and parliamentarian Democrats, already accused of squandering public funds. If the trend is not reversed, the government will lose its main argument to justify its expenditure, i.e. the promise to create jobs and improve the economic outlook.

Barack Obama has so far defended his economic policy - a plan of 787 billion dollars and record investment in health care, renewable energy, education and vocational training - as a necessary measure to stabilize the economy and create jobs. The White House continues to advise patience, although many experts believe that the unemployment rate is expected to exceed 10% in 2010 and it will take several more years before it returns to its level before the recession (about 5%). According to experts, the increase in the number of unemployed is expected to strain the state budgets, accompanied by an increase in child poverty and raise of the unemployment rate for black and Latin America up 20%.

"I find it astonishing that people do not worry about what remains to come," said Lawrence Mishel, president of the Economic Policy Institute. "We're dealing with a rate of structural unemployment that will cause enormous damage in many communities." Since the beginning of the recession in December 2007, the U.S. economy has lost nearly 5.7 million jobs. In recent months, the increase in unemployment has slowed down, markets are divided on the rise and the level of consumption has increased, raising hopes of a recovery. However, 345,000 jobs have still been destroyed last month.

Other factors that darken the picture. Unemployment remained at a high level several years after the end of the last two recessions in 1991 and 2001. Companies putting more and more time to re-employ the workforce and technological advances enabled them to be more productive with fewer employees. If all workers are affected by the recession, industry and construction are the hardest hit, affecting particularly the low-skilled workers and immigrants. However, these categories of toil more people back to work. In addition, the current recession, following the implosion of the real estate market, led to a virtual collapse of the financial sector and the automotive industry. Despite government intervention, many of the jobs in these sectors will not be recreated.

Finally, the importance of the unemployment rate does not bode well for consumer spending, which accounts for nearly 70% of U.S. economic activity. "The rate of unemployment has not reached its peak, it will last much longer," says Mishel prophesy. The political debate seems to suggest that the recession is behind us, but we still need to discuss ways out of the real crisis, i.e. to re-create jobs."

Source: Michael Fletcher, The Washington Post
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