Friday, January 9, 2009

Unemployment Rate Now 7.2 Percent And Rising

The U.S. Labor Department just released the latest jobs report, and—surprise!—it wasn’t pretty. For the first time in the history of the report, there were back-to-back monthly job losses in excess of 500,000—584,000 jobs lost in November, followed by 524,000 jobs in December—bringing the total for 2008 to 2.6 million—the largest yearly drop (by number) since 1945.

"We have a bigger economy now, but even on a proportional basis, the last months have been the worst since [1945]," said Kurt Karl, head of economic research at Swiss Re, according to CNNMoney . "It's just an enormous acceleration of job losses."

It doesn’t end there: In addition to unemployment, there is an increasing number of under-employed workers. The under-employed rate jumped to 13.5 percent, up from 12.6 percent, which is the highest level on record since measurement began back in 1994, according to CNNMoney.

Experts don’t envision things turning around anytime soon either. Tig Gilliam, chief executive of Adecco Group North America, a unit of the world's largest employment firm and Karl both expect about another 1 million jobs to be lost in January and February before the declines begin to shrink to about a 200,000 level in June. Both said stimulus will help, but they doubt that infrastructure jobs will have as quick of a boost as lawmakers hope, according to CNNMoney.

Obama is attempting to enact an economic stimulus plan that will create or save 3 million jobs. In addition to major tax cuts for businesses and consumers, the plan also calls for huge investments in infrastructure. This could help put to work the legions of unemployed construction workers, although experts think that benefits wouldn’t be heeded until the end of the year. Even if that is the case, "Putting money into highways won't by itself end the recession, but it will put a lot of skilled workers back on job," said Ken Simonson, chief economist for The Associated General Contractors of America in a CNNMoney article.

It is difficult not be pessimistic about the employment prospects for Americans, "We're seeing a complete unraveling of the labor market and are on track for getting beyond 10 percent unemployment," said Lawrence Mishel, president of the Economic Policy Institute in a CNNMoney article.

It is hard to envision the government allowing unemployment numbers to surpass 10 percent, but unless they act quickly it is a definite possibility. I think Obama will do everything he can to prevent unemployment from spiraling out of control, but will it ultimately be enough?

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