Unfortunately the current labor market is very weak and firms are still unwilling to hire the more than 7 million jobless Americans out there. However there is optimism in the recovery of firms, where third-quarter 2009 productivity rates increased gained 8.1% and labor hours increased. The first step for firms are to increase their current employees' hours before even considering hiring more. Hopefully these trends continue to move in a positive direction to decrease the rate of unemployment.
Tuesday, February 2, 2010
White House Sees U.S. Unemployment Rate Averaging 10% This Year
The Obama administration has forecast continued GDP growth by 2.7% this year however provided grim news, informing the nation that forecast unemployment rates will still remain around the 10% mark it currently lies around. This forecast is 0.2% higher than the initial forecasts predicted in August however in the State of the Union, President Obama emphasized the necessity to create jobs.
Subscribe to:
Post Comments (Atom)
We have all learned that GDP by itself cannot fully describe the current state of an economy. While there is constant GDP growth the unemployment rate is still twice as much as it should be. I think that the reason for this is that inflation just started happening in November. If inflation continues to increase the real wages will decrease and this will boost the job market bringing down the unemployment rate closer to its natural rate. The problem with all I've said is that at this point firms would rather increase their current employees' hours instead of hiring new ones. In order for that to change the government need to find the right incentive based approach to get firms to start hiring again.
ReplyDeleteThere is the new proposed $5000 tax credit for hiring a new worker. Do you think that will have any effect on unemployment?
ReplyDeleteFor many companies, $5000 is probably nothing compared to the new training, salary, and benefit expenses of hiring a new employee. I'm not so sure this incentive is going to produce much change. According to other articles I've been reading, all of the job stimulus plans combined will only keep unemployment stable at 10%, which is only .5% lower than expected unemployment without any government interference. I think something else needs to happen to make up for the lost jobs.
~Cassie
$5000 better than nothing, right?
ReplyDeleteIf a firm see and expects demand for goods and services increase in future and their demand for labor increases, they will consider hiring more. Often, unemployment happens in low-wage jobs most, so I think they require not much training. Of course, the firm would carefully calculates whether benefit is higher than the cost for hiring.
Besides, if the unemployment rate remains unchanged until the end of the year, then GDP is expected unchanged, too. Somethings need to be done here and I'm looking forward to better policies from the government.