Sunday, November 28, 2010
Economy sees growth, but unemployment stays high
Even with a growing economy, the unemployment rate does not appear to be reaching normal rates of 5.5 to 6% anytime soon. This year the economy grew at 2.5%, more than expected by the Fed. This higher than expected growth may be due to stronger U.S. spending by consumers and higher overseas sales. Still, the Fed does not project unemployment to decrease significantly for a few years. The latest projections show just under a 7% unemployment rate by the year 2013.
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This article shows unemployment as the lagging indicator it is. This lag is why we will see other parts of the economy such as growth, effected before unemployment changes. This also relates to what was discussed at the economic outlook conference this year and last year.
ReplyDeleteIt is disturbing that unemployment continues to remain so high despite the economy's positive growth overall. The fact that unemployment will continue to remain high can slow down recovery even further just through the psychological implication that consumers will still spend less because they feel like we are still in a recession even though we aren't.
ReplyDeleteThe article and the data do prove how unemployment is a lagging indicator in economic performance. Even with the marginal increase in spending and demand in the last few quarters it is understandable that companies are still uneasy about the long term viability of this growth and aren't hiring readily to meet these increases or preparing for further growth in the future.
ReplyDeleteIt is slightly disturbing that the Fed isn't a little more positive in its economic outlook in light of recent economic growth over predicted and expected levels and this outlook is bound to have an impact on consumer and corporate confidence thereby lowering maximum growth potential and in turn helping maintain some of these levels of unemployment.
Lastly, one consideration that needs to be made is the fact that many more people now are looking for jobs and not finding employment as compared to years before this recession. Many more women are seeking jobs now as the previously earning member of the family may have lost their job, many baby boomers and other cohorts are also seeking employment now due to their depleted 401K plans. Thus since the number of people seeking jobs have increased these unemployment figures are being constantly strained by additional burdens and this makes comparisons between rates before, during and after the recession slightly tricky to evaluate just at face value.