Although the American economy has shown improvement in housing and manufacturing in recent months, economists and the Federal Reserve expect the unemployment rate to reach 10 percent by the end of the year. Forecasts predicted the unemployment rate would only rise to 9.5 percent, up from 9.4 in the last monthly report.
“High unemployment rates are going to be with us for quite a while,” Michael Feroli, an economist at JP Morgan Chase, told the New York Times. “It’s going to be a long, long time before we see 6 percent or 7 percent unemployment.”
The unemployment rate has risen throughout 2009, but the rate of increase has slowed considerably compared to the rapid increase in job losses seen earlier in the year. In January, the economy lost 719,000 jobs, more than three times the number lost last month.
Watch a NewsHour report and discussion from Feb. 6 on the Janurary job numbers, which were later revised:
The slower pace of job losses suggests that while the figures are still grim, the economy may be turning a corner.
In minutes from an August meeting of the Federal Reserve Board of Governors, the group agreed that the economy was improving, but that job losses would continue.
“Incoming data and anecdotal evidence had strengthened their confidence that the downturn in economic activity was ending and that growth was likely to resume in the second half of the year,” according to the minutes.
The unemployment rate is much higher if laid-off workers who have stayed in part-time jobs or have given up looking for a new job are included. The “underemployment” rate is 16.8 percent, the highest since 1994.
The Obama administration, which pushed through a $787 billion economic stimulus package in February intended to encourage job creation, have cited analysts who estimate that the package of tax cuts and spending has created or saved 500,000 to 750,000 jobs to argue that the policy is contributing to a rebound.
Vice President Joe Biden touted the stimulus in a speech this week.
“The recovery act has played a significant role in changing the trajectory of our economy, and changing the conversation in this country,” Biden said. “Instead of talking about the beginning of a depression, we are talking about the end of a recession.”
A total of 6.9 million Americans have lost their jobs during the current recession, which began in December 2007. In the latest round of job losses in August, layoffs were particularly heavy in sectors such as construction and manufacturing. The financial sector, hard hit by a financial services collapse a year ago, also pared 28,000 jobs last month.