“I don’t believe it’s too late to change course, but it will be if we don’t take dramatic action as soon as possible,” Mr. Obama said at George Mason University in Fairfax, Va., adding, “A bad situation could become dramatically worse.”
Indeed, the Labor Department published a report Thursday before Mr. Obama’s speech showing the number of people continuing to seek unemployment benefits has risen sharply, indicating laid-off workers are having a harder time finding new jobs as the recession enters its second year.
The Labor Department reported the number of people continuing to claim jobless benefits jumped unexpectedly by 101,000 to 4.61 million. That was above analysts’ expectations of 4.5 million, according to the Associated Press, and the highest level since November 1982.
Unemployment figures due out Friday, according to the AP, are expected to show a net total of 500,000 jobs lost in December. That would bring total job losses last year to 2.4 million, the first annual job loss since 2001 and the highest since 1945.
Job cuts are expected to send the unemployment rate to 7 percent in December, up from 6.7 percent the previous month and the highest level since June 1993. The unemployment rate also will be released Friday.
President-elect Obama’s economic team and Democratic congressional leaders are working to finalize the stimulus package proposal, which is expected to total nearly $800 billion. They hoped to have the package approved by Congress by Jan. 20, Inauguration Day. However, that timeline has slipped into at least mid-February.
Mr. Obama asked Congress to work with him “day and night, on weekends if necessary” to pass a plan within the next few weeks so that it can be ready for his signature shortly after he takes office.
The package is expected to include tax cuts for businesses and middle-class workers, money to assist states with Medicaid and other costs, and a large share for infrastructure building, investments in energy efficiency and a rebuilding of information technology for health care.
“At this particular moment, only government can provide the short-term boost necessary to lift us from a recession this deep and severe,” Mr. Obama said.
Even with government stimulus, economists believe the unemployment rate will keep climbing, according to the AP, hitting 8 to 10 percent by the end of 2009. Mr. Obama’s economic advisers estimate that a $850 billion recovery package would lower the jobless rate to about 7.4 percent and create 3.2 million jobs by the first quarter of 2011.