Unemployment still hangs over an improving economy
Unemployment under President Barack Obama has remained high for the longest period since the Great Depression. Despite a slowly improving job market, the millions of Americans without jobs underscore weakness in the recovery, drag down consumer spending and still roil the nation’s politics.
Wall Street has had its jitters but the stock market remains high, consumer confidence has improved and the housing market is making a solid comeback.
Yet, while economic conditions change, much remains the same.
On Friday, the government will release its monthly jobs report, and economists predict that U.S. employers added 165,000 jobs in June. That’s fewer than in May and far short of the number of new jobs needed to push the unemployment rate down significantly from its current perch at 7.6 percent.
Unemployment has dropped from a high of 10 percent in October 2009. It also is the last consequence of a recession to show improvement in a recovery. But the jobless rate has remained at or above 7.5 percent for 53 months, a period that has left an unusually large number of people out of the workforce for so long that some of them likely will never work again. Nearly 12 million people are searching for work, and millions more are underemployed in involuntary part-time jobs.
The rate will take time to bring down, adding pressure on the economy and creating political problems for Obama and his Democratic allies in Congress. Moreover, experts say the rate could plateau at a higher level than the 4.7 percent unemployment in place before the recession hit in 2008.
The Federal Reserve last month issued an optimistic forecast that the jobless rate would drop to between 6.5 percent and 6.8 percent by the fourth quarter of next year.
But the Fed has been overly optimistic before; in 2009 it projected unemployment would hit between 6.7 percent and 7.5 percent at the end of 2011. Instead, it remained at 9 percent for most of the year before dropping to 8.5 percent. It also has had to revise other subsequent projections upward.
Likewise, some forecasts have been too pessimistic. The nonpartisan Congressional budget Office projected in February of 2012 that unemployment would remain above 8 percent until 2014.