Extended Period’ of Unemployment

When govt officials are openly pessimistic, what comes is usually worse than their concerns were. The real unemployment rate is higher than 9.7%--it's closer to 18-19%. 1 out of 5 workers can't find work. Pets to become emergency meals? Tune in and find out.

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Obama Aides See ‘Extended Period’ of Unemployment
By Rebecca Christie and Mike Dorning

March 16 (Bloomberg) -- U.S. employers won’t hire enough workers this year to lower the jobless rate much below the level of 9.7* percent reached in February, three Obama administration economic officials said today.

The proportion of Americans who can’t find work is likely to “remain elevated for an extended period,” Treasury Secretary Timothy F. Geithner, White House budget director Peter Orszag and Christina Romer, chairman of the Council of Economic Advisers, said in a joint statement. The officials said unemployment may even rise “slightly” over the next few months as discouraged workers start job-hunting again.

“We do not expect further declines in unemployment this year,” the officials said in testimony prepared for the House Appropriations Committee. They predicted the economy would add about 100,000 jobs a month on average -- not enough to bring the jobless rate down substantially.

Today’s projections are in line with the 10 percent average unemployment forecast for this year in last month’s budget plan. Christopher Rupkey, chief financial economist at Bank of Tokyo Mitsubishi UFJ Ltd. in New York, said the administration’s language risks damping expectations for a recovery.

“They need to work on the message, and right now the message is that there is not a lot to be hopeful about,” Rupkey said. “Warning about a slow jobless recovery can help make it a reality.”

Growth Outlook

Geithner, Orszag and Romer reiterated the administration’s forecast that the economy would grow 3 percent this year, as measured by comparing fourth quarter growth in gross domestic product. Growth is projected to rise to 4.3 percent in 2011 and 2012, and inflation probably will remain low, they said.

“The worst now appears to be behind us,” the officials said. “However, the country faces significant and ongoing challenges: high unemployment, the need to build a new and stable foundation for prosperity in the years and decades ahead, and a medium- and long-term fiscal situation that could ultimately undermine future job creation and economic growth.”

The three urged Congress to pass Obama Administration job stimulus proposals including extended unemployment benefits, aid to state and local governments and tax breaks for businesses that hire new workers.

They argued tax benefits for businesses that add new workers would have a large impact in the early stages of an economic recovery.

‘Particularly Effective’

“The current situation -- where for many firms the question is not whether to hire but when -- is one that may make such programs particularly effective,” they said.

The officials said projected federal budget deficits, which the administration forecasts at more than $1.5 trillion for 2011 and over $751 billion for 2015, “remain undesirably high.”

“Deficits matter. Ours are too high; they are unsustainable,” Geithner said during testimony. “The American people, along with investors around the world, need to have more confidence in our ability to bring them down over time.”

The officials put the greatest blame for the high budget deficits on “years of poor decisions” during the administration of George W. Bush, citing enactment of the Medicare prescription drug benefit and income-tax cuts without corresponding budget savings to pay for them.

“If these two policies had been paid for, projected deficits -- without any further deficit reduction -- would be about 2 percent of GDP per year by the middle of the decade, and we would have been on a sustainable medium-term fiscal course,” they said.

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Geithner Warns Unemployment Will Stay High in 2010

By BRUCE KENNEDY
Posted 2:35 PM 03/16/10 Economy

U.S. Treasury Secretary Timothy Geithner and other top economic officials in the Obama administration say that, while they expect some improvement this spring, 2010 will probably remain a rough year for Americans looking for work.

In testimony before the House Appropriations Committee on Tuesday, Geithner read a joint statement -- which he prepared with Christina Romer, chairwoman of the president's Council of Economic Advisers, and Peter Orszag, director of the White House's Office of Management and Budget -- warning that the nation's unemployment rate "is likely to remain elevated for an extended period. The forecast projects that in the fourth quarter of 2011, the unemployment rate will be 8.9%, and that by the fourth quarter of 2012, it will be 7.9%."

Geithner called the current unemployment rate of 9.7% "unacceptable by any metric." He testified that it usually takes the creation of more than 100,000 jobs per month to bring the unemployment rate down; the administration foresees job creation averaging 100,000 for the rest of 2010 -- but doesn't expect it to substantially exceed that. In fact, Geithner said, the jobless rate might even rise slightly over the next few months, as unemployed workers attempt to return to the labor force.

However, he said, the Obama administration's actions have kept the United States from slipping into a "second Great Depression."

"The worst now appears to be behind us," said Geithner. "However, the country faces significant and ongoing challenges: high unemployment, the need to build a new and stable foundation for prosperity in the years and decades ahead, and a medium- and long-term fiscal situation that could ultimately undermine future job creation and economic growth. The big problems we face today were all years in the making, and it is our responsibility to address them without delay."