U.S. unemployment picture looks grim for October and beyond
With the U.S. unemployment rate hovering near the double-digits and forecast to rise sharply for the month of October, the jobless picture is looking dim for the United States.While the economy is slowly climbing out of the depths of the latest financial crisis, unemployment rates are likely to take a number of years to return to pre-recession levels, and things could get worse in the near term before they get better.
Gallup, a polling organization, forecast that the government's jobless rate could rise sharply for the month of October -- from 9.6 percent to between 9.7 percent and 9.9 percent when it is released Nov. 5.
A closer look at the underemployment rate -- the percentage of part timers seeking full time work -- is also worrisome. It has not increased from 18.6 percent in mid October while the unemployment rate has risen, which is normally a good sign.
But that could also mean that some part time employees are losing their jobs and are not being replaced, or have become unemployed or dropped out of the workforce entirely, Gallup said.
For the long term, unemployment is forecast to decline, albeit at a painfully slow rate.
International Monetary Fund (IMF) Senior Economist Oya Celasun and Economist Evridiki Tsounta said the recovery in employment is likely to be slow, given the sluggish nature of the recovery in aggregate demand, which is held back by the lasting damage of the crisis on household and financial sector balance sheets.
Recovery is expected to be sluggish but will likely strengthen in 2012-13, so there are likely to be more meaningful declines in unemployment in those years and thereafter.
The IMF is less optimistic than many analysts, forecasting unemployment next year to be around 9.6 percent, while the consensus among most economists stands at 9.4 percent. It will likely drop below 9 percent in 2012 and slide to 8 percent in 2013.
That means that six years after the recession began, the jobless rate will still be much higher than it was before the downturn.
The bulk of unemployment is cyclical, due to low and uncertain demand going forward.
IMF staff analysis suggests that 1.5 percentage points of the increase in the unemployment rate is structural, due to frictions caused by skills mismatches and underwater mortgages -- mortgages that leave the homeowner with more debt than the home is worth -- and people not being able to move to where the jobs are, they said.
页:
[1]