People who have been eager to find a new job so they can get their credit score and other personal financial details back in order may be disappointed by the slow pace of unemployment relief projected for the coming year.
In a recent joint statement to the House Appropriations Committee, Treasury Secretary Timothy Geithner, Council of Economic Advisers Chair Christina Romer and Office of Management and Budget Director Peter Orszag said that job creation is likely to amount to 100,000 per month for the rest of the year.
The problem with that figure is that it is not considered high enough for the economy to start significantly replacing the millions of jobs that were lost in the course of the recession. Still, the economic officials expect the job creation rate to reach 200,000 per month by next year, and 250,000 per month in 2012.
The modest expectations for job growth this year suggest that the unemployment rate is unlikely to fall much beyond its current 9.7 percent rate. Some economists have warned that the rate could back up toward 10 percent before falling again. Another issue to consider here is that unemployment data often overlooks millions of discouraged workers who have given up seeking jobs or who are working part time to make ends meet.
Expectations for the gross domestic product are at the moderate level, with a growth rate around 3 percent projected for the fourth quarter of 2010. For 2011 and 2012, the government is envisioning a GDP increase in the 4.3 percent neighborhood.
"Typically following a recession, we see increases in productivity, temporary employment, and the length of the workweek before employment begins to recover. For the most part, developments in recent months have been following this pattern. Productivity growth has surged; temporary help employment has risen for 5 consecutive months; and the workweek has been generally rising," said the three economists, adding that job growth is likely to begin "sometime this spring."
Looking ahead, the unemployment rate is likely to continue contributing to elevated credit card default and mortgage foreclosure rates. This is bad news for consumers who had been hoping to get some relief in the foreseeable future. Until the labor market does improve, tight budgeting and trying to keep up with at least all minimum monthly payments will be the order of the day for millions of people.