US Unprepared for Double-Digit Unemployment Rate
The US unemployment rate could rise into double digits by next year despite President-elect Barack Obama’s proposed stimulus package, according to Oxford Analytica.
The chair-designate of Obama’s Council of Economic Advisers, Christina Romer, on January 10 estimated that the unemployment rate could peak next year at 8.8-11.0%, in the absence of Obama’s proposed economic stimulus package.
Romer estimates that the stimulus plan will create at least 3 million new jobs. However, given that employers are likely to slash payrolls by at least 5.0 million over the course of recession (a figure that could go much higher) and that 5.4 million US residents are already drawing unemployment insurance, ‘mass unemployment’ is likely to create serious economic and policy challenges through 2010, OxAn says in UNITED STATES: Unemployment will surge through 2010.
“While New Deal-inspired infrastructure spending will help to reduce unemployment among blue collar workers, and redress decades of underinvestment in public works, it leaves one major challenge unaddressed: unemployed middle-class professionals. Most of these individuals have had little experience of unemployment, and may face significant challenges in retraining. New Deal-model retraining programmes are unlikely to help them.”
While increased infrastructure spending may be apposite, Washington appears unprepared to deal with the welfare and retraining challenges of mass unemployment.
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