January 2010 brought unexpected results – a decline in the unemployment rate from 10% to 9.7%. This is the lowest that the unemployment rate has been since August. The decline was welcomed by President Obama, who said the numbers are a "cause for hope, but not celebration." The unemployment report on Friday stated that 8.4 million jobs vanished in the Great Recession. If the United States is lucky, economists say we could be able to get back 1.5 million jobs this year. Economists also say for the job market to return to anything like normal, it will take three to four years at the least.
Employers got rid of 20,000 jobs last month, according to a separate survey of businesses. Last month's report offers hope that employers soon will start adding jobs. Excluding the construction industry, the whole private sector added 63,000 jobs. In previous months the shrinking labor force had been holding down the unemployment rate. John Silvia, chief economist at Wells Fargo, said this time that was not the case. "It simply was, people found jobs," said Silvia. Paul Ashworth, an economist at Capital Economics, said the economy had been growing for six months, but the payrolls are still shrinking. "Based on what we've seen so far, we think it is fair to characterize this as another jobless recovery," said Ashworth. President Obama cautioned that the data will continue to shift back and forth for months.
Seasonal adjustments have a big impact on the January unemployment rate. Manufacturing added jobs for the first time since 2007. It gained 11,000 jobs, the most since April 2006. Retailers added the most jobs since November 2007, coming out at 42,100. Temporary help services continued into it's fourth month of gains by gaining 52,000 jobs. Those numbers could mean future hiring, since employers usually hire temp workers before permanent ones. The average hours in the work week increased from 33.2 to 33.3. That shows the possibility of new hiring, since employers are increasing hours for their current employees. Part-time workers that are looking for full-time jobs, but can't find them, fell by almost 1 million. That lowered the rate of “underemployment” from 17.3 to 16.5.
Jobs still remain scarce in this recovering economy. In the October-December quarter the GDP (Gross Domestic Product) rose by 5.7%. That's the fastest pace in six years. Economists say businesses are reluctant to add workers because they're unsure if the recovery will continue after government stimulus measures fade in the spring. They also say some employers may be holding back because of the health care reform debate and the expiration of some Bush administration tax cuts at the end of this year. Public concern about unemployment has forced President Obama and Congress to shift their attention to jobs and the economy instead of health care reform. On Monday the Senate will begin working on legislation that would give companies a tax break for hiring new workers. Obama's budget plan that he released this week projected unemployment will still be very high, 9.8 percent, by the end of the year.
I'm very happy unemployment unexpectedly dropped in January. I fully understand President Obama's statement about how the unemployment rate will continue to shift, and I hope others understand that too. I get so mad when people jump at him when unemployment rates go up. Things must get worse before they can get better! Of course this news may come as more of a 'joy' to some than to others. Coming from a home that has experienced many months with unemployed parents, hopefully you can see why I had chosen this topic and am calling this great news. About Obama's projected unemployment rate for the end of this year, I would not be surprised. I, though, am projecting a lower amount, around 9.4. I also think that the .3% drop in unemployment was because more people found jobs, not the shrinking labor force. I won't ask for every month to get lower and lower, since that is mostly impossible in these circumstances, but I'll take a guess and say that 5 or more of the months in 2010 will show a growth in employment. Fingers crossed, I hope February will help lower the unemployment rate also.
Click Here for a video on the unemployment drop. I would have added it or added another picture, but it's only letting me add one picture. (?)
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