CNN Money has published reports that the national unemployment rate continues to climb. Currently the figure stands at 6.7%, and theres no sign of greener pastures in the coming months.
The announced
loss of 553,000 jobs in the month of November alone comes along just as America faces the longest recession since the Great Depression of the 1930s, and estimates have this particular recession extending far longer with effects far greater than that of the 1980s. Global Insight has predicted that unemployment will reach 8.6% by the end of 2009.
Some people are even starting to question whether we should be calling it a recession these days. Weve gone from recession into something that looks more like a collapse, says Ian Shepherdson of High Frequency Economies.
Job losses are expected to continue until other foundations of the American economic system right themselves. The middle-class has taken the hardest hit in the process, as 70% of the job loss has been reported out of the retail, hotel and restaurant industries.
Its a prime example of how expendable income is tightening and people are focusing on the necessities rather than frivolous spending. Those that once carried out the roles of big spenders are now forced to hold their assets, and the companies that used to benefit from consistent daily spending are consequently forced to bite the bullet, most notably by cutting back on man power.
The bigger picture boils down to a chicken-and-egg quandary. As Michael Darda, chief economist at MKM Partners, says,
As goes the service sector, so goes the U.S. economy, thus continuing the downward cycle of both.
But the situation isnt completely dire. Americans workers have pulled themselves back up after taking hard hits in the past, and the
incoming President is positive we can do it again.
Part of the $500 billion stimulus package Barack Obama plans to implement calls for $100 billion to be invested into the redevelopment of roads, bridges, and levees around the country, a decision that he predicts will generate over 2 million new jobs for the unemployed.
Obamas plan would spark the biggest
investment in the nations infrastructure since President Dwight Eisenhower launched the interstate highway system fifty years ago, which also focused on getting people back to work. His vision is that of a two-year nationwide effort to spark job creation and lay a foundation for a growing economy through public labor. Well put people back to work rebuilding our crumbling roads and bridges, modernizing schools that are failing our children, and building wind farms and solar panels, offered the President-elect.
Obama is reporting that $57 billion worth of projects can be launched within the next 120 days, and the nations governors have another $80 billion worth of projects set to follow that initial program.
In addition, Democratic Rep. James Oberstar of Minnesota recently devised a $45 billion proposal called Rebuild America, an outlined plan to cover 100% of the cost for projects that Obama would like to see put into action. According to Oberstar, $18.25 billion would go towards bridge and highway restoration, $9 billion would go towards developing environmental infrastructure, and $6.5 billion would towards public transit systems.
He envisions the effects of this package generating over $220 billion in economic activity and creating or sustaining more than 1.25 million American jobs.
Past has revealed Americas struggle to come out of recessions quickly due to lack of job creation among other factors. Says Lakshman Achuthan, managing director at the Economic Cycle Research Institute, What we cant afford is to have a jobless recovery like we had the last two times. My fear is not a depression, my fear is we end up with a weak recovery we really cant afford.
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