Job growth may not curb unemployment rate: WHouse Feb 11 06:52 AM US/Eastern
A new White House economic forecast showed Thursday the US economy is set to start producing job growth this year at a rate of 95,000 per month, but that the unemployment rate will remain high. President Barack Obama's annual economic report to Congress said the economy is on the verge of pulling out of a period of steep job losses stemming from the worst recession in decades.
But the report also said that the unemployment rate may not come down much from the current level of 9.7 percent, and may even rise because of labor market growth and the return of more discouraged workers to the labor force.
The White House forecast, most of which was previously released with budget documents, calls for growth in gross domestic product of around 3.0 percent in 2010 and an average unemployment rate of 10.0 percent.
"Because projected GDP growth is only slightly stronger than potential growth, relatively little decline is projected in the unemployment rate during 2010," the report prepared by the president's Council of Economic Advisors said.
"Indeed, it is possible that the rate will rise for a while as some discouraged workers return to the labor force, before starting to generally decline. Consistent with this, employment growth is projected to be roughly equal to normal trend growth of about 100,000 per month."
Christina Romer, who heads the president's council, told reporters she expects the trend on job creation to turn position "by the spring."
The report projects more robust job growth by 2011, averaging a gain of 190,000 per month, to bring the average unemployment rate down to 9.2 percent for the year.
The report said that because of a huge economic stimulus and other measures, the economy is on a growth track again.
"Because of these and other steps, we can safely say that we've avoided the depression many feared," it said.
"Our economy is growing again, and the growth over the last three months was the strongest in six years. But while economic growth is important, it means nothing to somebody who has lost a job and can't find another. For Americans looking for work, a good job is the only good news that matters."
In his economic message, Obama renewed his call on Congress to pass a jobs bill that includes tax relief for small businesses and other measures.
Obama also said more needs to be done to bring down record budget deficits weighing on the economy.
"For growth to be truly sustainable -- for our prosperity to be truly shared and our living standards to actually rise -- we need to move beyond an economy that is fueled by budget deficits and consumer demand," the president said.
"In other words, in order to create jobs and raise incomes for the middle class over the long run, we need to export more and borrow less from around the world, and we need to save more money and take on less debt here at home."
The report comes days after data showed the US economy lost 20,000 jobs in January while the unemployment rate fell from 10.0 percent to 9.7 percent.
The latest official data showed the US economy expanded at a strong 5.7 percent pace in the fourth quarter, in a second straight quarter of growth after the worst downturn in decades.
