Unemployment to be at least 10% through next year

July 15, 2009
Unemployment to be at least 10% through next year
Economic News and Information for Consumers

Do you think the unemployment picture is going to get better?  The FOMC says no, in fact, no improvement through all of next year.  Can you wait that long?

The economy isn’t quite recovering they way the Fed had hoped or expected.  Initially Obama had said that the stimulus package would prevent unemployment from rising above 8%.  That number is long gone as nationwide we hit 10% rather easily.  In some areas, like California, we have 13%, which when adding in part time workers and those that have given up looking for work should be closer to 16%.

Unemployment is largely affected by the retail market.  When people aren’t buying, jobs are lost, when jobs are lost, people aren’t buying.  It’s a nasty cycle that needs to be stopped through opening up credit markets and fixing the housing debacle.

Credit markets should have eased by this time but they haven’t because banks have held onto free government money instead of loaning to consumers as they were supposed to do.  This was another massive problem of lack of oversight.

Furthermore, banks are holding onto extensive inventories of foreclosed homes until the money they received through the TARP program also runs out.  Some sources believe this could happen later this year though that will differ from bank to bank.

When these problems are fixed, we’ll see employment numbers improve.  Until that time, they will likely continue to move upward.