Unemployment Could Still be High into '09

[dollardaze]

The low number of new car sales have American auto workers losing jobs. More can be expected as the numbers for June come rolling in.
Ford reports a 28% decrease in sales, 21% for Toyota, and 18% for General Motors. Manufacturers are likely to cut their production and lay off more workers.

The drastic fall in home prices have eliminated jobs for an extraordinary number of people, including bankers, real estate agents, constructions workers and furniture manufacturers. Lenders are tightening their standards because of the high loss in mortgages, which makes it hard for many U.S. citizens to get the credit they ask for. This credit is what has allowed consumers to spend, and without it the economy has lost about 70% of the money it needs for a boost.

Since unemployment has accelerated, and employers are slashing working hours for those people who are still working; the shrinking paychecks cannot cover the needs of the workers.

The reluctance of employers to create new jobs has marked the weak labor market until recently. Now however, economists say that the troubled economy will leave in place a combination of tight credit and few job opportunities perhaps well into next year. One economist says that it's a slow-motion recession. That in a normal recession, things kind of collapse and get so weak that you have nowhere to go but up. Now though, we aren't getting the classic negative 2 or 3 quarters. Instead, he expects 2 years of sub-par growth. Growth that is not enough to generate jobs. It's a chronic, rather than an acute pain. He goes on to say that he expects tepid economic growth and a shrinking labor market to persist through the fall of 2009.

Although the national unemployment has shown a climb of a full percantage point over the last year to 5 1/2% in May, it does not factor in people who do not have a job and have given up looking for one. Also the report does not count those people who have gone from full-time employment to part-time jobs. When those people are factored in, the "underemployment" rate climbs to 9.7%, up from 8.3% in May 2007.

One authority on the matter has predicted that the rate of unemployment will peak at 6.4% late next year before we see any improvement. Which means that this trend is only half completed. It has been said that the falling housing market and the credit crunch is still very much ongoing and more jobs will be lost in the finance, housing and construction industries.

The Labor Department will release it's report on the job market for June on Thursday. Most economists expect that report to show another 60,000 jobs lost, which would be the sixth consecutive month of decline.

[moneysense]

My question is where will the jobs come from then. If people arent spending money then why would workers need replaced?

Most of the places that are now laying people off are the big ticket deals, such as housing, new cars etc. What about all the 30 and under crowd that just havent worked and dont seem to be interested in doing so?

Are we looking at a possible swing to other types of employment for a lot of people?

We read every day about how bad the economy is, and how bad its going to be. We also read about oil prices being so high and most likely to go higher. But we dont read about anyone that has any kind of a plan to fix this situation that has gone so bad. And will most likely remain that way.

Those of us who are working are having a hard time making ends meet. What are the ones that have been laid off doing now? Where will help come from for them?

[pennypinch]

I bet unemployment will still be high in 2009. I really don't see things changing for the better before then. If anything, I think they may be worse. The government isn't doing anything to help things now, they probably won't be then either.

As you do moneysense, my husband and I both work. I have not one job but two and sometimes babysit to help out too. We still struggle day to day to get by. I cannot imagine how all of these people who are unemployed are coping with everything.

[moneysense]

I dont think that the unemployment thing will get better for a long time. Some of our factories have been sent out of the country, some have closed down, and more people are being laid off everyday.

Unless new jobs are made, where are all of these people going to work at? There arent a lot of choices left to people that are now unemployed, and the ones that want to replace their jobs may have to be retrained for something else, and where will the money for that come from?