Economists expect joblessness will start to ebb in 2010Economists believe joblessness in the U.S. will begin to slowly subside in 2010, according to MSNBC.com. However, they also believe consumers will remain cautious about spending.
The unemployment rate reached 10.2 percent in October, which is the highest in 26 years. About 9 million people currently receive unemployment benefits.
In a survey conducted by the National Association for Business Economics (NABE), economists predicted net employment losses will bottom out in the first quarter of 2010.
"Although the recovery has been jobless so far, that should soon change," says Lynne Reaser, NABE's president and chief economist at Point Loma Nazarene University, San Diego. "Within the next few months, companies should be adding instead of cutting jobs."
Still, hiring is not expected to increase quickly. About 7.3 million jobs have been lost since December 2007, and about 61 percent of economists surveyed say they do not expect a complete recovery of those jobs until 2012. In fact, they believe the unemployment rate will remain high, averaging 9.6 percent in the fourth quarter of 2010.
Economists also said the federal deficit is their biggest concern during the next five years, followed by the high unemployment rate. They expect inflation will remain low and the dollar will remain weak.
Although economists expect sluggish consumer spending, they also expect housing rebounds. Housing starts are expected to increase 36 percent and residential investment 9 percent in 2010, which would make it the first year since 2005 that the housing sector contributes to overall growth.
Additionally, businesses are expected to increase their spending; corporate profits are expected to gain 12.4 percent in 2010.
The economy grew at a 3.5 percent pace during the third quarter, which signals the economy is starting to recover from recession. Economists predict 3 percent real gross domestic product growth in the fourth quarter of 2009, as well as 3.2 percent growth for 2010. All economists surveyed predict the stock market will grow in 2010.
Date : 12/1/2009