President Barack Obama’s top economic advisers offered a cautious forecast on Thursday that U.S. job gains for 2010 will average 95,000 a month, with analysts expecting hiring to expand by spring.
In a conference call with reporters on Wednesday, Christina Romer, the head of the White House Council of Economic Advisers, said the administration’s projection is below the consensus of private Blue Chip forecasters, who envision a more optimistic monthly average of 116,000 jobs.
“We’re very much in the range of other forecasters. Going forward, we expect that to pick up, we think it’s very important that it pick up strongly, because it is what ultimately will put Americans back to work,” Romer said.
The administration’s downbeat 95,000 monthly jobs projection follows a similar cautious forecast offered with the president’s proposed fiscal 2011 federal budget on Feb. 1. Romer and budget director Peter Orszag then projected that unemployment would remain high, at 9.8 percent late this year and 9.2 percent at the end of 2011.
“These job projections are very reasonable, but they are also very disappointing since they imply the unemployment rate will remain very high for a very long time,” said Larry Mishel, the president of the Economic Policy Institute, a liberal research group. “This is because we need to create at least 100,000 jobs each month in order to absorb new workers and keep the unemployment rate from rising. It suggests that policy is not being aggressive enough to drive down unemployment.”
The council projects that employment gains would average 190,000 monthly in 2011 and 251,000 in 2012. That’s more in line with the 4.3 percent annual growth forecasts for those two years that the White House envisions. Those growth rates, however, are considerably rosier than private consensus forecasts.
The council’s annual economic report, released Thursday, explained that since growth will not be much higher than its potential, “relatively little decline is projected in the unemployment rate during 2010. 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.”
Another reason for a continued high unemployment rate, the council report said, is the huge jump in productivity ? worker per-hour output. Companies are doing more with fewer workers. Given their uncertainty about the future, employers are likely to remain cautious about hiring.
The council report said that, “Employment growth is unlikely to be large enough to reduce the employment shortfall dramatically in 2011.”
The projections are likely to give ammunition to proponents of new efforts to stimulate the economy and create jobs. Congress is trying to reach a bipartisan agreement to provide more aid to states, tax credits to employers and perhaps even a holiday for employers from paying Social Security taxes on new hires.
The report is in many ways an evaluation of administration economic policy. This year, Romer said, it carries historical value given the unprecedented challenges facing the new administration.
“I think inherently it’s special because this has been a year of such incredible economic challenge. What the president had to deal with since the minute he took the oath of office is enormous,” Romer said. “I think it does inherently make this volume important.”
Treasury Secretary Timothy Geithner released a statement late Wednesday on the first anniversary of the release of the administration’s Financial Stability Plan.
“At the time, with America in a deep recession, it did not matter if you were a company large or small, a family trying to buy a house, a car or even to put your kids in college; loans were not available,” Geithner said, noting the progress made over the past 12 months in part because of the administration’s policies.
He added that, “access to credit is improving and the costs of borrowing for businesses, consumers, homeowners, and state and local governments have fallen sharply. In addition, we have achieved this progress at much lower cost than anticipated. By encouraging private capital solutions rather than relying on public funds, the expected cost of stabilizing the financial system has fallen by more than $400 billion. We expect it will fall even further.”
(c) 2010, McClatchy-Tribune Information Services.
