Job Growth Is Likely Next Year. The Question Is: How Much?

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Unemployment could keep rising next year even as employers add more than 100,000 new jobs per month, economists say. The last few months have seen a flurry of economic stimulus measures: The Federal Reserve has begun its purchase of $600 billion in bonds, and Congress has passed -- and President Barack Obama has signed -- a broad extension of tax cuts, including a surprise decision to cut the Social Security withholding tax by 2%. But will any of those measures create enough new jobs to finally get the economy moving?

Among economists, the consensus is that the job outlook will improve very slowly in the first half of 2011 -- but that unemployment numbers could keep rising through the summer. If they're right, the jobs conditions could spook consumers, who account for the bulk of economic activity, up to 70% by some measures. Businesses have shown no eagerness to start hiring in such an uncertain environment.

Thousands of New Jobs on the Way

Kenneth Goldstein, a labor economist at the Conference Board, an executives association, expects an average of 125,000 to 150,000 new jobs to be created each month next year. He's raised his forecast from just 30 days ago, when he estimated 100,000 new jobs would be created each month, largely due to the Obama Administration's deal to extend the Bush-era tax cuts and lower the withholding tax.

Still, he warns that long-term interest rates could slow that growth. "The [economic] package is going to help, certainly, but it's offset by the big run-up in long-term interest rates," Goldstein says. The yield on the 10-year Treasury bond rose to 3.48% Tuesday, up about 1 percentage point from a month ago. That means it now costs homebuyers and businesses much more to borrow money than it did even a few weeks ago.

However, Joel Naroff, president of Naroff Economic Advisors, a Holland, Penn.-based forecasting firm, is much more sanguine about the job outlook. "I actually think we're on the cusp of a clear turnaround," Naroff says. He thinks job creation could grow to 150,000 to 200,000 new jobs per month by the summer -- and as many as 250,000 a month by year-end.

Are Buyers Liars?

Where does this difference in opinion come from? Part of it has to do with varying interpretations of recent economic data, especially Tuesday's downbeat report on consumer confidence. The Conference Board's consumer confidence index declined to 23.5 from 25.4 in November, which surprised many economists in light of the relatively positive retail sales numbers for the holiday season.

The declining confidence suggests that consumers were hunting for end-of-the-year bargains during the holidays, which would be a temporary -- not a long-lasting -- phenomenon, Goldstein says. But Naroff says he lends more weight to what consumers are actually doing -- spending more -- than to what they say about their confidence.

"If job growth continues to increase at 10,000 a month, by summer you're looking at 175,000 to 200,000 a month," Naroff says. "That assumes consumers are getting more comfortable." Still, he acknowledges that the private sector added only 50,000 jobs in November, which was substantially below expectations.

With the inflation rate stagnating at only 1.2% and hourly wages rising 1.6%, employers have little incentive now to add jobs, Goldstein says. "If it's going to cost you 1.6% more to hire that person and you're only going to get back 1.2% on whatever you sell, even with a productivity dividend it's awfully hard to see where you're going to make money on the deal," he says.

Some Jobs Are Gone for Good

Uncertainty about the cost of Obama's health care package, adopted earlier this year, also is keeping employers cautious about adding workers, Goldstein adds.

He expects the unemployment rate to grow to 10.2%, from the current 9.8%, in the first few months of the new year. As more long-term jobless workers rejoin the official unemployment numbers, the rate could remain high through the middle of the year, he adds.

Goldstein predicts that unemployment will remain above 6% as late as 2014 or 2015. In fact, employment may never return to earlier levels, he forecasts, because businesses found it was profitable to cut jobs. "Some of those folks in their 40s and 50s may not realize it, but they are not going back to work, period," he says.

While economists disagree about the exact speed of jobs creation next year, most expect at least some growth, however slow. Any number of possible surprises, of course, could change that. For example, if sharply spiking oil prices reduce the amount people drive -- and shop -- the economic outlook and jobs growth could decline.

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carriekrueger@email.com

This is a great time for job seekers to revitalize or restart their job search. Even small bits of good economic news are cause for celebration and a reminder to be out there looking. If you are out of work, remember, you do not need thousands of jobs, only one. People are being hired every day. Position yourself to be one of them. Here is help with developing a job search strategy for 2011: http://blog.jobfully.com/2010/12/job-search-strategy/ I hope this is helpful in creating a thoughtful and strategic approach.

Carrie Krueger
www.blog.jobfully.com

January 03 2011 at 1:31 PM Report abuse rate up rate down Reply
crissylea

Doesn't matter where you get your money if the government keeps allowing these oil companies to rape us. Every penny I get goes in my gas tank. We're paying $100 a barrel for oil and selling them food for about $7 a barrel. Let them learn to grow food in the desert or stop allowing them to overcharge us for oil because they think we can't live without it. If everyone will carpool, take one less trip, curb the teenagers driving for the fun of it, demand will come down and the price will come down. This, along with allowing the banks and big corporations to rob us of our home equity, pensions, etc. is exactly what put us here in the first place. When we are all too poor to buy their goods, they'll realize that their attempts to wipe out the middle class have hurt their pockets the most. It is disgusting. We call ourselves a free nation...yet we are slaves to the rich, inbred politicians whose decisions are only in their interests. It makes me sick to watch them give piddly unemployment so we can eat, just so they can keep millions in tax breaks for themselves...oh well...now I've put myself in a funk!

January 02 2011 at 7:30 PM Report abuse +1 rate up rate down Reply
wade53part

Thousands of jobs are not going to help the job market in 2011 or any other year. People need to branch out and take what is out there to give the economy time to turn around. Taking more from the government is not the answer nor is freezing some of the government employees pay going to turn around a spending spree that this administration has been on.

January 02 2011 at 6:27 PM Report abuse -1 rate up rate down Reply
pinus1

Charles Wallace, I think you nedd to rethink this stuff you wrote.

The 600B being dumped into the economy by the private corporation called the Federal Reserve will, as always, benefit them. For the working middle-class, once the back bone of America; you know Charles, the people who made this country so great will only see massive inflation. Look at gasoline, look at fresh fruit at the grocery store.Once, not long ago, fruit was sold by the pound. Today at most markets it is being sold by the piece. I saw this when Santa wanted to bring the good little boys and girls tangerines for Christmas. They were 3 for $2.00. A loaf of bread has been off the charts for two years. Please tell me Charles how the average American family will be able to eat just a good diet and afford to pay for that? Remember, not only gas prices are going up but also related things like electricity, heating; either oil and gas.

Jobs Charles? If you are counting only the current unemployed that means just the number of people who are on welfare. That does not factor those who are not elligible or refuse to take it. Your count does not factor in the new high school and college graduates who will be wanting work in 2011.

My estimate is that there will be at least five more years of this and worse. Would you like to bet me Charles Wallace?

January 02 2011 at 6:14 PM Report abuse +3 rate up rate down Reply
davandsher

Clinton ( Democrat )signed the NAFTA agreement which sent jobs overseas.

January 02 2011 at 6:05 PM Report abuse +4 rate up rate down Reply
davandsher

Richard, If the Democrats have their way, you may not be eligible for Social Security benifits till you're 87

January 02 2011 at 6:03 PM Report abuse +5 rate up rate down Reply
jerzfox

Solution: Impose extra taxes for every job a corporation sends overseas. Give a tax break for every job a corporation creates in the US.

January 02 2011 at 5:34 PM Report abuse +7 rate up rate down Reply
2 replies to jerzfox's comment
pinus1

jerzfox,

You have nailed it. I would include a tax, aka customs,or duty, on all the junk being imported from China. I would do that tomorrow.

January 02 2011 at 6:17 PM Report abuse +1 rate up rate down Reply
Sharon

My sentiments exactly!!

January 02 2011 at 10:19 PM Report abuse rate up rate down Reply
karensfineart

This may seem a minor consideration to desperate folks needing jobs to keep their homes, and I respect that and pray that the Federal Government wakes up and creates another WPA/CCC type program to utilize all our skills and experience doing the work that goes undone, as Republicans will not hire Americans in this country and no millionaire tax cuts will encourage them to do so, despite the propoganda. However, my last job as a temp at the Census opened my eyes to all the millions of Americans over 50 who want to work, many until they can't physically do so anymore, and no one wants to hire them, no way, no how. I see such a waste of talent and feel sorry that so many desire to contribute and not be seen as freeloaders or "on the dole", as the Republicans love to paint them, and they can't find anything. Volunteer work isn't the same, and most people cannot raise the capital for a business of their own, let alone have the business skills to survive the first few years in this economy. When you are older, many of the physical jobs like someone suggested - weeding, chores and the like - while valuable and necessary, are beyond the physical capabilities of most. It's hard to realize when you are 20-30, but after a while, your body tells you to either slow down a bit or do less strenuous physical work. So realistically, only the younger folks could follow the "create a micro business" idea, and not even all of them. Another thing that hasn't come up to my knowledge is a discussion of what will happen when the Republicans who raided our Social Security funds to fight all those immoral wars we can't win and keep the military industrial complex happy and "on the dole"! succeed in raising the eligibility age for Social Security higher and higher, yet no one wants to hire you after 50, and supposedly, those over even 40 won't ever work again??? By the way, if the reason they don't want older workers is that they think they won't remain long, it is just the opposite - it's the younger ones who tend, now more than ever, to job hop. I am so glad that I am not starting out in my 20's now, and I genuinely feel for younger folks, especially those with minor children, because they are getting gypped in comparison to the opportunities that should be there for them.
PS That's not "whining" - that's the truth!

January 02 2011 at 5:34 PM Report abuse -3 rate up rate down Reply
universallite

No one tells me that I cannot do anything. Being a woman I did machine setup for
20 years. I was told to my face that no woman will ever do setup. You do create
your own reality. You can be valuable at any age. If you can make money for the
corporation or for whatever other area you wish to enter then you can be employed.
Do not listen to "can't' anything. You are an Amer - I CAN.

January 02 2011 at 4:13 PM Report abuse +4 rate up rate down Reply
customlawnil

The article should have been titled: "Democrates lose lock-down in Congress - job growth likely to increase in 2012"

January 02 2011 at 3:27 PM Report abuse +4 rate up rate down Reply