The statistics collected over the past month have shown clear indications that the US economy is slowly getting back on track. Industrial activity is picking up, investors are moving into US markets once more and consumers are beginning to lose their fear of spending again. However, no matter what the figures and facts say about the improvement in the economy, the jobless are still no better off than they were a year ago.
More than 8 million jobs were lost during the recession, figures that were worse than any predictions made by economists. Employment opportunities continue to be far and few between as unemployment levels hold steady at very high levels. The current 9.7% unemployment is, according to experts, here to stay for a while at least. In fact, most experts predict that through 2010 unemployment will hover around 10% before any significant change is seen.
This is bad news as employment is typically a sound measure of economic conditions. Better employment opportunities mean more spending power in the hands of the consumers and this leads to more production, which fuels the economic growth further. In short, for the US to shake off the final effects of the recession an improvement in employment is critical. But this is simply is not happening.
There have been many views about why the normal scenario of more jobs with improving economy is not taking place in the US yet. Some believe that the recession was not gauged correctly and thus measures to tackle it were also not as potent as they should have been. Federal Reserve Chairman Ben Bernanke believes that the recession was far worse than it is believed.
This, combined with the fact that most companies were able to maintain decent productivity levels with huge staff cutbacks, has contributed to the slow pickup in the job market.
The disconnect between employment and economic recovery has prompted speculation on whether the traditional gross domestic product (GDP) analysis as a measure of economic conditions is still relevant. Some prominent economists have pointed out that the gross domestic income (GDI) may be a more accurate way to measure economy as it stresses on the income generated and not the spending in the economy. If this is indeed true, then the 6% spurt in annual GDI recorded in the 4th quarter of 2009 may well be a precursor to an improvement in employment soon.