EconomicCrisis.US

Investors have been nervous recently about whether the U.S. Federal Reserve may be sending out clues that interest rate increases are coming.

If they’re hoping to get more clarity from Fed Chairman Ben Bernanke this week, they are likely to be disappointed.

The Fed last week increased the rate charged to banks on emergency loans, which markets took as a sign that tighter credit across the economy may be the next step. Since then, Fed officials have been saying they’re not sure when borrowing costs for consumers and companies could also rise.
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The unemployment rate in the U.S. unexpectedly dropped to 9.7 percent in January, indicating the labor market may be poised to climb out of its deepest slump since World War II.

More than half a million Americans found work, a Labor Department report showed today in Washington, helping push the jobless rate to the lowest since August. A separate survey of employers showed payrolls declined by 20,000 as construction companies and state and local governments cut back.

Manufacturers hired more workers for the first time in three years, expanded hours and boosted pay, which may lift consumer spending and sustain growth. Revisions to previous data increased the number of jobs lost in the recession to 8.4 million, adding impetus to the Obama administration’s push for fresh government measures to boost employment.
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Nouriel Roubini, the New York University professor who anticipated the financial crisis, says the outlook for growth remains “very dismal”. The White House economic adviser, Lawrence Summers, says the economy is still mired in a “human recession”.

Speaking at the World Economic Forum in Davos after the US reported the fastest growth in six years, the comments underscored concern that emergency measures to rescue banks and fight the recession may be soon withdrawn.

“The headline number will look large and big, but actually, when you dissect it, it’s very dismal and poor,” Professor Roubini said after a Commerce Department report showed expansion of 5.7 per cent in the fourth quarter. “I think we are in trouble.”
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Even when the U.S. labor market finally starts adding more workers than it loses, many of the unemployed will find that the types of jobs they once had simply don’t exist anymore.

The downturn that started in December 2007 delivered a body blow to U.S. workers. In two years, the economy shed 7.2 million jobs, pushing the jobless rate from 5% to 10%, according to the Labor Department. The severity of the recession is reshaping the labor market. Some lost jobs will come back. But some are gone forever, going the way of typewriter repairmen and streetcar operators.
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