Wednesday, October 21, 2009

Higher Jobless Rates Could Be “New Normal”

Some economists are shedding a new and interesting light on the economic recovery and the future of job losses by saying it could be the “new normal”. They assert that we cannot expect to recover from this recession like we have from those before because of heavy losses in the banking and automobile industry. Check out the following article on the “new normal” from the Associated Press.

Even with an economic revival, many U.S. jobs lost during the recession may be gone forever and a weak employment market could linger for years.

That could add up to a "new normal" of higher joblessness and lower standards of living for many Americans, some economists are suggesting.

The words "it's different this time" are always suspect. But economists and policy makers say the job-creating dynamics of previous recoveries can't be counted on now.

Here's why:

• The auto and construction industries helped lead the nation out of past recessions. But the carnage among Detroit's automakers and the surplus of new and foreclosed homes and empty commercial properties make it unlikely these two industries will be engines of growth anytime soon.

• The job market is caught in a vicious circle: Without more jobs, U.S. consumers will have a hard time increasing their spending; but without that spending, businesses might see little reason to start hiring.

• Many small and midsize businesses are still struggling to obtain bank loans, impeding their expansion plans and constraining overall economic growth.

Continue reading at Yahoo News…

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