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The US economy continues shedding a large number of jobs. March's unemployment report provided yet another dismal view on the state of our economy. In March the economy lost 663,000 jobs; including the revised figures for January the total number of jobs since this recession started has risen to 5.1 million. The unemployment rate now sits at 8.5%; however, this number masks the true extend of the job picture. If one includes those working part-time because they can not find full-time work, or those who have given up looking for work because they are unable to find it, the total unemployed plus underemployed jumps to 15.6%. Every state in the Union reported has seen an increase in unemployment; labor department figures at the state level for January show that 16 states have unemployment rates of 8% or more, and 4 states have rates in the double digits. Perhaps one of the few silver linings is that while the labor report was lousy, since December monthly job losses have improved slightly. Furthermore, the funds from the stimulus package are starting to get disbursed, and that should have a positive impact when it comes to job creation and some job preservation.
The stimulus plan is intended to provide a jolt to the economy that the private sector is unable to do at the present time. Tax cuts and tax credits are designed to spur spending by letting people keep more of their money. Investments in infrastructure, education, agriculture and others whether directly coming from the federal government or through the states will result in jobs being created in those areas, and in turn generate secondary demand for jobs to service the recently employed. Furthermore, by providing funding for unemployment benefits, and delivering assistance to the most needy through food stamps and other social programs the stimulus package aims to put money in the hands of those that will spend it immediately and provide demand in the economy (of course, in addition to helping maintain the fabric of society in areas where unemployment has become pervasive).
This increased demand, or the stabilization of spending/consumption, plus the new funded programs will generate new jobs and stop people from being laid off in other areas of the economy. While nobody expects the stimulus to turn the economy overnight, the hope from its proponents is that it will provide a catalyst for an eventual recovery to come later in the year or next year. As important as the actual number of jobs created directly by the program is to change the psychology of people that has turned considerably pessimistic and generating a negative rather vicious cycle.
As the program is implemented and jobs are created, this page will track: who is hiring, where, what type of jobs. It will also track actual job creation versus expectation.
The initial hope as outlined by the President was to create, or avoid loosing, 3 to 4 million jobs over the next two years. These goals are based on the assumptions put forward by economist in the Obama team. The Job Impact of the America Recovery and Reinvestment Plan lays out the assumptions made by the team. The changes on the stimulus resulted in some changes to the estimates; using the same methodology the White House published an analysis on the impact of the stimulus plan by congressional district; this table provides a summary by state, while the original document is found here. Nevertheless, it is worth pointing out that the margin of error for the estimate is very large, so there is no way to determine precisely how many jobs will be saved or created by the stimulus plan.
Perhaps more important than estimating correctly the number of jobs, is making sure that the funds disbursed find their way into the economy rapidly. While the timelines for appropriation of funds are very aggressive, the ability of federal, state and local governments to spend the funds rapidly is very much suspect. The Congressional Budget Office (CBO) put forward an analysis of the original version of the House bill (click here for the CBO analysis document). One can debate each one of the assumptions made, the main argument made by the analysts that historical spending in the programs funded has taken a much longer time than the two years anticipated by the government is one worth taking notice.
One of the biggest recipients of ARRA funds, the Department of Energy has announced a restructuring in the way it disburses loans and loan guarantees and chooses where to invest. These changes are meant to expedite how the department moves the funds coming from the ARRA. The plan calls for the first loan guarantees to be approved by early summer, and for 70% of the ARRA funding to be disbursed by the end of 2010. The DoE put out a press release detailing the changes. This is evidently good news; the DoE's previous experience disbursing loan guarantees, or rather not disbursing the loan guarantees that had been appropriated by Congress in 2005 had concerned many observers on the ability of the DoE to make use of the large amounts of funding made available by the ARRA. If the DoE is in fact able to keep its goals to rapidly spend the funds provided, there should be jobs for the taking in the areas of renewable energy, energy efficiency and the modernization of the grid.
JobsintheMoney, a job search site for accounting and finance professionals, published an interesting article on the potential jobs created by the implementation of the Financial Stabilization Plan. Given the significant changes in regulatory requirements, and risk compliance measures, accountants, financial and credit analysts, portfolio managers, quantitative analysts, and others bank operations finance professionals are expected to be in demand.
The government has released the $27 billion destined to highway infrastructure projects. States have 120 days to contract out these projects. Therefore over the next few months there should be an increase in the demand for construction jobs around the country. Take a look at the "Highway Infrastructure Funds by State" page, to find out what each state will get, and the link to the state budgets (for those states that have them ready), to find out what projects are expected to be funded.
Information on this page is provided courtesy of TrackTheStimulus.com. More detailed information on the stimulus can be found on that site. All rights reserved.