Forecast: U.S. Should Regain Almost All Pre-Recession Jobs By 2014

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Friday, November 16, 2012 Forecast: U.S. Should Regain Almost All Pre-Recession Jobs By 2014 ANN ARBOR - The U.S. economy has recaptured about half of the some 9 million jobs lost during the depth of the Great Recession, economists at the University of Michigan said Thursday, and if the economy continues at its admittedly sluggish pace, it should recapture almost all the remaining jobs by the end of 2014. The forecast outlined by Joan Crary, Daniil Manaenkov and Matthew Hall at the first day of the annual forecast summit held by the Research Seminar in Quantitative Economics at the U-M campus also forecast some federal tax increases and a reduced annual deficit by 2014, along with some increased federal spending. It also projected oil prices to remain at roughly the same levels. Also critical to the economy, the economists forecast that inflation will stay relatively low, as will interest rates. And extremely important to the Michigan economy, the forecast continues to call for auto and truck sales to grow through 2014. The U.S. forecast, along with projections on U.S. consumer sentiment and discussions of how factors like the summer drought's effect on food, were issued Thursday. On Friday, RSQE economists will release the forecast on 2013-14 on Michigan's economy. A slightly updated version of that forecast will then be given in January for the Revenue Estimating Conference. That conference will set the revenue totals Governor Rick Snyder must use in preparing the proposed 2013-14 budget he will deliver to the Legislature in February. Thursday's estimate comes just more than a week after President Barack Obama was re-elected. Crary said that during the election, observers and Obama's opponents had said no sitting president had ever been re-elected with unemployment as high as it was - it stood at 7.9 percent in October. But even with an underperforming economy, the voters did not view it as bad enough to deny Obama a second term. An estimated 9 million jobs were lost in the U.S. during the depth of the recession, which actually began in late 2007 and technically came to an end in late 2009. To date, the U.S. has seen some 4.5 million of those jobs come back. Critics have pointed out that many people working are now working part-time and for lower wages, but there has been hiring and that has helped keep the economy growing, if even at a slow pace. The RSQE economists forecast that, over the next two years, the U.S. economy will add another 4.3 million jobs, coming close to replacing all the jobs lost during the recession. They acknowledged that the pace of job growth has been frustrating and at times anemic, but overall they expected the U.S. to add 2 million jobs in 2013 and 2.3 million jobs in 2014. In terms of overall economic growth, the forecast projects that for 2012, the U.S. will see total economic growth of 2.1 percent (a year ago it had forecast growth of 2.4 percent for the current year). In 2013, the forecast expects the economy to grow at 2 percent and then by 2.6 percent in 2014. In terms of inflation, the forecast said in 2013 and 2014, inflation overall should be below the 2.1 percent inflation rate anticipated for this year. Interest rates should also stay relatively low, though with a stronger housing market, mortgage rates may start to inch up. Car and truck sales, which in 2012 should increase to 14.3 million units, should continue to increase and go to 15.6 million in 2014 with sales split evenly between cars and trucks. The forecast does include warnings, one of the most pressing being the federal fiscal cliff that Obama and Congress need to resolve before December 31. But the forecast does expect some increase in taxes in the long term that will increase overall receipts and help push the federal deficit down by close to 30 percent (from more than $1.1 trillion this year to $740 billion in 2014). Aside from that, the biggest worries remain the effect the world economy could have on the U.S. economy in the next several years, especially as the Chinese economy has slowed its growth and Europe may have drifted back into a recession thanks to the effect of austerity measures. This story was provided by Gongwer News Service. To subscribe, click on Gongwer.Com Author: Staff Writer Source: Gongwer News Service

Source: http://www.mitechnews.com/articles.asp?id=15124

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