Economy grows but unemployment will stay high

US Jobs

2010 should see the US economy gather strength after a torrid last two years as we really start to see the benefits of Obama's economic stimulus fund. However the Federal Reserve has warned that unemployment is likely to remain high throughout the year.

In its latest forecast, the Fed said that the economy would expand between 2.8 percent and 3.5 percent in 2010, better than its previous estimate of 2.5percent to 3.5 percent.

Yet the unemployment rate is expected to remain between 9.5 percent and 9.7 percent in 2010, easing to 8.2 percent to 8.5 percent next year. President Obama has repeatedly said throughout the start of this year that many American families are still struggling to make ends meet.

Millions struggling

"Millions of Americans are still without jobs, millions more are struggling to make ends meet," said the president.

"It doesn't yet feel like much of a recovery. I understand that."

The US officially exited recession towards the end of last year but companies and consumers remain reluctant to expand their spending habits after the nation has been advised by experts and top officials to remain cautious as the US tries to avoid a "W"-shaped economy.

The most recent official figures showed that the US unemployment rate in January was 9.7 percent, slightly down from 10 percent in December, which has given people room for a little more optimism but the Fed themselves have insisted it will take "some time" for things to return to relative normality for the both the jobs market and the economy in general.

Job-creation schemes

"The pace of the economic recovery will be restrained by household and business uncertainty, only gradual improvement in labour market conditions, and a slow easing of credit conditions in the banking sector", the Fed predicted.

Job-creation schemes have been a priority for Washington, with $179 billion being spent so far on increasing government projects such as road-building schemes, job training initiatives.

In addition, $93 billion worth of tax cuts for both individuals and companies have been issued. 

Daniel Jones

Daniel is a Politics and Philosophy graduate from Cardiff University where he also worked as a section editor on the award winning student newspaper. After university he joined an IT support company where he was a B2B online writer. He loves anything to do with sport and joined GDS in July 2009.

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