Economic recovery failing to create jobs

13:05, March 30, 2010      

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It's a mystery that has puzzled even US Federal Reserve Chairman Ben Bernanke: if the US economy is growing rapidly, why isn't it creating jobs?

The hotly anticipated US employment report for March may muddle matters even more. Economists polled by Reuters had widely divergent views, from a 400,000 job increase to a small net decline.

However, the once-a-decade Census requires the taking into account of hundreds of thousands of temporary workers, who are expected to account for the bulk of the growth.

While the jobs pay well ($22 an hour in San Francisco; $11.75 in Ames, Iowa), they last only a few months.
Bernanke and his central bank colleagues are well aware that Census hiring will skew readings, and have cautioned that unemployment will likely remain near 10 percent all year.

Although the downturn was the deepest since the Great Depression, the job losses were even more severe than most forecasters had predicted based on models that compare economic growth and employment.

Bernanke offered his two possible explanations in response to a question from a member of Congress last week, the deeper-than-thought recession, and some greater-than-estimated productivity gains.

But whatever the reason is, the jobless rate is expected to inch up again later this year since discouraged workers may decide to join the labor force by starting to look for work again, and the government stimulus spending and the Fed's support will be wound down.

Source: Global Times
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