High unemployment, deficits plague US in 'Obama 2.0' era
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With the mid-term congressional election around the corner and wide prospects that the Republicans might gain a bigger say on the Capital Hill, economists held that the U.S. slackening economy would continue trundling along amid challenges including high unemployment rate and deficits in the "Obama 2.0" era.
STRUCTURAL, CYCLICAL UNEMPLOYMENT
Various polls revealed that the U.S. citizens were most concerned about the stubbornly high unemployment rate issue this year, as the world's biggest economy slashed 8.5 million jobs during the worst recession since the Great Depression.
"The high unemployment in the United States is both structural and cyclical, and is likely to continue for many years, unless the US changes dramatically its domestic and international economic policies," Xiao Geng, director of the Columbia Global Center in East Asia, told Xinhua.
Data from the U.S. Labor Department showed that the unemployment rate stood at 9.6 percent in September, and the monthly figure was never lower than 9.5 percent this year to date.
Experts noted that financial and housing sectors, which created the boom and bust in the last economic cycle, had not regained their firm footing yet.
Friday figures revealed that the U.S real gross domestic product (GDP) in the third quarter gained 2 percent, slightly higher than the 1.7 percent pace in the second quarter. But it was not robust enough in many economists' views to fill jobs gap, while residential and nonresidential fixed investments sill remained sluggish.
Moreover, structural unemployment problem also loomed large after the financial crisis and longest economic downturn in decades.
It is essential to consider the extent to which structural factors may be contributing to elevated rates of unemployment. For example, the continuing high level of permanent job losers may be a sign that structural impediments, such as barriers to worker mobility or mismatches between the skills that workers have and the ones that employers require, are hindering unemployed individuals from finding new jobs, U.S. Fed chairman Ben Bernanke said on Oct. 15.
"The recent behavior of unemployment and job vacancies--somewhat more vacancies are reported than would usually be the case given the number of people looking for work--is also suggestive of some increase in the level of structural unemployment," Bernanke added.
"The unemployment situation remains bad. The unemployment rate may creep up a bit in coming months as the economy produces new jobs, but not at a fast enough rate to absorb new workers. The rate will definitely come down in future years, but only once we have growth of 3 or 4 percent annually," Douglas Elliott, a fellow at the Brookings Institution, told Xinhua.
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