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October 03, 2008

Job market outlook

The national unemployment rate for August was just released, and it showed the unemployment rate rising to 6.1 percent, the highest in 5 years. Look into your crystal ball. Will we continue to see jumps in the unemployment rate? Will it get worse before it gets better?

Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:

"Unfortunately, I think it will get worse before it gets better. Unemployment is what economists call a lagging indicator. That means that it continues to deteriorate even when the overall economy improves. For example, if you look at the last recession in 2001, that recession officially ended we now know in November of 2001, yet the employment market really didn't improve until 2003. And the reason, of course, is that employers want to make absolutely sure the economy is back before they start hiring additional people. So that said, if we look at today's economy and we take sort of a consensus forecast that the economy will not really pick up steam until next year, 2009, it will likely be late 2010 at the earliest before, unfortunately, we see a big improvement in the job market."

Posted by Dave at October 3, 2008 08:00 AM