by Alexander Cain
As we quickly approach New Year’s Day, there is no better time to reflect back on this current year and start making plans to tackle on the New Year. The main focus of this year was the anxiety of the economy. While the economy is showing signs of recovery, the road to recovery is still slower than expected. Many are still unemployed and may remain that way because their prospective industries and skills have, or are becoming, obsolete.
Others are forced to take lower salaried positions or temp positions just to remain in work. With the economy in a slow down and the private sector remaining cautious with its labor force, the government has intervened to spur the economy despite facing an ever increasing deficit. Withstanding the trying times, 2011 offers a mixed bag of hope: for some, the continued economic growth will spur more opportunities, but others face a tough road ahead as job demand has increased for those with higher education backgrounds and in certain industries. The best way to describe 2010 and the hopes for 2011 are the good, the bad, and the ugly.
The Good While we didn’t reach a full recovery of the recession in 2010, we were able to experience the first consistent signs of economic growth in the past three years. According to a recent USA Today report, we are experiencing a real GDP rate-an economic indicator measuring how many goods/service the country produces- of above 3% relative to early January. Another measurement, consumer spending is up relative to previous years. Bloomberg recently reported holiday sales jumping 5.5 percent relative to last year, the best performance in over five years. With consumers opening their wallets and spending their income again, the economy seems poised for a comeback in 2011.
The Bad 2010 was better than 2009 in many aspects of the economy, but it failed to meet many expectations. Many economists predicted a strong 3.5 percent real GDP growth for 2010, but even with a strong fourth quarter the United States is pacing around 3 percent. For many citizens, they might not even be feeling the economic growth as companies record higher profits, but still remain cautious about increasing their labor force. One of the major indicators of economic growth, unemployment, remains high. The Labor Department reported an unemployment rate of 9.8 percent, a seventh month high despite seeing growth in both consumer spending and real GDP.
The Ugly For those unemployed for the past few years because of the recession, there are signs this could be a permanent dislocation. One of the hardest hit industries- construction/real estate, isn’t expected to go back to pre-recession levels until 2014. Many construction workers will be displaced and because their skills aren’t transferable in growing industries such as healthcare and energy, they are facing a tough 2011. For others in industries such as manufacturing, they are permanently displaced as companies shut down entire plants and outsource labor to other countries. In these situations, workers have to struggle as they change industries.
With the economy recovering and the government examining ways to cut down the fiscal budget, unemployment and Social Security benefits are main discussion points. Many political analysts are expecting legislation focused on cutting unemployment benefits for those displaced by the recession. With the unemployed facing dying industries and lower benefits, 2011 could be a really ugly year. With 2010 nearly gone, 2011 offers a wide array of risk and opportunities.