Don't Expect Any Groundbreaking Proposals in Obama's Jobs Speech
U.S. President Barack Obama's jobs speech Thursday night will address one of the most critical economic factors affecting the country – but the content is likely to disappoint America's unemployed.
Last week's jobs report showed zero job growth in August, and the unemployment rate held at 9.1%, increasing pressure on Washington to deliver relief for the jobless.
But analysts warn not to expect any revolutionary new developments on how to improve the country's weak employment outlook.
"I don't believe we are going to be slack-jawed by the speech," Larry Sabato, director of the Center of Politics at the University of Virginia, told MarketWatch.
President Obama and the White House have only previewed some of the details. The president is expected to propose a $300 billion job creation plan delivered through tax cuts, infrastructure spending and state and local government aid.
President Obama faces strong opposition from congressional Republicans who vehemently oppose more government spending when the country is already more than $14 trillion in debt. He'll also face many skeptics who see small business hiring as the only way to successfully cut the country's unemployment rate.
Obama May Soon Join America's Unemployed
It may not be long before U.S. President Barack Obama joins the swollen ranks of America's unemployed.
A government report released Friday showed no job growth in August.
President Obama is scheduled to address a joint session of Congress Thursday night with his latest proposals on how to reduce the nation's stubborn 9.1% unemployment rate.
He faces numerous obstacles, including a glum economic outlook that has held employers back from hiring, public dissatisfaction with how he has handled the economy, and an uncooperative mood among congressional Republicans who have spoken openly of making him a one-term president.
At this point everyone in Washington realizes that high unemployment is probably Obama's greatest obstacle to re-election in 2012.
"Our nation faces unprecedented economic challenges, and millions of hardworking Americans continue to look for jobs," President Obama wrote in a letter to congressional leaders requesting time for the speech. "It is my intention to lay out a series of bipartisan proposals that the Congress can take immediately to continue to rebuild the American economy by strengthening small businesses, helping Americans get back to work, and putting more money in the paychecks of the middle class and working Americans, while still reducing our deficit and getting our fiscal house in order."
Jobs Picture Bleak
The Bureau of Labor Statistics data released Friday was almost uniformly bad, with most categories either holding steady or getting worse.
Although private employers added 17,000 jobs, equal losses in the public sector, mainly from local governments meant that net job growth for August was zero – something that hasn't happened since World War II.
New Obama Job Creation Plan Coming Next Month
With Small Businesses Sidelined, the U.S. Job Market is Headed for a Double-Dip
After showing some improvement over the past year, the U.S. job market is now beginning a double-dip.
The reason is simple: The number of start-up businesses has hit its lowest level since at least the early 1990s.
Indeed, small businesses are the main drivers of job growth and no amount of stimulus can compensate for their absence.
For instance, between the recession that ended in late 2001 and the start of the most recent recession in late 2007, businesses that employed fewer than 500 workers added nearly 7 million employees, according to ADP payroll services. Larger businesses cut nearly 1 million employees in that period.
Are You Worried About the Future of the U.S. Job Market?
The U.S. job market has improved since the unemployment rate's 10.1% high in 2009, but the sluggish pace of economic recovery has kept many workers jobless and discouraged.
The U.S. Department of Labor reported earlier this month that the country's unemployment rate in April rose to 9.0% from 8.8%. Employment in more than a dozen sectors hit four-year lows in April, and another 10 have gained little since hitting lows in the beginning of this year.
But it's not just a slow economic recovery that is leaving people unemployed. The U.S. job market is changing, as companies find ways to function with fewer workers and some shift operations overseas.
Zero Job Growth: Low Rates and High Deficits Aren't Helping U.S. Workers
When the government released its latest jobs report last week, economists were initially cheered because it showed that the nation's unemployment level had dropped much more sharply than anyone expected.
But that cheer immediately turned into concern when the report also revealed that the U.S. economy created only 36,000 new jobs in January. That's so far below the norm for this stage of an economic recovery that it would take us 10 years to put back to work all the folks who have lost their jobs since 2007.
In short, it's going to take a decade – and probably more – for normalized job growth to return to the U.S. economy.
Something has gone very wrong with the U.S. job-creation machine. Economists have been trying to solve this puzzle for more than 30 years.
And we found the answer.
Congress' Failure to Extend Unemployment Benefits Could Mean a Blue Christmas for 2 Million Americans
Nearly two million Americans are set to lose unemployment benefits between now and Christmas – the victims of a deadlocked Congress that's been unable to agree on how to pay for extending aid to the long-term unemployed.
Extended unemployment benefits began to expire at midnight Tuesday, cutting off the last lifeline of income and guaranteeing a blue Christmas for thousands of people already struggling to make ends meet.
Lawmakers are at loggerheads over whether to finance an extension with borrowed money, as they did earlier this year when benefits were interrupted for more than a month.
No Rest for the Weary: Unemployment to Remain High Through 2011 and Beyond
Stocks are up nearly 70% from their bear market lows. Corporate profits are rising. And the economy is expanding. Yet the unemployment rate continues to hover around 10%.
Neither President Barack Obama's $787 billion stimulus program, nor the U.S. Federal Reserve's quantitative easing has generated enough good news to convince companies to hire meaningful numbers of new workers.
Of the 8.7 million people who lost their jobs during the recession, more than 7.3 million are still without work. There are still nearly five job seekers for every job opening. In fact, adding in workers who are working part time but looking for full-time work and those who have given up looking all together brings the "real" unemployment rate to a staggering 17% compared to 16.5% last year, the latest government report shows.
The Jobs Market May Look Bleak, But Your Investments Don't Have To
There's no getting around the fact that the U.S. jobs market is bleak. Ultimately, though, it's a stark reminder that as investors, we should be looking abroad for maximum profits.
Indeed, investors must turn to countries where the number of people working is rising along with standards of living and consumption.
But that's not all.
There are a few companies that have been performing exceptionally well and are poised to bring investors some joy this holiday season. Before we get to those, though, let's take a quick look at the job market.