US Unemployment Could reach 9% in 2009
598,000 jobs were lost in January, and, according to projections, that's not the end of the bad news. Indeed, even a successful stimulus package would be unlikely to turn around the downward trend until late in 2009, with US unemployment possibly reaching as high as 9%.
The amount of Americans out of work will probably grow. The labor market lags behind economic output, and with the U.S. economy widely expected to contract in the first half of the year, the unemployment rate could reach 9.0%. Even with the best-case scenario of an economic turnaround in the second half of 2009, the labor market wouldn't see an improvement at least until the end of the year.
Meanwhile, Congress continues to hammer away at the stimulus package:
A group of moderate Senate Democrats with a few Republicans agreed to slash roughly 12 percent from the $937 billion (634 billion pound) package, which Democrats had hoped would usher in new spending for projects ranging from health care to education.
To reach that deal -- pegged at about $827 billion -- $40 billion in aid to states was nixed as was $16 billion for school construction, among other spending. But it still differs from the $819 billion bill that passed the House on January 28.
The differences will have to be ironed out in negotiations between the two chambers.