The United States Conference of Mayors has painted a bleak economic picture for President Barack Obama as he begins his administration.
The conference's new “Metro Unemployment Forecast” reports that 128 metropolitan areas have reported jobless rates of at least 7.0 percent — and the news only gets worse from there.
“The Recovery and Reinvestment Plan can best achieve its goal of jump-starting the economy and setting the stage for strong future economic expansion by explicitly targeting metro areas,” the report says. “That is where there is pain now, where there are productive resources ready to be put to use, and where public investment can have the greatest bang for the buck.”
As for the new president’s “adopted” hometown of Washington, it’s pretty much at home on the unemployment hit parade.
Last month, the Bureau of Labor Statistics reported that 37 states and the District of Columbia recorded over-the-month unemployment rate increases.
Over the year, jobless rates were up in 49 states and the District of Columbia.
What’s more, the conference reported that general unemployment will get worse before getting better, rising across the nation’s metro areas in 2009.
As for now, the slim good news is but a blip on the big screen, with only five metros escaping net losses this year and just one that will add more than 200 jobs on net.
The District of Columbia’s may be, with other sister metros, on a distressing unemployment uptick, but the New York metro area outstrips all in the jobless sweepstakes, suffering the largest job drop, totaling 181,000 — including more than 50,000 in financial services as Wall Street retrenches.
Meanwhile, notes the conference, Los Angeles will lose 164,000 as the Southern California economy continues to implode after the bursting of the housing bubble.
Down the road, unemployment will rise to above 10 percent in 70 metros, “including the recently booming Riverside-San Bernardino, and in long struggling Detroit and Cleveland.”
Runners-up include Los Angeles, Denver, and St. Louis among the 105 metros with joblessness above 9 percent. Meanwhile, 297 metros will see jobless rates rise by more than one percentage point in 2009.
Metros Essential to Recovery
The conference emphasizes that metro areas are essential to national economic recovery, with the nation’s 363 metropolitan areas home to 86 percent of U.S. employment and 90 percent of wage income.
“They are the key drivers of the nation’s economic performance. Without the economic recovery of metro economies there can be no U.S. recovery,” the report says.
The conference projects that 85 percent of the job losses during this recession will occur in metro areas. Significantly, 83 percent of unemployed workers in the nation live in metro areas.
December marked the 12th consecutive month of job cuts, and the cumulative payroll decline now stands at more than 2.5 million. The drafters of the Conference report believe that is just halfway to the total job loss anticipated during this cycle.
And the beat goes on . . . and on.
The trend of growing unemployment nationwide has no real end in sight.
Employment fell nearly 500,000 a month during the last four months of 2008, and the conference expects similar losses through the first quarter of 2009.
Job loss is not a phenomenon that exists in a vacuum, reports the Conference. Shrinking gross domestic product (GDP) is right there in the mix.
Real GDP growth is expected to have dropped nearly 5.6 percent in the fourth quarter of 2008 — its worst performance since 1982. The near-term outlook is not good either, with another 5-plus percent drop in real GDP slated for the first quarter of 2009.
Indeed, the recession, which began in December 2007, is expected to last 18-24 months, longest in the post-war era, with the second-largest peak-to-trough drop in real output.
A return to solid growth is at least a year away, report the drafters.
Significantly, metro areas contribute 90 percent of the production of goods and services that make up GDP. Investment in metro areas lowers the costs of doing business — stimulating further business activity and economic growth.
In fact, 94 percent of U.S. economic growth over the next 20 years will occur in metro areas.
In other findings: The unemployment rate has jumped to 7.2 percent, reaching a 15-year high. The conference sees the unemployment rate rising above 9 percent by early 2010, the highest level since the early '80s.Through the six months ending in November (the most recent data point), 41 states suffered payroll cuts, led by Arizona and Georgia. Forty-nine states have experienced unemployment rate increases during the past 12 months, 36 of those by more than one percentage point. The conference expects that 36 metropolitan areas currently in positive territory for the decade will end up below their 2000 level as a result of job losses during the next four quarters. That will bring the total number with job losses this decade to 129, more than one-third of all metropolitan areas. In addition to the 93 metros registering negative job growth for the decade, 131 more have experienced job gains that have not kept pace with the increase in the U.S. working age population. The Great Lakes and Northeastern states have experienced the weakest employment growth, with not a single metro in Wisconsin, Illinois, Indiana, Michigan, Ohio, New York, New Jersey, or the New England states generating job gains as fast as growth in the working-age population. In the high-tech centers of California’s Bay Area and Silicon Valley, most metro economies remain well below their 2000 peaks, as they have never regained the jobs lost in the 2001dot-com bust. In the Pacific Northwest, not even stalwart Seattle and Portland have managed to generate job growth commensurate with the growth of the U.S. working-age population, and they are declining now.
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