The US economy is a consumption driven economy which in turn depends on optimal employment of all eligible citizens. But the global economic crisis has pulled down millions of job in the last one year, and the rate of unemployment has hit a 26 year high last month.
The rate of 9.7% unemployment has not been seen after 1983. Just two years back the unemployment rate was at 3% and it has climbed up sharply in the last two years due to increased job losses across automobile / finance / insurance / export oriented sectors.
The increase in unemployment would have been more pronounced, had the government not started pumping up billions of dollars on stimulus plans. The Obama administration has so far spent over 800 billion dollars for revival of banking / insurance and automobile industry. Obama administration has gone ahead with the first home buying incentive of up to 10% or 8000 dollars whichever is lower.
In spite of that scheme, the housing sector has not been able to see a reversal in the fortunes. Had the scheme not been in place, the housing sector might have faced a massive collapse which has since been averted.
The Obama administration still expects the unemployment rate to reach 10% plus in the coming months, due to further trimming of jobs in the private sector.
US unemployment hits 9.7%
August - 20 - 2009 - Thursday
