High US unemployment projected despite Obama's jobs focus

Feb 1, 2010, 17:44 GMT

Washington - The White House acknowledged Monday that US unemployment will remain stubbornly high over 2010 despite President Barack Obama's new laser-like focus on reviving the labour market.

In its federal budget for the 2011 fiscal year, the White House projected the unemployment rate would be stuck at a quarter-century high of 9.8 per cent at the end of this year, down just 0.2 percentage points from the current 10 per-cent rate.

The labour market will continue struggling in the following years: The jobless rate will fall to 8.9 per cent by the end of 2011 and 7.9 per cent by the end of 2012, the White House predicted.

The figures are in line with most economists' estimates and mark a recognition by the Obama administration that its efforts to create more jobs in the US economy will take a long time to bear fruit.

The high jobless figures 'reflect the particularly severe toll that this recession has taken on the labour market and American workers,' said Christina Romer, head of the White House Council of Economic Advisers.

The stubborn unemployment rate comes even as the world's largest economy has begun recovering from its worst recession in seven decades.

Economic output grew at an annual rate of 5.7 per cent in the final quarter of 2009, according to an initial government estimate last week, the fastest quarterly gain in six years. The White House projected growth of 3 per cent over 2010 and 4.3 per cent in both 2011 and 2012.

Obama promised to make jobs his 'number one focus' during his State of the Union speech last week, answering critics that argued his administration spent too much time on other domestic priorities like health care over his first year in office.

Obama's 2011 budget, which would begin October 1, includes various tax cuts and spending proposals to encourage businesses to start hiring again.

The budget includes 100 billion dollars for job creation, including 33 billion dollars in tax cuts for small businesses and investments in infrastructure and clean energy. In total the budget includes some 300 billion dollars in tax cuts.