With the latest US unemployment figures higher than 10%, one might think that the employment prospects for 2010 are rather bleak. Unfortunately, there is no simple response to such a statement, at least not in the interim.
Why?
Even though the jobless rate is expected to remain high throughout next year (in the mid- to high- 9% range) the key take away is that it will first stabilize and then gradually start to drop. Stabilization in employment numbers like the unemployment rate is important, particularly for economists who would like to be able to identify clear trends and this is expected to happen in 2010.
Perhaps more important is that while the unemployment numbers will remain high, it does not mean that people will continue to lose jobs at the same pace as they have been. In fact, we are seeing the number of people claiming unemployment teetering off -- within the past month, we saw the lowest weekly number of filers in over a year. This is good news. If you previously thought you were going to lose your job but you have held out until now, the odds are slowly moving into your favor. Over the next two to three years, there will be more and more evidence that our employment is safe, with the unemployment numbers dropping to normal levels by the end of those three years.
But here's the good news. For those of us fortunate to have some security in our jobs, we can actually expect a raise or bonus next year. While nearly one in every two employers froze salaries and bonuses in 2009, less than one in eight expect to have to freeze raises or bonuses in 2010. Now, nobody should expect these raises and bonuses to floor us (on the positive side), but again the point here is more to show that employment prospects are turning around.
So, while the numbers are bleak by a purely economics view, they are rather promising. This allows people to continue to repay debt and avoid bankruptcy. And if the bankruptcy numbers follow the same stabilizing and slowing trends, then credit risk should also diminish, making it more affordable for people to buy consumer goods and durable goods. With more people buying, credit costs should start to drop, making debt repayment happen quicker.
