Where will the new jobs come from?
November 2008 was witness to 533,000 jobs being lost in the United States. This represented the biggest single month reduction in jobs in over 30 years and brought the unemployment rate to 6.7% – the highest level it has reached since 1974. These statistics should not come as a surprise and just confirms what many of us already know; we are in a recession that is likely to last through, at least, the first two quarters of 2009. Job losses will likely continue to mount and those individuals already out of work will likely find it increasingly difficult to find a new job.
Hence, the question becomes where will the new jobs come from? President-elect Obama has pledged to initiate the largest infrastructure program since the 1950s in an effort to create more than 2 million jobs. The infrastructure projects will likely deal with upgrades to roads and schools. These projects will create opportunities for many of the unemployed, especially those who have lost jobs in the manufacturing and technology sectors. Along these lines, companies that focus on areas such as steel, cement, construction and computer networking, to name a few, will also stand to benefit from this ambitious infrastructure spending program.
However, many of the other unemployed will not have the skill set and/or desire to participate in the infrastructure program and will likely either wait out the recession until their job of choice returns to the market or move into new and expanding sectors such as alternative energy. Individuals tend to spend less when they are either out of work or doubtful of their employment future. This does not bode well for the short-medium term Gross Domestic Product (“GDP”) outlook as consumer spending now accounts for over 70% of GDP.