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Wednesday, October 13, 2010

Potential Job Explosion in 2011

As depressing as was Gallup's report last week that U.S. unemployment hit double-digits in September, Monday's National Association of Business Economists (NABE) job forecast for 2011 was even more depressing. The unemployment rate has exceeded 9.5% for the past 14 months, and NABE forecasts that it will remain at 9.5% or higher through the middle of next year -- and only ease to 9.2% at the end of 2011.

What this kind of forecast can't help but ignore is the potential for a jobs explosion in 2011. Gallup's polling shows that 38% of Americans say their company is understaffed. A Wells Fargo/Gallup Small Business Index poll found earlier this year that 34% of small business owners are hiring fewer people than they need because they are worried about revenues, cash flows, healthcare costs, and finding qualified employees.







This workplace understaffing implies that many American businesses remain in "survival" mode. If policy-makers can ignite any kind of economic spark that gives businesses a reason to grow, then new hiring could become an urgent competitive need. Pent-up job growth could literally explode.

Whether the Fed's additional quantitative easing (QE2) plans can provide such a spark remains unclear. The same is true of a lame-duck session of Congress as well as the newly elected Congress of 2011. What is clear, however, is that the NABE jobs forecast is going to be unacceptable to most Americans -- and if it is realized, the political fallout in the nation's capital will be even worse in 2012 than it may be in 2010.

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