The U.S. economy is “coming out of an incredibly deep hole” and the unemployment rate will remain at or above 9 percent this year, said Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York.
“The level of activity, even with the good growth numbers we’ve been getting, remains very depressed,” Feroli said today in an interview on Bloomberg Radio with Tom Keene. “It’s going to be a really long slog,” he said, echoing an assessment yesterday by former Federal Reserve Chairman Paul Volcker.
Feroli said he doesn’t expect the jobless rate to fall below 9 percent until early next year. Unemployment probably stayed at 9.7 percent for a fourth straight month in April, according to a Bloomberg News survey of economists ahead of a May 7 report from the Labor Department. The rate reached a 26-year high of 10.1 percent last October.
“It could take four years, if not longer,” for the job market to recover the more than 8 million jobs lost since the recession started in December 2007, Feroli said.
Americans have benefited from a longer work week, suggesting many part-time employees are being granted full-time status, Feroli said. That can “generate a lot of labor income for the household sector,” he said. “A lot of consumer spending is being supported by an increase in hours worked.”
Feroli estimates payrolls expanded by 145,000 jobs in April, with about 85,000 coming from private employers. Many of the government hires will be temporary workers for the census, he said. His estimate compares with a median increase of 189,000 in a Bloomberg survey of economists.
Feroli also said it’s “harder for housing to get a whole lot weaker” and that inflation is “below what most people would say is optimal.” A stronger dollar, in response to the financial crisis in Greece, “is not helping the economic output here,” he said.
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