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Tuesday, March 16, 2010

Will the Underemployed Hold Out Hope?

It will be interesting to see how our measure of "hope for finding a new job" moves after Tuesday's statement from the Obama economic team.

Testifying before the House Appropriations Committee, Obama's top economic advisers lowered expectations for any significant decline in the nation's unemployment rate this year.

While they expect to see job gains "sometime this Spring," they say it won't be enough to push the unemployment rate much lower than where it currently stands until 2011.

So, what does such a forecast mean for the 19.8% of the workforce who are looking for work? Six in 10 of these underemployed Americans already tell us they are not hopeful about finding a job within the next four weeks. It is possible such a gloomy near-term forecast might reduce hope even further.

Our data show that a lack of hope has economic implications, just as lack of a job does. Despite having the exact same employment status, underemployed Americans who are hopeful about finding a new job soon are more likely to be satisfied with their standard of living and to say they are feeling better about their financial situation. They are less likely to report worrying about money yesterday and more likely to say they would be able to make a major purchase "right now" if necessary. These attitudes no doubt affect spending decisions every day, not to mention individual wellbeing.

But Team Obama also makes a case for holding out hope. In his testimony, U.S. Treasury Secretary Timothy Geithner urged lawmakers to support the administration's latest efforts to spur job creation, which the statement says "would improve the outlook for output and employment if implemented."

For now, workers aren't reporting significantly more hiring than at this time last year, though these same Gallup data do suggest the pace of job loss is slowing. Later this week, we'll report how underemployment is looking in the first half of March and once all of our March data are in, we'll see what impact, if any, Tuesday's forecast has on the level of hope among the underemployed.

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