Thousands of people waited in line for two hours or more to enter this job fair in New York City. The Federal Reserve says more people will lose their jobs this year. (AP Photo/Seth Wenig)

Federal Reserve Chairman Expects Job Losses to Increase
Says government must take strong action to improve outlook

Hard times are here for workers. Times may not return to normal for at least three years.

Jobs are getting harder to find in the United States of America. The number of people who lost their jobs kept growing in the first weeks of 2009.

The nation’s official unemployment rate for January was 7.6 percent. The U.S. Labor Department said the rate surged by a half of a percent in just one month. The rate was 7.1 percent in November.

One important forecast predicts the rate will keep getting worse in 2009. The Federal Reserve Bank said February 18 that the rate could be as high as 8.8 percent by the end of this year.

The normal unemployment rate is considered to be around 5 percent. The Federal Reserve said it does not expect the rate to return to 5 percent before 2012.

Federal Reserve Chairman Ben Bernanke said the unemployment rate is “very likely” to go higher than 8 percent.

Government must take strong action
However, Bernanke said what happens to the rate will depend on what the government does. Bernanke said strong and aggressive policies could begin to make things better before the end of this year.

However, the situation could continue to get worse if adequate actions are not taken, he added.

The Federal Reserve is among the branches of government that Bernanke said must take action to help the economy. By law, the Fed is supposed to increase employment. Its other task is to make sure prices remain stable. Sometimes the two goals work against each other.

The Fed has the power to set some money policies for the nation. The Fed has reduced some of its interest rates for borrowing money to almost zero.

Bernanke said the Fed must keep trying to improve credit markets. People who borrow money use the credit markets.

Bernanke said the Fed is going to start new lending programs for credit cards, student loans and car loans. He said those programs should start “any day now.”

Spend money to save jobs
Economists believe that more jobs will be saved if people spend more money. Borrowing money to buy things usually means more people get jobs. However, it is never a good idea to borrow money you cannot afford to pay back

Many workers who lose their jobs can receive unemployment benefits. People on unemployment get a check. The money they get is usually less than what they earned while working.

Unemployment is an insurance program. The program is supposed to provide part of the money that people need to survive.

Sources: Associated Press, Milwaukee Journal Sentinel, Wall Street Journal, Federal Reserve