January 20, 2010 / 5:24 AM / 10 years ago

Jobless rates seen high for many more years

WASHINGTON (Reuters) - Unemployment rates will likely peak in most U.S. cities in 2010, but it will be many more years before jobless rates hit their lows of the last decade, a report released by a U.S. mayors group shows.

Job seekers visit an employment center in San Francisco, California November 20, 2009. REUTERS/Robert Galbraith

In some areas, such as California’s central valley and cities in Nevada, unemployment rates will stay at or above 10 percent through 2013, according to the report published on Wednesday by the U.S. Conference of Mayors and research group Global Insight.

The mayors group released the report a day ahead of a meeting with U.S. President Barack Obama in which it will seek federal financial aid for small and large cities.

“What is just as alarming as the double-digit unemployment in many of the nation’s major metro areas is the lethargic rate at which it will recede once the job market turns around,” the report said.

The national unemployment rate currently stands at 10 percent.

The mayors will push the president to put direct fiscal relief for cities in the budget he is set to propose next month. They will also press for money banks are repaying to the federal Troubled Asset Relief Program to go to help small businesses.

“The effort to ameliorate the human and economic costs of unemployment needs to be sustained, and targeted directly to those metro areas where so much of the labor force is underutilized, unable to contribute to our nation’s economic growth,” the report said.

Tensions emerged when the $787 billion economic stimulus plan passed a year ago sent aid to cities through states. Now, local government groups are asking Obama to find new formulas to put money directly in their hands.

In November, the last month for which city-wide data is available, 17 metropolitan areas had unemployment rates topping 15 percent, according to the Labor Department.

According to Global Insight, metropolitan areas account for 86 percent of U.S. employment and 90 percent of its economic output.

While cities such as the manufacturing centers in the Midwest will soldier on with steep jobless rates for the next half-decade, many areas will see their rates fall below 5 percent.

The mid-Atlantic region, which includes the nation’s capital of Washington, D.C., will likely have an unemployment rate of 4.3 percent by the end of 2013, according to the report. Boulder, Colorado, will have a slightly higher rate of 4.7 percent, followed by Honolulu, Hawaii at 5 percent.

The report also analyzed real gross metro product growth and found cities are still smarting from the national recession that began in 2007.

Baton Rouge had the largest economic expansion in 2009, but it was a slim 0.8 percent. Only eight metropolitan areas experienced any growth last year.

Global Insight projects the U.S. government’s stimulus plan added about 0.8 of a percentage point to 2009 national gross domestic product growth and will add 1.3 percentage points to 2010 growth.

Still, it said, there is no strong correlation between where the money is spent and where it is needed. It found Las Vegas contributes 75.1 percent of Nevada’s gross state product, but only gets 30.9 percent of the state’s stimulus funding.

Editing by Andrew Hay

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