From Jobs to Gas: Your 2010 Economic Outlook

Jan. 4, 2010 — -- Many Americans couldn't wait to bid good riddance to 2009. But will 2010 be a better year for The Economy? It should be.

A vicious recession has given way to a fragile recovery, courtesy of extraordinary stimulus from the federal government. Which raises the question: When that stimulus wears off, will "private demand" pick up the slack? Will the economy be able to walk on its own two feet? The Federal Reserve is forecasting an average GDP growth rate for 2010 of 2.5 to 3.5 percent. But forecasters are divided on how quickly and forcefully the recovery will take hold. And plenty of risks remain.

So … here is your thumbnail guide to Economic Outlook for 2010 on the issues that matter most:

1. Jobs, Jobs, Jobs: When Will Employers Start Hiring? The consensus is that 2010 will be another year of high unemployment. The question is: how high? Even the best-case scenarios recognize that the economy is unlikely to grow fast enough to make a serious dent in the 10 percent jobless rate.

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Employers are expected to start hiring early in 2010, bringing an end to two straight years of job losses. But the economy needs to create at least 150,000 jobs a month just to absorb new entrants in the labor market, and most economists don't expect to see that pace of hiring until at least the second half of the year.

Ironically, as the economy and the job market improve, discouraged workers may return to the hunt, further elevating the unemployment rate. The increase in temporary hiring and the big jump in worker productivity are usually harbingers of better days to come in the job market. But companies tend to hire very conservatively in the aftermath of a recession, waiting for decisive signs of recovery before ramping up their payrolls. FORECAST FOR 2010: Unemployment Rate = 9.3 to 9.7 Percent (source: Federal Reserve)