By no means are we out of the woods just yet, but we are beginning to see glimmers of hope, according to the White House. Banks are freeing up lending and homeowners are taking advantage of low mortgage rates.

Global economists are in agreement that the recession has reached the bottom or is very close to the bottom. Some are saying we have begun a very weak recovery already and are predicting a moderate improvement in 2010.

It seems almost self-evident that everyone borrowed too much, creating a level of debt that is crushing our economy.

Do we really have the hope that the economy may pull out of recession by the end of 2009?

US officials are hoping that the sharp decline in economic activity may be slowing, but 2009 continues to be a difficult year. In a report today, employers cut a larger-than-expected 467,000 jobs in June and the unemployment rate climbed to a 26-year high of 9.5 percent.

How much worse do things have to get before they start getting better?

WASHINGTON – Barack Obama countered critics with an analysis Saturday by his economic team showing that a program of tax cuts and spending like he’s proposed would create up to 4.1 million jobs, far more than the 3 million he has insisted are needed to lift the country from recession.

Congressional Republicans reacted skeptically. Even the president-elect’s own economists acknowledged their two-year estimates could be wrong.

The 14-page analysis, which was posted online, says estimates are “subject to significant margins of error” — because of the assumptions that went into the economic models and because it is not known what might pass Congress.

“These numbers are a stark reminder that we simply cannot continue on our current path,” Obama said in his weekly radio and YouTubebroadcast address.

“If nothing is done, economists from across the spectrum tell us that this recession could linger for years and the unemployment rate could reach double digits — and they warn that our nation could lose the competitive edge that has served as a foundation for our strength and standing in the world,” he said.

Obama has provided few details of his $775 billion plan so far. This fresh report does not include the specific construction of his tax cuts, the amounts dedicated to state aid or public works — key questions that Obama aides have closely held.

The analysis came out one day after news the unemployment rate had jumped to 7.2 percent, the highest in 16 years. The nation lost 524,000 jobs in December, bringing the total job loss for last year to 2.6 million, the largest since World War II.

GOP lawmakers have insisted on carefully targeting any aid and on a politically popular tax cut for the middle class, as well as loans to states.

“We want to make sure it’s not just a trillion-dollar spending bill, but something that actually can reach the goal that he has suggested,” said Sen. Mitch McConnell of Kentucky, the Senate’s top Republican.

Obama’s plan has met with lukewarm support from lawmakers in general, despite economic news that has dominated the new administration even before it begins.

In hopes of having the new president gain immediate access to bailout money already approved by Congress when he takes office Jan. 20, his economic team and the Bush administration have discussed the possibility that Treasury Secretary Henry Paulson would ask lawmakers soon for access to the $350 billion remaining in the Wall Street rescue fund.

The transition team also has asked the head of the rescue program at the Treasury Department to remain in that position for a short time after the inauguration to help assure a smooth transition, according to an Obama official.

If Congress fails to enact a big economic recovery plan, Obama’s advisers estimate that an additional 3 million to 4 million jobs will disappear before the recession ends. Obama’s team also noted that with or without the plan, the jobless rate by 2014 would be the same.

The president-elect agreed on Friday to modest changes in his proposed tax cuts. Democratic congressional officials said his aides came under pressure in private talks to jettison or significantly alter a proposed tax credit for creating jobs, and to include relief for upper middle-class families hit by the alternative minimum tax.

The new report is likely to intensify debate as economists outside the Obama team begin delving into the analysis. The report, for example, estimates that the unemployment rate at the end of 2010 would be 1.8percentage points lower if the plan is enacted.

Top Democrats on Capitol Hill say there is far more agreement than disagreement on the major parts of the recovery plan: aid to cash-strapped state governments, $500-$1,000 tax cuts for most workers and working couples, and a huge spending package blending old-fashioned public works projects with aid to the poor and unemployed and a variety of other initiatives.

But it needs restrictions, Republicans say, to ensure prudent spending.

University of Maryland economist Peter Morici said the analysis attempted an economic justification for a political decision. He said evidence suggests that working class families would spend the modest tax credits— $500 per individual or $1,000 per family — on low-cost, imported products that do little for the U.S. economy. He also said state and local governments don’t need as much aid as Obama is proposing.

“They should stick to the infrastructure spending” in the plan and jettison much of the rest, Morici said in an interview, because that is the most likely proposal to provide a short-term economic boost and long-term benefits.

The report provides detailed breakdowns of how many jobs each part of the plan would create, even going so far as to provide estimates that more than 40 percent of the new jobs would go to women and that 90 percent of them would be created in the private sector. It also provides estimates of how many new jobs would be created in each different sector of the economy.

“It’s not too late to change course — but only if we take immediate and dramatic action,” Obama said. “Our first job is to put people back to work and get our economy working again.”

Source: Yahoo!News - By PHILIP ELLIOTT, Associated Press Writer

Initial claims for state unemployment insurance benefits jumped by 58,000, the biggest increase since September 2005, to a seasonally adjusted 573,000 in the week ended December 6 from an upwardly revised 515,000 the previous week. That was the highest print since November 1982, when 612,000 workers submitted new claims for unemployment benefits.

A Labor Department official said there were no special factors influencing the report. Analysts polled by Reuters had forecast 525,000 new claims versus a previously reported figure of 509,000 the week before.

The four-week moving average of new jobless claims, a better gauge of underlying labor trends because it smoothes out week-to-week volatility, rose to 540,500 from 526,250 the prior week, the highest since December 18, 1982 when a reading of 554,500 was recorded.

Continuing claims jumped to 4.43 million in the week ended November 29, also a 26-year high, from 4.09 million the previous week. The 338,000 increase in continuing claims matched the gain recorded in the week ended November 30, 1974.

Source : Yahoo!News

(Reporting by Lucia Mutikani; Editing by Walker Simon)

The unemployment rate generally doesn’t fall until after GDP turns positive again. When the last recession ended in November 2001, the rate didn’t peak for 19 months. So if this recession lingers longer than currently expected, unemployment might not peak until 2011.

Take Action

Check Your Emergency Fund

In 2009 it will be especially important to have enough cash on hand to cover at least six months of expenses – probably enough to tide you over if you lose your job. (The typical employment search now takes 4.4 months, up from 3.1 months in early 2008, according to outplacement firm Challenger Gray & Christmas. Senior positions can take longer.) Your stash falls short? Build it up while you’ve still got a job.

Raise Your Profile

The best way to avoid a pink slip is to do your job well and make sure your boss – and her boss – knows about it. Volunteer for assignments and take on additional duties if there have been cutbacks. Ask your boss for regular feedback about your performance.

Beef Up Your Skills

Adding education credentials or job-specific training can make you more valuable, says Paul Rowson, general manager at WorldatWork, an association of HR professionals.

Think about what skills you can add to make yourself more marketable, and don’t forget to take advantage of any tuition discounts that your employer may offer.

Start Looking Around

Even if you love your job, it’s smart to have a Plan B. Update your résumé and start investigating potential opportunities by talking to recruiters and other people in your industry.

“The more you’re known, the more opportunities you’ll have,” points out Steve Gross, a partner at Mercer. Then if the ax does fall, you won’t be starting a job search from scratch.