When Will Companies Start Hiring Again?

With so many families now struggling to find jobs and struggling to make ends meet people want to know when the deep recession will turn around.

It won't be anytime soon according to a top Federal Reserve Bank official. The Chattanooga Area Chamber of Commerce hosted the President and CEO of the Federal Reserve Bank of Atlanta during a visit to the city Wednesday.

While Dennis Lockhart said he's optimistic our economy will eventually recover, the uptick will be very slow and people looking for full-time work won't find much relief in the next year or two.

"The attitude among the top business leaders I talk to is quite cautious," Lockhart said. "Investment spending this year has declined sharply."

With banks reluctant to loan money and businesses wanting to cut costs, Lockhart said the outlook for job growth on a national level doesn't look good. He said the unemployment rate is much higher than the official numbers released by the government.

"The unemployment rate would move from the official 9.4% to 16%," Lockhart said.

Lockhart explained that the higher number reflects people who have given up looking for work and people who have had their hours cut through furloughs and other cost cutting measures.

The hardest hit sectors include construction. Right now housing starts are about a fourth of what they were before the recession. U.S. manufacturing has taken a beating too, with jobs either eliminated or reduced to part-time. 40% of all job losses are in construction and manufacturing.

"Unfortunately time may not return manufacturing employment to pre-recession levels," Lockhart warned.

Most losses affect men, according to the Federal Reserve Bank CEO.

So what does the future hold? Lockhart said American workers will have to get used to more part-time jobs becoming available with reduced or no benefits until businesses regain confidence in their bottom lines.

Education is more important than ever, as workers will have to learn new skills and trades in areas where growth is forecast. One of the strongest growth sectors is the health care industry, as the U.S. population ages.

Until the nation's banking system is re-wired and companies regain confidence to hire again, Lockhart doesn't expect the unemployment situation to improve anytime soon.

"I believe the overriding concern should be the quality of recovery as opposed to the speed of recovery," Lockhart told the Chamber gathering.

Lockhart added the challenge the Federal Reserve Bank and national economy faces is finding the right balance for the billions of dollars in stimulus money being spent. He said if stimulus funds are cut too soon it would "snuff out" the recovery, while spending too much stimulus money could create inflation. 

But the news is brighter for the Chattanooga area. The Chamber of Commerce wants to point out that companies like Volkswagen and their suppliers, Aerysin, Wacker Chemie and others are investing more than $1.4-billion to build or expand existing manufacturing facilities that will create more than 3,000 new jobs.

But the plants have to be built or expanded first, so the new jobs are still a year or two out.