Jobless rate casts shadow on Obama's stimulus plan

WASHINGTON — President-elect Obama projected Saturday that his yet-to-be-written economic stimulus plan would create nearly 3.7 million jobs by the end of next year, mainly in construction, leisure services and manufacturing.

But the projected $775 billion plan won't stop the nation's unemployment rate from reaching about 8 percent by the end of this year, an analysis of the plan showed, and will only have brought joblessness back to current levels by the end of 2010.

Obama's release of the study based on a rough draft of his stimulus plan indicated he wants to get ahead of dismal economic news, economists said.

The latest hit came Friday, when Bureau of Labor Statistics numbers showed an additional 524,000 U.S. jobs vanished in December, lifting the national unemployment rate to 7.2 percent, its highest level in 16 years.

"This is a very honest picture of what a stimulus package would do, but it's still not a very good story," said Dean Baker, co-director of the liberal think tank the Center for Economic and Policy Research. "It's saying we're in for some difficult times."

The 14-page report, prepared by Christina Romer, Obama's pick to lead his Council of Economic Advisers, warned the projections were subject to "significant margins of error" and were based on a "hypothetical package" of measures yet to undergo congressional scrutiny.

That didn't stop Obama from promising massive job creation in his Saturday radio and Internet address.

"The jobs we create will be in businesses large and small across a wide range of industries," he said. "And they'll be the kind of jobs that don't just put people to work in the short term, but position our economy to lead the world in the long term."

The Obama plan promises to invest heavily in infrastructure, education, health and energy; send needed fiscal relief to states; increase unemployment-insurance and food-stamp funding; and cut middle-class taxes.

The projections show the plan creating 678,000 jobs in construction, 499,000 in leisure and hospitality and 408,000 in manufacturing. The plan would also lower the national unemployment rate by 1.8 percentage points by the end of next year, the analysis said.

Those job fields are the same ones that showed the biggest cuts in Friday's unemployment report, with about 1 million jobs disappearing in the construction and manufacturing sectors between December 2007 and last month.

The labor report also calculated a whopping 15.3 percent unemployment rate in construction and a 17 percent unemployment rate in agriculture and related fields.

How the report, which was intended to counter some criticism that Obama's plan would create new bureaucracies rather than put people to work, reached its conclusions was uncertain since Obama has acknowledged there is no finished proposal.

Information from The New York Times is included in this report.