As Congress considers extending benefits, three professors from the University of Chicago Booth School of Business revealed their predictions for the coming year as the nation climbs out of recession.
"The forecast ... is partly cloudy with a chance of intense storms coming down the line," said Randall Kroszner, University of Chicago Booth School of Business.
"If we're going to look forward and expect a housing price recovery, it's not going to come," said Erik Hurst, University of Chicago Booth School of Business.
The professors explained that America's workforce shifted to more construction and housing jobs prior to the recession. When construction slowed, more of the unemployed were from the housing industry. They expect fewer new jobs to be in the housing sector as the economy evens out, leaving unemployment high.
"We're not going to see this because we have workers who took a decade to get into the construction industry and as a result they have to get reabsorbed by other factors," said Hurst.
The economists' predictions came as Congress considered extending unemployment benefits again. They cautioned politicians to balance compassion with creating incentives for unemployment.
"We need to spend far more time thinking about how the structure of these programs in a better way because they need to be part safety net, part ladder. You have to allow people to climb out," said Raghuram Rajan, University of Chicago Booth School of Business
"An alternative ... would be the total amount we would pay out to someone who is unemployed and give that to the person as a lump sum up front," said Kroszner.
The professors say the key to creating new jobs is promoting innovation and improving education. They expect new industries will eventually spark job growth. Their predictions will be presented in New York Wednesday with engagements in London, Singapore, Beijing and Los Angeles.