By Jeannine Aversa, AP Economics Writer
WASHINGTON (AP) — The economy's 5.7% growth last quarter — the fastest pace since 2003 — was a step toward shrinking the nation's 10% unemployment rate.
There's just one problem: Growth would have to equal 5% for all of 2010 just to lower the average jobless rate for the year by 1 percentage point.
And economists don't think that's possible.
Most analysts say economic activity will slow to 2.5% or 3% growth for the current quarter as the benefits fade from government stimulus efforts and from companies drawing down less of their stockpiles.
That's why the Federal Reserve and outside economists think it will take until around the middle of the decade to lower the double-digit jobless rate to a more normal 5% or 6%.
Another way of looking at it: A net total of about 3 million jobs would have to be created this year to lower the average unemployment rate by 1 percentage point for 2010, economists estimate. Yet even optimists think the creation of 1 million net jobs is probably out of reach this year.High unemployment poses a risk to the unfolding recovery because it leads consumers to spend less, keeping economic growth weak. A sharp pullback in spending might even push the economy back into a recession. Joblessness also represents a danger for President Barack Obama's Democratic Party in this fall's congressional elections.
The National Association for Business Economics and the International Monetary Fund think gross domestic product will rise just under 3% for all of this year. GDP, the best gauge of economic activity, measures the value of all goods and services produced in the United States.
To get a sense of just how deep a dent the worst recession since the 1930s has made in the economy, consider this: The economy shrank 2.4% for all of 2009 — the sharpest drop since 1946. It was also the first annual decline since 1991.