Challenge No 3: Another day, another 26,000 jobs lost

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By Janice Revell, Money Magazine senior writer

The economy probably shed at least 2 million jobs in 2008. About a million of those vanished in just the last three months of the year. The unemployment rate is more than 7%, and some analysts forecast that it will reach 9%. The layoffs started in home building and finance but they're spreading fast. "It's across industries and occupations and in almost every corner of the country," says Zandi. "That makes it scarier than past downturns because if you become unemployed, there's no obvious place to go."

What to expect from Obama: Obama has sweeping plans to "save and create" 3 million jobs in the first two years of his administration. This sounds a lot more specific than it really is: Since we will never know for sure how many jobs would have otherwise been lost, we can't know in 2011 whether Obama hit that mark.

Even so, Obama's plan deserves points for ambition. He wants a massive $350 billion public works program to repair and build roads, bridges, sewer systems, mass-transit lines and electrical grids. Public schools will get money to upgrade facilities. And Obama has pledged to create a slew of new "green" jobs aimed at reducing the country's energy use.

Obama wants to direct another $100 billion to keep state governments from having to slash essential programs, such as Medicaid, or raise taxes. He's also likely to extend unemployment benefits and distribute more food stamps. The point of such moves isn't merely to help the beneficiaries but to prop up overall demand in the economy. Unlike tax cuts, which may be saved by higher-income people, benefits for low- and middle-income families translate fairly quickly into consumer spending. That said, it looks like tax cuts for families earning below $250,000 are still on the agenda.

The job crunch could bring new urgency to Obama's most ambitious promise: guaranteed access to health insurance regardless of where, or whether, you work. Obama has said that he will pay for this in part by immediately rolling back the Bush tax cuts for people earning more than $250,000 a year. But given the worsening shape of the economy, that may be a nonstarter. "It just doesn't make sense to talk about raising taxes in a recession," says investment strategist Ed Yardeni of Yardeni Research.

As with housing, few analysts expect Obama to work any miracles here. "No matter what Obama does, we're going to have a deep recession going into the middle of the year," says Rogoff. "So even with very proactive policies, unemployment is likely to keep rising into 2010."

Your strategy if you're young: The U.S. economy is probably going to need fewer investment bankers and mortgage brokers for a long while. Younger people can invest in very different kinds of skills. If Obama's New Deal 2.0 takes root, this would be a good time to be studying civil engineering or green building design. Health care and education were always relatively recession-proof; Obama's plan would help to keep them that way.

Your strategy if you're mid-career: Your way ahead is tougher. You can't just quit your marketing job and start installing solar panels. But it certainly makes sense to look out for new kinds of business opportunities you can bring to your employer or perhaps new fields you can become the in-house expert on. For example, if you're in finance, you might start learning about public works financing or what's happening in the alternative-energy sector.

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