mrsamct
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Joined: 06 Aug 2011
Posts: 207
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 Posted: Wed Sep 07, 2011 4:15 am Post subject: Risk of Recession Grows with Employment Slowdown |
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dermalogica
Stephen Pierce International
The net gain in jobs in August in the U.S. was zero, and that big goose egg has economists and politicians on edge as the promise of another recession looms. The release of unemployment numbers last Friday signaled the worst employment report since September, 2010, with unemployment staying at 9.1%. In the aftermath of the release of the report, the broad stock market indexes plunged as investors globally worried about the state of the U.S. economy.
Analysts asked about the report noted that the U.S. economy cannot grow unless hiring increases. And while there isn’t much in the way of layoffs of late, companies are simply not hiring new workers. With consumer spending about 70% of economic growth in the U.S., and consumers unable to spend if they don’t have a job, the situation appears dire. James O’Sullivan, chief economist with MF Global, likened the situation to riding a bike, saying, "you either accelerate or you fall over. Something has to give."
The unemployment figures even have an effect on the spending of those who are actually employed, as the tight employment market makes workers realize that their situation may be tenuous and scale down spending in response. Economist Ryan Wang, with HSBC, reiterated O’Sullivan’s point, saying, "Underlying job growth needs to improve immediately in order to avoid a recession." For those who have been without work for months or years, however, it probably seems like the first recession never ended. Certainly home prices haven’t increased and employment hasn’t improved, so even in a non-recession period, the economy has clearly been weak all along.
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