It is concerning that jobs are not growing. Economic indicators reveal that jobs are still lagging. The economy cannot recover until and unless more people become employed. The month of July has seen a worse-than-expected loss in jobs and that is a result of the temporary census jobs that have closed up.
Though July has seen a gain of 71,000 private sector jobs, it still falls below the expectations of economists. It is very obvious that jobs do not pick up until the economy does, but then there is something very unusual about the 2008-2009 recession. In 2001 as well, the world experienced a recession. But then it was not the same then as the economy experienced a business-led slowdown.
This current recession has a shortage of jobs. Last October, the economy experienced a 10.1% unemployment rate and currently it still prevails as 9.5%. During the last downturn, the unemployment rate never reached even close to 9.5 % as the highest unemployment rate then was 6.3 %. “Coming out of a credit crisis, recoveries tend to be much weaker. I don’t anticipate a strong bounce in jobs or the economy,” says, Bill Seyfried, professor of economics at Rollins College.
It is very unlikely for the economy to improve until and unless more people are back to work. Consumer spending is another important driver to get the economy moving in the short term. Therefore, consumer spending has to increase at a decent rate. But it is very unlikely to happen as big businesses, in-spite of having a huge cash balance, won’t be hiring until the consumer spending increases. And how can people start spending, when there is either no job or a high–paying job or employees having concerns about holding on to their jobs?
Sean Snaith, director of the Institute for Economic Competitiveness, University of Central Florida, says “It is a chicken vs. the egg dilemma, but the weakness in the labor market reflects a gradual and slow recovery. The aftermath of the long recession has left scars on consumers and it’s going to take time for them to heal.”
The current scenario is grim as both consumers and businesses are waiting for the other to make the first move. Businesses should be brave to hire and make consumers more confident so as to help create demand. Bill Cheney, chief economist at John Hancock Financial says, “The real problem is not that employment lags, but that it’s lagging too much. At some point, jobs have to kick in for the economic engine to really work. Each month is like a little bit of torture where there are reasons to worry even more.”
This article was submitted by Rohit Arora, co-founder of Biz2Credit. Biz2Credit is a small business marketplace that connects entrepreneurs with financing options and advice to grow their business. Send all questions to