The United States economy may have shown signs of recovering, but small and big businesses are still struggling from the after effects of the recent economic meltdown that officially ended in 2009. Particularly, employment in the United States is currently experiencing a rollercoaster trend where everything seems to go high and low on a regular scale.
This time however, the market may be going for a low point. Just recently, many economists and business analysts have retracted their previous job predictions for this year and their new figures went lower than their initial assessments. Employment prospects in the US job market are getting weaker as the year goes by.
Michael Feroli, an economist at JPMorgan Chase, stated that the newest economic data is very “decisively disappointing”. Feroli and the rest of the JPMorgan Chase team are now convinced that economic growth will only reach a maximum of 2 percent during the July-September quarter. Their initial prediction was 3 percent.
The dip in their prediction was caused by the low hiring rate in the US job market, as well as the slow economic growth with the country’s business partners overseas. Export sales rates have dropped recently due to the sluggish economies of other countries.
Julia Coronado, an economist at BNP Paribas in New York, also shares the same sentiment with Feroli. Her early projections for economic growth this year was pegged at 2.4 percent. With the poor economic rating experienced by the United States earlier this year, Coronado withdrew her first forecast and now expects an economic growth of 2.2 percent.
Coronado has hoped that the economy will get a strong foothold this year and experience a stronger phase of resurgence, but recent data suggests that any chance of gaining a significant amount of recovery has been shot down. “The door keeps getting slammed shut,” Coronado said.
Other economic forecasting groups and financial organizations like the Macroeconomic Advisers and Swiss bank UBS have replaced their projections with marked down economic prospects. It looks like employment in the United States could continue to take a dive this year.
As a general rule, the U.S. economy must grow by 2.5 percent to provide employment opportunities as the population number increases. Any figure lower than that will not stave off unemployment. As more and more economists and financial forecasters predict a sluggish economy for the rest of the year, it is almost certain that the hiring rate will go down before the year ends.
On that note, people should expect that current employment conditions may well get worse.
The US job market recently suffered a blow in May 2012 when the market only generated 69,000 jobs, the lowest in a single year. Without employment opportunities, Americans will see their consumer spending powers dwindle. As spending lowers, the economy will slow down as well, since 70 percent of economic growth is driven by consumers and their ability to spend.
If consumers continue to lessen their spending, that could be bad for the job market as hiring rates will greatly reduce. The good news is that gas prices are falling, which means more money is left over for spending on other things. Positive trends in the construction and auto sales industries show that there might still be hope that the economy will experience significant booms in other sectors and that may have a positive effect on the job market.