More and more Americans are applying for unemployment aid, according to the US Labor Department. Applications rose by 6,000 within a single week from a previous record of 380,000, with the current number now standing at 386,000. This development strongly suggests that hiring is still sluggish. Bricklin Dwyer, an economist at BNP Paribas, said that the employment rate progress in the United States is slowly coming to a holt.
Joblessness claims must be lowered to 375,000 to suggest that the hiring rate is enough to reduce unemployment. However, Dwyer believes that the current trend implies “that the underlying pace of employment growth has softened.” The applications for unemployment aid fell during last fall and winter but have not gone down since.
There are now increasing concerns as employment probabilities continues to drop. Recent employment prospects have reached an average of 96,000 jobs per month in the previous three months. The past three months before that, the average was 252,000 jobs every month. This month, the employment rate is predicted to go down as numbers indicate the economy will only generate 75,000 jobs.
Despite the recent rise in unemployment rate in the United States, Joseph LaVorgna, an economist at Deutsche Bank, stated that the numbers are not enough to establish a trend. Federal Reserve Chairman Ben Bernanke said that the probable cause for the slow hiring is the warm winter. People are not inclined to spend during this time for normal expenses such as coats, boots, and winter equipment. A stronger economic boost is required to increase the employment rate, according to Bernanke.
However, economists believe that there is not much growth to be expected in the near future, based on the current figures. Adding to the difficulty are consumers who are cautious with their financial actions. As most of them remain cautious about spending, the economy will have a hard time improving. This is because consumer spending makes up 70 percent of the US economy, indicating that consumer spending is essential to recover economically.
Many believe that decreasing gas prices will help in a way. But economists think that it is not adequate.
While gas prices have dropped and freed some money which consumers can spend on other things, the slight increase in spending capacity may not be enough to bolster the economy. However, it may be enough to put the unemployment rate in check until consumer spending accelerates in summer.
This may be good news considering that the United States is still reeling from the economic recession that officially ended in June 2009. Salary rates have not yet leveled out with inflation. State and local government agencies still continue to let go of their workers. Around 8.8 million people lost their jobs during and immediately after the recession. Now, the economy gives back less than 3.8 million, or 43 percent, of these jobs to the unemployed.