NEWS AND COMMENTARY
August 23, 2001
Job Jitters Will Sink Spending
The evidence is piling up that laid-off workers are having a tough time finding new jobs. In the not-so-distant past, because of a tight labor market, the casualties of mass layoffs could quickly find replacement jobs. But the decline of the US economy is taking its toll. And this protracted slowdown -- already more than a year old -- may turn into a recession at any time.
The number of unemployed workers receiving benefits is now 3.18 million -- that's the highest since September 1992. At that time, the US economy was crawling out of a recession. This time, we're heading straight toward one.
Overall, the unemployment rate remained at 4.5%, but the employment situation is bound to get worse as the economic slowdown wears on. More importantly, as more workers remain unemployed or see their jobless neighbors struggle, their confidence in the economy is going to deteriorate. And that means a further drop off in consumer spending. Right now, with the economy on the verge of recession, all it will take is slower consumer spending to push the economy over the edge.
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