May 21, 2001
Job Outlook Worsening
In the recent past, economists downplayed layoff announcements, claiming that axed employees would have little trouble finding other jobs in an economy with an unemployment rate of 4%. But now, the unemployment rate creeps up steadily each month, and new jobs are fewer and farther between.
Americans waived goodbye to 223,000 jobs in April. Not since February 1991, when we were in the midst of a recession, have so many jobs disappeared in a single month. And Manpower's survey shows that employers aren't ready to add new jobs any time soon. Hiring projections for the third quarter of 2001 sank to levels not seen since the 1990-91 recession.
This news does not bode well for the economy or the stock market. When Americans lose their jobs and are faced with prolonged unemployment, they are less likely to spend. Until now, consumer spending has been the driving force behind this otherwise bruised and battered economy. It's also contributed to the stock market's recent rally. But the good times won't last as more Americans lose confidence in the job market and become cautious about their spending.
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