As we begin the final quarter of 2009 let’s take a moment to see where the economy is. By most accounts December 2007 was official day that most economist recognize as the beginning of the great recession. On the positive side looking at just GDP we are now beginning to get out of the Great Recession.
Yet, most will agree that the unemployment figures are still very high and instead of decreasing they continue to go up. In fact, September was the 21st straight month of increasing unemployment figures that we have experienced.
According to the U.S. Labor Department there was a net loss of 263,000 jobs during September. Initially job loss estimates were expecting to be a lot less at 180,000 jobs. The reports showed that a substantial portion of the job loss came from local government employment. Now the last time that the economy actually added any jobs was December 2007, making this the longest recession in recent history.
The loss of employment has the results of creating a vicious cycle in our economy. As would be expected the disappointing numbers cause most consumers to lose confidence and then pull back on their spending. This then leads to businesses cutting back and laying off more employees. Similarly there are other businesses that will not begin to add jobs until they see more sales and business activity.
This being said, many economist are predicting that this Christmas season stores will be
force to significantly discounting a lot in order to bring consumers in back into the stores
and then there will still be resistance.
In summary what all this means is that until the economy begins to show improvement in employment numbers, we will not experience a real economic recovery.