Unemployment Decreased Slightly, Fewer New Jobs Created than Forecasted: Is the Worst Still to Come?
The U.S. Department of Labor reported on Friday April 5th that the unemployment percentage was down to 7.6 percent. Only 88,000 jobs were added to the economy in March. Economists had predicted close to 200,000 new jobs would be created for the month.
This is before the effects of the Federal Budget cuts, also known as austerity measures, go into place. These budget cuts will have extreme negative effects in US economy as witnessed in Europe, country after country.
The first wave of budget cuts will put many Federal employees out of work; it will also cause a decrease in contracts to the private sector for services. There will be ripple effect in private sector employment as companies who depended directly or indirectly on government contracts will have to lay off employees.
The effect of these additional unemployed people will dampen consumer spending causing retail and service related companies to lay off employees. The private sector with continued lack luster job growth will not be able to absorb these job loses.
Another effect could be a down-turn in the precarious construction industry, further adding to the unemployment.
Sales of durable goods such as automobiles and appliances could also see a decrease causing further unemployment in the manufacturing and retail sectors of these industries.
There could not be a more vulnerable time to cut the Federal budget. Any slight rebound that was happening before will be cancelled out by this action. This is on top of the increase in payroll taxes already implemented.
Austerity measures do not work, as seen in countries in the European Union. Especially during an anemic recession recovery as the one we are experiencing. Instead of cutting services and laying off people, government should actively spend money on job creating projects.
Will these measures be severe enough to cause a dramatic increase in unemployment? This might be the spark to make people realize the grave imbalances that have not been addressed.
Will this result in the kind of social turmoil that is happening in countries such as Greece, Portugal, Spain and Ireland?
We could see a ‘hot’ summer if people take to the streets demanding that the top upper incomes taxes be increased, government spending increased, wages increased and more jobs created.
“UPI NewsTrack TopNews”.UPI. Web. 5 April 2013. 5 April 2013.
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