Economic Struggles: Unemployment Persists

While improvements to the employment picture have been seen in recent months, the unemployment rate is persistently high, and companies are not hiring. Even if job losses slow, the fact that businesses are reluctant to hire more workers continues to cause problems in the overall economy. Only seven states reported that there were job gains in September, and the jobless rate rose to a 26-year high of 9.8%.

Employment is one of the cornerstones of the economy, since the economy relies so much on the ability of people to spend money. Businesses rely on consumer spending to help them with meeting cash flow needs. However, with the labor market persistently weak, it will be difficult for many to increase their spending. But companies are reluctant to hire right now, since the name of the game is cost cutting. One of the easiest ways to cut costs is to hire fewer workers.

It’s a bit of a vicious cycle. People can’t spend money at companies, increasing cash inflows, unless they have jobs. But businesses can’t hire unless they have an increase in income. As a result, we are likely to see a long, slow economic recovery. And one that doesn’t involve a burst of hiring.

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