With the US election just over a month away the campaign to win the Whitehouse has stepped up a gear. On Wednesday Presidential hopefuls Democrat Barack Obama and Republican Mitt Romney will be able to challenge each other directly for the first time. The main focus of the hotly anticipated debate will no doubt be the economic worries plaguing the world superpower.
Unemployment issues have been a particular cause for concern in the US for some time and the latest data indicates that the situation is unlikely to resolve itself anytime soon. Romney’s supporters have been vocal in levying blame for unemployment woes on the faulty leadership of current President Obama. Meanwhile, supporters of the 44th American leader have been apt to attribute the present troubles to past mistakes and claim that Obama has done what he can to right the wrongs of the Bush legacy.
Whichever man ends up holding office will have a tough four years in front of him. Despite expansion in the world’s largest economy, growth is weakening. The lingering effects of the global slowdown and European crisis have caused problems enough but the new President will also have to deal with the repercussions of the impending US fiscal cliff, where alterations will be made to government spending and taxes.
Although housing and consumer confidence have shown signs of improvement in recent weeks, sales for businesses in the Standard &Poor’s 500 Index dropped by 0.9 per cent from the previous year. Although a 1.2 per cent advance is forecast for October to December the figure is still considerably smaller than the rise of 5.4 per cent seen in the first quarter of 2012.
Job cuts and reductions in investment and hiring will be a key part of employment sector belt-tightening in the months ahead and unemployment will probably get worse before it gets better.
According to Charles Lieberman, chief investment officer with Advisors Capital Management LLC, companies will only begin hiring again once the economic situation starts to stabilise and they can no longer ‘meet demand with their existing workforce’. Lieberman asserted that the aforementioned ‘cost controls’ are ‘one of the key reasons job growth remains relatively weak’.
The jobless rate is also in its 44th consecutive month of exceeding 8 per cent after rising to 8.2 per cent in August.
As a chief economist with Maria Fiorini Ramirez stated: ‘The economy is weak and is going to stay weak. The labour market will continue to struggle’.
Multinational companies like Staples and Hewlett-Packard are planning to slash thousands of US jobs in the near future and it’s been estimated that there will be up to 100,000 layoffs in the securities industry. With the amount of US chief executive officers expanding investment and adding employees also on the decline, unemployment figures could see fluctuations in the months ahead.
Harry Holzer, former chief economist with the Labour Department, asserts: ‘The headwinds we are flying into will likely dominate in the next few months, the public sectors at the state and local levels continue to shed jobs.’
All this will have a negative impact on consumer spending at a time when manufacturing is taking a knock and pessimism is on the increase. According to estimates data from the Institute for Supply Management will most likely show that US manufacturing contracted for a fourth consecutive month in September.
President of the Federal Reserve Bank of Chicago, Charles Evans, predicted last week that it would take until the end of 2014 for the unemployment rate to drop below 7 per cent, meaning that US citizens will face at least another two uncomfortable years.
One woman who has recently joined the ranks of US unemployed summed up the situation nicely. ‘There are more people looking for work and not that many jobs. There’s going to be fierce competition.’
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