Going dutch

The unemployment statistics released by the Bureau of Labor Statistics at the end of last week are pretty grim. For June, unemployment reached 9.5 percent nationally, up from 9.4 percent in May. The last time we’ve seen unemployment this high was in the early 1980s.

There’s no consensus on what this means for recovery, but most economists agree the creep of unemployment toward 10 percent doesn’t mean it’s going to happen quickly. The more precarious their job situation or the longer they’re unemployed, the more people will cut back on spending. Even if you have a job in a thriving industry, the last year of economic thin ice is probably enough to make you think twice about splurging on something you don’t need.

It’s like an awkward first date. Companies aren’t going to risk a stinging back-hand by re-hiring people and churning out products before there is a steady market for their products. Companies are going to let consumers make the first move. But consumers are so spooked from bad experiences that they’ve lost their nerve. They’ve got a lot to lose and they’ve lost a lot already.

Economists are watching for consumer confidence and spending to rebound as an indication that the economy is starting to turn around.

Until then, it looks like we’re all going home alone.

Here’s Newsweek’s take from last week

This entry was posted on Tuesday, July 7th, 2009 at 3:53 pm and is filed under Recessioncents, Unemployment. You can follow any responses to this entry through the RSS 2.0 feed.