The repercussions of the US economic collapse continue to be felt half a decade later. While private companies, organizations, and government agencies have been doing their best to offer employment opportunities to workers, unemployment remains at about 7.3 percent. In fact, the number of private sector jobs added to the American economy in October was the lowest it has been in the last six months.
According to numbers released by Automated Data Processing (ADP), only 130,000 new private sector jobs were added last month. That number is about 36,000 jobs below the number reported in September 2013 and approximately 20,000 below the expectations of the economists surveyed by Dow Jones Newswires. The greatest contributor to the disappointing numbers appears to be the government shutdown that occurred during the first half of October. The ADP report precedes the official report by the Bureau of Labor Statistics, which was delayed due to the government shutdown.
Employment numbers have been steadily declining since about June. The most dramatic change in hiring was seen in the small business sector. Over the last year, corporations with twenty to forty-nine employees had been adding about 30,000 private sector jobs per month, but these same companies added a paltry 2,000 jobs in October.
The prevailing theory for the low number of new private sector jobs is that businesses cut back on hiring when the future looks uncertain, and the government shutdown contributed significantly to the loss of consumer confidence in the economy. Even with the holiday season approaching, consumers may spend less than expected, resulting in smaller profits for companies that depend on the increase in purchasing that usually occurs this time of year.
October's partial government shutdown resulted in the furlough of over 400,000 federal employees and cost $24 billion. For many Americans, it emphasized how shaky the economy was, and the temporary measure passed by Congress hasn't done much to restore consumers' confidence. Experts feel the resolution passed by the government only postponed the battle to the coming year, when funding for the government again ends on January 15, and the nation's borrowing capability expires on February 7. Fearing a possible repeat of October's political showdown, consumers may choose to hold onto their money rather than spend it. With the possibility of slow sales on the horizon, human resources managers are hesitant to hire employees, so the number of private sector jobs added to economy may be even lower in November and December.
If the number of private sector jobs added continues to be less than 150,000 per month, then the unemployment rate will likely remain the same or increase. Some believe another government stimulus may be required to generate the employment opportunities needed to bolster the economy. The chances of that occurring, however, are slim.
(Photo courtesy of freedigitalphotos.net)
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