Economists say that the improving U.S. job market will bring further growth in the country’s economy in the upcoming year.
This forecast made by the economists was based on the most recent report saying that the number of people applying for unemployment benefits dropped for the third time since the start of the month. This decline in applications was the lowest ever since April 2008. According to analysts, this fall on unemployment rate only indicates that employers have stopped laying off employees and may start hiring new ones anytime soon.
After a low of 9 percent for more than two years, the unemployment in the U.S. fell to 8.6 percent this November. According to reports, employers have been a minimum of 100,000 employees every month starting from the month of July to November. This continues growth was the best series of increase since the year 2006.
High Frequency Economics Chief U.S. Economist Ian Shepherdson predicted that the country’s economy would continue to surge up at a 2.5 percent annual rate in the remaining days of the year’s last quarter. If this growth would be realized, this would be the “best performance of the year,” he added.
If there are more jobs, there would be more income for the economy. More jobs would also translate to more number of people to receive salary, thereby increasing the growth of consumer spending. And due higher consumer spending, an increase in demand for merchandises would take place, thus forcing employers to hire more workers to meet the need of the market.
However, IHS Global Insight Senior Economist Chris G. Christopher Jr. noticed that there are still a considerable number of households that do not experience any income growth. Good thing, the cost of gasoline is decreasing, leaving these families to spend more money on other things.
The fall of unemployment, together with other favorable economic reports released this week had largely contributed to prevent the U.S. economy from falling into a recession anytime soon.
However, there are also trends that may threaten the improving the U.S. economy in the upcoming year. Last month, consumer spending plainly increased with a slower growth rate than what was predicted. In two consecutive months, growth in business investment has also slowed down while the sales of new houses remain unfavorable from the last few months. But among all these negative trends, the worsening of the Europe’s debt crisis may serve as the most possible catalyst to turn the present condition of the economy upside down, as the Congress decided to extend the Social Security tax cut for 160 million workers within two months.
If the U.S. Congress decided not to extend the benefits for the long-term unemployed, millions of unemployed people would be starting to lose weekly checks, amounting to $300 each.