Intuit may have predicted that January was a slow month for small businesses, but overall the job market continues to steadily increase and improve. While economists expect that the unemployment level will remain the same at 8.5 percent, the number of applications for unemployment benefits decreased to the second-lowest level for a four-week average since June of 2008.
The Labor Department hasn’t yet released its Jobs report of January 2012, however they did release today that the unemployment applications lowered to a seasonally adjusted 367,000- a decrease of 12,000. It is the hope of many that this drop signifies there was enough hiring taking place in January that less unemployed had to apply for benefits or benefit extensions. The four-week average for January’s unemployment benefit applications found itself at 375,750, showing a drop for the third straight week in a row.
This is good news for the job market and only helps to facilitate the hope that many harbor for a return to pre-recession levels. However, some are still skeptical and that puts a bit of a damper on American spending, which in turn stagnates our economy. When people are weary of the job market and their job stability, they are more cautious with their spending. With a strong, reliable job market people are more willing to spend their money which, in turn, strengthens the economy.
Furthermore, it’s not just people’s cautiousness that cuts back on spending, but the weather has something to do with it as well. Who would have thought that the mild winter we are experiencing would have an effect on our economy? The Associated Press points out that the month of January is usually very beneficial to retail sales for winter clothes and shoes. Thanks to an unusually warm winter, these sales have slowed and haven’t been as beneficial as other years past. While stores such as Target and Costco actually surpassed economist’s expectations, department stores such as Macy’s and Dillard’s yielded disappointing sales figures for the month of January.
In part, this proves that consumer spending really fuels the economy and job market. Without it, the flow of money through markets and industries is slowed and business hiring decreases as a result. Until Americans start spending more and circulate their more of their money through the markets, our economy and job market will see spurts of small growth here and there, but an overall strong increase likely won’t happen. Consumer spending likely won’t take place until the job market picks up and wages are raised. Sounds a bit like a catch 22, doesn’t it? It may be disparaging, but economists were expecting a slow growth index for the months of January to March this year anyway and predict an overall growth of only 2 percent for this first quarter of 2012.
SOURCE: Associated Press
IMAGE: Courtesy of NewsOne
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