Slowing Growth Clouds Jobs Outlook
NEW YORK (TheStreet) -- On Friday, the Labor Department is expected to report the economy added 120,000 jobs in October, below the 148,000 recorded in September and the trend for months prior. Unemployment should remain about 7.2%.
The government shutdown and uncertainty about its precise impact on the data cloud estimates from the Bureau of Labor Statistics and forecasters' projections. A slowing economy, however, is having a more significant, damaging effect on the jobs outlook.
Since January, 456,000 additional Americans have reported working part-time, while only 525,000 more say they obtained full-time positions. In large measure, the part-time economy is driven by a weak economy, ObamaCare health insurance coverage mandates, and a large supply of immigrant workers. All push down wages in such industries as construction, retailing and restaurants, and widen income inequality.
Meanwhile, housing and auto sales have flattened. In both sectors, producers have emphasized higher priced offerings with more features to boost profits. These strategies are now up against higher interest rates, nervousness about future stock market gains and a sense that Western economies are unable to break out of their funk.Also, the financial and legal sectors continue to restructure, in part reflecting post-financial crisis expectations for permanently slower growth. Dodd-Frank regulations are compelling many small-town and regional banks to combine and cut jobs. Big banks face huge settlements in litigation with the Justice Department and federal regulatory agencies regarding mortgage-back securities and other issues surrounding the financial crisis and more recent abuses, such as in foreign-exchange trading. Furloughed government workers have received back pay; however, a robust recovery in retail sales is not expected. The upcoming holiday sales won't be much better than last year. Forecasters expect the Commerce Department to report the economy grew at about 2% in the third quarter, down from 2.5% in the second quarter. Commerce will release its flash GDP estimate on Thursday, but it may be subject to wide fluctuations in revised reports over the next several weeks. Not surprisingly, businesses across the economy remain cautious about adding additional full-time employees. Particularly hard hit are older workers, whose added benefits costs would drive up group insurance rates, and the long-term unemployed, who carry steep training costs when hired. Many people in these categories have quit looking for work altogether until conditions improve. As I've stated in previous articles, this slow growth is not acceptable and we need real solutions:
Unnecessary oil imports and trade deficits on manufactured products from China and other Asian countries tax demand for U.S. goods and services, slow growth and subtract more than 4 million jobs. Absent U.S. policies to develop readily available oil offshore and in Alaska, and effectively confront Asian governments about purposefully undervalued currencies and protectionism, the trade deficit will continue to steal growth and American jobs. The increased cost and slow pace of regulatory reviews curb investment spending. Robust assessments necessary to protect consumers and the environment must be at minimum cost and timely to add genuine value. Otherwise, excessive compliance costs send jobs to Asia and imposes great social costs. Absent smarter energy, trade and regulatory policies, slow growth and high unemployment are becoming permanent.Follow @pmorici1 This article was written by an independent contributor, separate from TheStreet's regular news coverage.
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