November 6, 2012
LIA Monthly Economic Report - Positive Feedback Loop
By: Dr. Pearl M. Kamer, LIA Chief Economist
With the housing market in recovery mode and consumers beginning to spend more, the economy may have finally entered a "positive feedback loop" in which spending gains lead to employment increases which lead to further spending gains. Consumers are now spearheading the recovery, a role that manufacturers played early in the recovery.
Recent data suggest that the spring slowdown in hiring was short-lived. Employers added 171,000 payroll jobs in October. To date, employers have added an average of 157,000 payroll jobs monthly this year as compared with 153,000 jobs monthly last year. This pace is fast enough to absorb new workers but not fast enough to reduce unemployment. Moreover, many of the new jobs being created are part-time jobs. This suggests that employers remain reluctant to increase hiring in the face of current economic uncertainties. The October unemployment rate was 7.9%.
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