The United States’ economy is not fairing terribly well right now. Corporate profits are down because of decreased spending, and in response they are attempting to decrease their operating costs. Since labor is one of the most expensive inputs that any company has, businesses across the nation are decreasing the size of their workforce. A recent report came out that the US unemployment rate has hit 8.1%, one of the highest since the 1970’s.
During the month of February, there were an additional 650,000 Americans that lost their jobs. This means that one out of every twelve Americans are currently without work. Most economists are forecasting that it’s only going to get worse from here. Some predict that the interest rate will rise as high as 12 or 13% before the jobless rate begins to decline and the economy begins to pick-up again.
Another statistic that US economists are watching very closely is a number called the “U-6”. This statistic includes individuals that have been laid off from their full time jobs and are working two or more part-time jobs to make enough income to provide for their family. The U-6 number also includes Americans that have simply given up hope in finding a job because they simply do not think that they can get a job in the current environment. Currently the U-6 rate is sitting at approximately 15%. Some economists estimate that this number could reach between 18% and 19% before the recession is over.
Some have argued that we are facing an economic catastrophe that’s the greatest seen since the Great Depression. They contend that the major drop in the stock market, the number of failing banks, and the ever increasing unemployment numbers are evidence that we are facing a unique cycle never before seen in the business world. Remember that each recession is unique and that the United States has recovered from every one of them. Eventually the economy will turn around, but it will probably not be in 2009,
Being unemployed certainly isn’t a walk in the park Being laid-off is sometimes an unavoidable consequence of living in a capitalist society. The best thing that we individuals can do to prepare ourselves to work through these types of situations is to make sure that we are financially stable in our own lives, by reducing the amount of debt that we carry and by building an emergency fund of three to six months of expenses.