Obstacles that Hinder Growth of Economy

Recently, the job market has begun to show signs of improvement. Economists forecast this growth to continue, if the economy can overcome some of the obstacles that stand in its way. Some good news has come in the form of a decrease in the unemployment rate, dropping from 9.1% to 9.0%, due to a job increase of over 1 million jobs in the job market. The average number of hours worked was 34.3% and average earnings per hour rose by .2%. Gains in temporary employment means that companies are seeing increased demand which will cause companies to increase the amount of permanent workers. Sectors such as manufacturing, health care, retail services and business services have all had job increases. However, the overall report is still too weak to make a significant dent in the amount of jobless Americans still sidelined by the recession and weak economy. The current trend of job growth is still not enough to bring down the overall unemployment rate in the immediate future. Certain "statistical quirks" undermine the trends in job growth. The overall labor force expands and contracts as new job seekers enter the market and drop out, often because of discouragement. The economy would need to produce 200,000 jobs per month more to cause a meaningful drop in the unemployment rate. The trend of employers increasing hiring rates can be attributed to the cost of taking on new workers dropping. Unit labor costs have fallen by 2.4% in the third quarter. With so much economic uncertainty in our economy, companies have been keeping inventories lean to avoid possession of unsold goods if the economy stumbles again. Another important event that will effect unemployment for the next three years is the federal budget debate, which has a deadline of November 23rd to decide all tax and government spending habits. Two other controversial issues that have significant outcomes are the issues of extended unemployment benefits and payroll tax cuts. The biggest unknown factor economists are concerned with is the financial crisis currently going on in Europe. As Europe slowly slips into a recession, the US economy runs the risk of being pulled down with it.