Could a recession lie ahead? Watch the job market. | csmonitor.com
The latest snapshot of American employment showed the first monthly decline in four years, but the worst part is this: The numbers suggest a steady weakening of the job market, not just an August dive.
Factories, home builders, and public schools all saw big employment losses in August, yielding a net loss of 4,000 jobs for the nation. But what's more troubling than the negative tally, economists say, is the breadth of deceleration.
Job creation in the service sector, where most US jobs are, has been cooling – from food services to professional occupations. Healthcare is one notable exception.
"I don't think it's a one-month number," says John Silvia, chief economist at Wachovia Corp. in Charlotte, N.C. "Businesses are expecting some slowdown in the economy, and they're reacting to it by not hiring people."
Meanwhile, consumer spending has been growing more slowly, too.
These patterns raise the risk of a kind of self-fulfilling prophecy. If economic uncertainty is prompting businesses to postpone hiring, and consumers to postpone purchases, a recession becomes much more probable.