Although Fed Chairman Ben Bernanke claims the recession is over, this Friday's unemployment figures are not expected to provide significant encouragement that the U.S. is in recovery mode.
The U.S. Bureau of Labor Statistics reports that nonfarm payroll employment continued to decline in September (-263,000), and the unemployment rate now sitting at 9.8% continued to trend up.
Most economists think the recession is over, but they say the jobless rate will keep rising until at least next summer.
The high unemployment rate is slowing economic recovery of the U.S. economy. In fact, most people are living week-to-week and check-to-check in the worst recession in 65 years. In an article for the Orlando Sentinel, Heather Boushey, an economist with the Center for American Progress, a Washington-based think tank, says, "Long-term unemployment is off-the-charts. The numbers are huge."
Unemployment numbers are so high that just this week, the Senate voted 97 to 1 to end debate and move ahead on the overall bill that includes an extra 20 weeks of unemployment benefits.
As more people lose their jobs, that translates into less consumer spending, which makes up two-thirds of GDP. According to the latest statistics released by the National Retail Federation, consumers are expected to spend about 3.2% less during the holidays this year than they did last year.
“Weak demand from battered consumers will be a ‘major constraint’ on the U.S. economy for the foreseeable future,” said White House Advisor Lawrence Summers, director of the National Economic Council.
Major retailers such as Wal-Mart agree. Wal-Mart Stores Inc, the world's biggest retailer, sees a slow recovery from challenging U.S. business conditions, while its Asia operations are "a little better," its Chairman Rob Walton said on Friday as reported in WorldNews.
Now factor in that the U.S. economy’s service sector showed signs of slower expansion according to recent figures from the Institute for Supply Management. Figures of more than 50 indicate expansion, while below that show contraction.
All these signs… rising unemployment, less spending by consumers and less expansion from the service sector signal the road to recovery will be slow. The Organization for Economic Cooperation and Development predicts that “the United States will endure a flat economic landscape in 2010 and may even face deflation.”
A flat landscape is also what Kent Lucas, editor of Taipan’s Safe Haven Investor, sees for 2010. “We won’t see a V-shape recovery like most analysts predict or hope for,” says Lucas, “but I think in 2010 we’ll see more positive trends.”
In his monthly newsletter, Lucas offers readers investment recommendations that are designed to protect your retirement wealth. Kent specifically looks for companies that are strong enough to weather the recession, and, at the same time, offer growth potential.
He also prefers companies that pay dividends, a strategy he believes is a great way for investors to help grow their wealth. You can learn more about Kent’s recommendations and Safe Haven Investor here.
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