Owing to the mounting uncertainties in the economy, U.S. employers have become cautious in hiring new workers, and are struggling to manage with their existing staff. Expectations are that Europe’s debt crisis is likely to grip the global economy, resulting in sagging consumer confidence.
Apparently, U.S. employers are knee-deep in pessimism regarding their economic futures, convinced that consumer demand would not see a rise anywhere in near future. Add to that tax, spending issues and environmental regulations, employers have a right to be anxious about staffing issues, which is explained by the fact that only 69,000 jobs were added by U.S. economy in May – the fewest in a year – indicating a sharp rise in unemployment levels.
Having hit the debt ceiling once on May 16 last year, U.S. government is again approaching its limit while struggling to slash its debt, resulting in lower budgets for schools and other public projects.
For one thing, government contracts and hiring plans for projects such as highway construction are on hold while Congress contemplates over payment plans for construction projects. Exactly such a situation has made Ed Dalrymple – vice president of Chemung Contracting Corp. – worried about the present state of affairs in his construction company; most of which depends a great deal on government contracts and state authorization of any project that needs to be completed.
The whiff of economic uncertainty has also cautioned John Hensley, who is worried about hiring new workers for his specialty bakery in Los Angeles called Lark Cake Shop, despite experiencing high sales since last year. He is of the view that people are not likely to spend much in future if the prevailing conditions and uncertainty do not subside.
A survey of 122 technology executives carried out in April reported that employers are not looking forward to increasing their payrolls as much as they did last year due to rising expectations of stagnant growth in revenues and a slowdown in Asian economies. The survey results showed that almost 30% and 33% of the respondents did not expect the economy to recover until 2014 and 2015 respectively.
Demand for gasoline and diesel has also seen a drop since the past few months, as people are travelling less and delivery of goods through trucks has slowed down. Bill Day, spokesman for San Antonia-based Valero Energy fears that demand for his products would not see a rise until the economy regains its health. Even though Valero isn’t cutting back on workers, low demand coupled with stricter environmental regulations is proving to be an obstacle in the company’s growth potential.
Yet another company severely affected by the slowdown in economy is Alan Gaynor’s New York architectural design firm, whose clients are hesitant to commence any new projects at present again because of one factor: uncertainty. According to Gaynor, a $30 million project in Manhattan has been on hold for nearly six months because the client does not seem to be willing to move forward with it.
If the present economic situation prevails, the businesses are likely to be the biggest sufferers in terms of sinking profits and a drop in consumer demand. It’s simply a matter of time before the economy completely breaks down in shambles. In such circumstances, one can only wait and hope for the best.