As of this moment, the shutdown is still active and continuing in spite of the hopes for resolution. The Bureau of Labor Statistics is shut down too, along with other federal departments; which makes it difficult to get the real low down on the status of the job market. In any case, all the painstaking studies of the job markets and economic conditions ever made will need to be reviewed and toned down, in the face of the current developments; which do not bode well for anyone.
From data that is available, it is clear that the private sector is already suffering negative effects and layoffs have started raising their ugly heads once again. 66000 able-bodied people who are willing to work have found themselves filing jobless claims, in addition to the existing applicants, taking the number to a whopping 374,000. The claims filed this month are the highest in the last six months. This major setback negates all hopes of achieving 180,000 new jobs, the projections that were based on the incremental growth registered in the previous months.
Reuters reported that the engineering firm URS Corp, defense contractor Lockheed Martin Corp and British defense contractor BAE Systems have temporarily laid off 4,200 workers due to the U.S. government shutdown. These furloughs were a result of having employees who work at government facilities that have been closed or due to the receipt of a stop-work order or directions to reduce staff. These numbers are expected to increase, should the shutdown continue.
It is not just government contractors who will be impacted by the shutdown. Retail companies are already aware of a slump in consumer confidence which ranks next to the times that followed the bankruptcy of Lehman Brothers in 2008 (according to a Gallup poll) and is still trending downward from a negative 34% at the moment! 67% of Americans expect the economy to worsen, and the shut down as well the wrangling over raising the debt limit are not helping matters any! The depressing thing about this poll is how far it has fallen since late spring; when we were celebrating the best ever result (of negative 3%) over the last 5 year period.
Is the resilience shown by the stock markets in anticipation of a resolution to the gridlock a case of unfounded optimism? Now caution requires that we prepare for an eventuality where the federal agencies slash their budgets further. Every company faces the dilemma of taking steps to protect their business interests without overreacting. They must find ways to protect workers with critical skills in IT, healthcare and other fields, as these individuals will quickly be engaged by others and not available when this crisis ends and the company returns to its planned growth initiatives. The ripple effect is rapidly widening!
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