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Just recently, the National Association of Business Economists lowered its predictions for both economic growth and employment growth in the United States for the remainder of 2011 and for 2012. Under the new guidelines, the economy is only expected to grow 1.7 and add only an average of 124,000 new jobs a month for the remainder of the year.
As reasons for the lowered economic growth projections and lower job expectations, the business economic panel said that the spike in gasoline prices, the production disruptions from Japan’s earthquake, a flare-up of Europe’s debt problems, a prolonged debate over America’s debt celiing and the lack of confidence in the economy by both business and consumers are responsible for its dim economic outlook.
Traditionally, American business, particularly small businesses employing one or two people up to 499 people, has been the economic growth engine for the country. These small businesses employ around 52 million Americans and account for just over half of all private sector employees in the country. Between 1990 and 1995, a period of solid economic growth in the country, these small businesses produced roughly 75 of all new jobs during that economic expansion. And now, these small businesses are not hiring as many people as they had in the past.
Consumer’s are the other part of the important economic growth equation. With unemployment levels remaining above 9, consumers have slowed their purchases. Because of the uncertain job market and perhaps because of the loss of jobs, consumers are not buying products and services as they once did and this is affecting sales and profits for American businesses. According to the business association economists, 250,000 new jobs a month are needed to rapidly bring down the high unemployment rate. American businesses can do this. The only question unanswered is: When?