The economy faces a myriad of woes at present, and the stagnant employment environment represents the biggest, economists tell The Wall Street Journal.
While a Journal survey of 54 economists puts the risk of a double-dip recession at only 16 percent on average, 21 of the 49 economists who answered the question say the biggest threat is slowing employment gains.
"If jobs don't grow fast enough, the recovery will sputter," says economist Nicholas Perna of Perna Associates. The economy expanded at an annualized rate of 1.8 percent in the first quarter, slowing markedly from 3.1 percent in the first quarter.
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It’s a vicious cycle: the slow economy limits companies’ willingness to hire workers, and that reluctance in turn limits economic growth.
The economists expect U.S. payrolls to rise by 2.2 million workers during the next year, down from last month’s prediction of 2.5 million. That’s the first month-to-month decline in the forecast since October.
A gain of that magnitude won’t put much of a dent into the unemployment rate, which stood at 9.1 percent in May. Economists on average see the rate easing to 8.2 percent in June 2012 and 7.9 percent by the end of next year.
In May, the economy generated only 54,000 new jobs. “These are pretty bleak numbers,” Julia Coronado, chief U.S. economist at BNP Paribas, tells Bloomberg, referring to the May report. “Some of the engines of hiring just went away.”
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