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No sign of recession despite zero job growth in US


No sign of recession despite zero job growth in US
The US job report released on Friday again sent a negative outlook about the US economy. Another array of news from US which could set triggers over the markets around the world.

The impact of this information will be felt on stock markets, gold and crude oil; with stock markets and crude going down and gold moving up on the perception of 'safe invetment'.


The United States Labor department reported that no new jobs have been created in August, below the overall expectations of 65,000 by various analysts, where in July 2011 saw 85,000 new jobs being created. This states that the unemployment rate is still at 9.1%, unchanged from last month, with 14 million people still unemployed in the US.

Stagnant US job growth in August inflamed worries about another recession in US. Economists, Analysts or Investors have every reason to say that US economy is heading to another recession. After all, this year has been filled with number of economic shocks.

Succession of shocks comes from the release of the second quarter GDP report in late July, clash of opinions between Democrats and Republicans over debt-ceiling, followed by surprising cut in the US credit rating by S&P, preceded by massive fall in global stock markets and finally this lower-than-expected job data magnifies those fears. Put together, concerns are growing that the global economy is weakening.

But there are still optimistic things on the cards which could twist the views about the US economy.

Federal Reserve have decided to keep interest rates to near zero till 2013 which makes borrowing very cheap for US companies, which could prompt more hiring and boost consumer spending as people with jobs have more spending power.


Though there is clash of opinions between Democrats and Republicans, but who knows, angry republicans could refuse to extend payroll tax breaks for US people, which will add to consumer spending further.

On the flip side, with zero job creation in US over the period of August, Federal Reserve may announce another round of stimulus by way of Quantitative Easing in economy.

News can be many, whether positive or negative, but three things sit on the pendulum are Stock markets, Gold and Crude Oil which vacillate in the interest of investors and traders around the globe.

Story first published: Saturday, September 3, 2011, 15:12 [IST]
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