Economists who could see ‘green shoots' emerging from the US and were predicting an accelerated recovery for the bereaved economy may have to eat their words. As reported by Bloomberg, the unemployment rate in the US hit another 26-year high in September, as the long-battered US labour market took an unexpected turn for the worse. The US Labour Department's latest report said that there was a net loss of 2.6 lac jobs in September, up from a revised loss of 2 lac jobs in August. It is also important to note that this is only the second time in 2009 that job losses rose month on month, after the US labour market started showing a steady recovery since the loss of 741,000 jobs in January this year. Having said that, despite all the stimuli that the US government has been pumping into the economy, an unemployment rate of 9.8% in September (9.7% in August) is unlikely to facilitate consumption. Hence the scope of US' economic recovery and recovery of all the economies that are linked to US' consumption stands limited
As if the high unemployment rate in the US was not enough, economist Bob Shiller noted for famously predicting the housing bust, does not hold a very positive view on the home prices in the US either. He is of the opinion that while the home price index has been moving up sharply based on data for three months, it is not clear whether the same will be sustainable. Shiller believes that the index will not continue at this high rate of increase and will infact move sideways for a period of 5 years! While the various stimulus packages have done their part in bolstering home prices, it remains to be seen how the scenario will unfold when these are withdrawn. All in all, the global economy which is hoping for a quicker US recovery will have to settle for playing the waiting game for the time being.
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