Written by: Jason Garoutte
The economy is still taking a blow and in a state of decline, despite the slight rise in the stock index seen recently as the DOW Jones index rose above 14,000 points for the first time since 2007. The unemployment rate in the United States as of January 2013 still remains at 7.9 percent with 12.3 million Americans still without work.
Another 8 million workers are considered “under-employed”, having been laid off from higher paying careers and having to settle for lower paying jobs just to make ends meet. An estimated 2 or 3 million more have simply given up looking for work and are not counted in the government unemployment numbers which are based on applications for unemployment insurance from the Federal government.
It appears that these numbers may increase not only in the next few months but in the upcoming years with many giant retailers closing the doors on numerous locations across the country.
Economists measure economic decline by measuring the income for the whole economy, which is called gross domestic product or GDP. For a recession to take place there must be six straight months with a negative GDP report.
Based on that measure, Americans have been facing a recession for years now and even with the slight increase in the stock market index, there does not appear to be a light at the end of the tunnel any time soon. There are many factors why an economy might decline and economists don’t always agree on what those factors might be. Some of those factors include declines in the housing market, high unemployment, inflation, high oil prices, government spending, and taxes.
So why is the unemployment rate still at 7.9 percent? Businesses earn less profit during a recession and lay off workers, which leads to less demand for products. If enough workers lose their jobs throughout the economy, then many businesses will earn less in profits and continue to lay off more workers. Increased taxes and regulations can have a further downward pressure on both large and small businesses struggling to maintain profitability much less increase their profit levels.
This is still happening today as eight giant retailers are forecasting numerous closures in the upcoming years. J.C. Penney, who has been struggling since this recession started, continues to struggle. They are forecasting 300 to 350 store closures nationwide. The video game giant GameStop announced it will close the doors on 200 stores in the year 2013 alone, with 300 to 400 more closures to occur in following years.
Other giant retail companies forecasting closures are Best Buy, Sears, Barnes & Noble, Office Max, and Radio Shack. Between 2010 and 2011, Radio Shack closed over 120 locations with even more forecasted in the near future.
All of these store closures mean more and more citizens becoming unemployed, which would once again add to the unemployment rate, which is a leading indicator of economic decline.
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