Experts: As consumers reduce spending, more layoffs expected
Economists say more workers may join the ranks of the jobless in the coming months, especially in the retail and home-improvement sectors as consumers nervous about the Wall Street mess cut back on spending.
“Come Christmas, people will be making arts and crafts instead of buying big-ticket gifts,” said Robert A. Rosenthal, chairman of the economics department of Stonehill College in Easton.
And anything related to housing “will be hit hard,” he added.
“People will not be taking new loans or refinancing in order to make new home additions or redecorate,” Rosenthal said.
Overall, unemployment looks to grow, another expert said Tuesday, after the state released jobless figures for September.
“I think it’s going to be worse in three months,” said Michael Jones, an assistant professor of economics at Bridgewater State College.
“My concern is that we don’t know the full extent of what’s happening in the financial industry,” he said.
The experts differed over how the outcome of the presidential election could affect the economy.
Jones said an Obama win on Nov. 4 could have a positive impact.
“A Democratic leadership would kick-start a transition toward a ‘green’ economy, something the governor (Deval Patrick) believes in,” he said. “We should see in the next couple of years all sorts of new industries starting to blossom.”
But Rosenthal said the election won’t have “an immediate effect” on the economy and added that the current crisis could stall the new president’s initiatives, including green projects.
“We are dealing with enormous deficits,” he said. “That is putting certain programs and desires on the back burner.”
More significant for Rosenthal is that the economic crisis is taking place as the holiday season approaches. Consumer confidence is a barometer for the economy, he said, so a shrinking job market will keep people from spending like they have in the past.
“An area that will take a huge hit in the upcoming months is retail,” he said. “The timing really couldn’t be worse for them.”