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Economic Recovery Moving In The Wrong Direction? [AUDIO]

Late last week, national figures showed the country’s economic recovery may have lost its momentum since the beginning of 2012. A measure of future U.S. economic activity fell in June, along with home sales, and the number of Americans seeking unemployment benefits made its biggest jump in more than a year.

Tom Grill, Getty Images

A quarterly survey from the National Association for Business Economics solidified concerns, as top economists suggest worsening conditions through increased flatness in sales and profit margins and less upward pressure on employment. They also expressed fears about the impact of the European crisis, potential U.S. government spending cuts in January, and the expiration of Bush-era tax cuts in December.

“About two-thirds of the panelists report unchanged employment in this survey, from the (April) survey,” said NABE’s Dr. Nayantara Hensel, also a professor of industry and business at National Defense University. “Only about a fifth of our panelists report rising employment at their firms.”

Looking down the road, less than 25-percent of panelists believed employment will rise over the next six months.

NABE panelists expressed significant concerns about the impact on their sales if Bush-era tax cuts expire in late December and the automatic government spending cuts take place in early January. They also said the European crisis has had a significant negative impact on their sales and is likely to continue doing so.

Hensel said these findings feed themselves into a vicious cycle.

“As a result of these uncertainties, firms are much less likely to hire; consumers are much less likely to buy. As fewer consumers buy, firms have fewer orders, they’re less likely to hire more, and the cycle goes on,” explained Hensel.

On the bright side, especially for consumers, panelists indicated fewer inflationary pressures.

“In this survey, over three-quarters of our panelists reported unchanged prices charged by their firms, since our last survey,” Hensel explained.

The NABE Industry Survey presented the responses of 67 NABE members, many of which represent companies with more than 1,000 employees.

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