So the debt ceiling has been raised and America’s credit has been downgraded, so how does that impact jobs?
This is a hot topic of discussion at the moment, but many of us might not fully understand what it all means, so for those of you who need a crash course—here is high level way to understand how the credit downgrade can affect you and jobs in the United States.
As everything is interdependent—the raising of the debt ceiling has in turn downgraded the U.S. credit which in turn will increase the interest rates that the United States will pay on the national debt, which in turn will result in higher borrowing costs for all of us (i.e. business credit lines, mortgages, student loans, and credit cards rates) which in turn can instill fear that any interest increase will slow the economy and mean less demand for workers, bringing about layoffs and increasing the risk of a double dip recession.
For those of you who are like me—visual learners click on the image below:
Other influencers? The downgrade adds to the worry that has already been instilled based on the fact that the government said our economic growth was far weaker in the first half of 2011 than economist had initially expected. So have employers stopped hiring? Well according to the soon to be released Beyond.com Q2 Trends Report (this is a sneak peak) when comparing Q1 to Q2 there was an increase in the number of fulltime jobs posted—which is promising.
So should we be worried? Well there are a lot of things up in the air at the moment, so it is hard to say. After all this is the first time in history that the U.S. lost its triple-A debt rating, however a better than expected jobs report that was released on Friday is keeping people calm.
Also, according to Beyond.com, CEO Rich Milgram, who acknowledges that while we saw a modest uptick in jobs for July, part of what is currently impacting job growth is the fact that many people forget about the woes of the world and go on summer vacation (even stay-cations)—that goes for the people who are doing the hiring and the people who are looking.
