U.S. companies are reluctant to hire—but not because of uncertainty over government policies, as Federal Reserve Chairman Ben Bernanke mentioned in his testimony before Congress last week. A majority of the 53 economists surveyed from July 8-13 by the Wall Street Journal say it is the lack of demand that is keeping hiring down.
The U.S. economy added just 18,000 jobs in June, less than one-fifth of consensus estimates, as unemployment rose to 9.2 percent. Asked by the Journal to name the main reason for employers not hiring more readily, sixty-five percent of the 51 economists who responded said it was due to lack of demand. Twenty-seven percent said it was uncertainty over the government, and others cited the appeal of hiring overseas.
The economists also revised downward their predictions for economic growth, housing, and jobs for the rest of the year, but they still expect the economy to perform better than it did in the lackluster first half of the year.
Despite their gloomy predictions, the majority of survey respondents didn’t advocate action by the Fed or federal government, rejecting proposals for a third round of Fed bond-buying, known as quantitative easing, or including an additional round of fiscal stimulus in a deficit-reduction package