Jobs Key to Consumer Confidence
Job growth is at the heart of increasing consumer confidence and growing the economy, Quincy Krosby, chief market strategist for Prudential Financial, told AICPA Council members Tuesday in San Diego.
“If we don’t bring the word ‘confidence’ in, small business owners will be afraid to hire. They are worried about credit markets and the economy and simply can’t bring in more jobs,” she said. “[When consumers start] holding back really quickly and being concerned about their job, [they] stop spending.”
Initial unemployment claims are beginning to trend upward, Krosby said, but she noted that what happens in just a couple of weeks cannot qualify as a trend. The Federal Reserve is concerned with both job growth and inflationary pressures, she added.
The reason jobs are crucial dates back to the Great Depression, when the country faced 25% unemployment rates and generations of people were “terrified to spend money,” Krosby said.
“The Great Depression weighs on policymakers, whether Republican or Democrat,” she said. “That prevents us from letting the market clean itself up.”
Globally, what is taking place in Europe and China will ultimately affect U.S. exports, but it is unclear by how much, she added.
The biggest fear related to the events in Europe, particularly Greece, is whether they will “contaminate the system,” she said. If they do, she expects a stimulus from Washington, even if it is not labeled that way.
To see results from the AICPA/UNC Kenan-Flagler Business & Industry Economic Outlook Survey Q2 2010, click here.
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