Unemployment in the US continues to increase at the fastest rate for 5 years.
Fresh unemployment claims in the US reached 448,000 last month. Some sectors like the construction sector have been particularly hard hit. US officials claim that his large jump was partly due to an effort to encourage people to claim benefits, however, it is hard to deny the slowdown in the economy.
There has also been a rise in disguised unemployment. For example, an extra one million employees have had full time jobs downgraded to part time. Part time work is not counted as unemployment and helps to disguise the weakness of the labour market.
The US economy has avoided recession so far - helped by a weak dollar and booming exports. However, the global slowdown threatens to harm US exports as well. Economists now predict a contraction in US economy next quarter as falling house prices, rising living costs and declining consumer confidence continue to reduce consumer spending.
It appears the summer tax cut may be insufficient to prevent an official recession.