Bad news for jobs equals bad news for savings accounts
September 12, 2011
Last Friday, the Bureau of Labor Statistics (BLS) released its Employment Situation report for August of 2011. The report represented more bad news for job seekers, and bad news for CDs, savings accounts, and money market accounts.
Key points of the report
The BLS report showed a net gain of zero jobs in August. This reinforces the impression of an economic recovery which has run out of steam.
The job numbers were hurt by 45,000 telecommunications workers being on strike, but even if these workers were added back into the employment numbers, it would have been an anemic month for job growth. Significantly, manufacturing job growth has slowed, which not only subtracts from job growth directly, but is an indicator of overall economic momentum.
Another area that continues to be a drag on job growth is government employment. Local governments have cut over half a million jobs since the peak in that sector's employment three years ago.
The government's role
Government job cuts are not the only impact that government had on this employment report. A poor month for employment was almost inevitable after the federal government began August with a messy budget squabble followed by a fiscal plan that seems designed to suppress growth. This week, President Obama will address a joint session of Congress to discuss job creation, but between them, the President and Congress created a situation last month which would have been discouraging to any business thinking of adding jobs.
A long road for savings accounts
Jobs relate to CD, savings, and money market rates because they are both an indicator of current economic momentum and a source of fuel for further momentum. Banks want an economic environment in which they can profit from loans and investments; absent that, they have little incentive to pay customers an attractive interest rate for deposits. The August jobs report suggests that slow growth, and low interest rates, are going to be around for a while. Until the government can inspire more confidence from the business sector, that's not likely to change.
