n a disastrous unemployment report released last week, the government said that job growth slowed to a trickle in the last three months, cratering in May when a depressingly low 69,000 jobs were created. That data seemed to expose underlying weakness in the economy and raised concerns over whether it can withstand the ongoing debt crisis in Europe and slowing growth in China. Furthermore, the U.S. faces a looming "fiscal cliff" at the end of the year, when a slate of automatic spending cuts and tax hikes are set to take effect unless lawmakers intervene. Should we be worried about another recession?
No. The economy is recovering — just at a snail's pace: "The economy isn't careening into a ditch," says USA Today. "It's just stuck firmly in the slow lane." It may not feel like it "for millions of Americans who are unemployed or whose wages are barely rising," but the economy "is in some ways measurably better than it was three years ago — manufacturing is stronger, vehicle sales are higher, and a nearly moribund housing market is showing a stronger pulse." The economy is still growing, though the recovery won't abruptly "take off and generate hundreds of thousands more jobs every month."
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And there are reasons to be hopeful: Let's not forget, says Zachary Karabell at The Daily Beast, that the U.S. economy "is a system that is expanding, that is gainfully employing more than not, and has systemic strengths that much of the world lacks...." America boasts "continued strength in manufacturing, stability in national employment, and the comparative strength of the United States in a global system that is under pressure." Sure, worriers make a strong case for the possibility of "wider global contraction." But stateside, it's not all bad.
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But uncertainty about the future could spell doom: Financial markets and businesses are panicking over a multitude of threats that constitute "one big hairball of risk," says G.I. at The Economist. At the top of the list is the fiscal cliff, and while "optimists love to quote Winston Churchill's line about Americans always doing the right thing after exhausting all other possibilities," it's entirely possible that a stalemate between Republicans and Democrats will push the economy into a disastrous double-dip recession. With that in mind, investors and businesses might remain on the sidelines for the rest of the year, and that "sort of disengagement can make economic pessimism self-fulfilling."
"A big hairball of risk"
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