Skittishness on the part of employers, rather than “market fundamentals,” might send the U.S. back into recession, Reuters said. The problems in Europe, the falling stock market, and weak earnings reports from large companies are coming all just as 2012 budgets are being set.
“My view is they continue to stay with a tight belt and I think it means less hiring than they would have done otherwise,” Michael Neal, a General Electric Co vice chairman, told Reuters.
“It almost looks like the world is worrying itself into another recession and that should not be allowed to happen,” Alcoa CEO Klaus Kleinfeld told Reuters.
According to a survey by Business Roundtable, nearly a quarter (24 percent) of executives of large companies said they’ll cut jobs in the next six months. That’s more than twice as many executives who said the same in June. However, in the recent survey, more than a third (36 percent) said they’d add jobs.
“We certainly are on a cusp here and it does feel as though the economy has downshifted,” said John Challenger, CEO of outplacement firm Challenger, Gray and Christmas. “A lot of companies are coming into this last quarter cautious and they’re not optimistic … It feels like the economy could turn either way.”
Analysts said the unemployment rate, currently at 9.1 percent, could rise back to 9.25 or 9.5 percent if the economy stays uncertain.
Many companies, though, have already cut nearly as many jobs as they reasonably can, making them less likely to cut even more unless there’s a severe downturn, Reuters said.