The US economy created only 69,000 jobs in May 2012, which is much lower than the expected figure confirming the fact that the US economy is rushing towards another spring slowdown. The Labor Department stated in the previous week that the unemployment rate moved up to 8.5 percent, this has happened for the first time in eleven months. The reasons attributed to the slow job growth market are uncertainty in the real estate scenario, higher pump prices and speculation over Europe economy.
The media reported this news following a government report on June 7, 2012 which revealed that the US economy moved at a 1. 9 percent yearly rate in the first quarter, which was much below the initial estimate of 2.2 percent and a much sluggish growth rate compared to the 3. 0 percent achieved in the fourth quarter. This could also create more problems to the US President Barack Obama as he goes in for re-election against former Massachusetts Gov. Mitt Romney. Romney issued a statement saying, “Today’s weak jobs report is devastating news for American workers and American families.”
The slow job market means consumers will be more tight-leashed about their finances and will look for more choices, better deals and better ways to save money on the products or services that they want to buy. According to market experts, consumers will focus continuously on price and value. Philip Whittaker a market analyst who has been analyzing consumers buying patterns said, “Consumer sentiments are obviously below the historical average and is returning to 2011 levels.”
Clearly, the consumers are becoming cost-conscious and they are looking for offers at convenience stores, club and drugstores. The sales at supermarket stores are noticeably declining for FMCG (Fast Moving Consumer Goods) products. The leading food company Heinz for instance, is experimenting with smaller and cheaper packs to cater to consumers who have decided to put off buying big bottles and larger packs of the product. Most companies have put off its sales earning growth at 6 and 9 percent on an average and believe that the growth over the next few years will be on the slower side.
The Society for Human Resource Management has stated that the hiring pace will slow down in June for the fifth time in the past six months compared with the way things were a month ago. Compared to Mother’s Day, the average consumer plans to spend 23% less on Father’s Day (Sunday, June 17, 2012). The retailers and stakeholders are keeping a steady watch on the economy and are trying to make the most of the declining economic situation to make sure that they manage to sell their products and services without hoarding them in their warehouses. Consumers on the other hand are looking for price cuts. So expect some better offers and deals if not price reductions for the consumer as retail companies wrestle their way through to register enough sales against their projected estimate.