Moreover, consumer sentiment dropped markedly over the summer and has remained low since then, reflecting households’ concerns about the broader economy as well as their own financial situations. Weak consumer spending, unsurprisingly, increases concerns among businesses about the prospects for sustained growth in the demand for their products and services. As a consequence, many businesses have been reluctant to significantly expand their payrolls.
Indeed, the average pace of hiring during the past several months has been quite a bit slower than earlier in the year. As a result, the unemployment rate has continued to hover in the vicinity of 9 percent since early this year.