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Jobless Rates Still Climb While Companies Hold Cash

Two stories recently reported by NPR spoke to the opposing forces that continue to spur stagnation in the economy: one regarding the country’s number of unemployed workers that continues to rise and the other on the current phenomenon of American companies racking up large gains and cautiously holding cash instead of hiring.

The U.S. Labor Department reported individuals applying for unemployment benefits rose 9,000 to 408,000 during the second week in August, the largest level in the preceding month. New unemployment claims have been more than 400,000 for 18 of the past 19 weeks.

An only slightly positive note: the four-week unemployed average dropped to the lowest point, 402,500, since the middle of April. However, that implies that while jobs are being created, they’re in too short a quantity to combat the high unemployment rate. Analysts claim the number must drop and stay under 375,000 to signal solid growth.

Meanwhile, many companies have become increasingly wealthier during this period, according to NPR, but a sizable amount of them are very hesitant to spend/ hire due to the unstable and sluggish climate. Recently, Moody’s reported that the more than 1,600 U.S. companies it studies had 11.2 percent more money than they did a year before — equating to $1.2 trillion. Rick Lane at Moody’s told NPR: “… I think one of the reasons that is contributing to many companies holding onto cash would be the very vivid memories of the severity of the downturn that commenced in mid-2008.”

Both stories speak to the lengths the economy must travel before a real correction is possible. If you’re struggling with business matters, contact the Southern California business litigation lawyer Art Matthews at Matthews Law Firm, Inc. Call 800-449-4850 for a complimentary consultation.

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