“Normally, labor markets lag the economy because incremental spending transactions are financed via debt, stimulated by interest rate cuts. But as long as credit remains frozen and in a deleveraging environment, job growth becomes an important leading, causal indicator of demand and other economic conditions. The deterioration in labor market will continue because companies’ profit margins are so deeply damaged (amid slowdown in consumer spending and credit crunch) that a little bounce in growth won’t do much to alter their need to cut costs.”
Bridgewater Associates
