This must change soon, economists agree. Either confidence will begin to recover or spending will start falling. The pessimists think the adjustment has already begun. In March, as the unemployment rate rose to 4.3 percent and the economy lost the highest number of jobs in a single month since 1991, retail sales fell slightly. During the early weeks of this month, initial unemployment claims increased to their highest level in five years.
Few analysts expect the unemployment rate to fall soon.
This year, Cisco Systems , Eastman Kodak and dozens of other companies have announced layoffs, most of which are taking effect over weeks or months. Altogether, employment statistics that suggest future trends like the number of hours worked and other measures have dropped to their lowest level in 19 years, according to the Economic Cycle Research Institute. Despite the increased popularity of investing in stocks, relatively few Americans rely on them for a significant portion of their income. Widespread job cuts, on the other hand, are almost guaranteed to crimp consumer spending, one of the few strengths of the American economy so far this year. With layoffs already under way, the economy is doomed to weaken further, say those who believe a recession to be unavoidable.