Since the end of 1999, wages have been gaining. Wages, however, are expected to plateau in the coming months. This is the one thing that stands out as the problem. For the Federal Reserve, it's a big problem. It's concerned that accelerating layoffs will further dent consumer confidence and result in an even sharper pullback in spending.
Recent surveys show that consumers are increasingly concerned about job security.
Consumer confidence, which rebounded in March for the first time since the early fall, resumed its downward slide in April. It's one of many reasons why the Fed has cut interest rates by 2 percentage points in the span of just four months. But it takes six to nine months for rate cuts to work their way into the economy. The Fed is crossing its fingers, hoping that until the benefits of lower rates kick in, companies will keep employees on the payroll and deal with squeezed profits in other ways. Manufacturing likely lost another boatload of jobs in April.