Struggling to stay above water
By Stella Dawson
WASHINGTON (Reuters) - The world economy is on a slippery slope. The euro zone appears to have tipped into a mild recession and the rest of the global economy is struggling to hold onto firm ground.
China is slowing, Japan's exports are tumbling. Eastern European countries are wobbling as credit dries up from a pullback in lending by euro-zone banks.
In the United States, the improving economic picture has clouded somewhat after a mixed batch of economic data and downward revision to third-quarter growth to 2.0 percent doused some of the optimism for a strong fourth quarter. Consumer spending slowed in October and business investment weakened, showing a recovery that remains weak and vulnerable to shocks.
Against this uncertain backdrop, financial markets are volatile as European leaders fail to deliver any credible solutions to the sovereign debt crisis and U.S. lawmakers hit gridlock on slashing the budget deficit, further eroding business and consumer confidence and damaging growth prospects.
The U.S. labor market epitomizes these problems.
Two years into a recovery in which corporate profits are robust, hiring should be rebounding sharply. But U.S. employment numbers due on Friday are expected to show an economy treading water, with 120,000 new hires in November, up from 80,000 the prior month but way below the level needed to improve the outlook.
"The trend has been fairly stable over the last five months, stuck at a level just about strong enough to absorb new entrants into the labor force, but not to reduce the unemployment rate significantly," said Jeoff Hall, economist at IFR Markets, a Thomson Reuters company.
In fact, large U.S, companies are showing new caution. Continued...