The Job Market Will Tell Us How Bad the Economy Could Get

Turn on the television and every single night you'll hear all kinds of different economic indicators and just how bad things are looking for the American economy. There is absolutely no denying that things are looking very bad right now, and there is no end in sight. Inventories continue to build in the beleaguered housing industry, credit markets continue to freeze up, and liquidity problems are still very real for the banks. Despite all of these things, it is my belief that the average American could save themselves quite a bit of time trying to understand how bad things could get in the economy by just keeping a close eye on the job market and the employment numbers.

Let's take a look at a few reason why I believe the job market will tell us all we need to know about the economy and consumer spending, which is so crucial to our economy.

1. As more and more American become concerned about their job, they will certainly cut back on consumer spending.

2. The Americans that are losing their jobs will understandably definitely not spend much at all on discretionary spending, which will contribute in a big way to a massive downturn.

3. Business to business spending will certainly slow as companies are forced to lay off quite a few workers just to stay competitive. It is unlikely that a company that is laying off thousands of workers will be spending a whole lot of money on software and technology for the future.

4. When the job market stabilizes and the unemployment rate begins to creep lower the consumer is likely to react quickly and begin to propel the economy into a turnaround.

To be sure, the recent job data is absolute horrific. In fact today's weekly jobless claims number was the worst in 26 years. November's job losses were more than half of a million, and previous months data had to be moved drastically lower as well. The bottom line is the current situation in the labor market is looking very bleak, with no signs of any turnaround anytime soon.

It may not be soon, but whenever the job market does begin to turn itself around you can count on consumers to start to put their money to work again. Ignore all the other economic data and keep a close eye on the most important number of them all, the jobs data.