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August Jobs Figures Raise Renewed Recession Fears

Last updated on Sunday, September 9, 2012

(INDIANAPOLIS) - On the surface they look like good numbers, but economists said August’s jobs numbers are a warning of another imminent recession.

Last month, U.S. employers added 96,000 jobs and the unemployment rate dropped from 8.3 percent to 8.1 percent.

Economists said that while the unemployment numbers may not look that bad at first glance, in reality they're a cause for deep pessimism.

The unemployment rate dropped, but only because 350,000 people quit looking for work.

The economy created fewer jobs than expected in August, and economists lowered their estimates on the number of jobs created in June and July.

Out-of-work Hoosiers said this is nothing they didn't already know.

"It's real tough, man. You can barely get a job these days," said one man, who told RTV6 he's been out of work for eight months.

After a year without a job, one woman is trying to start her own business.

"It's very tough," she said. "You know, you get used to a certain lifestyle, and you have to decide, you know, whether you want groceries or pay your electric bill. It's tough."

Butler economist Bill Rieber doesn't think the country is headed back into a recession.

"(It's) unlikely. That's the good news. Europe's in a recession; at least we're not," Rieber said.

But Ball State economist Michael Hicks calls the jobs report disastrous and said we might already be in another recession.

He expects action next week from the Federal Reserve System.

"Well, the Federal Reserve can engage probably in quantitative easing, which is a fancy way of increasing the money supply," Hicks said. "Printing (more bills), essentially printing them, or trading debt for money that doesn't have real backing," are some ways of increasing the money supply.

Economist Matt Will of the University of Indianapolis said Friday's numbers aren't that bad, but he's discouraged by slumping manufacturing figures.

"That's below 50 for three consecutive months now," said Will. "That means the manufacturing base is contracting. We haven't seen that since the recession back in 2008."

Will said he's been trying to remain an optimist, but he's now turning pessimistic and believes the country is headed into a recession.

Hicks said that the next recession shouldn't be as deep or as long as the previous one, but on the other hand, because the unemployment figures are starting from such a high base, they could get much worse.

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