The job losses are likely a temporary setback, said Jim Kurre, an associate professor of economics at Penn State Erie, The Behrend College, and director of the Economic Research Institute of Erie. Previous job growth was so strong – 1,300 positions were added in June alone, and 1,300 more opened in July – that total job numbers are still higher than at the same time in 2011.
Other data in the index, which tracks eight key economic indicators, including the U.S. interest rate spread, the TS Freight Index and the S&P 500, suggest good times are ahead. The index has grown in 10 of the last 12 months. It was last at this level well before the latest recession, which began in 2007.
“We are doing better now than before the recession started,” Kurre said. “So we can afford a brief downtick, so long as we resume the upward trend soon.”
He believes we will. The index, which is sponsored in part by Marquette Savings Bank, shows no sign of another recession on the horizon.
Political infighting could change that, however. A failure to negotiate the looming “fiscal cliff” could rattle economic markets as Americans react to higher tax bills.
The effect won’t be instant, Kurre said. But it could have a real impact.
“It’s not as if we’re going to jump off, and suddenly the economy is in free-fall,” he said. “But it will slow the economy down. If the tax increases kick in, people are going to have less income and are likely to reduce spending. And then unemployment goes up.
“At this point, we have a lot of uncertainty, which is bad for the economy,” Kurre said. “We haven’t had a fiscal cliff in the past. We don’t know how badly people will react to it."