Unemployment is at its lowest rate since the Eurozone crisis. There are combinations of factors which make the aggregate data appear as if the economy is improving, however this is not necessarily the case. While the numbers appear positive, a closer look at what composes those numbers shows that employers are hiring, but the positions are seasonal and temporary. These lower paid jobs come with fewer hours and less job security.

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The article titled UK Consumer Confidence Tumbles, looks at the impacts of the current economic recovery on the British economy. The Consumer Confidence Index is a predictor of spending, and it has dropped to its lowest point in four years. Insecure consumers have become very cautious despite declining unemployment and labor markets on the rise. Consumers who are not feeling the effects of the new employment profile continue to remain cautious, common in periods of slow growth. Spending is curtailed whether unemployed, less employed, or worried about employment. This lack of spending by consumers is likely to help keep economic growth slow, so the situation is likely to continue into the foreseeable future. Slow economic growth has many British workers concerned about their jobs in the upcoming year.

In a thriving economy with opportunities for advancement and profit, consumers are more likely to spend. Those expenditures fuel economic growth, and it becomes a self-fulfilling prophecy. The further economic slowdown, on the other hand, is in addition to Bank of England forecasts that growth will slow by half a percent. The dampening has deepened since that forecast was made last summer.

The Bank of England has been pursuing macroeconomic policies which predict the scenario described in the article; in the time since the 2008 financial crisis the focus has been price stability. This has necessitated the setting of the lowest interest rates since the institution of the Bank of England began. These low interest rates do not predict credit and expansion of markets; the low Bank set interest rate occurs simultaneously with a tightened credit availability. A lack of credit for investment is a major contributor to slow or no economic growth. While this is frustrating for some, it is achieving the monetary policy goals as inflation has also remained low. Price stability is not just the policy for Mark Carney and the Bank of England; it is the stated policy of the Central European Bank, the US Federal Reserve as well as the Bank of Canada and others. Globally, low interest rates and tight credit have ensured that prices remain stable, but the disadvantage is that they have remained stable at the expense of growth in the economy. Less growth in the economy has affected jobs and this has affected spending. In a roundabout way, the lack of spending is ensuring the price stability as demand curves shjft to the left across industries and markets.

Low interest rates set by central banks do not indicate that people are paying low interest rates; interest on credit cards, lease to own and doorstep loans and similar financial products remain in double and triple digits. There have been some savings in terms of interest for mortgage holders, however these savings have come at the expense of a dramatic reduction of equity in their home. Give the loss of asset this represents it is easy to understand why consumer spending by mortgage holders would be reduced, even though they are able to benefit from excellent rates of interest on their mortgage holders.

Low interest rates today predict low interest rates into the future, with further implications for slowed economic growth. As the monetary policy goal is price stability, then both an increase in growth and slow growth will have the net result of low set interest rates; given that the low set interest rates will continue, growth continues to be dampened. There seems little choice by decision makers to continue this cycle, as a spike in prices is even more likely to hurt consumer spending by reducing the overall spending power.

Consumer confidence is low, and for good reason. There may be further downturns for individual workers as permanent jobs transform into temporary and part time jobs. While the economy is improving very slowly, cautious households rightly keep any disposable income they do have tightly in their pocket.