Between the fiscal cliff at the beginning of the year and the automatic budget cuts at the beginning of March, the United States has been making a lot of steps to try and reduce the deficit in the form of implementing far-reaching budget reforms. The effects of March’s budget cuts haven’t been fully felt yet, and we’ll probably still be feeling them for years to come as new problems arise.
The economy is reacting, as any economy would, to the sweeping changes, and while many economists feared that the wounds of the last few years of recession were still too fresh for the economy to handle such widespread budget reform, the U.S. has weathered the first month, though with a few distinct slowdowns in hiring. (http://econ.st/14JO6hC) Government hiring went down by about 7,000 expected for the month, alongside retail and construction/manufacturing jobs reporting significant drops in hiring rates. This coupled with the recent news that unemployment similarly fell, but fell because the eligible workforce was shrinking rather than from increased hiring from employers means the growth we’ve been seeing over the last year is going to be hitting a major speed bump. (http://n.pr/XuvQa0)
If nothing else, these effects can be looked at not as the end but a new beginning—the government is doing its best to get its deficit back under control, and while a number of important programs and jobs were sacrificed in order to do so, the only real way forward from here is a tentative upward trajectory. The hardest part is over with, and while we’re only a month out of the freshly-budgeted March 2013, there hasn’t been any drastic shifts for the worse. While growth has slowed, the economy is still technically growing, and with the government running more efficient than ever, once the growing pains are over with many economists are anticipating a much stronger economy for the rest of the year.