A story in The New York Times this morning points out that, while profits have returned, jobs have not.
Why? A spokesman for Alcoa, a large aluminum manufacturer, says it comes down to confidence and certainty.
Alcoa spokesman Michael Belwood said his employer isn’t sure what’s going to happen with the economy: “We’re keeping a close eye on costs because there is still uncertainty about the stability of this recovery.”
Likewise, Washington Post columnist Robert Samuelson says it’s uncertainty about government that’s keeping employers from hiring. Samuelson warns this uncertainty will cause economic disaster:
“[I]t’s unclear whether corporate elites were so traumatized by the crisis that they’ve adopted a bunker mentality. That, as much as uncertainty over Obama administration policies, could be fearsome. What might appeal to individual firms — paring expenses to maximize profits, hoarding cash to protect against a future financial crisis, waiting to hire until sales improve — could, if adopted by most companies, sabotage a stronger recovery.”
One key example in the news today: taxes. While Treasury Secretary Timothy Geithner says raising taxes is the “responsible” thing to do, members of the President’s own party disagree. Democratic Congressman Bobby Bright (AL) said, “In a recession you don’t tax, burden and restrict.”
Right now it’s anyone’s guess what Washington will do next. For many businesses, this guessing game is too risky; they are waiting on certainty before investing capital into new and existing endeavors.
