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Europe's Debt Weighs On U.S. Employers
Originally published on Sat June 2, 2012 11:01 am
SCOTT SIMON, HOST:
So, why is job growth slowing? Well, part of the problem, as we just heard, appears to be in Europe. The economic turmoil there is looking worse, and that has ripped into the U.S. economy and slowing down hiring. NPR's Chris Arnold has more from Boston.
CHRIS ARNOLD, BYLINE: The weather this week was beautiful in Boston, so it's perfect for tourists having lunch outside by the harbor or taking a trolley bus around to do some sightseeing.
UNIDENTIFIED MAN: We're coming up to the oldest section of Boston right now, which is called the North End.
ARNOLD: A half-empty trolley bus rolls its way past some old brick alleyways. Some tourists hop off to go see Paul Revere's house, or some others go to grab dessert at some of the famous Italian pastry shops.
UNIDENTIFIED MAN: And don't forget about bringing back a cannoli for the driver. See you later.
ARNOLD: Some of the trolley companies here say that business is off from last year. And some think that that's because they're seeing fewer Europeans. Thomas Linnell(ph) is a driver with Boston Common Coach.
THOMAS LINNELL: We don't seem to have the travelers like we used to have. The Europeans' repeated business is not here like we used to have it.
ARNOLD: Linnell says he used to run a bunch of bus trips to a big outlet shopping mall outside the city for tourists - it's not exactly Paul Revere's house but apparently a lot of people want to go and they show up with empty luggage bags and stuff them to the gills at the outlet stores.
LINNELL: They are heavy.
ARNOLD: You know they're heavy 'cause you have to throw them under the bus and stuff?
LINNELL: Yes. Sometimes we have to put them under the bus or inside the vans. And I ask them once in a while if they brought their mother-in-law back with them in the bag because they're so heavy.
ARNOLD: But, with the economic trouble in Europe, fewer people apparently have that money to go spend and the weaker euro doesn't go as far as it used to in the States. So, right here on this street corner in Boston, you can see one small way that the economic trouble in Europe snakes its way into the life of a bus driver here in Boston. The company's owner says if his European tourist business was back up, he'd be hiring more people. And it's not just tourism. Ralph Hart(ph) runs an auto parts manufacturing company in Wisconsin and he sells products to Europe.
RALPH HART: We had originally planned to bring in between 10 and 15 new technicians this year to run our equipment. And we've stopped at five.
ARNOLD: Hart says his falling sales in Europe and the threat of worse problems over there were the main reasons that he put the brakes on hiring.
HART: It's affected hiring because we're more conservative now.
ARNOLD: Taking a step back, though, the majority of American companies actually don't have that much exposure to Europe, so the economic problems there haven't hurt most American businesses much at all. So then why is job growth slowing so much? Some of this, it turns out, has more to do with fear than the actual fallout from Europe so far.
BOB COSTELLO: I think there's a lot of businesses out there that are very nervous.
ARNOLD: That's Bob Costello. He's the chief economist for the American Trucking Associations. By tracking the trucks that carry goods all over the country, Costello can get a good sense of where economic activity is at. And he talks to lots of businesses as well. We've been checking in with Costello throughout the recovery.
COSTELLO: You see all this stuff going on in Europe and there's a concern will that come to the U.S., and therefore impact growth even more here. And so nobody really wants to go out on a limb and hire more people.
ARNOLD: Costello says the other thing that businesses are getting more worried about is the so-called fiscal cliff. That's a deadline that's looming at the end of this year. Politicians by then need to agree on budget cuts, the Bush tax cuts are set to expire, and all this might make Congress just deadlock and be unable to deal with it.
It's interesting, though, because this is all worries about things that haven't actually happened yet.
COSTELLO: That is exactly right. In fact, one could argue that job growth over the last couple of months certainly is not reflective of the amount of economic activity we have today. And most of the slowdown or much of it in the jobs area has been for what could happen, not what's going on today.
ARNOLD: So, maybe things will pick up if these fears ebb. Or, there's also the danger that's all of this concern that's stopping employers from hiring people becomes a self-fulfilling prophecy and the momentum keeps moving in the wrong direction. Chris Arnold, NPR News, Boston. Transcript provided by NPR, Copyright NPR.