Smith on Economy, Unemployment

Depending on the day of the week headlines on the nation’s economy speak of positive momentum or a downward spiral.

Goizueta’s Tom Smith says the economy is, indeed, moving in a good direction but unemployment may remain high for the forseable future.

“Our economy has actually been doing very well,” said Smith, an assistant professor in the practice of finance in an interview on Emory’s YouTube channel. “We’ve had very nagging and high unemployment but I think one reason for that is firms have been able to be profitable while running very lean and not having to hire workers. I think they’re substituting technology for labor.”

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The U.S. unemployment rate ticked upward in May, but Smith said one shouldn’t pay too much attention in the month-to-month report. Instead, look at trends and subtle reasons why changes occur.

“Gas prices were really high [in May] and that definitely pushes down consumer spending and gives a lot of firms cause to be cautious about their hiring,” he said. “People who had been previously out of the labor force are likely to enter the labor force when the economy gets moving. When you see that you can actually see the unemployment rate tick up — it’s very common.”

Smith said the economy could see a decrease in the unemployment in the Fall.

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