Consumer hesitation negatively affects unemployment rate

A lack of consumer confidence has hurt the unemployment rate.

The unemployment rate may be significantly lower if it weren't for the hesitation to spend from consumers, according to a report from the Federal Reserve Bank of San Francisco.

In all, the unemployment rate had the potential to decline to 7 percent this year, instead of a range between 8 and 9 percent, if consumers were more confident and spent money. The lack of spending encouraged the government to lower interest rates multiple times, with the latest promise made earlier this month, in order to help them remain low for the next three years.

"Monetary policy makers typically try to mitigate uncertainty's adverse effects the same way they respond to a fall in aggregate demand, by lowering nominal short-term interest rates," the study explained. "Because nominal rates cannot go significantly lower than their current near-zero level, policy is less able to counteract uncertainty's negative economic effects."

High unemployment and a lack of consumer confidence can affect property management companies, as they may have a smaller pool of willing and qualified candidates to rent property. Additionally, fewer companies hiring can affect office vacancy levels, further limiting income.

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