Bay Area residents feel double dip recession


San Jose resident Jim Mielke was gassing up his work van this morning at a Shell station on The Alameda, which set him back just over $90. He's deferring some home improvements because of the rise in gas and food prices. By not spending money, he realizes he's hurting the home improvement store or the materials supplier, which impacts their ability to keep employees on the payroll.

"If everyone's playing the same game, there are people that I would maybe purchasing these materials from who are not receiving the income that they're looking for because they're in the same boat that I am in, and it's kind of a vicious cycle," said Mielke.

On the other side of the pump, contractor Dave Caputo confirms that work has been slow because of people cutting back on non-essential spending, not to mention the slowdown in real estate sales and the related drop in repair and remodeling jobs.

I've noticed it picking up slightly, then all of a sudden it seems like it's flattening out, and quite frankly I'm ready for a double dip myself," said Caputo.

That cycle is contributing to the unexpected drop in job creation in May. The Labor Department said only 54,000 new jobs were added last month. That's the lowest number in eight months. Economists had been projecting double that number.

Professor Mario Belotti, Ph.D., an economist at Santa Clara University, said it's not just a downturn in consumer spending that's causing employers to throttle back. It's also the impact Japan's earthquake and tsunami have had on the auto industry, economic turmoil engulfing several European Union countries, and on-going civil strife in Northern Africa and the Middle East.

Job seekers -- many of them out of work for two or three years -- have a tough road ahead.

"It just makes me work a little harder in researching what is actually growing and try to hone my skills a little bit more towards that direction," said Palo Alto resident Claudia Reimann.

Still, there are companies like Suvolta, a high tech start-up, that plan to hire.

"Today's start-ups usually end up being tomorrow's big companies, but often those big companies spread out across the country," said Suvolta CEO Bruce McWilliams.

The biggest impact when there is a downturn in hiring is how it will affect those who have been looking for jobs for a long time. There are currently six million Americans who have been out of work for over six months.

Copyright © 2023 KGO-TV. All Rights Reserved.