Switzerland’s seasonally adjusted Unemployment Rate is set to rise to 3.9% in July, the highest in close to five years, pointing to mounting headwinds for consumer spending and thereby overall economic growth. In fact, the jobless rate may actually be understating the total impact of the current downturn on consumers’ spending power as many firms looked to cut costs by switching a portion of the workforce to a “short-time” schedule, which amounts to fewer hours and thereby smaller paychecks. Naturally, this trims disposable incomes and adds to already formidable disincentives to consume. Although exports are heavily represented as a component of Swiss economic growth, domestic demand is still by far the most important driver of activity, contributing about 60% to total output. The State Secretariat for Economic Affairs (SECO) has forecast that the jobless rate will register at 3.8% through 2009, an expectation that has been echoed in a survey of economists conducted by Bloomberg. Job losses have grown at an average pace of 3.35% in the six months through June and so would be expected to rise by an average of 4.25% in the second half of the year.