http://www.nytimes.com/2011/09/03/business/economy/united-states-showed-no-job-growth-in-august.html?_r=1&nl=todaysheadlines&emc=tha2
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"The hero is the one with ideas." (Jack Welch)
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So August has presented us with zero job growth. There was an estimate this morning that roughly 400,000 state and local government jobs had been lost over the past year.
The White House said yesterday that it expected the 9.1% unemployment rate to stay that high thru at least 2012.
President Obama is expected to propose tax incentives to promote hiring and infrastructure spending. He's also expected to renew the payroll tax cut and extend unemployment benefits.
According to one economist, we have the same number of jobs in the U.S. that we had in January, 2000. Or, to use Fareed Zakaria's analogy, the U.S. GDP is at the same level as it was in 2007 and there are 6 million less jobs.
An economic statistic that is very closely watched by many economists is the percentage of working-age adults who are employed. As of August, that number is 58.2% which is the lowest number since 1983.
Yesterday, in Cernobbio, Italy, Nouriel Roubini (aka "Dr. Doom" because he forecast the worldwide financial crisis well before it happened) indicated that the advanced economies had reached a stall speed of around 1% annual growth. Roubini went on to say that governments and central banks, which have already made multitrillion dollar stimulus moves had no more "bullets."
There are some other facts here. Zakaria has pointed out on more than one occasion that Top 500 CEOs have all time record levels of "cash" on their books and have indicated to him that they will not spend it on capital projects in the U.S. until the tax and regulatory environment is clear. Is this rocket science?
I could go on.
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I think the whole "tax and regulatory environment" argument is complete bunk.
ReplyDeleteCompanies are making record profits, largely because the efficiency of the average American worker continues to increase while hiring is flat (if not negative). CEOs don't see a need to grow their employees, because they're doing more with less.
The "tax and regulatory environment" thing is just a red herring, and it's a backhanded swipe at Democrats.
Facts: Taxes are lower now than they were under Bush. *Nobody* has suggested raising corporate tax rates, and I can't recall the last time any politician spoke with any sincerity about new regulations.
The truth is most CEOs are thrilled with the way things are. The labor market is full of overqualified and desperate people, who will work harder than ever for less than they have in a long time. It's a pretty perfect place to be in, if you're a consumer of labor.
I am a little on the border line here, Craig.
ReplyDeleteI do not believe the tax and regulatory environment argument "is complete bunk." This uncertain environment is definitely having an effect on the consumer. Every day I see reports on the market up and downs, and think "really? This was suppose to be over by now..." Three years ago, I was a college freshman, and all my professors were telling our class, that this crazy recession would be over by the time we graduated. Well, it's not, and it's scary.
I do think that the world has the potential to grow, and companies are holding their breath to see what happens tomorrow. Maybe the Top 500 companies are indeed thrilled to have overqualified people, but that's only 500 companies, who were already rich to begin with. What about all the small and medium size firms. A construction company doesn't have any jobs because there is no infrastructure growth. And they have plenty of hard working people waiting in line for a measly salary. An electrician company is fighting for bids on jobs. And all those people depending on their paychecks from the small firms, are not spending money.
The uncertainty is trickling down more than ever to the "little people." If small businesses saw business picking up, then they would hire more, instead of sticking with their small workforce. And if the government did something to encourage growth, these small firms would take advantage of this. Growth as in investing in education, building more schools, hiring more teachers. Or fixing our roads. Why doesn't the government spend more money on those types of projects instead of wasting their time with Wall Street about whether they were wrong in trading derivatives, etc.
So yes, the fact that the government is not spitting out a cohesive message is affecting our jobs.
Yesenia - Small businesses are hiring more while the Fortune 500 continue to lay people off.
ReplyDeletehttp://www.elfaonline.org/pub/news/indnews/news_report.cfm?id=13927
Another related link that's timely:
ReplyDeletehttp://www.chicagotribune.com/business/ct-biz-0908-bf-small-biz-20110908,0,3038724.story
Small businesses say unequivocally that regulation is for the most part not even a concern.
"None of the business owners complained about regulation in their own industries, and most seemed to welcome it. Some pointed to the lack of regulation in mortgage lending as a principal cause of the financial crisis that brought about the Great Recession of 2007-09 and its grim aftermath."
I keep thinking of things to add, sorry ;)
ReplyDeleteI will say I agree - there is a LOT of uncertainty. Everyone is holding their breath, waiting for signs of the economy breathing. But it won't breathe as long as we keep holding our breaths... it's a vicious cycle. It's not regulation or taxes holding us up, it's a lack of good news. But the lack of good news makes us clench up, leaving us in a spiral of self-fulfilled prophecy.
Great exchange! What we need is more intelligent dialogue like this at the highest levels of government. What Top 500 CEOs see is "Faster, cheaper, better.." and they don't want to hire people if they don't have to. Small business is where the money goes when Top 500 companies spend. Small business CEOs don't have the same cash problems. To: Yesenia, Great arguements, as always! Just one adder: I was NOT one of your professors who said it would all be over by the time you graduate - I consistently said that our economists don't know what they're doing and that this is a long haul depression-like situation. It's really very simple: I follow "jobs" and that situation has yet to improve. You and Craig have both shown again why you were both two of the best students I've ever had.
ReplyDelete