Wednesday, January 6, 2010

Corporate layoffs have all but vanished (7)

Another update in a long-running series. Announced corporate layoffs are now down to levels that in the past have been consistent with healthy economic growth, according to the folks at Challenger, Gray & Christmas. The firing storm has passed. Of course, we are still waiting for the other shoe to drop. Now that layoffs are back to normal, when will firms start hiring? With confidence returning and demand picking up, it's only a matter of time.

As this next chart suggests, it might be only a month or so until firms begin adding to payrolls instead of subtracting.


Thomas B said...

Your second chart is especially interesting. I would have expected the rate up would be less than the rate down. The slopes seem the same. Does this hold for past recessions?

Scott Grannis said...

Unfortunately the ADP data only go back to 2001. The NFP data seems to show a pattern similar to that of other recessions.

Thomas B said...

So employment is a lagging indicator due to later initiation, not due to higher friction? It just kicks in later?

Benjamin said...

Job growth is badly needed. Persoanlly, I would like to see gasoline taxes subbed for payroll taxes, but that's a pipe dream.
If you have ever pounded the street day after day looking for a job, and wondering about health insurance, you will not doubt for a second that we have to generate jobs.

Scott Grannis said...

As I see it, companies are quicker to fire than to hire. When you see things deteriorating rapidly, you move quickly to cut staff and spending. When things stop deteriorating you breath a sigh of relief. Before ramping up hiring and spending, however, you need to see sales improving, AND you need to be confident that things will continue to improve. Erratic government policies and threatening tax hikes don't help at all. So hiring is definitely going to be lagging this time around, and slower to rise than it otherwise would be.

The Obama folks wasted a fantastic opportunity with their trillion dollar "stimulus." If they had used it to cut tax rates instead of to redistribute income, we could be seeing a barn-burner of an economy right now.