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The ADP employment report released today was a bit softer than the market expected (-23K vs. +40K), but it's within shouting distance of an inflection point in which the jobs market stops shedding jobs and starts adding. Expectations for this Friday's payroll number are for a healthly gain of 180K, but most of this would probably come from the hiring of census workers. Regardless, it's clear that the jobs market is at or near the point at which growth replaces decline. Soon we'll be worrying about how fast the economy is adding jobs. It's still very unlikely that enough jobs will be added between now and the November elections to make the electorate feel like it received good value for the $1 trillion we borrowed to "stimulate" the economy. This could be one of the most exciting, important, and divisive elections in memory.
6 comments:
Scott,
You obviously don't understand the implications of morphing from an industrial economy to a labor efficient digital world.
Just because we added labor in the past as we grew industrially is logic that will not apply to the future.
Most retailers will be gone...we are already seeing the evidence with the elimination of thousands of video stores, tens of thousands of employees, and millions of square feet of retail space.
Next to go will be the concept of the bank branches as we all morph to online banking and little need for human interaction in banking.
Same with libraries, schools, and much of the current payroll of municipal governments. All very labor intensive segments of the economy.
Labor will simply not be as needed in the digital age as what we contemplated ten years ago is now being implemented today driving greater and greater efficiency.
What I am trying to figure out about you is whether you really a closet BIG government guy? Most of the over 20,000,000 million government employees and similar number of health care employees are basically being funded by a our massive deficit and incredible amount of debt being raised by Wall Street companies.
As practically every single school, hospital, city, county, state, and most businesses are firing workers or have instituted employment freezes.....yet you forecast job improvement?
Trying to understand the logic is illusive for a seemingly supply side conservative such as yourself.
The only way it seems possible is if we initiate a massive conflict and/or really ramp up deficit spending as governments are running out of cash around the nation.....
I guess time will tell.
alstry,
The economy tends towards full employment naturally. Unexpected shocks drive down employment and Government policies slow the job creation process.
Advances in technology have tended to increase employment over time. The greatest examples of that are the huge migrations of subsistence farmers into industrial cities and the entrance of most women into the job market. Nobody knows where these jobs will come from but they will be created by individuals seeking to better themselves.
Obama's job destroying policies will certain slow the recovery. My guess is that enough jobs will be created this year to restrain unemployment to a 9.5%-10% level. We might get to 8% by the end of 2011. This probably represents full employment in an Obama social "democracy."
I have just finished reading the text of a speech given by Dennis Lockhart at a business leaders' luncheon in Conneticut. Mr. Lockhart is the President of the Atlanta Federal Reserve and is a voting member of the Federal Reserve Open Market Committee, arguably THE most significant committee of the Federal Reserve.
The text may be found at the link below
http://www.frbatlanta.org/news/speeches/lockhart_033110.cfm
Most of the speech centered on the problem of unemployment but the part that interested me most was his discussion of the celebrated 'extended period' language and his PERSONAL criteria for beginning the process of normalizing short term interest rates (read: fed funds rate hikes). "I don't think it is appropriate to talk of a specific timeframe or number of meetings. As long as inflation remains subdued and inflation expectations anchored, a key factor for me is improvement of employment markets. ...I will be looking for signs that employment gains ARE LIKELY TO REPEAT AND ACCUMULATE,AND ONCE ACHIEVED ARE LIKELY TO BE DURABLE". (Emphasis of capitals is MINE, not Mr. Lockharts)
To me this is right out of Alan Greenspan's playbook for the '91-'92 recession where unemployment fell from 8% to about 7% before a hike occured, and the '02 recession from 6.25% to about 5.75% when the first hike occured. Incidently, unemployment continued to decline for several years after the rate hikes began.
It looks to me like there is no rush to initiate the tightening cycle as long as inflation stays subdued.
I continue to not see a hike until after the election - probably december.
I am sorry but the entire link did not make to the prior post
http://www.frbatlanta.org/
news/speeches/lockhart_
033110.cfm
Scott,
With State and Local govt. budgets in the dumpster, I think we are going to see mass layoffs over the next several months. Do you think private employment will be able to pick up the difference? The salaries for many of these workers have been very high because of rising property values. Not only are layoffs rising but the salaries are being cut. I just wonder what effect this will have on the recovery if you have a lot of formerly high paid govt. employees out of work.
Bill: one way to think about public sector layoffs is that it reduces government spending. Government spending is always the key thing to watch, since government spends money less efficiently than the private sector. So fewer people equals less spending equals more efficiency. The money that the government was spending, that it had to borrow or tax from someone else, is now likely to be used by the private sector for some more productive activity. With government so bloated at all levels, any steps taken to reduce the bloat are good in my book.
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