Wednesday, May 5, 2010

Corporate layoffs are back to normal

Publicly-announced corporate layoffs have dropped to their lowest level since mid-2006, according to the folks at Challenger, Gray & Christmas. It's hard to imagine things could improve much more on this front. Before hiring starts, firing has to almost grind to a halt, and it appears we are now at that point. Not surprisingly, net private sector job gains of 100K are forecast for the April employment report to be released this Friday. The only real question now is how fast the economy will add back the jobs it has lost. For politicians, the real question is whether enough jobs will be created before November to dampen anger over what increasingly appears to have been a trillion-dollar spending boondoggle (aka fiscal stimulus).

I'm guessing we will see progress (i.e., a declining unemployment rate) in coming months, but it's not going to be enough to disabuse the public of the notion that big government spending programs are a waste of money. Indeed, I've maintained all along that the "stimulus" package (which consisted mostly of transfer payments and make-work projects) effectively amounted to a headwind that would end up retarding the economy's progress. It was just the opposite of stimulus, since it wasted a lot of money that could otherwise have been put to better use (e.g., for tax cuts that would have increased the private sector's incentive to work, invest, and take risks).

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