Wednesday, June 2, 2010

Corporate layoffs are very low

If publicly-announced corporate layoffs are a sign that big business is bracing for bad times, then this chart says we're well on the road to recovery. According to the tally of the folks at Challenger, Gray & Christmas, recently announced corporate layoffs are just about as low as they've been at any time in the past 10 years. It strongly suggests that corporations have trimmed virtually all the fat they had planned to; that they are now lean and mean; that with almost no plans to fire anyone, they are very likely going to be hiring increasing numbers of new employees given the numerous signs of recovery in many sectors of the U.S. and global economies. In short, this is very good news.

So why is the world so concerned about the possibility of a double-dip recession? From the way the market has been acting, you'd think investors are bracing for bad times ahead. This chart says they should be preparing to celebrate the better times to come instead.


brodero said...

It feels like the economy is going to have to convince investors there is going to be substantial earnings. I think this is a result of the panic of 2008.The result is
going to be cheap P/E's for the next couple of years. Another result will be if the corporation create the earnings and the stock
market doesn't follow you are going to see the stock buybacks like we saw in the 1980's.

Andy said...

I was listening to an interview of Rob Arnott on Consuelo Mack's show and he made the point that while plenty of indicators are looking better, tax receipts are down 6$ vs 2009. I'm not sure specifically what he was referring to. Anybody seen something similar?

Andy said...

That was 6% lower

John said...


I have not seen anything specificly but I would think tax receipts would lag economic activity by a wide margin. This spring's reciepts would reflect 2009 while 2009 would reflect 2008. I think all it tells us is '09 was a worse year than '08. Hardly news IMO.

Public Library said...

Corporate profits are not making their way into peoples pockets. A quick look at the historical dividend yield on the s&p is an indicator of where the money is NOT going.

Additionally, with the unemployment rate at 10% and expected to hover there for quite some time, does it take another shock to 15 - 20% unemployment to create another recession?

Here are some juicy tidbits:

1. The gap between the top 1% and everyone else hasn't been this bad since the Roaring Twenties

2. Half of America has 2.5% of the wealth

3. Real average earnings of workers have not increased in 50 years

4. The personal savings rate has declined precipitously since 1982

5. Normalized to 1979, the top 1% have seen their share of America's income more than double. The bottom 90% have seen their portion shrink.

John said...

Danaher is a large US industrial conglomerate with extensive operations in Europe. The CEO Larry Culp, speaking at an investor conference is quoted by Reuters as saying,"..its likely now core growth numbers will be in the double digit range." He added he has seen NO SLOWDOWN IN EUROPEAN DEMAND (emphasis is mine) and that they feel very good about the first half of the year.

This is per Reuters News.

It is possible weakness in Europe could manifest itself in the near future but it appears from this that growth there is continuing for the moment.

Unknown said...

Just on the bitter tone for Europe.
1.Forward looking new orders to inventory indicator felt abruptly to 11 months low.
2.German export expectations, as part of IFO business, hit record levels in May, comparable with 2006/2007 levels
So it looks there is rather a downside risk in 2011 for German GDP, but maybe this is already priced in.

Scott Grannis said...

Re tax receipts: I don't think there's any doubt that tax receipts are going to be a lagging indicator of recovery. If for no other reason, tax receipts are going to be depressed for awhile given the tremendous losses that were incurred in the past few years. The place to look is NIPA profits, which have already staged a pretty decent recovery. Corporate profits are at a fairly high level relative to GDP.

Jeff said...

Public Library, I've got an idea. Let's tax the top 1% at a rate twice the rate as the percentage of income they make.

Oh....never mind. WE ALREADY DO THAT! The top 1% makes 21% of the income and pays 42% of all income tax.

Or how about this. Let's take $1.6 trillion out of the hands of those who produced it and send checks and stimulus out to the rest of the country.

Oh...never mind. WE ALREADY DID THAT TOO.

Or how about this. Why not just make Obama King, he can take all our wealth. We'll call the country the USSA and we can all drive cheap cars, live in apartments, and name our kids Dimitri.

I keep wondering why a socialist like you follows a supply sider blog like Scott. He doesn't serve any kool-aid here!

Bill said...

Public Library: Let's get rid of the capitalist swine once and for all, comrade...

randy said...

Jeff and Bill:

I'm sick to death of the handouts and entitlements. I'm sick of seeing so much wasted monetary capital, and wasted human capital that learns to become reliant on handouts. I'm sick of Obama's preaching and disgusted with the way the health care bill turned out (even though I believe health care reform was a good idea.) I'm especially sick of all the taxes I pay personally and the myriad of business taxes I pay. (Getting a visit from the sales tax auditor this week!)

But - my instincts tell me that it's not good for America, not good for me, when economic gains are too disproportionate. History says the same thing. Maybe it’s the fault of the social welfare programs. Maybe its globalization. I don’t think it was tax cuts.

I’d like to see the FairTax plan implemented as a way to take the politics out of the tax side. To improve income disparities is much more complicated. How to recover the lost African American community. Immigration reform. Education reform with more emphasis on trade schools. Financial reform that eliminates the heads I win tails you lose. Corporate tax reform. The list goes on.


Jeff said...


The “disproportionate” distribution of economic gains in this country and throughout history is MORE a result of governments and less with the free markets. From Marie Antoinette’s famous “Let them eat cake” to Eva Peron to the Communist Party to government regulated monopolies and government protected oligopolies today (i.e. banking, broadcasting, gambling, communications, et al).

Government action causes unfair distribution of wealth! The marketplace results (ordinarily) in the FAIR distribution of wealth.

Unless, of coarse, you are advocating government even taking that away as well. Then you’ll fall in line with Obama who thinks guys like me have too much and needs to take it from me and “spread it around”.

Even the real Robin Hood didn’t take from “the rich” and give to the poor. He took from the corrupt government and gave BACK to the people!! Which is exactly what Nehemiah does in Nehemiah chapter 5. Remember, God only asked Israel for 10%...and He is God! We now pay 45% to governments (local, state, federal).

Redistribution is not a valid rationale for taxation--by God’s standards or the constitution.

Scott Grannis said...

Re: disproportionate economic gains. I would submit, though I can't prove it, that disproportionate economic gains are the unintended consequence of the government's best efforts to redress disproportionate economic outcomes. The more the government attempts to redistribute income, the more the middle and lower classes become dependent on government handouts, and the fewer incentives there are for them to work hard and progress.

randy said...
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randy said...
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randy said...


I agree. Redistributive policies are part of the problem. Hey, I’m just guessing, but I suspect that the transformation of our economic base from manufacturing to financial had a lot to do with it as well. But all that is beside the point. The point that Public Library was making (I thought, anyway) was that you should consider how robust and durable a recovery can be if two thirds of the population continues to see real incomes decline. It’s a legitimate concern, not just socialist propaganda.