Good Grief! Where Are All The Jobs?
 It’s amazing, the economy hasn’t even (officially) stopped receding and we’re already hearing that familiar chorus; “where are all the jobs?” And, as usual, the choir consists primarily of those who would gain politically from a less than stellar recovery (that very same refrain was sung from the opposite side of the aisle as we came out of the 2001 recession).
The bad news for today’s cynical sopranos is that all (make that most) indicators are pointing to positive GDP growth for the third quarter. They will find their support however in the fact that, while the economy is about to move into expansion mode, we have about as much chance of seeing a near-term improvement in employment as Linus has of seeing the Great Pumpkin this Halloween.
But here’s the thing, job growth rarely occurs in the early stages of an economic recovery. I mean good grief!; half the country’s companies have just laid off half their workforce – do you suppose they’ll be hiring anytime soon? And besides, the Microsofts, Ciscos and Apples of the world have been hard at work, inventing all kinds of new technology designed to make companies more efficient. I.e., if the new computer application makes XYZ, Inc. more productive and doesn’t require health insurance and a pension, it’s going to be awhile before they even glance at a new employment application.
So while the critics play the “no jobs” tune like Schroeder plays Beethoven, don’t fret over the (near-term) continued weak employment stats. Again, that’s pretty much the norm. But what’s not the norm, and what honestly concerns me, is the fact that recent fiscal policy hasn’t been entirely consistent with what you might expect given the depth of this recession. One would think that we’d be looking forward to things like capital gains tax cuts and aggressive business tax credits/cuts – things that would inspire the private sector to expand and create jobs where real demand would dictate (and, ironically, increase tax revenue as we grow the economy) – as opposed to things like healthcare reform, raising tax rates on businesses, cap and trade, and the like.
I understand the talking point – “it’s an embarrassment that the greatest country in the world has so many uninsured citizens”. Not to discount that by any means, but isn’t it just a little embarrassing that the greatest country in the world is running monster deficits and piling up debt faster than a 19 year old with a MasterCard and an internet connection? I know, I digress (and I know you’ve heard this from me before).
Getting back to job growth: To be fair, there are government programs afoot designed specifically to produce new jobs – as we pave some roads and build a bridge or two. But when employment is created for the sake of employment itself, the jobs we get will in no way reflect free-market demand. Sure, we’ll see the construction projects and think “ah that’s great, our tax dollars are getting people back to work”, but we won’t see the legitimate, longer lasting jobs that weren’t created (or worse yet, lost) because those dollars were extracted from the real economy.
Short-term, all this spending will show positively in the economic stats… Longer-term, we’ll see.
Bottom line; we’ll survive any and all of it. If policy begins screwing things up, policy will change, just you watch.
As for 2009, it has clearly under-promised and over-delivered (thus far). Corporate earnings have consistently exceeded analysts’ expectations, the market has exceeded most pundits’ expectations, and while October may indeed drop a rock in your trick-or-treat bag Charlie Brown (by delivering the long-awaited correction (not a prediction)), don’t be surprised if the coming retail season (like earnings and stock prices) happens to manage a little unexpected merriment of its own (not a prediction).
Have a great week,
Marty
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The job market is going to be an interesting thing to watch. I agree, companies are in no hurry to hire again. Especially when they are using this down-turn to become more effecient with all the new technology out there.