Thursday, 30 July 2009

It’s the Jobs Stupid: Why There will be no Recovery until Employment Stabilizes.

It should be rather obvious that without any sustained job growth there will be no economic recovery. In the same breath, you will have someone tell you that this is no common recession yet when it comes to talking about the stock market they will tell you that in normal times, stocks recover before jobs. That is true if this were your run of the mill recession. It is not. When you have five states like Oregon, Rhode Island, Michigan, South Carolina, and California all having unemployment and underemployment over 20 percent then you know the unemployment situation cuts deep and wide. With massive market volatility that has sent the S&P 500 rallying 40 percent in only 4 months. That is not normal. Most Americans intuitively know that without a broad based job recovery, there is little reason to believe this recession is close to being over.

Economists should note that jobs in the US are still being lost at an alarming rate. There is no jobs growth. We saw only one month in which the LOSSES were not as bad as predicted. Until the bleeding stops one cannot expect a sustainable recovery. People need jobs to buy things and pay for mortgages, it's that simple. The follow-on effects from having large numbers of people out of work are obvious and the financial markets will eventually reflect this reality.

[Posted at the SpookyWeather blog, July 30th, 2009.]


steven andresen said...


...for want of a nail...

I understand that the economic recovery for people won't occur unless and until they have jobs which will give them paychecks.

But there is an underlying argument that has not been addressed. Back when the corporations claimed that slave labor in China, et al, would be better able to make the widgets that we need to buy in grocery and department stores across America, our leaders agreed to it all. This is why factory and manufacturing in general moved into these other countries. The corporations that owned them would pay less in labor costs and they therefore would make better profits.

The unstated argument that explains why jobs will not be returning to America is that if they did, those corporations would be losing money. Hence, it ain't gonna happen.

The playground is run by bullies, and since the bullies are essentially corporate, they will not be doing anything to help out the rest of us kids hidden away on the monkey bars and sand boxes. They'll continue taking our lunch money as long as we have any lunch money to be taken.

SpookyPunkos said...

great comment ... yeah, the money/profits got concentrated at the top while the ordinary folks got cut out of the deal. Now there's a distinct lack of ordinary folks with paychecks to buy things and a shrunken industrial base.

... and the corporations got taxbreaks to move their operations overseas ...

I wonder when the "breaking point" will be when we see civil unrest ...