Posted on 11/22/2009 10:04:39 PM PST by Steelfish
Economists See Joblessness Bottoming Out Should peak in first quarter, but hiring and consumer spending to lag
Economists expect the joblessness that has weighed down the nation's economic recovery will start to slowly abate in 2010, but they predict consumers will continue to keep a tight rein on spending, according to a new survey.
While signs have pointed to the end of the recession, joblessness remains rampant. The national unemployment rate jumped to 10.2 percent in October, the highest in 26 years. About 9 million people currently receive unemployment benefits.
The November outlook by the National Association for Business Economics, which is set to be released Monday, shows economists expect net employment losses to bottom out in the first quarter of next year. Employers are seen starting to add to their payrolls after that.
"While the recovery has been jobless so far, that should soon change," said Lynn Reaser, NABE's president and chief economist at Point Loma Nazarene University. "Within the next few months, companies should be adding instead of cutting jobs."
But even if companies do start restaffing next spring, they aren't expected to ramp up hiring very quickly. Some 7.3 million jobs have been lost since December 2007, according to NABE. Of the 48 panelists surveyed, 61 percent do not expect a complete recovery of those lost jobs until 2012. And they expect the unemployment rate will remain "stubbornly high," averaging 9.6 percent in the fourth quarter of 2010.
(Excerpt) Read more at msnbc.msn.com ...
Bullshit.
It will bottom out when everyone is unemployed, which is a distinct possibility with the Usurper in the White House.
...are these the same “experts” who are shocked every time unemployment goes up?
These hopeful signs that have been publicized occasionally are starting to seem like the “prosperity is just around the corner” line Americans were fed over eight years during the New Deal.
No doubt, and they are also the same “experts” who completely missed the signs of the current recession in 2008. And missed the housing bubble. And missed the tech bubble.
No conclusion to draw except that economists are pretty much complete idiots. Just like most politicians and journalists.
What can go wrong?
1. That $7 trillion that was dumped into the US economy starts generating inflation. To combat inflation, the Fed is forced to raise interest rates. This means a 1978-style inflation followed by a 1980-style unemployment surge.
2. The price of oil keeps going up, eventually resulting in the $4+/gal gas that started this recession.
3. The mortgage crisis finally hits commercial real estate. Large buildings need to re-finance short-term notes that expire in the next 1-2 years, and they can’t get the money. The resulting downward spiral of commercial real estate values and foreclosures forces Congress to do another TARP.
4. My wildcard — the Chinese economy starts to falter when Chinese government measures to create 1 million new jobs a month (which is what they need to keep their people employed) runs out of steam. Not only does this mean a source of profit for most of the “recovering” companies dries up, it also means that a source of money for the US debt dries up. And, there would be unrest in China and North Korea (DPRK).
If economists had any predictive skill, they would have been able to predict the credit collapse, which was easily telegraphed in the debt markets.
But they didn’t. They’re still working off statistical models based on post-WWII data, and according to their models, this recession has gone on for “too long,” and their previously correlated “leading indicators” show a little wiggle, so they think that there will be an increase in employment.
However, some of us look at the number of people who have been “part timed” against their will in order to merely keep their job, and see a big slack in the labor force that will mean that employers have an ability for the first couple of quarters of the recovery (whenever that will be) to increase “employment” by merely giving the currently under-employed full time hours again. This, I believe, will keep unemployment elevated for at least two quarters longer than leading indicators will indicate growth in employment, perhaps more.
just more government spin...move along, please.
They keep saying it, eventually they will be right! LOL
Shouldn't they first look for a reason for increased employment?
I'll bet they can't point to a single one.
They should, but that would be dealing with political realities, and it's above their pay grade. As NVDave said, economists simply base their predictions on past events - which are no longer relevant. For example, outsourcing killed manufacturing jobs; how relevant would it be to look back at 1950s and draw any conclusions from that?
At this time every sane company is forced by economic realities to move the business out of the country. There are many reasons; taxation is a big one, especially with higher healthcare costs. States are going bankrupt one by one, and they will want their pound of flesh from dying bodies of remaining businesses until there is nobody left. At the same time, hordes of unemployed people will be contributing to violence and social instability. New "green" laws make sure that nothing can be manufactured in this country; farmers in Central Valley of CA are sitting on dry land, without water, just because some tiny fish somewhere is being "saved." Is there any surprise that everyone who can run does just that? And when everyone is out of here, what the rest of the people are to do? There will be hardly any jobs left.
The only way out of this recession is by creating a business-friendly atmosphere, promoting growth and promising stability. Unfortunately the current government does just the opposite.
Are these the same “economists” who are “surprised” everytime a negative economic report is published? The same ones who see “unexpected” economic downturns every month?
Why should I believe them now?
Oh, you silly person, you. Economists don’t look for fundamental reasons for things. That would be so “unscientific.”
Herein lies the central problem for modern day economists: they’re so utterly enslaved by their own cleverness, enshrined within their models, that they’re now completely divorced from reality. Personally, they’ve been divorced from reality for some time, since most economists are tenured faculty at universities and think tanks. Now, with the increased reliance on computer modeling, they don’t even deign to talk to “real people” with “real jobs” - they just stuff numbers into models and keep turning the crank.
Well, that and allowing the market to work off the excesses.
There are only a couple of ways we could work off the excess housing inventory, for example:
1. Import a whole bunch of people and shove them into houses at taxpayer’s expense. A rather dubious idea, since many people aren’t ready to own houses. And anyone who lives here in the west can take you on rather depressing tour of Indian reservations to show you what happens with you literally shove people into housing by executive fiat. It isn’t a pretty result.
2. Hand out such outlandish incentives and financing deals that people who can even barely afford a second house get to buy one. This puts us back in the 2004 timeframe. The NAR would love this idea, but the taxpayer would not.
3. Move everyone out of entire neighborhoods and developments, then light a match and destroy the surplus inventory. Don’t laugh. FDR did exactly this sort of thing with the AAA in his first six months in office. Look up the “AAA” in 1932.
This is the central problem of excess supply brought on by too much easy debt: we end up creating vast over-supply of products or real estate, and the market doesn’t have a good mechanism for dealing with an over-supply of things like food and shelter.
Those are real reasons, but we also need to factor in the tightness of credit available to small businesses. The word I have from banks around Sheridan for small business is this:
1. If you don’t have at LEAST five to eight years of solid, profitable history in your small business, don’t bother asking for a loan or an increase on your revolver.
2. If you do have a history of consistent profits, but you’re in construction, better strap on the sandals and make like Jesus walking on water. You’d better already have a crew of employees who have been with you for a long time, a solid lock on some contracts, not any sign of over-extension (eg, some builders buy land much too far ahead of their building plans...).
3. If you’re in a purely retail business... you’re probably SOL.
And the recession here is nothing at all like the coasts. Nothing. You can tell there’s economic slack in the area, but it is nothing at all like the coasts. Still, the bankers are nervous as a bunch of long-tailed cats in a room full of rocking chairs...
What is that saying about a stopped clock? They have been saying this for months, eventually, it will get bad enough it can only get better. But it gives the state run media something to report.
re: shocked every time unemployment goes up?
Or down, or stays the same? Yup, that would be them. Usually can’t figure out what HAS already happened, but never at a loss to tell us what WILL happen. It fascinates me that there are people who are actually PAID to miss things over and over.
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