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Bush's National Economic Policies (pg. 6)
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| MisterOpus1 |
A closer look at the current readings on these new jobs just doesn't seem so rosy to me:
http://www.usatoday.com/money/econo...nt-report_x.htm
| quote: | The new jobs added last month mostly were in lower-paying industries such as retail and temporary employment firms. Average weekly earnings in those sectors are $366 and $318 respectively, said John Challenger, chief executive officer of Challenger Gray and Christmas, an employment research and recruiting firm. The national average is $521 per week.
Also, 1.4 million workers were only able to find part-time work, up 27% from a year ago. To make ends meet, 7.5 million Americans worked two or more jobs last month, up from 7.3 million a year ago.
One of four people out of work were unemployed for 27 weeks or longer last month. Nearly half of those were white-collar workers in management, professional, sales and office jobs, Challenger said.
The hard-hit manufacturing sector continued to shed jobs in October, losing 24,000. It was the 37th consecutive month of declines, though the pace has slowed considerably.
For blacks, the jobless rate climbed three-tenths of a percentage point last month to 11.5%. The rate fell for whites, Hispanics, Asians, men and women.
"It's quite alarming that the Bush administration is celebrating ... a very, very minuscule decrease in the overall unemployment rate while African-Americans are still standing in the unemployment line," said Rep. Elijah Cummings, D-Md., chairman of the Congressional Black Caucus.
"I see nothing to celebrate in these numbers," he said.
A Democrat-led effort in the GOP-controlled Congress to pass another extension of unemployment benefits probably will fail, Cummings said.
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Are these jobs really something to celebrate about? Is this something that should bolster such a great outlook? Manufacturing still lost 24,000 jobs - is that good news somehow?!? Seriously, part time jobs on the rise? Oh goody. As stated before, the tax cuts were merely a stimulus. A STIMULUS! We cannot ride the benefits on the tax cut forever. The money it brings inevitably runs out. Combine that with the increasing deficit and Bush's propensity for huge annual spending, and I'm just not feeling so peachy as others.
So tell me, should I not be so pessimistic? |
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| occrider |
| quote: | Originally posted by MisterOpus1
A closer look at the current readings on these new jobs just doesn't seem so rosy to me:
http://www.usatoday.com/money/econo...nt-report_x.htm
Are these jobs really something to celebrate about? Is this something that should bolster such a great outlook? Manufacturing still lost 24,000 jobs - is that good news somehow?!? Seriously, part time jobs on the rise? Oh goody. As stated before, the tax cuts were merely a stimulus. A STIMULUS! We cannot ride the benefits on the tax cut forever. The money it brings inevitably runs out. Combine that with the increasing deficit and Bush's propensity for huge annual spending, and I'm just not feeling so peachy as others.
So tell me, should I not be so pessimistic? |
Holy crap I have a lot to catch up on ...
Ok, To answer your questions in the order that you ask: Yes. Yes. No but it's inevitable. It is goody. No you shouldn't, but we should still remain cautious.
Ok, now, to explain my rationale ... first of all, yes these jobs growths are definetely a GOOD GOOD thing, and here's why: The service industry and temp jobs are the most elastic components of the labor market. Think about it, if business is booming and you're experiencing a sudden onslaught of demand who do you hire first? The people who interact directly with said demand ... the service industry, and temporary help initially, to be replaced with full time-staff as time goes on. In ANY kind of economic growth emerging from a recession, regardless of HOW that growth was encouraged or whether it was even encouraged at all, you will see similar patterns whereby the service sector and temp jobs will be the first to react.
Why is this? Well, no executive is going to add more white collared jobs in a time of relative economic uncertainty unless they are absolutely sure. Therefore they increase their temp staff as they slowly expand their full time staff. Now then, if you want to be ahead of the pack in anticipation of what's coming, I would follow the temp/part-time job situation very closely, because THAT will be an excellent indicator of further stregthening/weakening of the labor market. If temp jobs continue to increase and increase and increase, eventually it becomes more economical and prudent for managers to stop hiring so many temps and to begin hiring full time staff. If we see temp jobs decreasing, it means the labor market will likely weaken. This is exactly what happened in the anticipated recovery of 2002. Despite the fact that there was overall job growth, temp jobs were decreasing at an alarming rate. Why? Well because temps are the first to go before companies start to lay off their full time staff. Therefore it was almost a harbringer of doom (or rather further stagnation) for the economy.
With respect to the loss of manufacturing jobs, I'm afraid that that is an inevitability. There is simply no way to retain our manufacturing presence in the US in light of acheivements in third world markets. Has anyone been watching the economic releases of manufacturing data in much of the Far East? Industrial production is growing at rates of 5-15% as businesses are cashing in on cheap labor markets. The only way US industry can compete is to levy stiff trade barriers ... or increase productivity/skills relative to foreign labor markets. However, what was important to note was that in almost every single other industry outside of manufacturing, there was significant job growths.
So in conclusion we should remain cautious yet it is EXCELLENT, data which is a good omen for the economy. Do not let anybody try to tell you differentely. However, we should continue to remain cautious. As an article I read stated, this probably is not the end, but it is the beginning of the end. |
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| rupert |
| quote: | | So in conclusion we should remain cautious yet it is EXCELLENT, data which is a good omen for the economy. Do not let anybody try to tell you differentely. |
Analysis of the job figures from the Economic Policy Institute would beg to differ:
http://www.epinet.org/content.cfm/briefingpapers_bp146 |
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| occrider |
Rupert, you are analyzing the current STATE of the labor market ... I am analyzing the trend in the labor market, more specifically the latest trend in hiring data. I, for the life of me, cannot understand how you are trying to shrug off the potential indications of a resurging temp/part time job market as a sign of what may occur for the labor market as a whole ... especially since any expansion of labor markets would exhibit these similar signs.
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Hiring Companies Are Working Overtime
Cynics might read these seven words from the Federal Reserve -- "the labor market appears to be stabilizing" -- as a sop to certain Washingtonians who are anxious about their own job security. Fact is, though, the Fed's Oct. 28 observation was anticipated months ago by stock investors, who first saw more hiring on the horizon last spring. Since Mar. 31, employment-services stocks are up 79%, more than triple the gains in the Standard & Poor's (MHP ) 500-stock index.
Along with such giants as Adecco (ADO ), these companies include at least eight others with a variety of specialties and market values of more than $500 million (table). Yes, they have already rewarded the investors who bought back when it was Uncle Sam who was doing the bombing in Baghdad. And yes, the easy money in these stocks is gone. Yet this run of happier days for shareholders of employment-services companies, which have expanded far beyond simply filling the odd temporary receptionist's job, may not be over.
IT'S INSTRUCTIVE FIRST of all to look back at what happened to this group of stocks when the nation crawled out of its last recession. In June, 1991, the U.S. labor market broke an 11-month string of smaller and smaller nonfarm payrolls. In the seven preceding months, the stocks had gotten off to a head start, jumping 46% from a low the previous October. But they didn't stop there, gaining 9% more through the rest of 1991, 23% the next year, and 15% in 1993.
History rarely repeats with precision, and with steeper unemployment insurance and workers' compensation costs, future job-creation trends are sure to change. But most staffing companies see clearer skies ahead. A key factor for investors is that the group has cut costs and debt. The Swiss firm Adecco is a good example. It is more leveraged than most staffing companies. Yet the industry's leader has worked net debt down this year by 23% and lowered its own payroll by 2,500, or 8%. Result: Costs in the third quarter fell 9%, driving operating income up 25% on a 2% gain in sales.
For the group's higher stock prices to be justified, better revenue growth will have to arrive in 2004. Keane, which consults on and designs information-technology projects along with providing IT staffers or whole call-center crews in such lower-wage spots as India, says it sees strength among financial-services clients now, not just those in health care or the public sector, which had tided it over. "Even the most down-and-out industries have stabilized," CEO Brian Keane says. At Kelly Services, President Carl Camden similarly reports a widespread pickup across various clients, industries, and regions. "For the first time since the recession started, we feel that we are moving into the job-creating part" of the cycle, he said.
Some smaller companies, such as Resources Connection in Costa Mesa, Calif., are coming through their first recession. Spun off by Deloitte & Touche in 1999, it went public the next year and has been growing swiftly. Like its much larger and better-known rival, Robert Half International (RHI ), it provides companies with staffers for specific accounting and finance projects. Both are also helping clients hew to auditing rules under the Sarbanes-Oxley Act. MPS Group (MPS ), perhaps best known for its IT staffing unit, Modis, is expanding its ranks of lawyers for hire. Revenue in the professional-services division rose 4.5% in the third quarter over the prior quarter, as operating income jumped 27%.
With their varying focuses, some of these companies will do better than others. But their strong balance sheets and prospects for sales growth make them fair bets on Washington's dearest hope: more jobs in 2004.
By Robert Barker
http://www.businessweek.com/@@[email protected]_mz026.htm
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| rupert |
My apologies. I should have put a caveat into what I said previously.
Your statement about hiring of labour and how it relates to the business cycle is right on the mark.
But.
America is not an island. In fact as the most open economy in the world. And this is what I am trying to get across.
It is quite easy to have economic growth and high levels of unemployment, in fact I would argue that is how the IMF like it, at the very least their policies often have that effect. But I digress.
If I was an american company and I am getting more orders, well I will need to fill them but I will also need to improve profitability at the same time, so why in an era of global markets would I necessarily use american workers when the technology exists to perform many job functions electronically or by phone.
Remember the real productivity gains are made during the bad times not the good, when things are tough people try harder to get that extra penny, so the job cuts/productivity gains increase in flat economic periods.
So I would agree that the global economy is out of its dolldrums, all the economic indicators would indicate that but the fact that businesses have increased profits is not necessarily good for workers in the USA.
During the nineties, there was a steady shift of manufacturing jobs from the West to the developing world, this was particularly so in the USA with the introduction of NAFTA amongst other things making it a smart business decision to relocate to Mexico.
This led to an increase in income inequality, particularly in the USA but also throughout the West because their are fewer low end jobs to go around but the demand for low end jobs is still there, as the USA has a less skilled workforce than its western competitors because of the high rates of migration to the USA.
It is also more pronounced in the USA as US firms have been at the forefront of relocating to take advantage of cheaper labour sources But the jobless rate was able to stay low because their was a shift in employment from manufacturing to the service sector and the USA has the one of the highest rates of incarceration in the world. And who are the people in prison? Why they're african americans and hispanics the people that would otherwise be wanting welfare or wanting one of those dead end McJobs. Problem solved.
So what does all that have to do with the current situation then?
The transfer of jobs to the third world is an evolutionary process. Once Company X shifts its plants to a cheap labour source all Company X's competitors MUST do the same or they will get sent to the wall because their product will become more expensive in comparision. But once all the companies produce in cheap labour markets that will remove the competitive advantage from producing there. So what then?
Move more jobs overseas. As there are no restrictions on this happening and the technology is there to make this possible it has to happen. So in the nineties it was for the most part a lower class phenomenon but now it will be a middle class pattern as their jobs go as well. Of course many jobs will stay, someone needs to guard all those blacks in prison after all. But there will be an even greater degree of income inequality as all those college educated software engineers and accountants and radiographers and telesales/call centre workers are priced out of the market by workers who can do their job just as well but for a fraction of the cost in India or Bangladesh.
So sure, the unemployment rate can improve but my argument is that the nature of the global economic system makes income inequality and structural unemployment an absolute inevitability and no amount of "good news" from the Commerce Department or Labour Department is going to change that. Those jobs that went during the recession after 2001 are for the most part gone and they are never ever coming back. |
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| MisterOpus1 |
Wasn't it Bush who said the government should be controlled in it's growth?
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"The sudden rise in spending subject to Congress's annual discretion stands in marked contrast to the 1990s, when such discretionary spending rose an average of 2.4 percent a year. Not since 1980 and 1981 has federal spending risen at a similar clip. Before those two years, spending increases of this magnitude occurred at the height of the Vietnam War, 1966 to 1968"
"The preliminary spending figures for 2003 also raise questions about the government's long-term fiscal health. Bush administration officials have said fiscal restraint and "pro-growth" tax cuts should put the government on a path to a balanced budget. Bush has demanded that spending that is subject to Congress's annual discretion be capped at 4 percent."
"The federal government spent nearly $826 billion in fiscal 2003, an increase of $91.5 billion over 2002, said G. William Hoagland, a senior budget and economic aide to Senate Majority Leader Bill Frist (R-Tenn.). Military spending shot up nearly 17 percent, to $407.3 billion, but nonmilitary discretionary spending also far outpaced Bush's limit, rising 8.7 percent, to $418.6 billion.
"Much of the increase was driven by war in Afghanistan (news - web sites) and Iraq (news - web sites), as well as homeland security spending after the attacks of Sept. 11, 2001. But spending has risen on domestic programs such as transportation and agriculture, as well. Total federal spending -- including non-discretionary entitlement programs such as Social Security (news - web sites), Medicare and Medicaid -- reached $2.16 trillion in 2003, a 7.3 percent boost, according to the Congressional Budget Office (news - web sites)."
Source:http://story.news.yahoo.com/news?tm...28252_2003nov11
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Tax cuts plus huge spending = future disaster. Oh yeah, didn't our international trade deficit rise as well? Again, sorry, but I'm not sold whatsoever on our current economic scheme. We are going to go "bankrupt" real quick, and international investors will eventually wise up and realize that we're not going to pay them back.
bye bye social security.
bye bye medicare.
Keep squeezing the states, Bush. Not like our local taxes are going up or anything (they are, by the way). |
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| occrider |
| quote: | Originally posted by MisterOpus1
Wasn't it Bush who said the government should be controlled in it's growth?
Tax cuts plus huge spending = future disaster. Oh yeah, didn't our international trade deficit rise as well? Again, sorry, but I'm not sold whatsoever on our current economic scheme. We are going to go "bankrupt" real quick, and international investors will eventually wise up and realize that we're not going to pay them back.
bye bye social security.
bye bye medicare.
Keep squeezing the states, Bush. Not like our local taxes are going up or anything (they are, by the way). |
Now this I agree with. Bush campaigned into office under the title of a fiscal conservative. Since his 2 years in office the government has grown by more than 20% which is absolutely unacceptable. As much as I'm an advocate of tax cuts, they must be undertaken with fiscal cuts. Bush has yet to veto a single fiscal expenditure. Perhaps I could possibly let such a situation slide under the extreme short term, however, it appears that there's no end to Bush's big government in sight ... he's more like a goddamned democrat with regards to the size of the government. |
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| biodigit |
Maybe i missed reading it in this thread. But, has it occurred to anybody, maybe one of the primary factors behind the boost of economy are the interest rates? They have stayed on the lower level, for god knows, how long.....and they're still falling.
I was just talking to one of my co-workers and he mentioned that he re-financed his condo yesterday and now....within couple of months he will be getting a check for $20,000. Now thats what you call spending money! :D |
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| MisterOpus1 |
| quote: | Originally posted by biodigit
Maybe i missed reading it in this thread. But, has it occurred to anybody, maybe one of the primary factors behind the boost of economy are the interest rates? They have stayed on the lower level, for god knows, how long.....and they're still falling.
I was just talking to one of my co-workers and he mentioned that he re-financed his condo yesterday and now....within couple of months he will be getting a check for $20,000. Now thats what you call spending money! :D |
Yes, interest rates are most certainly a factor. However, mortgage rates are steadily increasing. As for the rest of fed. interest rates, they will most assuredly go up. How fast and how far they go up is highly dependent upon whether or not they can successfully compete with the private sector. If you're somewhat skeptical of the economic policies as I am, you would tend to think interest rates are gonna go sky high soon. But really, who the hell knows. |
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| occrider |
| quote: | Originally posted by biodigit
Maybe i missed reading it in this thread. But, has it occurred to anybody, maybe one of the primary factors behind the boost of economy are the interest rates? They have stayed on the lower level, for god knows, how long.....and they're still falling.
I was just talking to one of my co-workers and he mentioned that he re-financed his condo yesterday and now....within couple of months he will be getting a check for $20,000. Now thats what you call spending money! :D |
Although one should not discount the potential ramifications/benefits of monetary policy, in this case monetary policy has done practically nothing to stimulate the economy. What it has done was to bolster the housing market which somewhat stabilized the economy from sinking any lower. Ultimately, however, the housing market can only do so much to the economy and businesses were simply not investing in captial despite the lucrative interest rates. It appears that business investment only picked up once consumer demand/spending was stimulated through fiscal policy. One need only to look at the Fed's reduction of the federal funds rate during the past 2 years to gauge its relative effect or lack thereof of providing stimulus as opposed to stabilization:
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| occrider |
| quote: | Originally posted by rupert
The transfer of jobs to the third world is an evolutionary process. Once Company X shifts its plants to a cheap labour source all Company X's competitors MUST do the same or they will get sent to the wall because their product will become more expensive in comparision. But once all the companies produce in cheap labour markets that will remove the competitive advantage from producing there. So what then?
Move more jobs overseas. As there are no restrictions on this happening and the technology is there to make this possible it has to happen. So in the nineties it was for the most part a lower class phenomenon but now it will be a middle class pattern as their jobs go as well. Of course many jobs will stay, someone needs to guard all those blacks in prison after all. But there will be an even greater degree of income inequality as all those college educated software engineers and accountants and radiographers and telesales/call centre workers are priced out of the market by workers who can do their job just as well but for a fraction of the cost in India or Bangladesh.
So sure, the unemployment rate can improve but my argument is that the nature of the global economic system makes income inequality and structural unemployment an absolute inevitability and no amount of "good news" from the Commerce Department or Labour Department is going to change that. Those jobs that went during the recession after 2001 are for the most part gone and they are never ever coming back. |
What makes this any different from markets 10 years ago? |
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| MisterOpus1 |
| quote: | Originally posted by occrider
What makes this any different from markets 10 years ago? |
Are you referring to something like NAFTA?
If so, my response would be the current outsourcing situation is NAFTA on steroids. |
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