Friday, September 4, 2009

A Different Point of View on Unemployment

Another 216,000 jobs lost, but the employment picture is brighter? Only Joe Biden thinks the recession is over with 15 million people out of work!

In the United States, current unemployment, as reported by the Department of Labor, stands at 9.7% (ending August, 2009), the highest unemployment rate in 26 years, and expected to rise to 10%.

Approximately 15,000,000 people are out of work, yet we hear from many politicians that the economy is picking up, or that the employment situation is settling down.

Find $100K+ Jobs

I have a different point of view. What the unemployment numbers tell us is companies continue to shed jobs, maybe at a slower rate, but they not hiring folks in any great numbers. Factory inventories are about empty and order rates for goods and services are seriously down, thus no demand for increased production. Further, the likelihood of a major market correction becomes more likely as unemployment continues to rise.

Try RingCentral Fax FREE for 30 days

The American consumer is aware of the untenable amount of leverage they have taken on, and are adjusting to lifestyle of diminished spending. Further, great concerns about a dramatic increase in taxes, both from Cap and Trade, as well as the end of the "Bush Tax Cuts", and the potential destructive force of Obamacare are crushing consumer optimism and a willingness to invest in capital goods.

Chuck Norris wants YOU to get into shape! - Total Gym® Official Store. Try Total Gym® for 30 Days for only $1 - FREE Shipping.

What this means, is that until a period of reasonable certainty and stability returns, we are in for a very long ride. While credit markets may be easing, US home prices are still far below their highs, which is actually a good thing. Additionally, with decreased overall demand for goods and services, companies are in no hurry to hire. Without a marked increase in employment, don't count on the American consumer to go back to its spending habits.

Online incorporating services backed by people.

The only bright spot in this dismal period of unemployment is the potential for entrepreneurial growth. Usually, periods of high unemployment lead to smart, out of work people getting together to come up with goods and services adjusted for the new economic reality. While I hope this is the case, I think the fear around major tax increases are somewhat depressing interest in "going it alone." The lesson to take from all of this is the lesson of history. Left wing parties, regardless of country, always bring in high taxes and anti-business agendas. Productive capacity is taken from the private sector and put in the hands of inefficient governments. Forget power to the people, it becomes domination by the state.

No comments:

Peace and Freedom for Iran!
Respect Life, Defend the Weakest Among Us!