There will be some dips and blips along the way, but the U.S. jobless rate will continue on an overall upward trajectory for much longer than most dare to imagine. Here is why:
1) Despite all the political hype, the stimulus jobs are not materializing. This is not surprising because although the U.S. Government excels at creating various make-work projects and programs, doing so takes yearsnot months. Moreover, as almost everyone expected, the Great White Stimulus Hope has dissipated into various short-duration, pork-barrel projects with no overarching focus, coherence, or any discernible effect. Does anyone think the next stimulus round will be any more effective?
2) The state and local government firing binge is just getting started. With sales, income, and property tax revenues plunging like never before, American states, counties, and cities are gearing up for their first-ever mass layoffs of clerks and bureaucrats, schoolteachers, librarians, dog catchers, and even police and emergency services personnel. State colleges cannot be far behind.
Not even the Great Depression saw it get this bad so early in the gamewe are looking at unprecedented grief in a sector employing roughly five percent of the labor force, which has hitherto been almost entirely insulated from the larger economy.
3) Auto-industry layoffs are just warming up. Uncle Sams bailout has bought some time, but what about the GM and Chrysler factories and hundreds of dealerships already slated for closure, not to mention the collateral damage to hundreds of parts suppliers and other dependant businesses such as catering, security, and building services? The long-expected terminal downsizing of our auto industry has not even begun.
4) Tourism, hospitality, and airline industry downsizing is just around the corner. Go to any vacation spot and you will see half-empty hotels and desperate managers hoping for a turnaround in the economy before they go under. Anything short of a lightning-fast rebound to previous levels of consumer discretionary spending will see many of them close their doors.
On the transportation side, Delta has said that it will reassess staffing needs, US Airways is asking some personnel to take unpaid vacation, and American Airlines intention to cut a mere 2.4 percent of its workforce seems a little on the rosy side relative to prior experience. It looks like some serious trimming is just around the corner.
Moreover, how many soon-to-be Pan-Ams are out there in the airline sector, ready to disappear at any moment? Does anyone believe that this perpetually near-bankrupt industry can avoid mass liquidation in the near future?
5) Precipitous demand destruction in coal, metals, and some other resources is only now leading to mass layoffs in the extractive sector. Coal shipments are already down an astounding ten percent year-on-year and with no sustained manufacturing recovery, will not be rising any time soon. No matter what happens in Washington and on Wall Street over the next few years, our nation will not require nearly as many miners as it did when the hyper-consumption economy was booming and the typical yuppie bought a new car or laid fresh asphalt on his driveway every four or five years.
6) Many small businesses are hanging by a thread. This is one of the biggest underreported stories out there. Not possessing sufficient clout to secure a bailout, handout, or any other form of government cheese, tens of thousands of smaller enterprises employing millions of Americans are deep in the red, running out of cash and credit, and sputtering along on nothing more than momentum and hope. How long can this go on?
7) Last but not least, the optimistic mainstream consensus over the last 18 months has been consistently proven dead-wrong. Whatever the mainstream agrees on at any given time, the opposite has repeatedly proven true. If they are now saying that the employment picture is stabilizing, you can be 100 percent sure that, somewhere at the bottom of the governments murky statistical soup, it is in fact getting much worse.
1) Despite all the political hype, the stimulus jobs are not materializing. This is not surprising because although the U.S. Government excels at creating various make-work projects and programs, doing so takes yearsnot months. Moreover, as almost everyone expected, the Great White Stimulus Hope has dissipated into various short-duration, pork-barrel projects with no overarching focus, coherence, or any discernible effect. Does anyone think the next stimulus round will be any more effective?
2) The state and local government firing binge is just getting started. With sales, income, and property tax revenues plunging like never before, American states, counties, and cities are gearing up for their first-ever mass layoffs of clerks and bureaucrats, schoolteachers, librarians, dog catchers, and even police and emergency services personnel. State colleges cannot be far behind.
Not even the Great Depression saw it get this bad so early in the gamewe are looking at unprecedented grief in a sector employing roughly five percent of the labor force, which has hitherto been almost entirely insulated from the larger economy.
3) Auto-industry layoffs are just warming up. Uncle Sams bailout has bought some time, but what about the GM and Chrysler factories and hundreds of dealerships already slated for closure, not to mention the collateral damage to hundreds of parts suppliers and other dependant businesses such as catering, security, and building services? The long-expected terminal downsizing of our auto industry has not even begun.
4) Tourism, hospitality, and airline industry downsizing is just around the corner. Go to any vacation spot and you will see half-empty hotels and desperate managers hoping for a turnaround in the economy before they go under. Anything short of a lightning-fast rebound to previous levels of consumer discretionary spending will see many of them close their doors.
On the transportation side, Delta has said that it will reassess staffing needs, US Airways is asking some personnel to take unpaid vacation, and American Airlines intention to cut a mere 2.4 percent of its workforce seems a little on the rosy side relative to prior experience. It looks like some serious trimming is just around the corner.
Moreover, how many soon-to-be Pan-Ams are out there in the airline sector, ready to disappear at any moment? Does anyone believe that this perpetually near-bankrupt industry can avoid mass liquidation in the near future?
5) Precipitous demand destruction in coal, metals, and some other resources is only now leading to mass layoffs in the extractive sector. Coal shipments are already down an astounding ten percent year-on-year and with no sustained manufacturing recovery, will not be rising any time soon. No matter what happens in Washington and on Wall Street over the next few years, our nation will not require nearly as many miners as it did when the hyper-consumption economy was booming and the typical yuppie bought a new car or laid fresh asphalt on his driveway every four or five years.
6) Many small businesses are hanging by a thread. This is one of the biggest underreported stories out there. Not possessing sufficient clout to secure a bailout, handout, or any other form of government cheese, tens of thousands of smaller enterprises employing millions of Americans are deep in the red, running out of cash and credit, and sputtering along on nothing more than momentum and hope. How long can this go on?
7) Last but not least, the optimistic mainstream consensus over the last 18 months has been consistently proven dead-wrong. Whatever the mainstream agrees on at any given time, the opposite has repeatedly proven true. If they are now saying that the employment picture is stabilizing, you can be 100 percent sure that, somewhere at the bottom of the governments murky statistical soup, it is in fact getting much worse.
