Labor Woes Cast Doubt on Recovery Hopes (more layoffs)

[UpInArms]

http://reuters.com/newsArticle.jhtml?type=businessNews&storyID=3535190

NEW YORK (Reuters) - Growth at Midwest businesses slowed sharply in September while U.S. consumer confidence plunged to the lowest level since the start of the Iraq war, two reports showed on Tuesday.

<snip>

"The Chicago Purchasing Managers' (index) fell off a cliff. It is an ugly report," said Cary Leahey, economist at Deutsche Bank Securities.

The news also stoked speculation the Federal Reserve may again cut its target interest rate from a 45-year low of 1 percent in coming months. Fed officials have said they could cut rates if layoffs mount despite faster economic growth.

<snip>

For now, corporate America is still getting rid of workers. Ford Motor Co. F.N said on Tuesday it will slash 2,800 salaried jobs in a bid to trim costs by the end of the year.

"People may be losing their faith in a strong recovery because of the job situation," said Stephen Stanley, senior market economist at RBS Greenwich Capital.

<snip>

A breakdown of the Chicago indexes threw into question the sustainability of the recent bout of expansion among firms from Illinois to Wisconsin and Michigan. New orders growth was sluggish, suggesting demand slowed abruptly. Inventories were built up at a faster pace, meaning less production will be needed to meet future demand.

...more...

[davidinalameda]

1. when was the recession over

I think that some people missed it

[Beetwasher]

2. The economy is getting WORSE not better

Despite the cheerleading. And now the stock market is even starting to tank again...

[David__77]

3. Point regarding Bush "conspiracy theories."

I thought I'd mention a related matter: many people on this board fret that somehow, the right will manage to affect a semblance of "recovery" that will dupe people into signing onto their agenda. The fact is that the policies of the right are doing the economy in, and despite even the best of propaganda, people will look at the pocketbooks and those of their friends and see the truth. The money is not there for another "stimulus." The only way to do that would be to raise taxes, which of course would help us in another way: "Bush is a liar!"

[UpInArms]

5. my better half worries about that

me? I worry that we will survive the economic destruction that awaits us as surely as the sun rises in the east.

no way will this loser crew enact a "miracle recovery" - that is not what their agenda is, has been or ever will be.

remember Poppy: righter tighter hands

[Snellius]

4. Corporations are exploiting this recession

to cut benefits or to justify "out sourcing" existing jobs or laying off workers which they have probably wanted to get rid of all along.

[aquart]

6. Recovery hopes? Who had recovery hopes?

We have NO hope of recovery until George is gone, and scant hope until his anti-regulation supporters have been appropriately dealt with.

Would you invest in business when business leaders are licensed to steal?

[ClintonTyree]

7. How does all of this.............

jibe with the newest growth reports? The economy is reportedly growing at a 3.3% rate (last quarter, projected to be in the 4's early next year). Is this the result of increased DOD spending only? Or are they fudging the numbers in some other way? I don't trust these crooked bastards as far as I can throw them, but the numbers don't add up. I guess I shouldn't expect them to with the Bushies.

[LoneStarLiberal]

8. In two words, LAYOFFS GOOD!

First off I love the name! HA!

Second, one of the things that is driving some of the growth numbers and some of the rallying on Wall Street (though no consistent rallies, mind you) IS the unemployment AND the layoffs. When companies cut jobs, they save money spent on salaries, benefits, and retirement matching. That money is figured into better performance estimates which makes the company look better, ironically while laying people off.

Third, spending is up in some sectors again BECAUSE OF unemployment. Companies are trying harder than ever to automate humans out of their jobs and nothing says opportunity for automation like a good bout of layoffs! For companies that are not trying to automate humans out of jobs, they simply do have more money to spend with fewer workers around.

The third point I make in particular is a glossy generalization, but the basic idea you can take away is that layoffs are good for corporate performance in this climate.

Is that sustainable? No.

[mbperrin]

9. GDP (Gross Domestic Product)

has been growing - this is just stuff that is manufactured, not necessarily sold, and the inventory growth now tells us that it's not being sold, and so orders will fall and GDP will, too. GDP is a LAGGING indicator, not a leading one, and is also subject to the following errors:

1) rate of inflation is understated and so GDP is overstated
2) businesses placing orders change their minds after they realize they're wrong about prospects of sales
3)large currency changes improperly adjusted can also overstate GDP, especially if the dollar strengthens.

No doubt there's more, but this will get you started!

[ozone_man]

12. Good point. I don't have a good answer, but when military is subtracted

from the GDP, it is more like 1.5%, maybe less. What is especially interesting is that 2/3 of GDP is made up from consumer spending. The consumer spending has been pumped, mostly from house refinancing, but also from tax cuts (two in the past two years). The consumer has not been making the money that he is spending to create this GDP figure. Also, what about deficit spending part of government spending? This must be enormous. If the real GDP was computed, it would probably be -10% IMO. Anyone care to take a stab at computing the real GDP?

GDP = Consumer Spending
+ Business and Residential Investment
+ Government Spending
- Trade Deficit

I have heard that employment/unemployment numbers are pretty real and they seem to be fudged only moderately. I would use these as a better gage of the economy. The GDP number, I think, is fudged to make the market sheeple feel that the economy is OK.

http://www.bls.gov/webapps/legacy/cpsatab12.htm

[Avalon Sparks]

10. DUH~

"People may be losing their faith in a strong recovery because of the job situation," said Stephen Stanley, senior market economist at RBS Greenwich Capital.


I'll file that under DUH!

[dArKeR]

11. What's Behind Jobless Recovery? - CBS

http://www.cbsnews.com/stories/2003/10/01/national/main576071.shtml