“A Jobless Recovery?” Not This Time!

September’s jobs number was a big disappointment for those that are hoping for positive job creation by the end of this year. The job losses for September slipped back with 263,000 non-farm payroll jobs lost after a better than expected smaller decline in August.

The August number was revised with 15,000 fewer job losses to 201,000, from previously reported 216,000. But July was revised upward adding 28,000 more lost jobs bringing the total to 301,000. for a total of 13,000 more job losses for those two months.

Much has been said about the economy already recovering and the possibility that this, like the last recession, will be a jobless recovery.

Not this time!

Past recessions were not confronted with the problems that exist in this one. The confluence of personal and corporate losses exceed those of the past three recessions combined. Though the downward economic spiral has been slowed, the underlying causes of the financial collapse still exist and are troublesome for any healthy recovery.

Unemployment increased to 9.8% and, as many have stated, is headed for double digits. The highest level of those unemployed during the most recent recessions was approximately 6%.

In previous recessions the job losses were mostly centered around a few industries. But during this recession there has been a widespread decline in all areas of employment: labor, manufacturing, and service. As a result there are few, if any, sectors to help pull us out of this economic quagmire.

What will spur a jobless recovery?

For the last few months only healthcare and education have shown positive growth, but education was negative in September due to cutbacks by States in all parts of the country. Construction, manufacturing, and service industries are still laying off large numbers of workers and there is no sign they will be creating jobs anytime soon.

Those arguing that we will have another jobless recovery cite previous recoveries and point to improvements in production.

Improvements in production have helped us climb out of the morass of previous recessions without seeing immediate increases in employment. Though production continues to improve, as in past recessions, the need for improved production has waned.

There are numerous factors that eliminate the possibility of a jobless recovery; some factors that did not exist in previous recessions.

The most significant factor that will obstruct a jobless recovery is buying power. In today’s recession the consumer has little or no buying power. Consumers are tapped out and have been reduced to spending mostly on consumer staples and cutting back on discretionary items in order to survive the crisis.

In the recent recessions the consumer still had buying power. In the recession of 2001 homes were still appreciating, being used as perpetual piggy banks, credit was still available to purchase autos, money was readily available on credit cards with high limits, business loans were easy to get, and equity lines were being handed out to anyone who owned a house.

All those wonderful cash cows have dried up. The consumer’s loose access to money has been tightened, lost, stolen by the financial services industry, perpetuated by Congress; damaging the American people for a long time to come.

The consumer has been eviscerated, unable to buy the products that improved production promises.

This has been evidenced by the long touted inventory rebuild that would move the economy when American businesses began to restock their dwindling inventories. But, the anticipated rebuild has been weak at best indicating that businesses are reluctant about replacing items the consumer won’t—or will not be able to—buy.

Supply Side Economics is DEAD!

Producing products that people cannot buy is not the answer to our current financial problems.

And the problem with this economy is not the fear of higher taxes, not concerns about the programs the government might enact; healthcare reform, cap and trade, consumer protection. It isn’t about any of those things. And it isn’t about small businesses fearful of hiring because of any potential government actions, as so many have suggested and gotten wrong.

It comes down to 30 years of greedy capitalists, cheating and stealing, raping and pillaging the American people until they have nothing left to give; nothing left to buy their stupid, meaningless, cheap, foreign made products and services.

It’s about corporations, greedy executives, and public servants selling out their country to put money in their greedy little pockets. If that’s what they wanted, then they’ve done a great job because the middle-class has been destroyed and will no longer be able to purchase the crap they’ve been peddling.

And if the American consumer can’t buy their products, there can be no jobless recovery.

As unemployment continues to rise, buying power declines. This makes smart businessmen less inclined to increase inventories or hire additional personnel.

Unemployment has its own hidden bombs that could destroy any possibility of a recovery, let alone a jobless one. Two programs have a potentially negative impact on the direction of a struggling economy.

Extending unemployment benefits, due to expire by the end of the year, is a tipping point. The House has already voted to continue the program rather than dropping hundreds of thousands of unemployed workers from the rolls. And the Senate is poised to approve the extension as early as next week.

Not extending the program could leave nearly half-a-million citizens with zero buying power and almost as much chance of finding a job.  Extending the benefits adds to the deficit, a whole other problem that will have to be paid back when the economy recovers. The former will impact the recovery immediately and is completely negative in the current environment. The latter will be less negative in the near term, more positive than leaving people with no income, but will be negative later and may still derail a potential recovery if creation of jobs does not begin in early 2010.

The Emergency Unemployment Compensation (EUC) program presents another unique problem that remains hidden from open economic data. EUC has prevented workers from showing up in the reported unemployment data, but still has an adverse effect on the economy. Though more workers remain employed under the program, 3.3 million recipients have each lost a portion of their discretionary income.

The program was designed to assist businesses weather the recession and put them in a better position when the economy began its recovery. The problem is that those collecting EUC has increased every week since its implementation. Like unemployment it is serving a purpose and would be difficult to withdraw.

To be honest, unemployment benefits, extended benefits, and EUC are preventing the economy from complete collapse.

Foreclosures are another problem in trying to forge a recovery sans jobs. As foreclosures increase home prices fall, equities decline, and buying power is further eroded. Despite the recent, slightly positive housing data, there is still a huge amount of shadow inventory and thousands of homes edging toward foreclosure, soon to be on the market.

The soon to begin collapse of the commercial market will further destroy the economy and does not bode well for a jobless recovery. Businesses large and small are fearful of the current commercial credit market. The inability to get financing could cause many businesses to fail creating another wave of unemployment.

The band aids the government has used have staved off financial ruin but have not gone far enough to address the ills that have caused this recession. And without cleansing a corrupt, greedy, unfair system there will be no healthy recovery. And a jobless recovery?

Not this time!

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2 Responses to ““A Jobless Recovery?” Not This Time!”

  1. kaptaintrippsATSirius says:

    I’ve given up. As an “over 50″ soon-to-be-turned-out-yet-again jobless person, I have about given up looking…trying…hoping. The sad part is, I have no one to turn to. In Nevada, alone and out-of-work means a move “under the overpass.” I’ve lost faith in my country, my government, my countrymen, and the media–who used to care enough to uncover and write about the sorrow of the poor and the discriminated against. And that’s a sad place to be for an educated, non-Tea Party person in the U.S.

  2. mattg says:

    Spot on. The structural pillars of our economy are embedded in the quicksand of reduced payrolls, continuing foreclosures, and the lack of access to any discretionary income other than people’s stagnant wages. Without a brisk (and rapid) return of a significant manufacturing base, we’re sunk.