Jobs Are Obama's Job No. 1

You're hired. Now help the rest of us find a job.

That's the unmistakable message to Barack Obama, just days after his historic election. The unemployment rate, which rose to 6.5 percent in October, is now the highest it has been since 1994. And with dozens of companies announcing layoffs recently, most economists think unemployment could rise well above 7 percent next year, as workers get their termination notices. Unemployment might even approach the levels of the early 1980s, when the nation endured the most wrenching recession since World War II.

For most of this year, job losses have been confined to a few troubled areas, such as the swooning financial sector and the embattled housing industry. For a while, there was hope that resilient consumers would spend their way out of a recession. But the ballooning rolls of the unemployed show that the economic downturn is now spreading through most of the economy, possibly triggering the dreaded "adverse feedback loop": Workers who fear for their jobs refuse to spend money, which further lowers business revenue, leading to more layoffs and making consumers even more worried. At which point everybody hoards money except for the government, which takes on an epic amount of debt as it tries to make up for penny-pinching shoppers.

As President-elect Obama huddles with his new team of economic advisers, here's what the latest employment data are telling them about how the recession is deepening:

It's bad where you'd expect. In the auto industry, for instance — where sales have plunged 15 percent this year  —companies like General Motors (GM), Ford (F), Chrysler, and their many suppliers have cut more than 110,000 jobs this year, according to outplacement firm Challenger, Gray & Christmas. Bank mergers and recent cuts like 3,200 layoffs at Goldman Sachs (GS) have axed 130,000 jobs in the financial sector. Those two industries alone account for about 25 percent of all layoffs announced this year, according to Challenger.

Even "safe" industries are suffering. Government and healthcare jobs are supposed to be among the most stable, but this time around, there's no such thing as "recessionproof" industries. Challenger's data show major cuts in the pharmaceutical industry, for example, where Merck just announced it would lay off a whopping 7,200 people. Government payrolls are declining, too, as states and cities run short of tax revenue that funds their operations. The state of California has already laid off more than 10,000 workers and cut pay for 200,000 more, while warning much deeper cuts could be coming as it grapples with a funding gap that could reach $10 billion.

Entrepreneurship offers no respite. During other recent downturns, many laid-off workers have turned adversity to their advantage by starting their own businesses. But the credit freeze, which has made funding scarce even for profitable businesses, appears to be strangling that option: Small businesses cut about 25,000 workers in October, according to the ADP Employment Report. That's the biggest decline since 2002.

Workers know it's going to get worse. Consumers will probably show a minor gain in confidence now that the campaign is over and they know who's in charge. But if the stock markets are any indication, Obama won't get points just for showing up. The markets, bracing for bad economic news, fell steeply in the days following the election, and consumers, too, expect deep problems. In the latest Conference Board survey, for example, only 7.4 percent of consumers said they expect there to be more jobs in six months, while 41.5 percent think there will be fewer. It would be nice to think a new president will be able to change that. But for several months, expect the data to show otherwise.

Disclosure: No positions

Comments

[moonbat1775:]

Obama should not worry about preserving jobs but about preserving lives. Let jobs fall as they may until the economy readjusts. If jobs were based on a false euphoria then they ought to go away. If they are needed in the current environment they will be spared.

These boom/bust cycles are from hell via fractional reserve banking and the Fed.

2008 Nov 07 01:45 PM

[Philly Jim:]

International competition: What was the mistake made that caused the global depression in the 30's? The competition was blocked and creativity and efficiency collapsed in U.S. manufacturing. Obama needs to open up contracts to companies from around the world for domestic infrastructure projects. Of course U.S. citizens will be the ones working on the projects but this will encourage more creativity and efficiency not to mention productivity in U.S. markets. The rest of the world won't be cut out and America will benefit from new ideas, technologies, etc... We really need to change from the top down, like getting rid of people such as Rick Wagoner of GM and welcome in new people with new ideas.

2008 Nov 07 02:20 PM

[Jason Rines...:]

For one of the first times ever Moonbat, I strongly disagree with you. Take an import like oil and replace it with our own energy sources. Millions of jobs created. Problem solved for the consumers, the banks, new investment opps etc.

No Main St = No Wall St. The weakness is small business and the consumer was VERY apparent as early as Q4 of 2007 and simply accelerated from there. Strange the disconnect about job losses and the obvious indicator up until this point. The encapsulation effect of those in power not effected until very recently is interesting to me. Has the United States ever heard of things like market research and surveys? There's this little funny thing called a Regression Model in research. A good read is Innovator's Dilema which speaks into behemoth companies reduced to ashes, reaching a tipping point (another great book actually) because they lost touch with the consumer as they reduced consumer research.

2008 Nov 07 02:27 PM

[Jason Rines...:]

Exactly Philly Jim. I just went through this with an organization powered by someone very big we would all know here. While this person was a visionary and a Patriot and attempting to do things to help America, his personell screened me out without hearing the value proposition (even though this man himself was interested). The funny thing was, the value proposition was database technology to qualify whom could help with this effort and at what level. I was told 'we are not going to do business with you because we don't know you'. That was indeed interesting, considering I had a resume a mile long working with Washington and the public on tech/database platforms and creating a new ad industry in 1997 to connect the masses. Oh well, guess they can keep working harder, not smarter in there effort.


On Nov 07 02:20 PM Philly Jim wrote:

> International competition: What was the mistake made that caused
> the global depression in the 30's? The competition was blocked and
> creativity and efficiency collapsed in U.S. manufacturing. Obama
> needs to open up contracts to companies from around the world for
> domestic infrastructure projects. Of course U.S. citizens will be
> the ones working on the projects but this will encourage more creativity
> and efficiency not to mention productivity in U.S. markets. The rest
> of the world won't be cut out and America will benefit from new ideas,
> technologies, etc... We really need to change from the top down,
> like getting rid of people such as Rick Wagoner of GM and welcome
> in new people with new ideas.

2008 Nov 07 02:32 PM

[moonbat1775:]

iThinkBig,

Yes, I am all in favor of the government getting out of the way of energy innovation but that is all that is required. Picking energy winners or loser via subsidies is not the way to go. Germany tried to go green via government regulations/subsidies and is stuck with a lot of obsolete and inefficient windmills and solar cells that it is still paying for.

There is just no substitute for a free market making the best use of resources and labor. To the extent that innovators are not shackled is the extent to which we will prosper.

As for government, it should stay out of the way as much as possible. Let it provide for the basic survival needs of people if necessary until the economy readjusts. Maybe a low cost jobs program for the unemployed in the interim. There is no reason the economy should not quickly readjust if the government will stop discouraging entrepreneurs via taxes, inflation, and regulation. A truly honest banking system would inspire so much confidence that the US would have a golden age.

2008 Nov 07 02:52 PM

[Jackson Cash:]

@moonbat1775:
"A truly honest banking system would inspire so much confidence that the US would have a golden age."

Agreed, however good luck my friend. Money was created for one thing - to preserve the status of the rich. The banking system in the US is as fallible as it comes -- AND STILL IS. Until we abolish the Federal Reserve Bank, and the political control of our currency, the poor will always be second priority.

I have utterly zero confidence with the elitists in charge of preserving their elitism... take the recent bailout of the rich front and center.

Already we've seen banks use the money for everything BUT what was intended...

2008 Nov 07 03:49 PM

[Smarty_Pants:]

I'm going to form a company specializing in digging holes by hand. Moonbat can form a company specializing in filling in holes by hand

We will each hire the unemployed masses and win massive government contracts paying them minimum wage while we collect 6 figure bonuses for 'managing'.

Day 1) My company employees dig a bunch of holes by hand.

Day 2) My company employees dig a bunch more holes by hand somewhere else while moonbat's employees fill in the holes my employees dug on Day 1).

Day 3 to N) Repeat Day 2).

Presto. Unemployment problem solved.

2008 Nov 07 04:20 PM

[Rich No More:]

I have 27 years with GM. I have had 14 job titles in 10 different locations around the country. All of them sales related in some way. A few common sense facts for you to digest.

1. A lexus (Toyota Made 100% in Japan) until recently had a $9,000 price advantage over a comparable Cadillac just on exchange rate.

2. We didn't build all these truck plants we have for fun or to jam them down consumers throats..........consu... wanted them. Last time I checked we still hold more market share in the US then any single company.

3. If 70% of our GDP is based on the consumer how can cutting wages and jobs be good for the economy? Wall Street says lower wages are good for inflation. And don't forget to strip out energy and food????

4. Quality isn't rocket science it just cost more......so we need cheap labor to get it.........refer to back to number 3.

5. Free unregulated markets have proven to work well based on current market conditions and melt downs?

6. In the history of man there has never been world peace and there is no such thing as free trade........period. Just look at the success the WTO has had! You need to cover your butt on both

7. Housing prices fell because they over built and most of all they priced them higher then a typical Wall Mart worker and lowered wage manufacturer worker (and fired wall street worker) can afford. Refer to number 3.

8. Nothing happens until something (not shadow somethings) is sold. You either have resources (oil etc) or you make something........Follo... the money around the globe to see who has/does what.

9. People are actually dying because they can't afford health care so we have decided profit is worth more than a life.

10. Most business school educators have never spent a day in a main street business.

11. I need a drink have a good week end

2008 Nov 07 04:31 PM

[moonbat1775:]

Actually, I was hoping that we would go in a big circle. It will be easier for your guys to empty holes that have been recently filled by mine. Plus, fewer environmental studies to pay for.

2008 Nov 07 04:31 PM

[Smarty_Pants:]

moonbat:

I secretly plan on starting another company to hire people to "clean up" the mess your guys left when filling in those nice holes.



"7. Housing prices fell because they over built and most of all they priced them higher then a typical Wall Mart worker and lowered wage manufacturer worker (and fired wall street worker) can afford" - Rich No More

Ummm ... it takes two to tango. How did "they" manage to price houses "too high" unless those Wal-Mart workers agreed to buy? That's like saying that GM lost money because their sales force priced the vehicles 'too high' and drove away customers while ignoring that the final price is negotiated individually.

My first vehicle was a pickup truck purchased brand new for $6400 in 1984. Today the bottom of the line pickup truck in that model costs $20,300 new. The Bureau of Labor Statistics inflation calculator tells me that my $6400 from 1984 will purchase $13,500 today. The price of that truck increased 50% more than inflation.

Why are you "overpricing" trucks?

That's a facetious question, but the point is valid. I can choose to not buy the truck if the price is beyond my means and so could those homeowners. Don't blame "them" for 'setting house prices too high'.

Nobody held a gun to those house buyers' heads and forced them to buy at obscene prices, just like you don't force people to buy cars at obscene prices either.

2008 Nov 07 05:05 PM

[moonbat1775:]

"Nobody held a gun to those house buyers' heads and forced them to buy at obscene prices, just like you don't force people to buy cars at obscene prices either. " Smarty

Nope, but artificially low interest rates discourage saving and encourage consumption and speculation particularly if the interest rates are below the respective inflation rates. Who needs guns when one has a central bank?

2008 Nov 07 05:19 PM

[moonbat1775:]

"I secretly plan on starting another company to hire people to "clean up" the mess your guys left when filling in those nice holes. " Smarty

There wouldn't have been a mess if your guys had dug the holes better. It is hard to get them back to their original condition under the circumstances. Wait, I'm getting a business idea if you and I can only cooperate a bit ...

2008 Nov 07 08:16 PM

[Ames Tiedeman:]

The package for the U.S. Auto Industry will be massive and will cover everything from retirement to healthcare costs. An enormous cash injection is coming as well.

2008 Nov 08 09:18 AM

[John Lounsbury:]

For all you raging and raving against the Fed, you should study some history. The financial crises of the 19th and very early 20th centuries (pre-Fed) were devastating events for the masses and enabled dangerous concentration of wealth with little accompanying opportunity for others.

However, history is not one-sided. The Great Depression was caused and perpetuated by central bank mismanagement plus poor trade management and fiscal policy. It remains to be seen if the current crisis will be better dealt with.

If one carefully weighs the hundred years pre-Fed with the nearly hundred years post-Fed, there should be no doubt that the Fed years have been better, even with the one (hopefully not two) monetary/fiscal failure(s).

2008 Nov 08 11:01 AM

[Danny Newton:]

We had the governor of Tennessee state offer buyouts. I wonder how buyouts are tabulated as unemployment. After taking the money and retiring early, some people still want to work at least part time. Government retirement systems are in trouble in a lot of places because they are not actuarily stable without constant growth in employment or wages. The growth required in Tennessee is more than the growth of personal income. This ought to send off a few alarm bells.

2008 Nov 08 11:12 AM

[Bill Gordon...:]

The BIG lie
"I may not have won your vote tonight, but ... I will be your president, too." --Barack Obama

2008 Nov 08 02:46 PM

[Dr.Jackpot:]

I'll pay you $40 an hour to rub my back. Then I'll charge you $40 an hour to listen to your problems. Hey----then we can both go down to Circuit City and buy a new Chinese TV--------on our credit card of course. Why not? Were're both employed are we not?

2008 Nov 08 03:07 PM

[moonbat1775:]

"If one carefully weighs the hundred years pre-Fed with the nearly hundred years post-Fed, there should be no doubt that the Fed years have been better, even with the one (hopefully not two) monetary/fiscal failure(s). " jlounsbury59

I am about to reread that history. But what I remember is that fractional reserve banking backed up by STATE governments was behind those boom/bust times. A state government would prevent the redemption of gold or silver at the behest of the banks. Otherwise, bank runs and redemptions by sounder banks would have kept FRB in check. I recommend Murray N. Rothbards's book available in a brand new 2nd edition "The Mystery of Banking" available as a free download from:
mises.org/Books/myster...

2008 Nov 08 06:31 PM

[Steven Hansen:]

concerning infrastructure projects, do you realize that the usa management system has the highest work unit ratios in the world? why in hell would you want the inefficiencies of foreign systems in the usa?

the american tax system is why we have difficulty exporting our infrastructure abilities overseas. in fairness to all americans we tax money our citizens make overseas (less a deductable which is eaten up by taxing the house you are provided overseas, the school you must send your kid to, and the air tickets).

in many infrastructure projects overseas, i have had to use canadians, australians, indians, kiwi's and paki's for white collar positions in order to get the job. most americans do not realize that an american specifies an american product when working overseas, and a brit will specify a brit product, etc,

taxing americans abroad is one of the reasons our balance of payments suck.

2008 Nov 09 01:16 AM

[Crank Monkey:]

Thank government for bringing down our economic system.

Obama's first picks for key spots are Granholm and Bonior to run his transition, and Waxman for a key House chair.

Granholm raised taxes on Michigan businesses. Waxman hates big business. Declaring war on business won't help the economy.

2008 Nov 10 07:15 AM

[Barry Sotoero:]

Obama is just a special rights activist. He has never held a job. He is a community organizer and he is angry at rich people and big business. It shows in his proposed tax plans. Taxes were not created to take from rich or poor. They were created to provide public services , roads, schools, hospitals, police, fire department, social security, etc. Raising taxes on the wealthy only decreases there spending power. What happens when business do not have free cash flow, they quit spending and they cut jobs.
What we really need to do is stop all the gov't spending and give everyone who pays taxes a rebate, not those who do not pay.
In the next couple years we will see our jobless rate rise, gov't spending will soar and inflation will rise to levels never seen before. In the 70's we had inflation of 14% plus. There were no stimulis packages to cause this issue.
The Fed. has MADE over 1.2 trillion and are currently injecting it into our economy and banks. The Fed. has cut the interest rate from 6.5% to 1%, dramatically devaluing the dollar. Europe has cut their interest rate many times devaluing the Euro. China just announced a stimulis of 586B. We are going to see historic changes in the value of the dollar and other currency world wide. I just hope all of you are ready. I have said before that gold will be the only hedge to this mess. It is the original currency that all currency are based. Over the next five years gold will soar $2000oz and higher. On top all this Obama and Nancy P. are going to spend like never before and Nancy is already calling for another stimulis of 400B next year.
Who is paying for this , not the pieces of shi.. that Obama is giving tax cuts too.
So to some things up we are going to receive higher taxes a devalued dollar (causing inflation) and a soaring jobless rate. I hope our new community organizer of the Chicago hood knows what to do!!!

2008 Nov 10 08:25 AM

[Jason Rines...:]

In general Moonbat you are correct, government creates horrible effects when it meddles in business but it always do so, either by legislating into ones own pocket or socialist movements brought about by a populace's moral decay. The government need to go out and begin making direct investments into energy. It can however, subsidize corporate lending programs like the SBA for example.


On Nov 07 02:52 PM moonbat1775 wrote:

> iThinkBig,
>
> Yes, I am all in favor of the government getting out of the way of
> energy innovation but that is all that is required. Picking energy
> winners or loser via subsidies is not the way to go. Germany tried
> to go green via government regulations/subsidies and is stuck with
> a lot of obsolete and inefficient windmills and solar cells that
> it is still paying for.
>
> There is just no substitute for a free market making the best use
> of resources and labor. To the extent that innovators are not shackled
> is the extent to which we will prosper.
>
> As for government, it should stay out of the way as much as possible.
> Let it provide for the basic survival needs of people if necessary
> until the economy readjusts. Maybe a low cost jobs program for the
> unemployed in the interim. There is no reason the economy should
> not quickly readjust if the government will stop discouraging entrepreneurs
> via taxes, inflation, and regulation. A truly honest banking system
> would inspire so much confidence that the US would have a golden
> age.
>

2008 Nov 10 11:06 PM