Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Cut In Work Hours Overshoots To The Downside? Upside Potential In Place?

Interesting chart from Merrill Lynch-Bank of America, showing a scatter plot of the relationship between the decline in business hours and output during the past 11 recessions during the post-war period, together with a linear regression of the data. The chart shows that the current recession has been a significant outlier, with work hours cut way more than the historical norm of a 5.5% cut in work hours for a 4.5% decline in output. Part of this may be explained by increased productivity, but we can't deny that the data is consistent with the across the board cuts also seen in investments and inventory. I do not try to predict when company hirings, investments in fixed assets or inventories will pick up, or better yet, what will cause the turnaround. I am not an economist and I will not meddle with this stuff. However, just following common sense, any potential pick up in activity will force businesses scrambling for employees, capital or inventories... just like bearish investors have been mistaken and are scrambling to get back into the stock market.