Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Twelve Reasons for the Job-Loss Recovery


This is destined to be the weakest ever.

I've been talking about the Job-Loss Recovery for quite some time. (Click here to see recent examples of my discussion, and check out Professor Megan Barnett's explanation in The Decoder: Jobless Recovery.)

Of course, it's no mystery why job growth has slowed, and here are 12 reasons it has:

1. We consumed more than we produced for a decade. Consumers are deep in debt and need to take care of their balance sheets.

2. We built enough houses for 15 years in a five-year window.

3. People thought home prices would rise forever and borrowed against their homes. They're now under water and cannot sell or move.

4. There's rampant overcapacity everywhere. We don't need another Walmart (WMT), Pizza Hut (YUM), nail salon, Target (TGT), Home Depot (HD), Lowe's (LOW), gas station, grocery store, or anything else.

5. Global wage arbitrage and outsourcing.

6. Boomers heading into retirement are scared half to death. They won't be spending or traveling as much as they thought. Indeed they'll be attempting to downsize their lifestyle.

7. Attitudes everywhere have changed. People have finally caught on to the idea that home prices don't always go up. Businesses have caught on to the idea that home prices and commercial real estate don't always go up. Thus banks have tightened lending standards and consumers are reluctant to borrow.

8. "Frugality is the New Reality." Here is a Search for the word "frugality" in my blog.

9. Misguided federal tax policy. The administration plans to raise taxes on the wealthy. On top of that, the health-care plan is going to be very costly for small businesses. Thus the administration has inadvertently given small businesses two more reasons not to hire. Instead the administration should be slashing corporate tax rates.

Government pension plans. States are raising property taxes to help fund pension plans that have blown up. This is a drain on the economy. These plans need to be killed. Please see California Treasurer Spanks Legislature Over Pension Reform And Reckless Spending for an interesting rant about the pension mess in California. Most states are in the same boat, although California is the worst of the lot.

11. Stimulus spending. Japan has already proven that Keynesian and Monetarist solutions cannot and do not work, yet we try anyway. Please see Will Stimulus Take Hold? for details.

12. Deficit spending in general. Spending what you don't have and cannot afford never solves anything. We can no longer afford to be the word's police officers, but still attempt to do so at enormous cost. Indeed, there are many things we cannot afford and do anyway. As a result, interest on the national debt is soaring, the dollar is weakening, and this is drain on the real economy -- regardless of what the stock market thinks about it.
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Featured Videos