Did Washington Save the Economy? Part 1
A "jobful" rebound is unlikely to goose the recovery.
These funding sources made the HES Complex impervious to the macro-cycle -- so long, that is, as this infinitely elastic financing gig held-up. But now, as will be amplified below, the decades-long advance in the health, education, and social complex may be finally heading into a brick wall. The Governmental Fisc is exhausted, and the heretofore unimpeded flow of third-party health-insurance payments is likely to slow to a trickle as ObamaCare steadily strangles the system over the years ahead. Consequently, the cyclical jobs-rebound case depends on the outlook for the balance of the economy. But therein lies the rub. The US economy's Boom Period jobs-growth record outside of the HES Complex was shockingly anemic, registering just 29,000 new jobs per month over the seven-year period.
As will be seen, even this scrawny figure may not be replicable in the period ahead -- at least to the extent that job growth in the balance of economy reflected bubble-era activity levels. For instance, the construction and FIRE (finance, insurance, and real estate) segments contributed about 20,000 per month of job growth during the seven-year Boom. But owing to the great housing and financial meltdown during the Slump, these segments shed in excess of 2.3 million jobs in the 24 months ending last December. True enough, some of these were temporary losses and will be recovered as the economy strengthens. But the larger point is that construction and FIRE sectors developed huge excess capacity during the Phony Boom of the past several decades -- capacity that's now been permanently liquidated. Therefore it's highly unlikely that construction and FIRE will generate any trend growth in jobs at all during the upcoming expansion cycle.
Likewise, during the Boom another 30,000 new jobs per month were generated in the Leisure and Hospitality and the Personal Services (repairmen, household help, trainers, etc,) segments -- nearly all of which are directly dependent on discretionary consumer spending. Again, some portion of the 750,000 jobs lost from this segment during the Slump is likely to be recovered over the course of the next business cycle. But a consumer shorn of his home ATM account and in the process of rebuilding his savings isn't likely to have anything close to the discretionary spending power that fueled job growth in these segments during the last cycle.
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.
Daily Recap Newsletter