The Bureau of Labor Statistics publishes another statistic: mass layoffs. A mass layoff is defined as one company that fires 50 or more people at one time.
A mass layoff indicates panic in senior management. This means doing without a lot of workers. It is not a normal occurrence. Here is the BLS report for July 23: "Mass Layoffs in June 2009."
Employers took 2,763 mass layoff actions in June that resulted in the separation of 279,231 workers, seasonally adjusted, as measured by new filings for unemployment insurance benefits during the month, the Bureau of Labor Statistics of the you.S. Department of Labor reported today. Each action involved at least 50 persons from a single employer. . . .
Over the year, the number of mass layoff events increased by 1,046, and associated initial claims increased by 104,483.
That means that a year ago, the number of mass layoffs was at 1,717. It rose to 2,763 this June.
This recession is nowhere near over. In fact, its really becoming a depression though highly obsfuscated and unreported.
The report also provided information regarding the extent of these mass layoffs since the official beginning of the recession in December 2007.
During the 19 months from December 2007 through June 2009, the total number of mass layoff events (seasonally adjusted) was 39,822, and the number of initial claims filed (seasonally adjusted) in those events was 4,090,538. (December 2007 was designated as the start of a recession by the National Bureau of Economic Research.)
If we divide the total number of mass layoff events of 39,822 by 19 months, we get an average monthly figure of 2,095. June's was 2,763. The media tend not to report on this figure. It is limited to large firms. Most firms cannot fire 50 people. They do not employ 50 people.
WHY ARE THESE MASS LAYOFFS SO CRITICAL TO THE UNEMPLOYMENT PICTURE AND the economy ?
Most new jobs are created by small businesses. Large firms employ lots of people,
The comparable jobs are simply not available.
The job-seeker must set his sights lower. He aims lower in terms of pay and seniority, because he will be entering the labor market in the "just getting started" segment. These jobs are not secure. They tend not to pay as well as established jobs in large companies.
Mass layoffs are career-disrupting.
People who had hoped to keep a job in an established company that offers health care benefits and a retirement program now find that they have lost their health care insurance, and their pension money is insufficient to offer them any hope for retirement.
folks, this recession picture is nowhere near over. Not by a long shot. Not when you have over 2700 Mass layoff actions of 50 or more people per action.
There aren't not only enough new jobs to replace the ones lost, but the jobs people are getting are primarily for far lower wages, without good benefits, without health insurance, and most importantly without much in teh way of long term security.
When people aren't secure, or don't feel that way about their job, they certainly aren't going to be spending much, other than for absolute necessities.
It is therefore completely and utterly absurd to think, that becuase we have greater than 80% "employment" that those 80% are going to carry anywhere near the level of purchasing power or interest in consuming that was just occuring in 2006 or 2007 before the market peak.
those 80% are in jobs where wages have been compressed or stagnated, they are at coompanies that have been trimming massively, companies that are taking furloughs in recrod numbers, companies that have shortened work weeks to less than 34 hours on average, companies where people simpyl don't feel anywhere near as secure about their own jobs as they did only 1 or 2 years ago. EVERYONE is highly nervous, now finally saving, when and whereever they can, and if they are not saing they are trying hard to pay down debt and frantically harder to not take on more. People are getting foreclosed upon, or they are even downsizing where possible, and they are trying to refinance, that is the lucky ones who still have a job. Certainly not all folks feel this insecure, but its a far greater number that feel this way than don't, when all they see is the gloomy news, and the incerasingly vacant strip malls, shopping malls, abandoned cities, towns, shuttered factories, or vacant office spaces.
I wouldn't get too caught up in the bull parade. this has a long long way to play out.
You can say earnings are meaningless and that the PE of 723 is in the rearview mirror, but the fact remains, we certainly dont have anywhere near the consumer purchasing power we did only a few years ago, we aren't making up for it in exports, and the ATM's that were people's homes and debt induced spending of yester years, is pretty much gone as banks refuse to lend, many mortages or homes are underwater, and home prices continue their downward trend despite occasional fleeting price spikes.
I have green shoots in my trees. These are the tiny little stems that proliferate from the branches. These green shoots sprout all over the place and majority of them need to be pruned or the tree will die due to sucking the juice from the core branches and leaves. Green shoots are not good for the most part. Its is an apt metaphor. they are illusory, and drag us from the important activity of seeding, planting, and cultivating new and strong trees, not just trying to keep alive and constantly prune the old ones (our industries like auto, road construction, home building, plane building, banking services, ) that are mature and dying.
We need much more. green shoots aint gonna cut it. In fact they are suckign the life out of wher the real investments ought to be made.
Good luck investing. or trading or whatever your pleasure.
