It’s turning into a real oxymoron to call this “Labor Day” weekend. The string of bad economic news coming out of Washington just in time for the annual summer-ending holiday was capped off by a rise in the unemployment rate to 9.6% and the sad fact that 15 million Americans are out of work this Labor Day. Yes, private companies did add 67,000 jobs during August, but overall the nation lost 54,000 jobs as more than 100,000 of those ubiquitous, temporary US Census workers were let go.
Along with these numbers, a new survey of 350 senior executives by Chicago-based consultancy Grant Thornton shows that business leaders in the manufacturing space are pretty pessimistic, with only a third expecting the US economy to improve in the next six months. And their hiring outlook is equally gloomy—only 37% of manufacturing leaders said their companies will increase hiring in the next six months. Fifteen percent actually forecasted that they will lay people off. And 54% said they think the US economy won’t truly come out of recession until late in 2011.
If it wasn’t so sad, it would be funny that these stats come from what Grant Thornton calls its “Business Optimism Index.”
“Manufacturers are very optimistic about the factors that they can control, such as their own productivity, quality of their products, ability to control internal costs,” says Walter Gruenes, national managing partner of consumer and industrial products at Grant Thornton. “However, they are pessimistic on matters that they feel are beyond their control. There is a great sense of uncertainty about national policy on taxes, union and labor matters, export and monetary controls. As a result, they are very hesitant to increase their staff until some of the uncertainty is resolved.”
My Thoughts: Unemployment has been above 9% for 16 months now, and that’s the real crux of the problem. Perception is reality. It doesn’t matter that GDP has been positive for a few quarters. Everyone knows someone who’s out of work, and the latest uptick in unemployment only makes those “perception” matters worse. Without some strong job growth soon, consumer spending will remain limited, and consumer spending is still THE driver of 70% of our economy.
And here’s a scary thought. Will millions of people out of work for 18 to 24 months become permanently unemployed or underemployed? If they were laid off at the start of the recession, they will have lost valuable skills by next year, and we may NOT see the unemployment rate fall below 7% or 8% for years. Sorry to be such a Wet Blanket.
My questions: What is your company doing in light of continuing high unemployment? What would it take to remove your uncertainty about taxes, environmental regulations and the money supply to get you to hire more people? Post a comment below.