US faces a jobless “recovery”

US jobs Sept09.jpg

Today is Labor Day holiday in the USA. But sadly, the latest news on jobs remains deeply worrying. As the chart from the New York Times shows, jobs are still being lost (blue line), long after recovery had begun in downturns from 1974 – 2000. And far more jobs have already been lost.

Total jobs lost since the downturn started now amount to 7.4m, the largest decline in any slump since World War 2. Unemployment rose to 9.7% in August, with 14.9m Americans out of work. And a further 5m were out of work for over 26 weeks (and not counted in the 9.7% rate).

These job losses have continued even with major stimulus programmes in place. And the Financial Times reports that 40% of the 35m Americans now on food stamps (worth c$290/month) are also working part-time, which suggests that wages outside the financial sector are starting to fall.

The figures make it seem very unlikely, to the blog at least, that any “recovery” in official GDP figures will lead to a rapid rise in consumer spending. And that, at the end of the day, is the key factor that will determine chemical company sales and profits next year.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. He also serves as a Global Expert for the World Economic Forum. The aim of this blog is to share ideas about the influences that may shape the chemical industry and the global economy over the next 12 – 18 months. It looks behind today’s headlines, to understand what may happen next in critical areas such as oil prices, China and Emerging Markets, currencies, autos, housing, economic growth and the environment. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.


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