Best of the Week
Most Popular
1.Gold Price Trend Forecast, Where are the Gold Traders? - Bob_Loukas
2.Stocks Bear Market of 2017 Begins? Shorting the Dow At its Peak! - Nadeem_Walayat
3.Betting on President Trump Leaving Office Early, Presidency End Date - Betfair Market - Nadeem_Walayat
4.Why Stock Market Analysts Will be Wrong About 2017 - Clif_Droke
5.Is This The Best Way For Investors To Play The Electric Car Boom - OilPrice_Com
6.Silver Price 2017 Trend Forecast Update - Video - Nadeem_Walayat
7.Gold Price Set For Very Bullish 2017, Trend Forecast - Austin_Galt
8.10 Things I learned From Meetings With Trump’s Transition Team - - John_Mauldin
9.How Investors Can Profit From Trumps Military Ambitions - OilPrice_Com
10.Channel 4 War on 'Fake News', Forgets Own Alt Reality Propaganda Broadcasting - Nadeem_Walayat
Last 7 days
The Mother of All Financial Bubbles will be Unimaginably Destructive when it Bursts - 19th Feb 17
Gold’s Fundamentals Strengthen - 18th Feb 17
The Flynn Fiascom, the Trump Revolution Ends in a Whimper - 18th Feb 17
Not Nearly Enough Economic Growth To Keep Growing - 18th Feb 17
SPX Stocks Bull Market Continues to make New Highs - 18th Feb 17
China Disaster to Trigger Gold Run, Trump to Appoint 5 of 7 Fed Governors - 18th Feb 17
Gold Stock Volume Divergence - 17th Feb 17
Gold, Silver, US Dollar Cycles - 17th Feb 17
Inflation Spikes in 2017, Supporting Gold Prices Despite Increased Odds of March Rate Hike - 17th Feb 17
Roses Are Red... and So's Been EURUSD's Trend - 17th Feb 17
Gold Trade Note Sighted - 17th Feb 17
Gold Is Undervalued Say Leading Fund Managers - 17th Feb 17
NSA, CIA, FBI, Media Establishment 'Deep State' War Against Emerging 'Trump State' - 16th Feb 17
Silver, Gold Stocks and Remembering the Genius of Hunter S. Thompson - 16th Feb 17
Maps That Show The US’ Strategy In Asia-Pacific - 15th Feb 17
The Trump Stock Market Rally Is Just Getting Started! - 15th Feb 17
Tesco Crisis - Fake Prices, Brexit Inflation Tsunami to Send Food Prices Soaring 10% 2017 - 15th Feb 17
Stock Market Indexes Appear Ready to Roll Over - 15th Feb 17
Gold Bull Market? Or was 2016 Just a Gold Bug Mirage? - 15th Feb 17
Here’s How Germany Buys Time From China - 15th Feb 17
The Stock Trader’s Actionable Guide to Trump - 15th Feb 17
Trump A New Jacksonian Era? The Fourth Turning (2) - 14th Feb 17
Stock Market Yet Another Wall Street 'Witch's Brew' - 14th Feb 17
This Is Why You Don’t Own A Lot Of Stocks - 14th Feb 17
Proposed Tax Reforms Face Enormous Headwinds - 14th Feb 17
BBC Inside Out Tesco Rip off Offers - Determined to Lose Big Spend Customers! - 13th Feb 17
Is the UK An Economy Built on Debt? - 13th Feb 17
Stock Market VIX Cycles set to Explode in March/April 2017 – Part 2 - 13th Feb 17
Stocks At Record Highs - Will Uptrend Accelerate? - 13th Feb 17
US Dollar: 'Rumors of My Death are Greatly Exaggerated' - 13th Feb 17
Is This The Top Commodity Play For 2017? - 13th Feb 17
Trump a New Jacksonian Era? - 13th Feb 17
Stock Market at High Tide - 13th Feb 17
Channel 4 War on 'Fake News' Ends - The New News Age - 12th Feb 17

Market Oracle FREE Newsletter

State of Global Markets 2017 - Report

Mass Layoffs, Robots, Paints Dismal U.S. Jobs Siutation

Economics / Employment Aug 05, 2011 - 12:11 PM GMT

By: Mike_Shedlock

Economics

Best Financial Markets Analysis ArticleA good jobs report on Friday (if we get one) is now meaningless. Looking ahead, the jobs situation is bleak globally, not just in the US. Here is supporting evidence for my statement.


Planned Layoffs Surge In July

Challenger says Planned Layoffs Surge In July

August 3, 2011: For the past three months, American companies have been cutting their workforce in increasing numbers, according to a new report from Challenger, Gray & Christmas, an outplacement consultancy group in Chicago. In July, the number of planned job cuts surged to a 16-month high of 66,414 — a 60 percent increase from June. “We’re beginning to see patterns that are disconcerting, and the really troubling part is this: Nothing is happening in the economy which is going to boost job growth,” said Christine L. Owens, executive director of the National Employment Law Project. With the exception of slight improvement last week, new weekly unemployment claims have topped 400,000 a week for more than three months — the level generally considered the dividing line between an improving labor market and a stagnant one. Likewise, the number of job openings dropped in June and July, according a firm that tracks online job postings. Another telling piece of the puzzle: The number of temporary workers — whose fortunes are closely watched as an indicator of employers’ future hiring intentions – dipped between May and June, according to the Bureau of Labor Statistics.

For the record, last week's dip below 400K initial claims was revised up. It has been 17 consecutive week of +400K initial claims.

40,000 European Bank Positions Targeted

Marketwatch reports 40,000 positions are targeted; Swiss firms hit by soaring franc

A running tally of planned job cuts by European banks reached around 40,000 Tuesday, little more than halfway though earnings season, as firms that failed to control costs or were over-optimistic about growth make the deepest cuts.

Most of those cuts are in Europe but a slowdown in Europe means a slowdown in US exports. Moreover, one can expect similar cuts in the US as soon as banks are forced to mark assets to market.

HBSC, Credit Suisse, Goldman Sachs, Morgan Stanley Announce Cuts

The New York Times reports HSBC to Trim 30,000 Jobs in Cost-Cutting Move

August 1, 2011: HSBC, the big European bank, said Monday that it was cutting 30,000 jobs, as part of a wide-ranging cost-cutting program to improve profitability. HSBC is the latest bank to announce job cuts amid regulatory uncertainty and global economic weakness. Credit Suisse said last week that it planned to eliminate 2,000 positions, or 4 percent of its jobs. Goldman Sachs and Morgan Stanley are also reducing their head counts.

That 30,000 is part of the 40,000 reported above.

Merck To Cut Up To 13,000 Jobs

The Wall Street Journal reports 2nd UPDATE: Merck To Cut Up To 13,000 Jobs, Reports 2Q Net Gain

Merck & Co. (MRK) said Friday that it would widen its cost-cutting measures by eliminating up to 13,000 jobs--on top of the 17,000 layoffs in prior actions--as the drug maker responds to generic competition and other challenges by shifting resources to emerging markets.

I would be very surprised to see this "contained" to Merck. Should Congress do something rational, such as allow drug imports from Canada, there could be a bloodbath in pharmaceuticals.

Mexicans Return Home

The jobs situation in the US is so bleak in California, Mexican economy draws undocumented immigrants home

There are fewer undocumented immigrants in California – and the Sacramento region – because many are now finding the American dream south of the border. "It's now easier to buy homes on credit, find a job and access higher education in Mexico," Sacramento's Mexican consul general, Carlos González Gutiérrez, said Wednesday. "We have become a middle-class country." Mexico's unemployment rate is now 4.9 percent, compared with 9.4 percent joblessness in the United States. An estimated 300,000 undocumented immigrants have left California since 2008, though the remaining 2.6 million still make up 7 percent of the population and 9 percent of the labor force, according to the Public Policy Institute of California.

Mexican citizens returning home is a good thing. That they are returning home because of exceptionally poor economic conditions in the US is not.

One Million Robots to Replace Workers

Please consider Foxconn to replace workers with 1 million robots in 3 years

Taiwanese technology giant Foxconn will replace some of its workers with 1 million robots in three years to cut rising labor expenses and improve efficiency, said Terry Gou, founder and chairman of the company, late Friday. The robots will be used to do simple and routine work such as spraying, welding and assembling which are now mainly conducted by workers, said Gou at a workers' dance party Friday night. The company currently has 10,000 robots and the number will be increased to 300,000 next year and 1 million in three years, according to Gou. Foxconn, the world's largest maker of computer components which assembles products for Apple, Sony and Nokia, is in the spotlight after a string of suicides of workers at its massive Chinese plants, which some blamed on tough working conditions. The company currently employs 1.2 million people, with about 1 million of them based on the Chinese mainland.

Manufacturing Jobs Vanish in "Creative Destruction"

People blame China for stealing jobs. While that is partially true, the bigger picture is "creative destruction". Many manufacturing jobs are simply vanishing period. They no longer exist. Robots and technology do the work. Flashback August 27, 2009: Creative Destruction

[My friend] BC writes:

See chart 5 illustrating the conditions persisting during Japan's slow-motion, deflationary, debt-deleveraging depression from the mid-to-late '90s when the Japanese Boomer demographic drag and persistent price deflation took hold. I strongly suspect that we will experience a similar pattern between private and public debt/GDP. We could see bank lending/GDP return to the 30% long-term average area from today's peak of 50-51% (and bank real estate loans/GDP of 27% vs. the long-term average 10-11%). If so, we are likely to see little or no bank lending growth, which in a debt-money economy means little or no GDP growth and further mass-consolidation of capacity and debt defaults or gradual pay down. Instead of "recovery" or "expansion", we should think in terms of a Schumpeterian Depression phase of the Long Wave trough, characterized as a debt-deflationary, deleveraging, demographics-induced no-growth regime. Long-term 3.3% real GDP growth has decelerated to ~1.5%, and I expect average growth from the '00 peak to the mid- to late '10s to decelerate further to 1% or below. The bottom line is that private debt-based growth is simply not possible, whereas any "growth" we do experience will be as a result of incremental government borrowing and spending, most of which will be in the form of war spending, bailouts, and social service transfers at very low GDP multiplier.

Schumpeterian Depression

Inquiring minds might be interested in concepts like Creative Destruction.

The economic concept of creative destruction was first introduced by the Austrian School economist Joseph Schumpeter. Theory and Examples Companies that once revolutionized and dominated new industries – for example, Xerox in copiers or Polaroid in instant photography – have seen their profits fall and their dominance vanish as rivals launched improved designs or cut manufacturing costs. Wal-Mart is a recent example of a company that has achieved a strong position in many markets, through its use of new inventory-management, marketing, and personnel-management techniques, using its resulting lower prices to compete with older or smaller companies in the offering of retail consumer products. Just as older behemoths perceived to be juggernauts by their contemporaries (e.g., Montgomery Ward, FedMart, Woolworths) were eventually undone by nimbler and more innovative competitors, Wal-Mart faces the same threat. Just as the cassette tape replaced the 8-track, only to be replaced in turn by the compact disc, itself being undercut by MP3 players, the seemingly dominant Wal-Mart may well find itself an antiquated company of the past. This is the process of creative destruction. Other examples are the way in which online free newspaper sites such as The Huffington Post and the National Review Online are leading to creative destruction of the traditional paper newspaper. The Christian Science Monitor announced in January 2009 that it would no longer continue to publish a daily paper edition, but would be available online daily and provide a weekly print edition.

The Seattle Post-Intelligencer became online-only in March 2009. Traditional French alumni networks, which typically charge their students to network online or through paper directories, are in danger of creative destruction from free social networking sites such as Linkedin and Viadeo. In fact, successful innovation is normally a source of temporary market power, eroding the profits and position of old firms, yet ultimately succumbing to the pressure of new inventions commercialized by competing entrants. Creative destruction is a powerful economic concept because it can explain many of the dynamics of industrial change: the transition from a competitive to a monopolistic market, and back again. Creative destruction can hurt. Layoffs of workers with obsolete working skills can be one price of new innovations valued by consumers. Though a continually innovating economy generates new opportunities for workers to participate in more creative and productive enterprises (provided they can acquire the necessary skills), creative destruction can cause severe hardship in the short term, and in the long term for those who cannot acquire the skills and work experience.

I do not know what Friday's jobs number will bring, but at this point, assuming it is good, it is more likely to be a last hurrah than anything else. My guess is for jobs to be under 100,000 and for unemployment to "unexpectedly" rise .2%. Regardless, consumers have tossed in the towel, most of Europe is in an outright recession right now, and the US is headed for a recession if not in one now. Global stimulus has worn out. It always does. No structural problems have been fixed by central bankers, they just bailed out the banks and the bondholders at the expense of taxpayers, sending taxpayers deeper into the hole. There is no reason at all for businesses to want to expand in this environment, so they won't. That's all you need to know.

By Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management . Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.

Visit Sitka Pacific's Account Management Page to learn more about wealth management and capital preservation strategies of Sitka Pacific.

I do weekly podcasts every Thursday on HoweStreet and a brief 7 minute segment on Saturday on CKNW AM 980 in Vancouver.

When not writing about stocks or the economy I spends a great deal of time on photography and in the garden. I have over 80 magazine and book cover credits. Some of my Wisconsin and gardening images can be seen at MichaelShedlock.com .

© 2011 Mike Shedlock, All Rights Reserved.


© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife