I’m in a room that’s 8 feet by 10 feet. It’s just me. There’s a small box playing loops of TV shows, but I’m ignoring it. The temperature is 95 degrees but its cold in here. And I have a lot to think about.
I know I’m going to pay for it. Situations like this require penance and it’s going to cost me. It’s part of life though and inevitably I’ll be back.
The bill was a shade under $200. Frankly it could have been a lot worse. My car hasn’t been serviced in a year; it needed an oil change, inspection, tire rotation, and the radiator hose had a hole in it. I paid for the car, but I got time to think.
This cycle of activity drove me to consider the business cycle. It normally looks like a sound wave with peaks (good times) and valleys (recessions).
Are we still in a recession? Are we in an initial recovery? Maybe even an early upswing? Chris Stuart wondered the same thing in his write up Why We’re At The Early Upswing Stage In The Business Cycle.
I predicted the recession after observing a lack of income appreciation and buying patterns changing in October 2007 and although this is a classic supply and demand cycle where aggregate demand is lacking it feels more structural. Structural means the skills needed in the employment arena are lacking in the environment, so a transitional period of training is required. Instead of a sudden shift in skills we have an elongated one. Globalization dramatically changed supply chains and created liquidity in the job market. Goods producing jobs like manufacturing are now feasible almost anywhere. And the education advantage of the US is no longer prevalent.
This is forcing the US to consider it’s jobs strategy, or at least create one in the first place. Many of the assumptions about the viability of the US worker are no longer true. And think about the US consumer. Will they always buy? Like an alarm clock introducing the morning, the US worker and US consumer realized better days are not guaranteed. People are starting to slowly de-leverage. It’s a huge adjustment in the way people live their lives and it will take time. The debt burden is simply too great.
So if this cycle is a classic supply and demand recession and the US consumer isn’t going to buy (low demand) then isn’t this going to take awhile? Yes, the rest of 2011 and 2012.
Here’s my outline of the timescale:
Jobs will be tepid but consistent for the rest of the year and next. Companies large and small are getting creative with their resources. Many are investing in equipment rather than people (you don’t need to buy health insurance for an industrial printer), but the gains will be positive. There is no double dip recession.
The best workers are beginning to jump to other opportunities. They’ve installed micro-innovations for their current employers, but since volume has been low these improvements haven’t knocked anyone’s socks off. But they will.
So after a period of discipline, brighter days are ahead.
I wanted to pull together some graphs showing what’s happened since the beginning of 2008. Below are four time-scaled illustrations showing the situation with jobs.
- The first one is the overall jobs report. It shows how far we have to go to balance out the lost jobs.
- The second one is a growth rate of jobs for the private sector as they relate to Service Producing and Goods Producing industries. Goods Producing encapsulates manufacturing and construction, two of the harder hit industries.
- Since the ratio of Service Providing jobs and Goods Producing jobs is 5 to 1, I wanted to show the relative impact and that is what the third graph depicts.
- The last one the Dow Jones during the same period. It’s the index that most people focus on as a reflection of the stock market.
Lastly, Wired did some research with Linkedin.com about what terms people were using in their titles after they changed jobs. The results below reflect a pool of 7 million linkedin users and a good indication of what jobs are in need in this day in age. But remember, people still need an oil change.
Working Thoughts 6/15/2010
We Respond To Cues Very Effectively
Working Thoughts 6/15/2009
Resilient Attitudes are Rare