When Will The Job Losses Stop?
Over the past month or so, there has been a feeling of cautious optimism that we may be on our way to recovery after one of the most devastating recessions in history. Certain economic indicators are creeping into positive territory, the stock market rallied during the month of March, and then Friday we learned that the economy still lost 650,000 jobs during the month. Why aren’t the job losses slowing down?
Employment numbers are a lagging indicator of economic conditions. The current recession started in December of 2007, but job loss numbers didn’t start making headlines until midway through 2008. In other words, by the time the job losses become a factor, the economy has already been struggling for a while.
It works the same way when the economy rebounds. Things may indeed be getting better and the economy might have found pretty stable footing at this point, but jobs will likely be one of the last areas to recover. The economy will have to show signs of strength for a sustained period of time before employers feel comfortable hiring again.
Small business owners are responsible for about 70% of the jobs in the United States, and they are the ones who will need to begin hiring again to see unemployment numbers improve. Small business owners have to be extra careful though, without the cash reserves of major corporations, they need to make sure this recovery is sustainable before they feel comfortable expanding or even returning to pre-recession levels.
Keep an eye on economic numbers like factory orders, inventory levels, pending home sales, consumer confidence, and the direction of the stock market to get an idea of what direction the economy is going. Each of these areas has shown improvement during the past 30 days, and if the improvement continues for the next few months, we should then expect to see improvement in the job market.
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Tags: indicator, job losses, recession, recovery, unemployment
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