Sloping Unemployment Should End By 2Q 2010
Recent unemployment numbers in the 200,000 region contrast nicely to the 4-600,000 jobs lost per month early in 2009, but it may be only a few short months until employment picks up again.
2-3Q Rule
History shows us that employment gains typically come 2-3 quarters following economic growth. Though it is still too early to officially forecast that the recession is in fact over, it is likely that the recession ended in late summer 2009 and that unemployment should drop sharply over the next 6-9 months and employment gains should be made soon after.
On the Cusp
The economy is on the cusp of recovery having already thrown out plenty of mal-investment in the real estate market and forced employers to shed their least productive workers. Having shed all this weight so quickly does put the economy in an excellent position to repair itself as new workers are added to growing businesses and companies come back leaner and more efficient than ever.
Employment Creates Vicious Recovery
The fact that the US economy is 70% dependent on consumer spending is bad for the plunge but works out excellent for any recovery. As the US economy begins to add jobs, more consumers are brought to the table and consume more, creating more opportunities for economic growth. Consumption is a bit of a double-edge sword, however, due to the fact that it adds to the velocity of money but does not add to any economic progress. We’ll take what we can get, though.
Stock Market Picks
There isn’t one specific stock sector you should be buying on a recovery, I think they’ll all perform just about the same. However, investments like real estate should be one of the better performers as people find the confidence again to make major purchasers. If we can exit this recession by 2Q 2010, we’ll be set for at least 3-4 years of boom before another slowdown.
This is fairly optimistic. I think we’re looking at a fundamental shift in the market and U.S. productivity which may make for a longer employment lag than historically suggested.
I admire your optimism. I do not think we are quite out of the woods yet. The main problem is the high unemployment rate, currently above 10%. If people do not have jobs, then they can not stimulate the economy. The reason why the market has gone up so much is because of government intervention. Unfortunately, government cannot continue to spend money and eventually it will run out. The economy needs to sustain itself and the only way to do this is for people to have jobs.