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alstry (35.36)

10% Unemployment Rate By Summer

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April 17, 2008 – Comments (5)

Right now the unemployment rate is over 5%. 

Recently we have seen company after company announce it will be laying off 10% or more of its workforce.  Merrill Lynch, AMD, Dell, and the list goes on and on.  Government deficits is forcing big budget cutbacks.  Construction, Mortgage Finance, and Real Estate sales has lost 50% or more of its employees in many cases with further cutbacks coming.  Other businesses are shutting down completely.  Many more are scaling back such as retailers, airlines and pharma companies.

It is not just one industry, the cut backs cross many boundries.  Health Care, Contruction, Technology, Government, Finance, ect....At this point, forecasting a 10% unemployment rate by summer seems pretty reasonable.  The question now is how much over 10% will we go if current contraction trends continue?

What will happen to housing and other industries from the impact of rising unemployment?

5 Comments – Post Your Own

#1) On April 17, 2008 at 8:26 AM, EScroogeJr (< 20) wrote:

Now I refuse to understand anything. You were complaining  that construction companies are  evil, they destroy your property value and should be shut down. Now you are complaining about construction layoffs. Here's a suggestion for you. How about we build more houses, demolish them, then rebuild them and demolish again, ad infinitum? You will kindly pay for this activity through your taxes, but you'll keep your property value intact and have no unemployment. :):):)

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#2) On April 17, 2008 at 8:28 AM, alstry (35.36) wrote:

The spillover of job cuts. 

Harley Davidson also announced additional job cuts today.

The problem is that for every job Harley cuts, many more supplier/vendor jobs will also likely be cut.  Truckers, parts manufacturers, ect.....  Job cuts beget job cuts.

The say for every job lost on Wall Street, two additional jobs are also lost.  Today MER announced 4000 job cuts, that would mean a likely loss of an additional 8000 jobs.

JC Penny scaling back growth means more jobs cut.  Not just at Penny but at for all of the workers who would have participated in the build out.

You get the point......

For the last seven years, our economy was built on credit due directly from easy money.  Now those loans are defaulting and credit is becoming much more difficult to obtain.  Credit spends just like money.  No credit....no money.........no money....no business.

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#3) On April 17, 2008 at 8:46 AM, cubanstockpicker (20.86) wrote:

Well lets not even report all the 1099 people that work in real estate and mortgages. I would say 60% of the workforce that was doing real estate and mortgagaes and indepenedents or "FLIP THAT HOUSE" like careers are now trying to rejoin the workforce. Unemployment is already much higher, but the numbers we use are just based on the companies that report. Its very easy to fudge numbers that way, especially when you dont take certain data to account. How does the US tabulate these unemployment numbers? Just in one of my clients offices 4 people were fired in two weeks. Thats out of 15. I dont think he filled out a form to report to the government.

Small business are the backbone of the american people.  We are only looking at Public companies to count the numbers, but the numbers are already higher.

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#4) On April 17, 2008 at 9:20 AM, alstry (35.36) wrote:

I agree with you completely.

I think if we were going to use apples to apples comparisons from the way unemployment was tabulated in the 70s and 80s, we would already be over 10%.  If you were to factor underemployment, the number would go even higher.

The problem is that as credit continues to contract for individuals, businesses, and governments.....contraction will continue and so will rising unemployment.

If current trends continue, we could easily exceed 25% before all is said and done. 

The problem I see now is that we must purge the current excesses.  The system is well on its way to starting the process.  We have a long way to go.  The process will be painful but in the end we will be on a much stronger foundation to move forward.

Clearing out 30 years of compounding credit creation takes some time and a lot of work.  We will likely see conditions much worse than the thirties at the deepest point.  But when we pull out, things should should be much brighter for most as we prepare for baby boomers retiring.

 

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#5) On November 21, 2008 at 6:53 PM, Mcguf (47.23) wrote:

Doesn't look like unemployment even went much over 6% until well into Fall. Things are pretty bad right now and I don't think even Roubini is predicting 10%. 

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