It looks like tomorrow could very well become yet another 'brace yourself Friday' or another edition of 'As The U.S. Economy Turns.'Still, hopefully it won't become a new rendition of 'down goes the Dow' with another visit by our old friend, you guessed it - - Dow 8,000. But analysts and economists haven't ruled the latter out.
The reason? The December 2008 jobs report, to be released by the U.S. Labor Department at 8:30 a.m. EST.
December jobs data won't be pretty
President-elect Barack Obama, D-Illinois, and House Speaker Nancy Pelosi, D-California, said they are bracing for a 'sobering' jobs report, Reuters reported.
Sobering is one way to lower expectations: economists surveyed by Bloomberg News expect the December 2008 jobs report to show a loss of 500,000 jobs. If that occurs, the U.S. economy will have shed more than 2.5 million jobs in 2008 and a staggering 1 million jobs in the last two months alone, November / December 2008. It would also make 2008 the largest job loss year for the United States since World War II.
Economist Peter Dawson told BloggingStocks economists are becoming "very concerned" for two reasons. First, a trend line for job cuts has increased for more than six months. Second, ADP's (NYSE: ADP) private sector job report showed the loss of a staggering 693,000 jobs, and even though the ADP report has not correlated well with the Labor Department report, it still is setting off alarm bells in economists' circles.
"The U.S. economy can not continue to shed 400,000 and 500,000 jobs a month. These levels rival lay-off totals from the Reagan era recession [1981-1982] when the unemployment rate hit 10.8%," Dawson said. "Corporate earnings are already expected to decline in 2009. If we continue to see ridiculously high job losses, corporate revenue and earnings will plummet, leading to another round of job layoffs. The stock market, obviously, would have a difficult time in that environment."
Hence, Dawson reiterated that it's imperative that Obama, Pelosi, and across-the-aisle Congressional Republicans pass a large stimulus package with infrastructure spending, as quickly as possible, to pump money into the economy for work that needs to be done. He called the Obama Administration's $700-$850 billion fiscal stimulus proposal for 2009 "a good start."
Another idea Dawson really likes, a must in his view: a corporate investment tax credit and a corporate tax deduction if a company hires employees add/or cancels job lay-offs for current employees (up to certain number).
"Right now, this recession is as much about reversing psychology as anything else, and corporate investment credits will help change that psychology, and start a virtuous cycle of increased demand, revenue and job growth," Dawson said. "The corporate investment policy change will send a signal to companies that now is the time to invest and undertake business projects."
Fiscal Policy / Economic Analysis: The United States needs to go from sobering to sensational job statistics, but we'll settle for sustainable GDP growth and with solid job gains.
Further, the discovery of a new growth sector would also really help the U.S. economy, and if you have an idea or suggestion as to what that new sector might be, add your comments below. Let us know what you think.
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Reader Comments (Page 1 of 1)
1-08-2009 @ 3:03PM
Jason said...
I tend to trust the ADP job numbers more than the ones from the Labor Dept.
www.eeinvesting.com
1-08-2009 @ 4:12PM
Wendy said...
Great idea, rewarding companies who do not lay off. However, many companies have already cut back hours and slashed benefits, which also adds to umemployment rolls.
New idea: reward companies who do NOT lay off, who restore hours and benefits to those who are working, and give "extra credit" for such things as green practices, hiring US citizens, lowering Boardroom comp.
1-08-2009 @ 5:29PM
BHarrison said...
Quote from article: ""Right now, this recession is as much about reversing psychology as anything else, and corporate investment credits will help change that psychology, and start a virtuous cycle of increased demand, revenue and job growth . . . "
Well, the FIRST THING that are needed are:
1.. FULL DISCLOSURE and TRANSPARENCY for what is being done with the Bailout monies to provide public and professional scrutiny to prevent the "gaming" of the "bailout"monies.
2. Congress to draft, pass, and implement reasonable and prudent regulations and effective oversight to INSTILL INTEGRITY in the corporations, the FIs, and the markets.
Without these basic actions, we have NO INTEGRITY as to what is being done with the BILLIONS of dollars in the bailout/recovery efforts, and there can be no "faith and confidence" in the corporations and markets. People have already been substantially defrauded by the manipulated and corrupt markets and institutions; they are not going to invest in these STILL CORRUPT and MANIPULATED markets and corporations, especially in a "declinging markets" that are being projected to decline another 20% to 40%.
And with there literally being an almost ZERO return on investments, there is no incentive to invest in HIGHLY RISKY INVESTMENTS when there is no, if any, "significant RoI".
The $700 Billion Bailout plan was for the "benefit" of the core financial corporations . . . there has been no discernable "trickle down" benefits of any significance to the American people or small businesses . . . The Banks got the money and they are holding onto it or using it to buy up other banks at supposedly "bargain prices'.
Once again, Congress has failed the American people; Congress' actions have been strictly for the special interests and the ultra-wealthy. It is IMPERATIVE that we PURGE Congress of these INEPT, INCOMPETENT and/or CORRUPT Congressmen . . . we are running out of time on all of this. Even Obama is saying that on the news today.
A critical part of these problems is that the VAST MAJORITY of our Congressmen have apparently been complicit in supporting and/or assisting the FIs in the development of our national economic debacle . . . Barney Frank, Ms Pelosi, Mel Martinez, Mr. Reid, Mr. Dodd, etc., they ALL vehemently FOUGHT AGAINST and VOTED AGAINST implementing regulations that would have headed off or prevented this economic melt down. Now they are leading the recovery efforts . . . what a total sham this has become.