It's a stat for the era, and probably for the ages: the number of open jobs declined 50% in the past two years, to a seasonally-adjusted 2.4 million in July, Marketwatch.com colleague Rex Nutting reported Wednesday. Read the full government report by clicking here.Equally sobering, in July there were 6.05 applicants for every job opening. To show you how much the U.S. job market has deteriorated, and how much slack there is in the labor force, in December 2007 there were just 1.72 unemployed people for every job opening.
High unemployment: not good for the market
Further, investors, particularly those employed and/or who are doing well financially, should not look at the unemployment rate as merely a personal or labor issue. Unemployment is directly correlated with corporate revenue and earnings. True, for a time, revenue and earnings can advance without job growth, but sustained GDP growth is not possible without job growth, and a lack of the latter will eventually drag down revenue and earnings.
High unemployment also increases public social spending costs at every government level, and leads to a host of other social concerns.
More broadly, from a theoretical standpoint, the whole point of the American economic system is: profits and jobs. Briefly, profits and jobs are the reasons Americans endure so many more hardships than their European brethren. Take the former away and irritants occur; take the latter away, and social and political pressure for change builds.
By extension, for those who think the current economic system is just fine, and don't want any reforms, certainly not liberal reforms from the Democratic Party, here's some advice: support policies, private and public, that promote domestic job growth, and the more jobs, the better.
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Financial Editor Joseph Lazzaro is writing a book on the U.S. presidency and the U.S. economy.
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Reader Comments (Page 1 of 1)
9-09-2009 @ 6:45PM
al coholic said...
Makes sense to me....
9-09-2009 @ 8:12PM
william lindblad said...
The fed says that things are getting better, with only the St. Louis region as a laggard. Given the fact that I do believe what you are saying regarding employment, this is but another case of how statistics can be misleading. There is one thing that the Fed, all analysts and economists should get through their respective heads - the recession will be over when the UN-employment rate gets down to 5% or less!
9-10-2009 @ 11:10AM
Mike said...
And with all this stated above, the president is pushing hard for government-run health care...
9-10-2009 @ 12:31PM
Mitchell Tharp said...
This article seems to use "applicants" and "unemployed" interchangeably; however, an applicant is not necessarily unemployed.