December unemployment and the double dip recession

Posted by: Joel Capperella

Today’s BLS unemployment report is, as I wrote yesterday, exactly why we at The Seamless Workforce try to remain pragmatic. Yesterday, there was plenty of good news predictions regarding today’s BLS numbers. But, as it turns out, we lost more jobs last month than had been estimated, and unemployment remains at 10 percent (probably much higher, if discouraged workers are factored in).

85,000 jobs lost and unemployment at 10 percent.

Bright spots?

• In November, the economy actually generated a net gain of 4,000 jobs (tempered, however, by the fact that October’s number was off 16,000 jobs in the other direction).
• Temporary employment continues to grow. Approximately 166,000 positions were added since July, and 47,000 in December alone–the highest December temporary employment growth since the BLS began tracking temporary employment 20 years ago.

Areas of continued concern?

• Long-term unemployment (unemployed for more than 27 weeks) continues to climb.
• Construction, manufacturing and wholesale continue to see the ranks of employed dwindle.

Truthfully, it is difficult to genuinely say anything about the future when looking in the rearview mirror, which is essentially what we are doing when we examine the jobless rate for the previous month. For instance, the temporary job hiring would historically be good news. Yet, at such dramatic increases, is it the harbinger of a wave of permanent employment opportunities, or is it indicative of a continued risk-adverse position that employers are taking because they simply are not confident in the recovery? Difficult to say.

What can be said is that one of the factors that has driven temporary employment and the slowdown of the unemployment number is the economic stimulus package. Important, because as Paul Krugman has noted several times since early December, the stimulus effect is finite, and there is a danger of a weak recovery turning into the dreaded double dip recession.

And it appears that the current administration is thinking the same thing and doubling down on their Keynesian ways by announcing another stimulus, this one directed toward clean technologies and manufacturing. In fact, as I type, the President specifically pointed out TPI Composites as a firm exemplary of the possibilities of clean technology generating green sector manufacturing jobs.

Will this assuage the fear of the double dip recession? Will such an economic stimulus keep the hope for moderate growth alive?

We are, as always, taking a pragmatic position. Even if a stimulus moves through Congress, such investments are unlikely to have a dramatic immediate impact. Wind turbines and clean tech are simply not mainstream enough in our economy to make a significant difference.

So, our recommendation would be to continue efforts to search for efficiencies in the way in which you are managing your workforce. Take inventory of your current employee satisfaction in order to anticipate or head off retention problems if growth does arrive. Evaluate every aspect of sourcing for talent and leverage each to ensure your talent supply chain can support your needs at all possible levels of demand. And finally, read the monthly BLS tea leaves with as much pragmatism as you can muster.