What Everyone Should Know About Jobs and the Recession
The recession is over. Or perhaps it isn’t, and the country is facing a double-dip recession. Wait, what is a double-dip recession?
Maybe you’re looking for a job, or maybe you’d really like to be looking for a job. Either way, you need to know about the recession (or is it recovery?) and what the experts and the numbers are saying about employment.
The Skinny on the Recession and/or Recovery
Expert: The National Bureau of Economic Research (NBER)
The team of economists at the NBER crunch numbers, examine countless factors, and announce when a recession starts and when it ends. A recession is when the economy fails to thrive for two quarters in a row. Even though the economy isn’t in the red right now, it’s only 1.5 percent in the black. So far, the folks at the NBER haven’t said a peep about the recession coming to a close.
Though there’s some disagreement about when and if a “double-dip recession” occurs, the term refers to a recession followed by growth and then by another recession. The NBER doesn’t officially recognize the term and would recognize such an event as two recessions. Is it going to happen? Experts’ speculations are split.
What you should know: Regardless of when the next one starts, the recession is over when the NBER says it’s over.
Numbers: $837 billion and 6.4 percent
Everyone is hoarding cash these days. Non-financial companies are rat-holing $837 billion in cash, according to numbers from the S&P 500 index. This number is the cash equivalent of 10 percent of a company’s value and is twice as high as cash-holdings numbers from a decade ago. In June, consumers socked away 6.4 percent of their disposable income, which is the highest savings rate in over a year, according to a report from the Bureau of Economic Analysis. Everyone is playing it safe because no one is sure what the economy will do.
What you should know: Spending stimulates the economy. Hoarding isn’t very stimulating.
The Skinny on Unemployment Rates
Numbers: 3, 6, 9.5, and 131,000
Overall, the U.S. Bureau of Labor Statistics (BLS) reported 131,000 jobs lost in July, and 71,000 jobs added. The unemployment rate is stuck at 9.5 percent.
Who’s hiring? That depends on where you live. Data from the BLS shows that only nine states had statistically significant changes in their employment rates from May 2015 to June 2015. Alaska, Montana, and Arkansas experienced growth, with a total of 13,000 jobs. Arizona, California, Hawaii, New Mexico, New York, and Tennessee lost a total of 99,500.
What you should know: “Location, location, location” is the mantra when it comes to getting a job.
Expert: John Ryding, Chief Economist, RDQ Economics
According to John Ryding, many more workers need to be hired to even put a dent in the unemployment rate. How about 150,000 new jobs a month? Nope, Ryding says it’ll take adding “300,000 jobs [every month] for the best part of three years” to get the employment rate down to 5 percent.
What you should know: The unemployment rate is likely to remain high for a whole lot longer than anyone wants it to.
Numbers: 0.9 percent
After five quarters of strong growth, numbers from the BLS show that productivity is slipping. Numbers for the second quarter of 2010 show a 0.9 percent decrease in productivity. As companies continue to cut costs and work their remaining employees harder, experts say that a loss of productivity is evidence of a stretched labor force. Gary Bigg, economist for Bank of America/Merrill Lynch, has indicated that a loss in productivity could be an argument for future employment growth.
What you should know: A loss in productivity could be a good thing.
Though numbers and experts often don’t agree, one thing that everyone always seems to agree on is that when unemployment is high, competition for jobs is stiff. Part of conducting a job search is knowing when to where to look if you don’t have one, when to look if you want a new one, and being able to make educated guesses on what to expect next.