I was hoping to start a healthy discussion on the labor market which is a key variable in the long term health of the economy.  When you look at how fast and how deep the labor market deteriorated starting in September it is amazing.  One “shock” to the system that happened during that time frame is a dry up in credit and confidence.  A percentage of job losses has to be contributed to these two variables.  The question is how much.  The engineer in me sees spikes on a chart and is not happy.  You would rather see a gradual trend change versus a deep fall off.  The economy is weak and the job market tight I am not questioning that.  I also can’t help to think though that this job market will turn around much faster than some anticipate as confidence is restored and credit improves.  In February yet another Fed / Treasury program is aimed at improving credit to small business.  You also have the Fed spending up to 500B in the conforming MBS market over the next two quarters. The increased / historic rates from Fed Funds to prime to 30 year fixed will at some point sooner than later increase spending further adding to an improvement in the labor market.  Curious to hear anyone’s thoughts on the subject.

Thanks,

Tony

That’s an interesting topic.Pls discuss.

maison de credit

I read somewhere that up to 50% of those who lost jobs got new ones pretty quickly.  At least I think it was 50%.  Something substantial nonetheless.  At any rate….I think the next wave of unemployment will come from the public sectors - police, firemen, teachers, local gvmt employees etc. as municipalities are going to spend 2009 slowly going broke and therefore in need of budget cuts (unlike the Feds, they can’t run multi-trillion dollar deficits ad infinitum and expect continual funding).  This should keep unemployment rising throughout the rest of this year.  Assuming we get no additional black swans (ya know…revolution, systemic collapse etc.), I think we could reach a leveling off a year from now but really, we’ll just have to wait and see.  If we get another round of private sector layoffs then, we’re in really deep doody.  I think (hope) most of that will abate near-term.  We also need to stabilize unemployment within the year as unemployment benefits run out after 9 months.

Mayor Quimby - 21 April 2009 11:46 AM

I read somewhere that up to 50% of those who lost jobs got new ones pretty quickly.  At least I think it was 50%.  Something substantial nonetheless.  At any rate….I think the next wave of unemployment will come from the public sectors - police, firemen, teachers, local gvmt employees etc. as municipalities are going to spend 2009 slowly going broke and therefore in need of budget cuts (unlike the Feds, they can’t run multi-trillion dollar deficits ad infinitum and expect continual funding).  This should keep unemployment rising throughout the rest of this year.  Assuming we get no additional black swans (ya know…revolution, systemic collapse etc.), I think we could reach a leveling off a year from now but really, we’ll just have to wait and see.  If we get another round of private sector layoffs then, we’re in really deep doody.  I think (hope) most of that will abate near-term.  We also need to stabilize unemployment within the year as unemployment benefits run out after 9 months.

T-Bill (Bill for short) the trading dog, and junior analyst says that things are going to work out just fine with a final market bottom in August to October of this year and an unemployment bottom in February of 2010.

‘Course Bill is just a dog. 

I like the US Gov. bidding up mortgage-backed-securities (MBS), which can lead to 30 year rates to around 4 - 4.25%.  REFI heaven.

http://www.layoffdaily.com/

Who is laying ‘em off and how many.