A Medium to Long Term Perspective on the Job Market
The chart below is something you need to see to have some medium to long term perspective on the economy and the job market. It comes under the heading of something you won’t see in the mainstream media. I have finally been doing this long enough to know that people don’t always like it when I present something that’s troubling and I actually thought about not posting it. But I reminded myself that my job is to give you the best information I can that will help you run your business, even if it’s not cheery, or maybe especially then since nobody else seems anxious to do it.
The purpose of posting this is to give you some perspective on the possible duration of our current economic conditions. Remember we need something like 100,000 to 125,000 new jobs a month just to keep up with population growth. Eventually, new jobs and new industries will be created and the country will prosper if only because of its massive natural advantages. But financially caused recessions are historically always the worse, and the deleveraging process we are going through has to be measured in years.
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Well Jeff this can’t be much of a surprise for many of us in the surf industry. Our staff is down from a peak of 50 to the low 30’s right now and will fall even more into the fall and winter. So your chart seems to actually show the country as a whole is doing better then one surf shop in Santa Monica! Thank goodness!
As always, I appreciate your info and your perspective. Keep up the good (and gloomy) work.
Mikke
ZJ Boarding House
Thanks Mikke,
I’ll be just as diligent in posting good news when it starts to come in, as it finally will.
Holy Shoot – Super Ugly chart there.
Jeff- What about the 1929 crash data? I don’t see it here!
J
Janet,
The people who prepared the chart chose to focus only on recessions since World War II. Maybe there’s a lack of good data before then, or maybe they just couldn’t fit any more on the chart. If we did have Great Depression data, it would look even worse as unemployment hit, I think, 25%. I think most of us have some concerns about how the TARP money was spent and that some of the banks and companies were bailed out, but it’s highly likely that doing that, even if it wasn’t done well, saved our collective asses.
The scariest of the scary aspects of this chart is that the return to pre-recession employment is longest for the three most recent recessions, and that each of the three has seen a slower return than the previous recession. In 1990-91, recovery took 30 months. In 2000-01, 46 months. And this time around? We can’t even foresee when we might get back to 2007 levels. The job decline went on longer than any recession except 2000-01, and has been much deeper than any recession in the past 60 years.
Not surprisingly, people are prioritizing their expenses. Fortunately, they have made experiences a top priority. So destinations and activities that create memorable experiences, and the products that enable these experiences have an advantage. This advantage doesn’t guarantee success, but it makes failure optional, if not avoidable.
Rick,
You see the chart clearly, and I agree with your interpretation. If we are in any way immune as an industry, it’s due to higher average income. At the higher income and education levels, unemployment is not as bad as it is across the rest of the population.
J.
Thanks Jeff, This chart adds much needed perspective to the current situation (but 1929 would be a great addition). I first assumed that a “modern”, information age recovery would likely be faster, but unfortunately the chart shows that the three most recent recoveries were actually more gradual than those prior. I could think of a few reasons why (especially factory employment). Also, I think that post 2001 innovations in communications, sales (esp. web), social media and online marketing tools will continue to do more to help a company’s bottom line before it will help our country’s unemployment line.
But consider this, when Japan’s recession hit many of the underemployed had more time on their hands to participate in affordable, leisure activities. That was very helpful (and the saving grace) for some US-based, action sports companies whose products were not dependent on the highest price points. So, I’ve suggested two things to clients recently: 1. make sure you offer Real Value, and 2. Find inexpensive ways to pursue international sales. Focus on countries that are not hit as hard as the usa and that do not have strong, local action sports brands of their own. A weak dollar will help here. Go Team USA!
Kelly,
Wish I could add the Great Depression, but I’m just passing on the chart. My sense is that most people in the US who lose their jobs don’t have the money for leisure time activities. They are mostly trying to make the rent, take care of their kids, etc. Japan is informative, but also a little scary. They have now been in a deflationary recession for going on 20 years. One of their faults is that they weren’t willing to reform their financial sector. To some extent, they have been able to weather it better than we may be able to because of their exceptionally high savings rate, and perhaps that’s why they had time for affordable, leisure activities. While our savings rate has improved in the last year or so, it’s nowhere near Japan’s.
Thanks for the comment.
J.
Jeff, Yes, America would never survive like Japan did. But with the yen at ¥83 the time is now to sell there…Kelly