Living Like Every Day Isn’t the Last

MRINetwork First Friday Preview
May 2009
Volume 3 Issue 5

UNITED STATES

Living Like Every Day Isn’t the Last


Over the last two months, a steady flow of new reports has pointed to improved conditions in the U.S. economy. Consumer confidence is growing, home sales are showing life, and the Dow Jones Industrial Average is more than 20 percent off its bottom. Many of the banks that were banging on the door of the Federal Reserve for the last year asking for money now want to give it back. In the first quarter, Ford lost less than projected, and burned far less cash than expected too, giving a breath of hope to the auto industry. Around the world, countries are looking hopefully at the winds of change in the United States as a promising sign for their own futures.>

Is it time to break out the champagne? Maybe, but not the vintage stuff. >

“What employers should take from the last two months is that this is not the Great Depression,” says Tony McKinnon, president of MRINetwork. “A lot of people on Wall Street had started to think that the end was near and were acting accordingly. Sometime in early March though, traders realized that while we are in a deep recession, it wasn't going to be the new Great Depression. Now, employers are going to have to go through that same change in thinking.” >

In the labor market, unemployment claims dropped sharply in the second week of April, yet the economy is still far from adding jobs and the unemployment rate likely won’t begin to fall before the end of the year. Adding more pressure, as was pointed out by the Federal Reserve in April’s Beige Book, “many 2008 college graduates are still looking for jobs, with 2009 graduates now just entering the market.” >

The professional and managerial unemployment rate now stands at 4.2 percent; twice what it was a year ago, and higher than it has been in at least a decade. While the Bureau of Labor Statistics doesn’t break the professional and managerial rate down by age group, the total age-based statistics suggest that much of that increase is likely coming from college graduates, not a glut of older experienced workers. >

The unemployment rate of college graduate-aged Americans—those between 20 and 25 years old—reached 14 percent in March, almost twice the 7.6 percent rate for 25 to 54 year-olds. >

“There is little doubt that on the way down employers were over-cutting and letting good, experienced people go while trying to right their ships,” says McKinnon. “Now as they are starting to hire again a lot of companies are going to find that the quality people they let go didn't stay on the market as long as they would have thought. >

“This is the fundamental challenge of workforce management in preparing for an upswing. Sure your business is still in flux, you don’t know if you’ve hit the bottom or not,” continues McKinnon, “but if you flinch, if you decided to put off hiring too long, you'll see the advantage switching back from employers to the candidates.”Showing how early experienced talent starts to leave the market, in 1992, unemployment for workers between 45 and 54 years old peaked a month before the general unemployment numbers. In 2003, the same age group’s unemployment rate peaked three months before the general population.

Provided by MRINetwork www.MRINetwork.com Edited by Sean Muir (212) 687-8999 smuir@KitchenPR.com
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This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.