Showing posts with label recession. Show all posts
Showing posts with label recession. Show all posts

Monday, June 1, 2015

Is another Bigger Global Recession on its Way now ?

One of the Most stable country in the world, Canada's economy shrank in the first quarter by a whopping 0.6 per cent. Is this the beginning of a new recession ?
Recessions of course are defined as two consecutive quarters of negative growth. Now we learn today that Canada's economy shrank between January and March, the biggest decline in GDP since 2009, and the first contraction in the last four years. In fact, the economy contracted in all three months. It is even more dramatic when you think that Q4 2014 registered a growth of 2.4 per cent! 

Of course, we don't know yet if this trend continued into April and May, but if it has, as we should find out soon enough, it raises the prospect that we are heading for a yet another recession, and that Canada's economy is not immune to the turmoil facing many countries. Given the problems the rest of the world is having, who knows what this potential recession will look like.
Taking a closer look at the statistics, we see that private sector investment declined dramatically as a result of the oil crisis, and that is certainly having repercussions in other sectors. Consumers are slowing their spending dramatically (slowest level since 2009), and governments are cutting spending as well. Do you see where I am going with this? Where is the growth going to come from in the coming months? 

Exports? Well, today we also learn that the U.S. economy has also shrunk in the first quarter, by 0.7 per cent! This was revised downward from a previously reported gain of 0.2 per cent. With the U.S. economy contracting as well, our exports should also fall.
We seem to be dead in the water.
This is even more startling for two reasons.
First, recall that just last week, the Bank of Canada told us that Canada's economy had stalled, and registered zero growth. Now we learn that the reality is actually worse. The Bank told us as well that Canada's economy would rebound in the second quarter to 1.8 per cent, then to 2.8 per cent in the third quarter and 2.5 per cent in the fourth quarter. These numbers are increasingly looking like pie in the economic sky. These new numbers will probably lead to a decline in interest rates in July.  

Second, most economists were expecting bad news, but not this bad. In fact, in a survey done by Bloomberg, the consensus among economists was for a small but positive growth of about 0.3 per cent. The latest figures, however, are sure to force many economists to rethink the path of Canada's economy in the near and medium future.
If anything, what this shows is that neither the Bank of Canada nor economists really know what's going on. Of course, it could be that the bad economic news in both Canada and the U.S. is the result of bad weather and other minor problems, as many pundits have rushed to the airwaves to say. But what these pundits have failed to do is to take a step back and look at the whole picture. The truth is we have not been doing well since the 2007 crisis. Rather than rethink economics, governments have continued with the same bad policies as before. And now the austerity chickens are coming home to roost.
Where do we go from here? Well these numbers are certainly troubling, but they should convince governments that now is not the time to tighten the belt. In fact, austerity is a contributing factor in this mess. When everyone is not spending, as is the case now, the government has a moral responsibility to step in and spend, and to support Canada's flagging economy. As I have said many times, now is not the time to balance the budget. When your house is on fire, it is not the time to think about which new wallpaper for the dining room: you need to put out the fire first before it spreads and does even more harm.
Finally, well, there is this little thing called an election coming in October. If second-quarter numbers are also negative, as I am prepared to bet, then this spells sure trouble for the Harper government. It means that we will have an election on the heels of bad news. It could possibly be a game-changer.

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Monday, October 1, 2012

Global Recession can help savvy new entrepreneurs

Investors eye the 'cliff' as Obama gains in polls
CBS News
"They'll be faced with determining whether we get a recession or not," says Jeff Kleintop, chief market strategist at LPL Financial. But investors remember the budget battle in the summer of last year, which ended with the country losing its top credit ...
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Recessionary outlook
Oman Daily Observer
At Credit Agricole bank, economist Frederik Ducrozet commented that "the question which stalks the market is not the recession — a recessionary outlook would hit risky assets such as shares, but would have far less effect on the government bonds." He ...
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Oman Daily Observer
Recession can help savvy new entrepreneurs
Tulsa World
Jeanine Hamilton, owner of the staffing company Hire Partnership, wears a headset while working at her office in downtown Boston. Hamilton was laid off from her job in June 2008 and then started her own business despite the economic downturn. STEVEN ...
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As Spain's recession worsens its tradesmen are swallowing their pride (blog)
Who would have thought it? When I first set foot in my golden valley if I'd needed a plumber, electrician or builder to pop round to fix something at the house, I'd have expected to wait. And wait. Now, if so much as a whisper goes round that I need a ...
See all stories on this topic » (blog)
Economic Forecast October 2012: Huge Decline, Fundamentals Degrading
Global Economic Intersection
These economic pulses cause some to believe the economy is heading towards arecession – as forecasts use growth rate-of-change to assess economic trends. Further, these cycles are out of phase with the calendar – and the commonly used seasonal ...
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Global Economic Intersection
Global economy: Chances of prolonged recession are high?
Economic Times
Final September surveys of purchasing managers are likely to confirm the euro zone is mired in recession. But Berenberg Bank said that, thanks to the ECB, the 17-nation bloc was close to an inflection point; rebounding growth in narrow money pointed to ...
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Economic Times
Economists in clover as global recession bites
Four of the country's leading firms have expanded rapidly, posting annual sales increases of between 12pc and 28pc in their last financial year, according to filings at Companies House. For their directors and founders, it has been a very profitable ...
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Hartford Highlights a State's Divide
Wall Street Journal
In the Census report, Hartford joined the ranks of America's most impoverished places. Its 36% poverty rate was higher than other urban centers such as Cleveland, Newark and the Bronx. Before the recession, the poverty rate in this city of 125,000 was ...
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Wall Street Journal
State economy needs a new tailwind, by Steve Norton and Daniel Barrick
The Keene Sentinel
The Great Recession disrupted much of the New Hampshire economy, as it has across the country. But it is a mistake to assume that the recession is the sole reason for the recent slowdown in the state's economic engine, or that, once the impacts of the ...
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Recession worsens brownfields backlog in WisconsinLong after a red icicle’s discovery, industrial pollution haunts a Lake Michigan neighborhood

Thursday, September 13, 2012

How to Make Work Pay Again

Yesterday the U.S. Census Bureau reported that family income in the U.S. dropped to its lowest level in 16 years. The key thing in this news is that the drop is not just over the last three years, during the Great Recession. The squeeze on the middle class isn't new, it wasn't caused by the recession, and it won't be fixed as we come out of the recession. If we're going to rebuild the middle class, we need an agenda aimed at making work pay in the 21st century.

That's why I worked with more than 20 groups who understand the daily struggles of working families on a new report we're releasing today, "10 Ways to Rebuild the Middle Class for Hard Working Americans: Making Work Pay in the 21st Century." The report is a road map for addressing the truth that we don't just have a jobs problem; we have a good jobs problem.

Before we get to what we do about it, we need to confront the fact that even though the proportion of Americans with a college education doubled in the past three decades, the share of working people with a decent job dropped. Six out of ten (58 percent) jobs now emerging from the recession are low-wage. On top of that, the jobs projected to have the most openings between now and 2020 are mostly low-wage and require no more than a high school education. So there is no reason to think things will get better unless we act.

One set of solutions proposed in "10 Ways to Rebuild the Middle Class" is to tackle the lack of support and protections for low-wage workers. A first step is to restore the minimum wage, which buys 30 percent less now than it did 40 years ago. The minimum wage for tipped workers is $2.13 an hour, the same as it was in 1991. One in five workers would get a pay raise if the minimum wage were increased. That includes workers who get paid just above today's minimum wage, who would also benefit as the legal floor got raised.

Remarkably, four out of ten private sector jobs -- including the great majority of low-wage jobs -- do not give employees any paid time off if they are sick or need to care for an ill family member. In response, Connecticut and several cities have passed paid sick days ordinances. The federal government and states and localities should update basic labor standards to include this essential benefit to working families.

The report recommends tough enforcement, with meaningful penalties, of laws that unscrupulous employers now routinely flout. Many employers of low-wage workers routinely steal wages by not paying the minimum wage, not paying for overtime, or simply not paying workers at all. Other employers 'misclassify' workers as "independent contractors" in order to get out of paying payroll taxes or benefits and hire "permatemps." Worker safety and health is another area where measly penalties, weak enforcement, and widespread retaliation against workers who dare to speak up allow employers to keep low-wage workers in hazardous work conditions every day.

It will take systemic solutions to address the broader problem of stagnant wages. A crucial step is to uphold the freedom of workers to organize a union by modernizing the National Labor Relations Act and stopping employers from harassing organizing efforts with virtual impunity. Nothing in our nation's history has done more to bring workers decent pay, benefits, and dignity at work than organized labor. The factory workers of the mid-20th century didn't have a college education; they organized unions. The low-wage workers of the 21st century -- the housekeepers and janitors and home health aids and retail clerks -- will only be able to get decent wages and become part of the middle class when they are able to effectively organize to bargain collectively.

Other proposals in the "10 Ways to Rebuild the Middle Class" report would create new social insurance protections for the 21st century, just as Medicare, Social Security, and Medicaid were key to fighting poverty and building the middle class in the last century. The nation took one major step in 2010 with the passage of the Affordable Care Act, which in 2014 will enable working families to get affordable health coverage even if they don't get it on the job.

The report proposes two other steps to provide families more security in their work and in their retirement. Though today's norm is for all the adults in a family to be in the workforce, only one in ten workers (12 percent) has paid family leave through work to care for a new child or a sick family member. A solution is to establish a national family and medical leave insurance program, similar to Social Security and successful programs in California and New Jersey, for workers to draw on when they are out on family leave.

To address the fact that pensions have been replaced by thread-bare 401(k)s over the past 30 years, the report recommends establishing new pooled and professionally managed retirement plans for those who rely solely on Social Security and 401(k)s, which would pay a defined amount -- a pension -- each month.

In addition to these and other steps, "10 Ways to Rebuild the Middle Class" recognizes that a foundation of improving work is full employment. That is why we need to stop laying off public workers and outsourcing jobs overseas. It's also why we should create millions of jobs now by investing in infrastructure and a green economy.

Rebuilding the middle class is about more than assuring that every working American can support his or her family with dignity and security. It's about powering the economy forward in the 21st century. The middle class is the engine of our economy, an engine that can only be rebuilt by making today's jobs good and tomorrow's jobs better.

Why "Recession-Proof" Jobs Are a Myth

When President Obama proposed a federal pay freeze recently, there must have been quite a few civil servants who thought, "Whoa! This isn't supposed to happen!"

In private firms, pay freezes have become as common as Post-It notes. But government jobs, you'll recall, are supposed to be "recession-proof" and far less susceptible to the strains of a weak economy. The government has never said that, exactly, but lots of career experts have, and if the compact was never overt it was at least well understood: Government jobs tend to come with lower pay and prestige, but with benefits and job security that make up for it.

No longer. As with so many other things, many of the old assumptions about safe jobs and stable careers have been shattered by the grueling economic transformation we're still in the middle of. Yet the ubiquitous lists of best careers and recession-proof jobs continue to propagate the phony idea that some lines of work are immune to economic stress. Here are some of the careers recommended by outfits like CareerBuilder, Forbes, Time, HR World, and Associated Content, along with the more sobering reality:

Education. Conventional wisdom: Education is indispensable and most teachers get their paychecks from state or local governments, which are less susceptible to recessions than private industry. Plus, most teachers belong to unions, which provide further protection against layoffs and pay cuts.

Reality: State and local governments are facing severe budget pressures and are starting to lay off teachers. Since 2008, for instance, the number of local teaching jobs has fallen by 157,000, according to the Labor Department. Plus, teachers' unions that refuse to accept pay and benefit cuts are increasingly seen as out of step with the rest of America, prompting a backlash in some areas that could lead to school consolidations and other recession-like moves.

[See 12 industries still losing jobs.]

Military. Conventional wisdom: We're still fighting two wars, terrorism is ever-present, and Congress always supports the military.

Reality: The huge federal debt has to be cut somehow, and the military is one of the biggest targets. One prominent proposal calls for freezing military pay, cutting benefits, and outsourcing many military jobs to contractors. As for Congress, it tends to support big weapons programs more than spending on troops. Plus, the Iraq deployment is winding down and a drawdown in Afghanistan is scheduled to begin next summer.

Public safety. Conventional wisdom: Police, firefighter, and federal law enforcement jobs will be the last to be cut.

Reality: Maybe so, but governments have now reached that point. Police and fire departments are now subject to the same pressures as other local government agencies, and cuts in the federal workforce seem inevitable as well, with every agency likely to give up something. Overall, state and local governments have cut 260,000 jobs this year alone, with more cuts likely in 2011 and 2012.

Utilities. Conventional wisdom: Everybody needs to keep the lights on and heat the house, plus most utilities are regulated, which keeps prices stable and helps smooth out ups and downs.

Reality: It's true that everybody needs energy, but Americans have cut back on virtually everything, including gas, electric, and water. Labor Department data shows a net loss of about 4,000 jobs in this industry since 2008, with steeper cuts in traditional power plants and minor gains at nuclear facilities.

[See why every worker needs new skills.]

Energy. Conventional wisdom: Energy is obviously a staple, so demand will stay strong in any economy, providing job security.

Reality: Energy is a volatile commodity subject to steep price swings. Energy demand has held up reasonably well over the last few years, with a net job increase in industries like oil and gas extraction. But anybody from Texas or Oklahoma can tell you that an energy bust can be brutal. And "green energy" remains a wild card that could flourish, taking jobs away from fossil-fuel industries, or peter out, leaving a bunch of shuttered startups where people were once hoping to find stable, high-paying jobs.

Accounting. Conventional wisdom: "Death and taxes are a sure thing," according to one job-advice site, which reasons that tough times ought to force companies and individuals to scour their finances more closely than usual, making more work for accountants.

Reality: There's a glut of unemployed accountants and bookkeepers right now, thanks to severe corporate cutbacks and weak revenue at small businesses. There are about 86,000 fewer accounting jobs now than there were three years ago.

Computers. Conventional wisdom: Companies are increasingly replacing people with processors, with no end in sight to the technology revolution.

Reality: With intense pressure to cut costs at most companies, lower-level IT jobs are being shipped overseas in droves; any job that can be done remotely by a lower-paid worker in India probably will be. The safer jobs involve systems engineering and proprietary software work, which requires a high degree of skill and tireless attention to new technology.

[See how the middle class is shrinking.]

Sales reps. Conventional wisdom: In a downturn, companies are likely to hold onto the sales reps who bring in desperately needed new business, while cutting support functions and other jobs that don't contribute to the bottom line.

Reality: Companies don't always do what's rational, and besides, sales reps don't add to the bottom line when potential customers hunker down and refuse to spend money. No wonder the economy has lost more than 400,000 sales jobs since 2008.

Federal government. Conventional wisdom: Uncle Sam doesn't have to please shareholders or customers, so it doesn't face the same budget pressures as private companies. Plus, many government jobs have union protection.

Reality: The federal government has been spending far more than it takes in for a decade, with the national debt ballooning and the day of reckoning drawing near. Voters have now made it clear they want a smaller government, and cutbacks in the federal workforce seem inevitable. One harbinger of coming cuts is the U.S. Postal Service, once thought to be recession-proof itself; its labor force has shrunk by 137,000 jobs since 2008.

To be fair to the job-advice sites guiding workers toward precarious fields, many of their recession-proof lists predate the 2007-2009 recession that proved them wrong. And a number of them are derived from a 2008 book that could not have anticipated the ravages of a downturn that destroyed more than 8 million jobs. Still, many of those outdated lists pop up high on a Google search for "recession-proof jobs," and readers don't always check the date when doing research on careers.

[See what could cause the next recession.]

Practically every list of recession-proof careers also includes a variety of medical jobs, from nurses and doctors to technicians and home health aides. That's valid, since the aging of America's population makes it inevitable that more people will need health care. And sure enough, healthcare has gained jobs in practically every sector over the last few years, despite the recession. But even in healthcare there are a lot of variables that could make jobs less appealing down the road. As more people flee declining industries and flock toward the few that are growing, a glut of qualified workers can develop, driving down pay and benefits. Healthcare reform could produce unexpected changes that make some jobs safer than others. And the complexity of healthcare, combined with relentless pressure to lower costs, is already leading doctors and other caregivers to report high levels of stress and low levels of satisfaction.

It might be distressing to think that no job is safe from recession, but in a fast-changing economy where old industries are displaced by new ones faster than ever, focusing on safety and stability may be the wrong way to pursue a rewarding career. There's mounting evidence that adaptable skills, creativity, and lifelong learning are the new determinants of success, with the biggest rewards going to people with multidisciplinary experience who can apply lessons learned in one field to another and accept the idea that they're likely to have two, three, or four careers, not just one. Cathy Farley of consulting firm Accenture says that as companies recover from the recession and start to hire again, they'll build a more agile workforce capable of responding to a wider variety of challenges. "Companies will organize themselves more flexibly," she says. "They'll look for people with the ability to adapt to different types of work."

[See 3 myths about disappearing prosperity.]

Companies built around a fixed set of skills, meanwhile, may not be hiring for a long time. Industries like manufacturing, construction, telecommunications, and even insurance are still losing jobs, more than a year after the recession officially ended, and many of those lost jobs may never return. A lot of workers in those fields, naturally, are trying to break into different lines of work that offer more stability. But the first move ought to be recession-proofing yourself, by building skills that will transcend the inevitable lurches in the economy. That way, you won't be caught flat-footed when the next pay freeze or technological transformation comes along.