The US will more than just make it through
I think of a just making it Economy as around 2% growth. That is enough to keep things going, but not enough lower unemployment or raise disposable incomes.
The entire last decade was whew we made it frame, with growth averaging 1.9%. I called it then in my newsletter when I was writing on the Greenspan economy, it was good call and lot of folks and friends objected to my POV
It may just be the time for another Call on the US economy going forward over the coming decade. Let's look at the what's happening, as follows;
One, the Bush tax cuts were extended, and not to do that would have put the US back into recession, not to mention dead wrong policy at a time of high unemployment.
About 65%+ of the American Rich are small business owners. These are the people who 2 things when they get extra money: they invest some, and then look for ways to put it to work to grow their businesses. The more they have the more they work to grow the businesses.
That is the way entrepreneurs work, they want to grow and get better, no matter what the enterprise, they want to create more value in new markets and products, which means more jobs. And then when the cycle slows they tighten the belt and hope to last until things turn up again.
Small businesses are the essence of job creation in the USA., and yes some get rich and are taxed less, and then more money is made and reinvested businesses creating more jobs and opportunity.
When you look at Bill Dunkelberg's, Chief Economist of the National Federation of Independent Business, graft of the prospects for future job growth in the USA, it looks better than at any time since the beginning of the Great Recession. See the chart below:
Dunkelberg notes: Reports of net job creation continued to oscillate around the 0 line in December. Asked about changes in total employment over the last three months, 13% of owners reported increasing employment at their firms by an average of 3.5 workers while 14% reported reducing total employment an average of 2.9 workers per firm. Clearly, no surge in hiring in December. This produced a reduction of -0.07 workers per firm, basically unchanged from the 0 October reading and +0.01 reading in November. In normal times, this measure would be in the range of 0.1 to 0.2 workers per firm (chart below). Still, the percent reporting higher employment levels is the second highest reading since December, 2007 (the peak of the last expansion according to the National Bureau of Economic Research) and the percent of owners reporting lower employment was down 2 points from November.
The good news is that the two job creation indicators, job openings and job creation plans both reached new recovery highs. The percent of owners reporting hard-to-fill job openings rose 4 points to 13 percent, the best reading in 24 months. This indicates that the unemployment rate should improve in December and the months ahead. Plans to create jobs gained 2 points, rising to a net 6% of all owners, the best reading in 27 months. These indicators point to a pickup in job creation activity in the first quarter of 2011. But the small business sector continues to underperform on job creation in this recovery compared to other recovery periods (charts below).
And when you look at the charts below, you see Light on the horizon.
Jobs is a lagging indicator, and over the past 4 months there have been upward revisions of the headline numbers.
There is a wide divergence between the establishment survey and the household survey numbers.
When you look carefully it shows a rise of 500,000 jobs. Pretty darn good.
The establishment survey aka the headline number, is created by calling up a statistically significant percentage of established businesses every month, and asking them how many people they employ.
They do not call small businesses and start-ups, which is where the job creation actually begins, those jobs are estimate and referred to as the birth/death ratio. or B/D-R.
The B/D-R is based upon past trends, and a best at guessed number. Thus, when the economy starts to recover from recession, they underestimate the number of those jobs, lagging indicator, remember.
And when the economy is going into recession, the trend analysts overestimate the number of jobs lost, and as the data gets better data, those numbers are revised upward.
The Key is to watch the way of the monthly revisions. As I noted above, it is now 4 months of upward revisions. That is a positive, and I expect that to continue.
As employment rises, people who have given up looking for work come back into the workforce. As they start looking for jobs, they are counted as unemployed. That keeps the unemployment number high.
There are about 130 million people working in the USA now, down from 137.6 million in Y 2007, and less than were employed 10 yrs ago, in Y 2000.
That also means that about 15% of all workers had to find new jobs last year, not counting those who quit on their own and went to another job. I seem to remember that if you count the latter, the number rises to about 20% of US workers changing jobs each year. The jobs market is fluid in the USA and the fact is that 20% of Americans change jobs every 5 yrs or so, and that may be low.
There are a lot of changes going on now with the tech advances that were predicted in the late 1970's, so there will be some pain felt in the economy it evolves. It has happened before in the US
I have gone on record that I believe that the US economy will grow between 4.0 to 4.4% GDP this year, with the World doing better, and a German led EU charging forward, and China beginning to turn into the World's biggest importer. That means Growth and Jobs...Stay tuned...Paul A. Ebeling, Jnr. www.livetradingnews.com