To view a slide show presentation of some U.S. companies that posted higher revenues yet fired thousands of its workers, click here.
The U.S. gross domestic product was up 2.6 percent in 2010, and spending by U.S. consumers was up 0.4 percent in December, according to the U.S, Commerce Department - but who cares?
Unemployment was down slightly to 9.4 percent at the end of 2010, according to the U.S. Census Bureau. Economists estimate, however, that the real number is probably closer to 20 percent if the people whose unemployment benefits have run out and are still sidelined are counted.
For example, companies such as Verizon (NYSE: VZ) reported a revenue increase of $2.2 billion for its fiscal 2010, yet fired about 39,000 workers over the past two years. Hewlett Packard (NYSE: HPQ) laid off 24,600 over the past two years, yet generated revenues of $126 billion in its fiscal 2010, up from $114 billion in fiscal 2009.
About 14.5 million people are collecting unemployment benefits right now, only a 0.4 percentage point decrease from 2009. Consumer spending is up as well as companies profit, but that doesn’t help people on Main Street who are struggling to look for work, pay their bills, and face housing foreclosures.
So how can the numbers tell such a contradictory tale?
Jim Pearce, a senior economist at Welch Consulting, said U.S. citizens should actually be looking forward to a recovery, although he did say it is happening slowly.
“What’s happening now is that the economy is growing but it’s not growing fast enough,” he said. “It’s not growing at the pace where it can absorb a new labor force and re-employ experienced people who lost their jobs over the past few years.”
Pearce also said that unemployed people should be encouraged.
“Productivity growth has kept the GDP on a slightly rising trend. Businesses are rising but not very fast. It’s happening right now as it often does in the middle part of a recession, where we kind of see things rising slowly but unemployment remains high.”
He added that people hunting for jobs might want to get more education or make sure they are overqualified, because the ratio of job-seekers to employers is high right now.
“The people that companies are hiring are the best qualified people,” he said.
As for the rising consumer spending contradicting the still high unemployment rate, Pearce said, “I suspect people who have not lost their jobs are feeling a little more secure in their present situations since layoffs don’t seem to be increasing.”
He also noted that consumers see the recession lifting slightly and are being encouraged to spend more.
“It’s helpful when people have income from retirement, he said. Those people probably cut back quite a bit in the heat of things in 2008 and 2009, and now they have to replace things that are worn out, such as durable goods. Consumers are just being a little less precautionary right now.”
As for companies that had positive revenue growth in 2010 yet laid off workers, Pearce said, “I suspect those companies operate in a number of different countries and have different facilities in different parts of the country. In times like these, those companies tend to quickly cut off business lines that aren’t doing so well so that they can rebuild their workforce in a fairly flat economy.”