Tuesday, December 7, 2010

Unemployment and Retail Hiring


The unemployment situation is in this country is hitting critical mass. Obama and the Republicans were wise to extend unemployment benefits this week. Not that the extension will help solve the problem, but it will give the federal government more time to deal with the inevitable riots and civil unrest that will follow a complete system breakdown. Many people have argued that the United States is dealing with a deflationary cycle, but anyone who has gone to the gas pump, paid a heating bill or purchased groceries would have seen a spike in prices. Simply put, the price for he crap you don't need (TVs, video game consoles and luxury goods) have gone down, while the prices of the things you do need (food, water and energy), have gone up.

I've seen a big spike in my water bill, groceries and gas. The unemployment situation is getting worse and given the recent disappointing job numbers, it's likely to get worse. according to the U.S. Bureau of Labor Statistics, U3 unemployment rose to 9.8% in November. More importantly, the more realistic measure stayed at 17% of the population. Almost one-fifth of the population is unemployed, a record 41.8 million people on food stamps,

The government is projecting that an average of 43.3 million people will be on food stamps in the new year that began in Oct, 2010. Sure, many companies claim that they will hire a lot more people for season jobs this holiday season, but you need jobs to get customers with actual money. If there are no jobs, hiring more seasonal people will not help. Sure, the people with seasonal jobs will have more money to spend, but if they are working a seasonal job, they aren't likely to be in a position to spend a lot of money on junk.

The overall situation will not improve. In fact, the Federal Reserve's continued dollar printing fest will only make things worse as the food stamp funds buy less and less food because of the dollar devaluation. It also means that your income will produce less and less for your family, which will further contract the economy.

Retail Hiring

Take a look at the chart below, retailers supposedly hired three times as much people in October for seasonal jobs than they did last year. This is a huge increase that shows that the retailers are much more optimistic. Why are they so optimistic. Last October, the U3 unemployment rate reached 10.2%. Now, it's down to 9.8%. It's a difference, not not enough to justify a three fold increase in hiring. So if these companies really are hiring like crazy and we have 43 million people collecting food stamps, how in the hell are they going to get a massive boast in sales.

Where the hell are the jobs? If you don't have any money, you probably won't be buying much. If the companies are hiring as much as Challenger, Gray & Christmas claims, this January will be an even bigger disappointment, because they spent so much on hiring temps and the customers didn't buy much more. But here's what I think is going on. The companies are trying a different strategy. They are doing most of their hiring early and cutting throughout the holiday season in response to demand. They are learning that it is cheaper to hiring more people now to train properly than to hire and train during a busy season.


Jobless rate rises to 9.8% in November

Food Stamp Recipients at Record 41.8 Million Americans in July, U.S. Says

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