Time to Work on Plan B

Weekly initial jobless claims continue their rise, overall unemployment stays flat to last month, Congress just passed the "bailout" which the President has signed, so now what?

I have heard the statement "From Wall Street to Main Street" many times recently on the local and national news when reporters or "experts" are referring to the current economic crises. Just because we have an economic rescue package does not mean that the economy is going to quickly turn around. It is going to take a while for the impact of this economic "bailout" to help aid the economy. The main purpose is that it will remove the "toxic" assets from banks' balance sheets so they can start to lend money to other banks (at lower rates than the recent record high rates), small businesses (many that use short-term loans to make payroll) and ultimately to consumers. These economic crises took a while to develop. I was emailed an article this week by a senior manager in our organization that was from the New York Times in September of 1999 that reads as though the author of the article has channeled Nostradamus' predictive powers. In the article reporter Steven A. Holmes wrote, "Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits." Later in the article he declares, "In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's." Maybe I could call Mr. Holmes to find out when my beloved St. Louis Rams will win their first game!

Congress has taken a positive step in aiding the prospect of financial recovery, although it will be a while before we start to see the effects of the bailout make its way down to "Main Street." Congress should continue to work to find additional ways to help those on "Main Street." I read an advertisement in the Wall Street Journal today that was a letter from the CEO of Interactive Brokers Group, Thomas Peterffy, in which Mr. Peterffy recommended that the "bailout" be "fixed" so it would simply pay the first $250 of every home owner's mortgage in the US for the next five years (at a cost of about $10 billion monthly). I find this idea very intriguing. You would think that it should have at least hit the radar screen of CNN or Fox News? In the advertisement Mr. Peterffy points out that his idea is "progressive" and would cover a larger portion of the mortgages for those with "modest homes" verses high-dollar estates. Maybe Congress will be wise enough to continue to work on this issue and develop contingency plans in case our economy continues to slip, even in the face of passage of the "bailout." Let's hope we do not have to go there, but it would be refreshing, reassuring, if we knew that Congress was hoping for the best but planning for the worst. Plans such as that put forward by Mr. Peterffy need to be examined and considered when it comes to putting together the proverbial Plan B.

How do you feel about the "bailout" package, and do you see it as a positive or negative move by our leaders in Washington?

Stabilization

Has the U.S. economy started to enter a phase of stabilization? The following are indicators that point to this being the case.

• According to the Commerce Department/U.S. Census Bureau orders for durable goods or big-ticket manufactured goods rose for a second month increasing in July by 1.3% over June, which posted an equal level of increase. The July increase included jumps in orders for commercial aircraft, motor vehicles and transportation equipment. (Read more.)
• Consumer confidence is recovering. The Conference Board's index that measures consumers' moods rose to 56.9, which is the highest reading since May. The Conference Board's inflation expectation also dropped to 6.7%, the lowest level since March.
• The US dollar is on the rise against foreign currencies.
• Oil and gas prices are lower, and overall demand for oil in the US is down more than 5%.

When combined, these positive economic happenings indicate that we are starting to see signs of stabilization in the economy. Even with oil prices rising on fears that current weather issues could halt production in the Gulf of Mexico (where 25% of the US oil is produced), gasoline prices remain stable due to the aforementioned drop in consumption. This trend will give consumers disposable income that could be used for going out to eat, shopping for back to school, etc. This potential boost in consumer activity could lead to businesses needing to add staff, which in-turn would start to aid the labor economy. Given that current productivity levels are as high as they are, companies are likely going to have to add staff to meet the need of any increased demand for their products and services.

I am by no means trying to say that I believe we are solidly on our way to economic recovery as yet. The overall economy has a long way to go before we can use the good "R" word. Based on the information that is available, I personally think we are witnessing the economy beginning to stabilize. Once we experience a multi-month decline in the unemployment rate and the weekly jobless claims consistently fall below the 400,000 level, we can be confident that recovery has begun. I personally believe that this will come to fruition in 2009.

What are the key economic indicators that you watch closely and are important to your business or industry?

2008 Staffing Industry Analysts Executive Forum

Last week I attended the SI Executive Forum in Las Vegas. The event was packed with quality breakout sessions and notable keynote speakers. I was particularly impressed with Robert Reich's (former Secretary of Labor) presentation on the state of the US economy and Dr. Kevin Freiberg's keynote on change and being brave enough (or having the "Guts") to be a game changer in today's business world. Kudos to the staff who was responsible for putting this event together and their selection of fabulous keynote speakers; nice job!

Robert Reich did an outstanding job of articulating the current state of our economy and his opinion of where we are headed. He used the word "stagflation" to describe the current "perfect storm" economic conditions in the US economy. He also pointed out that the world economy is now stronger than the US economy. Immigration was another big topic in Mr. Reich's presentation. He shared with the crowd that the largest percentage of workers in the US at any given time that were immigrants was 15%. We are once again closing in on the magic number, which in years past has been the cause of legislation, (Smoot-Holly Tariff Act) which in turn had a deepening negative impact on our economy.

Although recently there has been a lot of negative press surrounding our labor economy, there are still bright spots. According to the latest BLS data the health care industry added 36,000 jobs in February, and the food services industry (hospitality) is still growing. The staffing industry is upbeat and confident which could partly be due to the increase in the total number of individuals in the labor force that are now working part-time jobs.

Dr. Kevin Freiberg really got the audience fired up. If you did not get fired up, you were obviously not listening to the passionate presentation in which I was engaged. Trust me when I say that the bravery level among entrepreneurs within the staffing industry went up a notch after listening to Dr. Freiberg's presentation. Current times call for new innovation and strategy that will take bravery in business. Do you have the "Guts!"?

Thank you to all of the staffing industry executives who stopped by our booth for a demo of our newly redesigned website, and a special thank you to all of our customers who stopped by to share their successes using our products. We love to hear from advocates! I also greatly enjoyed the round tables and the chance to learn about current trends within the staffing industry directly from industry leaders. Our attendance and participation in the event is another good example of an investment The Employment Guide is making to stay in tune with the dynamic needs of the staffing industry. We have been meeting your recruitment needs for more than ten years and look forward to continuing to exceed your expectations well into the future.

Let me ask you one more time. Do you have the guts it is going to take to be successful in today's business climate?