If the global recession is "likely over" as many people around the world seem to think, where are the jobs going to come from to power growth in sales and earnings?
And if many Americans now think that their economy is back on a strong growth path, what will they think when the recovery is just as gloomy as the recession they have just been through?
Fed chairman, Ben Bernanke doesn’t seem to see any chance of US employment growing in the next year and the central message from the Organisation for Economic Co-Operation and Development’s 2009 employment report was similar.
It was: things are looking up, but employment is going to get a lot worse with the OECD forecasting another 10 million jobs will go in its member countries in the next year, on top of the 15 million who have already been made redundant.
That could see the total of people out of work in the 30 major developed economies hit 57 million by the end of next year.
That’s a demand dampener, if every there was one.
Australia got a tick, but also several questions raised about youth employment and the long term unemployment.
But still, we were better than the US, the major European economies, and Japan.
The Organisation said Australia’s jobless rate would be as much as 1.9 percentage points higher next year without the two government stimulus packages.
“Job losses would be significantly higher if vigorous macroeconomic measures had not been taken,” the OECD said.
It said that Australia’s jobless rate would be between 1.4 percentage points and 1.9 percentage points higher next year in the absence of government spending.
That equates to between 150,000 and 200,000 fewer workers in employment.
It said that while stimulus measures in most countries haven’t had a “strong effect” in cushioning the drop in employment amid the deepest global recession since the 1930s, “Australia is a notable exception.”
But we have other problems which, according to the OECD report (See the summary below)
The jobless rate was 5.8% last month, compared with 9.7% in the U.S., 9.5% in the euro region in July and 5.7% in Japan.
According to this report from Reuters, Nobel economics prize winner, Paul Krugman believes US unemployment won’t peak until 2011.
"Unemployment in the United States will peak only in early 2011 because of a slow and painful recovery from the global economic crisis, Nobel Prize-winning economist Paul Krugman said on Wednesday.
He said the global economy seems to be stabilizing at a level that is "unacceptably poor" and added it is possible that the recession will be a double-dip one.
"(U.S.) unemployment will peak in early 2011 … certainly staying very high and possibly rising all next year," Krugman told a business meeting in Slovenia, adding his forecast was based on data from previous U.S. economic crises."
The OECD said 15 million jobs were lost between end-2007 and July of this year and a further 10 million more could go by the end of next year despite signs the economic has stopped and the outlook is picking up.
"A major risk is that much of this large hike in unemployment becomes structural in nature," the report said.
"The world economy is indeed recovering. We’ve thrown trillions and trillions and trillions at it and of course we’re seeing results," OECD Secretary General Angel Gurria said.
"(But) employment is the bottom line of the current crisis. We cannot claim victory because we see economic indicators going up. We should not assume that (renewed GDP) growth will take care of this," he told a news conference.
The OECD-wide unemployment rate has already hit the highest on records going back to World War Two, surging to 8.3% by June 2009 from 5.6% at the end of 2007, the annual employment report from the OECD said.
The latest aggregate jobless rate across the OECD was 8.5% in July of this year.
Spain, Ireland and the United States were worst hit, with unemployment rates rising by 9.7 percentage points, 7.8 percentage points and 4.5 percentage points respectively between the start of 2007 and mid-2009, it said.
"The labor market outlook would be even worse if governments have not pursued expansionary monetary and fiscal policy," the OECD said.
It estimated that government spending on anti-recession projects will raise total employment next year by about 0.8% – 1.4% more than would otherwise have happened.
All this was ignored by the markets which preferred to focus on a 0.8% rise in industrial production last month in the US, the second monthly increase in a row.
Much of that was accounted for by the cash for clunkers car scrappage scheme, which won’t last as Chrysler’s new management said overnight that it has had a terrible September with sales down 19% already. General Motors managers confirmed that the month was been weak compared to the strong August.
Thursday in the US new home starts were up, but thanks to a 25% jump in new apartment blocks and the like: the important single family home figures showed a 3% fall in August, with permits to built them also falling.
That surprised some in the markets who had been looking for another increase (the total number of starts was the highest for nine months thanks to that stro
