By: Dr. Mike Campbell
Economics is a cyclical beast. Any Bull Run will eventually peter out and turn into a Bear market. Periods of seemingly unlimited growth, where the only way is up, always end with a dose of reality as profits are taken and the market falls. Boom usually follows bust. What that means is that the prevailing mood of global pessimism, Bearish sentiment and retrenchment, will come to an end – the rub is that nobody knows quite when this will happen.
As the economic cycle turns from recession (or very sluggish growth as we are experiencing now, since the global recession is now part of history: honest!) to sustained demand and growth, jobs will be created to meet demand. Employment always lags behind growth since businesses want to be certain of the trend before they commit to a recruitment campaign.
The news that the US created 103000 jobs ought to be a source of near universal joy, but it is tempered by the fact that the US unemployment statistic has remained stubbornly unchanged at 9.1% of the working population. The figure included 45000 workers that had returned to work at Verizon after being on strike. Even with this taken into account, the number of new jobs created still surpassed analyst’s expectations.
2012 will be an election year and the economic situation will loom large as a factor which will dictate who becomes the next President (or holds on to the job, if the present incumbent runs, as seems likely). No doubt with this in mind, President Obama announced a $450 billion package of spending plans aimed at stimulating employment in the US. The measures are intended to create jobs through major construction projects, schools and services increases and stimulus measures to encourage small businesses to hire staff. The measures call for a tax hike on wealthier citizens and is, of course, meeting objections from the Republican Party.