US job loss will reach a new height

Though America is showing signs of recovery from the economic recession, gloom is still hanging over the job market. Famous computing and business firm, Automatic Data Processing, Inc. released its latest report on June 3, 2009, which says that US employers cut 5,32,000 jobs in May 2009. The company also revised its estimate of April 2009 job cuts from 4,91,000 to 5,45,000. The major cause behind such high job cuts is that employers are still taking necessary cost cutting measures. Here are some of the high lights of the report:

· Large business organizations cut 100,000 jobs.

· Medium business cut 2,23,000 jobs.

· Small business cut 2,0,9000 jobs.

· The “service-producing” sector declined by 2,65,000 positions.

· The “goods-producing” sector cut 267,000 jobs.

The US Dept of Labor is going to release its latest job report on June 5, 2009 and as per “analyst average estimate” the report will also show a figure around 5,20,000, a 9.2% increase against April 8.9%. The worst news is, despite economic recovery, American companies will reduce another one million jobs in the rest of the current year and by 2010, the jobless rate of the U.S will hit the peak of 9.5%-10%. It will be the highest since September 1983.

Related articles:

Reuters

Business Journal

Economic Recession Will End in 2009: Most Economists are Wrong!

In a survey, most economists have predicted that economic recession in USA will end in 2009. National Association for Business Economics carried out the survey and 74% of economists thought that things would become better for the US economy in the next quarter. Well, I was going through most of the reports in major websites like Bloomberg, AP, CNN etc and I did not find anything to be excited about that the recession would end in the US in 2009. The economists perhaps feel that the stimulus package and increasing consumer confidence would help to make things OK again.

First of all, 5 months of the year is almost gone. The trend of job loss has not vanished. Rather job loss figures look as solid as it can be. Even in the survey, many economists felt that people will not get back their jobs right away. In fact, what I feel that many big companies are fighting to remain profitable. Major automakers are on the verge of bankruptcy. The banking sector is not in good shape either. President Obama may have offered a stimulus package but there is no substantial plan for creating new jobs.

As a hobby economist, I feel that creating new jobs will be the biggest challenge. Recession will only finish when this problem can be addressed. On the other hand, US economy is closely related to European and Asian countries. There is no good news for those countries. In the last few days, we have seen one after another Japanese company big annual loss. We have also seen very bad condition of economies of Germany and Britain. The same thing goes for China. In a global world, US economy cannot remain safe in an island.

Well, I am a hobby economist. Still, I understand that most economists failed to predict about the start of the recession. So, I will not be surprised if their prediction is wrong again.

Unemployment Rate: Is USA becoming a Third World Country?

I admit that the title I gave the title to create some excitement in the mind of my readers but unemployment rate of 11% should not be in a state like California. After all, it is among the richest states in America. Secondly, it has both Silicon Valley and Hollywood and a very flourishing agriculture sector. So, what is going wrong? In any case, 11% unemployment is perhaps too high for any rich country. Condition of some other US states is not good either.

The national unemployment rate for USA in April was around 9% and it is not good either. Of course, in some third world countries this rate can be almost 25% or even 30%. So, USA is not becoming a third world country. However, the reality is that if the US economy has to go out of the economic recession then more jobs have to be created first.

Economic Recession: 10 Lessons for American People to Learn

USA is in the midst of economic recession and there is no debate about it. It is the worst economic crisis after the great depression of 1930s. It is now almost certain that the US economy will not be out of the crisis in 2009. 2010 may become a better year but still, there is a long way to go. Large companies are suffering and millions of people are also suffering. Every month, nearly half million jobs got lost for the last few months. This has become a monthly ritual for the people to read about job losses of the previous month.

I was thinking about the lessons that American people can learn from the economic recession and here, I have made a list of 10 possible lessons.

1. Recession is real and can come again

The great depression started in 1929 and naturally, most people have not seen that with their own eyes. So, the idea may have come to many people that USA is the richest country on earth and economic recession would not touch its economy. The year 2008 perhaps taught these kind of people a crushing lesson that it can happen anytime to any country.

2. Living with Family has some advantages

Most people in America do not live to live with their family. In fact, this has some advantages. It ensures personal freedom and can keep you out of many family related problems and quarrels. However, I feel that living with or next to other family members have some advantages. The first advantage that you can get is that you can decrease your expense. If you live with your parents then surely, it will decrease many of your expenses. Secondly, in times of trouble and recession, you can get mental support from your family. In fact, in most Asian countries, family members and relatives try to help each other when someone loses his or her job.

3. Spirituality can help you to pass tough condition

This is obviously my opinion. I feel that in American society, there is a lack of spiritualism. People have really become materialistic. There is nothing wrong in it but the main problem is that when you give too much importance to your job and money then when you lose your job and you see that the economic condition is bad then surely, you will lose your mental strength. By spirituality, I am not just indicating religion. Instead, you can be an atheist but you can have some kind of idealism and passion for something. Life should be more than earning money and spending it.

4. When USA is in trouble then the rest of the world too. Don’t forget them

This is a very thing for the global economy. After recession hit America, naturally, the people of the country became worried about their future and it caused a big problem to those countries who export to the US. For example, India, China and Japan all of them suffered as their export orders decreased from Europe and America. Many people in China have lost their jobs and have returned to their villages after their factories were shut down. Some workers in Indian diamond industry have committed suicide after losing jobs. Try to think about them and then you will see that at least you are much luckier than them.

5. Save Money for the future

Many people think that they should try to increase their money all the time. As a result, they enter into risky places like Forex Market or Stock Exchange. Many of them do not have any idea about the risks involved with these markets and often lose money just like gambling. This is very bad and instead of risking their money, they can keep it in bank and then nothing will happen to it. So, do not take unnecessary risks especially in the markets that you do not have idea about.

6. Don’t become addicted to your credit card

I do not need to emphasize this matter because it has already become a national problem for USA. It happens from early teenage life for many people. They feel that whatever they like they should buy with their credit cards and then they can pay back. Several million people have lost jobs in the last one year and many of them are now finding it difficult to manage their credit card related credits and expenses. The credit card companies are getting smarter and they are trying to find a way that people cannot declare themselves bankrupt after failing to repay the loans of their credit cards. Understanding the gravity of the situation, US Senate just passed a bill that would sharply curtail credit card issuers' ability to raise interest rates and charge fees.

7. Travel to a poor country and be satisfied and spend less money

You do not need to travel to Africa or Asia. Instead, just visit some poor places of Mexico or even Haiti. Then you will notice that these people manage their life by spending just 10% of what you do or even sometimes less. Yet, they are happy and satisfied. You do not need to focus on the poorest people of those countries. Instead, take a look at their middle class people. They also spend much less money then you. Yet, they are becoming educated and living a decent life.

8. In recession, government cares only for the big companies not poor individuals

This is perhaps the biggest lesson to learn for American people. Obama announced a huge stimulus package, G20 countries also came up with $1 trillion package to create some life in the economies of those countries. However, all the money were for big companies and industries not for individuals. $1 billion dollar would happily head to save a bank but not $10,000 to save an individual. So, remember that you are on your own.

9. Don’t become crazy for buying a house

Credit crunch that came from the real estate sector pulled the trigger for the economic recession. I cannot understand the craziness of American people for buying a house by taking huge amount of loan from bank.

10. Invest on Education and Improving your Skill

US companies are outsourcing jobs on a regular basis to remain profitable. This may bring more profit for the companies but for the individuals, it is just disaster. I read a report in Yahoo: No Outsourcing Here: How to Train for the Best American Jobs. All these jobs need you be highly educated and highly skilled.

As the title of this blog suggests, I am just s hobby economist. I have written this entry for providing some food for thought. If you do not agree with me or feel that I have got the thing wrong then let me know your idea in the comment section.

Welcome to Hobby Economist Blog

All my life, I studied in humanities and Economics was my most favorite subject in high school and college. When the time of studying in University came, I had the opportunity to any subject in my university but I selected English Literature and Language instead of Economics. Well, I live in a poor country and my parents felt (and I agreed) that English has better prospect than any other subject in the humanities field in terms of career prospect. There was a second reason too. I wanted to be a journalist or a writer and English seemed to be a better choice. I even wanted to study journalism and English seemed to the best option for my future.  

I am happy that I decided to study English literature because it gave a career boost to someone like me who comes from a lower middle class background. On the other hand, I have got some skill in this language. This skill of English has helped me a lot to be passionate about knowledge and information. The reality is that you cannot find enough good quality books on any subject in any language in South Asia from where I come from. So, studying English in university level has given me a good base for the future.

I have been professionally blogging for more than 3 years and I always tried to write something related to South Asian Business. I still have blog about this topic and the url is: http://www.southasiablog.com

A couple of my entries got linked by two leading blogs on Economics: Mariginal Revolution and Economist’s View. I felt very happy for this matter and my interest and passion grew about Economics. That is why; I decided to open this blog.

You may be surprised with the name of this blog: Hobby Economist. Well, I liked the name because it correctly depicts my condition. On the one hand, I like to become some day a real economist and until that time, it is just my hobby.

What will be featured in this blog? I like to mainly write about the US economy. I have to admit that I am not an expert on this field. However, I know that I am a keen observer of US economy and I have tried to remain updates about US economy for the last 2 decades. Of course, being updated means reading reports and columns on newspapers or listening about US economy in BBC Radio, BBC World Television Channel and CNN- nothing academic; rather pure hobby.

In our time, US economy is totally related to the global economy. You cannot separate them. Whenever, you want to discuss about European economy or Asian economy, sooner or later you will find the relationship with America.

I like to write for the ordinary readers. If you are looking for some serious discussion or observation then this blog may not satisfy you. Still, you are most welcome here because at the end of the day, economics is one of the most important things that govern our personal and social life.