Healthy Momentum, But Still Waiting For Jobs
-- February 2, 2004
The economy slowed to a 4% rate of growth in the fourth quarter from the sizzling 8% pace in the third quarter. That's still a healthy rate, but how long can it last when an extremely powerful component of this recovery that is stuck in neutral -- those darn jobs. Where are they hiding?
According to Steven Roach, Morgan Stanley economist extraordinaire, "There's never been anything like it. The U.S. economy is currently in the midst of the most profound hiring shortfall of any modern-day business cycle. Fully 25 months since the economy technically bottomed in November 2001, private nonfarm payrolls are 7.7 million workers below the typical hiring trajectory." Roach believes, as we do, that the internationalization of the business cycle has changed the dynamics in the U.S. job market. In other words, it's that giant sucking sound of U.S. jobs moving overseas.
Never before have we faced a situation where both manufacturing and service jobs can move so easily offshore. With the stroke of a key, process and service technology is beamed across borders to the most efficient/cheapest/slave-labor markets.
Eventually, the hundreds of millions of unemployed or underemployed Chinese and Indian workers will become more fully employed and buy more stuff from the U.S. and elsewhere, or so the economic theory goes. Will that take months, years, or decades? Not sure.
One thing is certain, until jobs materialize on U.S. soil, it is highly doubtful that U.S. economic growth can remain healthy once the pre-election government stimulus runs its course. Stay tuned.
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