More of those canaries-signaling-danger-in-the-economic-coalmine are fluttering into view. For example, if car sales in 2008 were bad enough in 2008 to push General Motors and Chrysler over the bankruptcy cliff, what do even worse numbers for sales in 2010 portend? According to 247WallSt.com (August 31st): "US car and light vehicle sales probably reached a 28-year low in August, their worst level since the same month in 1982. The data for the projections is from Ward’s, a leader in car industry research, and data gathered by Bloomberg. If the forecast is right, the rate of sale could be below 2008, the year that nearly destroyed the auto industry and drove GM and Chrysler into bankruptcy…. Nothing the car companies have been able to do, including offering large amounts of incentives, has been able to arrest the slide." Some say that there is only enough room in the US for two big carmakers. Chrysler is a distant third. Hmmmm.
The good news is that, according to the July 3, 2010 Shanghai Times, the GM joint venture is now selling more vehicles in China than it does in the U.S. GM is itself forecasting that it will sell 2 million units in the PRC this year. Don't get too excited, since the China car market grew by 35% this year generally, and most of us don't live in China! While Chrysler's Jeep is doing okay in this Asian market, Chrysler as a whole is way behind General Motors in China. Chirp! Chirp!
Big retailers – from Saks to Sears – seem to have regressed to bragging about how their losses are narrowing. Not necessarily that consumers are buying more, just that the managers of those companies have figured out how to squeeze suppliers, buy less, cut the number of workers and operate more efficiently. The August 19th DailyFinance.com put it more politely: "Sears Holdings (SHLD) reported a second narrow loss compared to a year ago, mainly because last year it incurred pension plan and store-closing costs. The chain store operator continued to feel the impact of tightened consumer spending as same-store sales declined 2.2%." Oh yeah, I forgot that… and they each closed a pile of stores. But the key in all of this is "tightened consumer spending." Chirp! Chirp! And if you think consumers are gaining confidence, since much of that confidence comes from how folks perceive the employment picture and job security, it doesn’t help that August direct unemployment numbers (not even corrected for those who have given up looking, the under-employed and forced part-timers) have increased from July to 9.6%. The numbers are goin’ in the wrong direction... what’s worse... as expected. Chirp! Chirp!
I've already written about the precipitous drop in new and previously owned homes in July (chirp! chirp!), although I have to admit that the Case-Shiller index (May to June) showed a whopping 1% increase in average home prices in a survey of the top 20 cities in the U.S. The banking world is sending mixed signals: (i) the number of bank loans in default 90 or more days actually fell for the first time in four years, but (ii) "The FDIC reported that its 'problem bank list' grew to 829, up from 775 banks last quarter. FDIC chair Sheila Bair (pictured, right) said the agency expects the number of failed banks this year to exceed last year's total, with failures peaking in the third quarter. Already 118 banks have failed in 2010; there were 140 bank failures in 2009." DailyFinance.com (August 31st). Chirp! Chirp!
The minutes of the Federal Reserve meeting (August 8-9) are pretty clear: "the staff lowered its projection for the increase in real economic activity during the second half of 2010 but continued to anticipate a moderate strengthening of the expansion in 2011…" Hope floats! Chirp! Chirp!
It's not as if things are going to get terribly worse; the real conundrum we face is that things aren't likely to get significantly better for years. That means that folks who are older and have been squeezed by lay-offs might just be past retirement age when they might really have a shot of being hired. People who are entering the job market during this malaise will find themselves making a whole lot less money over their lifetimes than those who were already in the market or those who might follow in better economic years. Raises and salary expectations are generally based on entry level compensation, and percentage raises starting at way less… well… do the math, and you can see how a bad starting pay can ripple throughout the rest of your life.
Further, with employers learning how to hire less, outsource more and operate with greater efficiency, you most certainly can expect that employers will expect more of job holders than ever before, and raises are much less likely to be institutionally automatic. Our productivity and pay levels are no longer competing with comparables in other areas of the U.S…. or even the Western world… our jobs are now in direct competition with labor in every corner of the earth. Wipe that smug smile off your face, Goldman Sachs analyst, because some dude in India is eyeing your job with math skills that would make even you turn pale! The one arena where we still rock is entrepreneurial pan ache, and while the numbers of hard U.S. patents are falls just as those in China rise, nobody can create new businesses and business models like Americans. So, everybody! Get to work! Create!
I'm Peter Dekom, and there are plenty of not-so-distant silver linings out there, but most certainly not for everybody!
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