The introductory question during the Passover Seder reads “Why is this night different from all other nights?” I ask “Why does this recovery seem different than all other recoveries?” On the plus side US businesses recorded an annualized record breaking 3rd quarter profits of $1.7Trillion. JP Morgan announced a 47% increase in profits prompting its CEO Jamie Dimon to predict demand for new credit would increase in 2011. The U.S. consumer, he said, "is getting stronger," and certain firms are showing new appetite for loans. "I think the future is extremely bright, despite all the headwinds," he added. Also, consumer spending is up, inflation seems to be under control, 3rd quarter GDP was 2.6%, and the Stock Market continues an unspectacular but steady climb to its highest point since August 2008.
But where are the jobs? Unemployment is at 9.4% with real unemployment closer to 18%. On the homeowner front according RealtyTrac, there were a record one million homes that were repossessed in 2010, and there are five million homeowners who are at least two months behind on their mortgages.
So which is it, things getting worse or are they getting better; both depending on your education, your industry, and where you live.
Unemployment by level of education for people >25 years old:
a) Less than High School education: 15.3%
b) High School graduate, no college: 9.8%
c) Some college or associates degree: 8.1%
d) Bachelor’s degree and higher: 4.8%
Unemployment by region:
a) Northeast: 8.5%
b) South: 9.2%
c) Midwest: 9.1%
d) West 10.9%
Unemployment by Industry Sector:
a) Management, business, and financial operations occupations: 5.7%
b) Professional and related occupations: 3.8%
c) Service occupations: 9.8%
d) Sales and related occupations: 8.3%
e) Office and administrative support occupations: 8.3%
f) Farming, fishing, and forestry occupations: 22.5%
g) Construction and extraction occupations: 20.7%
h) Installation, maintenance, and repair occupations: 6.7%
i) Production occupations: 11.7%
j) Transportation and material moving occupations: 12.0%
So if you happen to live in the west without a high school education and you’re only relative experience is construction, you’re screwed. If you happen to own a home you’re quite possibly one of the +30% of the regional population in a house that is underwater, or perhaps even foreclosed.
The above also helps explain why it is difficult to recruit for some professional positions as the unemployment level is low and if the person is one of the 25% homeowners nationwide that is behind in their mortgage, relocation may not be an option. Further, states such as Nevada, California, Arizona, and Florida that were on the bleeding edge of the boom-bubble-bust of the commercial and residential construction industry have felt the recession the hardest. States that were heavily dependent on blue collar labor such as Michigan, Illinois, Ohio, Tennessee, and South Carolina have been dealing with comparatively higher unemployment rates for some time as factory jobs have been steadily leaving this country.
So what does it all mean? Corporations will continue to thrive with fewer employees, the financial services sector will always find ways to make money and not jobs, the construction industry is the most stimulative industry and it needs to be revived or replaced, and we are not producing sufficient college graduates in the technology, engineering, and science sectors.
We must take a long view of solving this problem through increasing college opportunities for our young people, regain technical edge, and rebalance our economy so it is less dependent on consumer spending.