Tuesday, June 9, 2009

More "No Green Shoots" Evidence From the Real World

Manpower Inc., a temporary help company with a large U. S. operation, has unpleasant news, as reported in the MarketWatch story:

Jun 9, 2009, 12:01 a.m. EST
Employers' hiring plans stuck in negative territory
Third-quarter outlook unchanged from second quarter's record low: Manpower

Here are excerpts:

Employers' hiring plans for the third quarter didn't budge from their record-low second-quarter outlook, according to Manpower's latest Employment Outlook Survey.

A net -2% percent of employers said they plan to hire in the upcoming third quarter, flat from the -2% who said they would hire in the second quarter, on a seasonally adjusted basis, according to the Milwaukee-based firm's survey of 28,000 U.S. companies. (The second-quarter outlook was revised down to -2% from -1%.)

The survey's previous low point was in 1982, when a net 1% of firms planned to hire in the third quarter.

A year ago, a seasonally adjusted net 12% of firms said they would hire in the third quarter. The Manpower survey measures the percentage of firms planning to hire minus those intending layoffs. Manpower doesn't measure the number of jobs. . .

"We are seeing some stabilization from an outlook perspective. To me, stabilization right now is pretty good news," said Jeffrey Joerres, chairman and chief executive of Manpower Inc. "For a while, every quarter seemed to have gotten worse and this one at least is leveling off."

DoctoRx here. I beg to differ with Mr. Joerres. Stabilization in what is the longest economic downturn since the one that began in 1929 is pretty bad, not pretty good. It stinks, in fact. There was a tax cut last year, one this year, "stimulus" here and much more coming, money printing and credit extension by government on a vast scale, and the best we can get is a bottoming process?

The weight of the actual evidence, rather than hopes, is that the U. S. economy is following the Roubini script: a prolonged bottoming process. This may change, but a good rule of investing is not to expect rapid trend changes. Thus in the 1990s, tech was hot both in the business world and in the investment arena; expecting those trends to change (which was rational) cost a lot of people a lot of money. Investing on the basis of one's fervent hopes for a strong economy to rise out of this poor one may be equally rational and ultimately correct, but early.

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