When the financial crisis lifts, a bleak job market will need some overdue attention.
My favorite part of this story is the excerpt I have added below. It is interesting how we are now looking back at our activity in the US and seeing TRUTH. The truth is that we have been GREEDY and CONSUMERISTIC. I believe that the church is just as responsible for this kind of consumerism as anyone and those of us who are thrifty, slow to act, balanced and careful with life and the actions we make, living in such a way as to GIVE BACK to the rest of the world and our neighbor will be the kind of Christian that the rest of the world will one day want to be like.
Read the following excerpt to see what I mean:
“The employment picture is deteriorating rapidly. The United States has lost 760,000 jobs in the past nine months, according to the Bureau of Labor Statistics, while weekly initial jobless claims have hit a recent 478,000 from the low 300,000 range in early 2007.
Those are numbers that go hand-in-hand with recessions, noted Northern Trust economist Asha Bangalore. “Projections of weak economic growth,” she added, “suggest that a higher level of jobless claims in the months ahead is nearly certain.”
In fact Microsoft (MSFT, Fortune 500) founder Bill Gates said Monday he believes the unemployment rate could hit 9%, up from 6.1%. Any substantial rise in joblessness will put more pressure on house prices and further undermine the mortgage markets that governments around the world are trying desperately to shore up.
After the binge
The economic stumbles come after a debt-fueled consumption binge tied to the surge of house prices in the first half of this decade. Consumer spending as a proportion of gross domestic product rose to 71% in 2005 and 2006 from less than 65% in 1980 and a 25-year average of 68%, according to Royal Bank of Scotland data.
To finance that spending, consumers and businesses took advantage of former Fed chief Alan Greenspan’s expansionary monetary policy and borrowed heavily, laying the groundwork for a massive expansion of the financial sector. Low interest rates, together with deregulation, allowed the likes of now-defunct Lehman Brothers and Bear Stearns to post record profits and ply top staff with multimillion-dollar bonuses.
But outside the booming financial sector, job growth was soft and wages were stagnant. The median U.S. family’s income was actually a shade lower in 2007 than it was at the end of the high-tech boom of the 1990s, according to census bureau data.
“Since 2000, a lot of economic growth has been illusory,” said Len Blum, a managing director at investment bank Westwood Capital. “Now that the asset bubbles have been popped, you start to realize we really didn’t make that much progress in our economy.”
Indeed, consumer outlays are now falling, as households try to work off their debts. Along with the surge in mortgage delinquencies that precipitated the financial crisis, the spending slowdown is also taking a toll on employment.
What’s more, the news in the job market seems to worsen by the day. General Motors (GM, Fortune 500) said Monday it will close plants in Wisconsin and Michigan, costing 2,500 jobs. Financial firms have cut 65,000 workers in 2008, as the so-called shadow banking system has cratered, forcing the feds to cough up billions in bailout cash for the likes of Fannie Mae (FNM, Fortune 500), AIG (AIG, Fortune 500) and others.”
Click below for the rest of the article at cnn.com