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Jobless Recovery an Oxymoron.
By Dr. Rick Johnson
Tuesday, 27th October 2009
 
Jobless Recovery - Every time I hear this term I want to vomit; Wikopedia states - A jobless recovery or jobless growth is a phrase used by economists to describe the recovery from a recession which does not produce strong growth in employment.

How can we possibly recover if we aren't creating jobs? The September unemployment rate is in. We lost another 263,000 jobs and unemployment in this country is now at 9.8%.

Tell one of those hundreds of thousands of people that are out of work that the economy is in recovery and they are liable to smack you in the mouth.

Jobless Recovery is Simply a Political Phrase --- an Oxymoron

An oxymoron is a figure of speech that combines two normally contradictory terms...

A jobless recovery or jobless growth is simply a phrase used by economists to describe a so called recovery from a recession which does not produce strong growth in employment to reduce unemployment. Personally, jobless recovery to me is simply an oxymoron. 

There is no such thing. This economy will start recovering when we start creating more jobs.
The reality of the situation is explanatory as to why the so called experts are calling it a jobless recovery. Congress approved a $787 billion dollar stimulus bill to bolster the economy and create jobs. Factually however, less than 10% of that money has been spent on job creation programs. Additionally, much of the money that has been spent does not create permanent jobs. The fact that much of the stimulus bill is really pork reduces that number still further.

The Free Enterprise System Works

Personally, I believe in our free enterprise system. I expect that the recovery will gradually gain momentum and that economic slack will diminish slowly. In particular, businesses are likely to be cautious about hiring, implying that the unemployment rate could remain high for a time, even after economic growth resumes. But, recovery isn't recovery until we start creating jobs.

I believe Job recovery should start by the third quarter of next year as businesses begin to gain confidence and start buying equipment and increasing capital investment. It may be a modest 1% or so but that represents a dramatic improvement compared to four straight quarters of decline since mid 2008. Inventories are being worked through and pent up demand is increasing. That is a good sign.

Caution ---- Uncontrolled Spending Can Have an Impact

Of course, the worm in the tequila may be the lack of control on federal spending. If we can not reduce the huge deficits, we may be facing rising interest rates and higher inflation. That's a bad thing and could stop recovery and job creation. In recent months, the economy has benefited from a slowdown in the pace at which businesses have slashed inventories, prompting factories to expand production.

Auto sales have been aided by the cash-for-clunkers program which gave buyers incentives to trade in cars. Home sales have been stimulated by a tax credit for first-time home buyers, an inducement that expires in November.  That means that the economy has been propped up somewhat and is still fundamentally weak.

However, companies have learned a lot during this crisis. Best practices have been employed, contingency plans have been created and executed upon and once all the dust has settled companies are emerging stronger and in better control of their destiny.

However, unemployment will continue to rise in the near future until it reaches double digits.  Until unemployment starts to decline the term jobless recovery sounds ridiculous. Many individuals, particularly those who have grown so discouraged that they're no longer looking for work will be vomiting right along with me. For them, a jobless recovery is nothing more than a term used by politicians to mask reality.

Don't Lose Hope

The sky isn't falling. Success will come at a much greater pace if you have proactively built leadership skills into the organization. I realize the economic realities may be that you are in a contingency mode and you are forced to make serious cost reductions. Be careful not to throw the baby out with the bath water.

Remember………. Companies that will thrive in this economic environment are companies that continuously develop leadership skills at every level in the organization. Doing business today is just not as easy as it was when we were riding the high wave of the economic boom. You actually have to know what you are doing to get through this economic crisis. That means you have to dust off your visionary skills.

Often, these skills take a back seat when our attitude leans more toward survival. If the current economic crisis tells you anything, it should tell you that those who are prepared, those that have developed long term plans are going to be in a much better position to take advantage of the windows of opportunity that will occur as the economy recovers.

Remember, this economy will recover. You and your company will get through these tough times. Jobs will be created. You can be prepared and take advantage of the opportunities this economy creates. After all, your competitors are facing the same conditions you are. Maybe the "good times" created a little complacency within their ranks. Take advantage of it. Take advantage of future opportunities by being prepared.

Let's be honest, people without jobs don't spend money, and the economy is too dependent on consumer spending to recover without people returning to work. Economic recovery and job creation has a lot to do with the consumer. Consumer spending accounts for about two thirds of the gross domestic product. But personal spending has suffered not only from job losses but also from a loss of overall household wealth thanks to the decline in the stock market and the housing market.

Rick Johnson, expert speaker, wholesale distribution's "Leadership Strategist", founder of CEO Strategist, LLC a firm that helps clients create and maintain competitive advantage. Need a speaker for your next event, E-mail rick@ceostrategist.com.  Don't forget to check out the Lead Wolf Series that can help you put more profit into your business. www.ceostrategist.com
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