Washington Offers No Guidance To Business, Leaving Job Growth Stagnant

Washington Offers No Guidance To Business, Leaving Job Growth Stagnant

This is interesting, as it is the first time since I have begun tracking the index (since ’07) that we have seen a constant reading for 8 straight weeks.  This is meaningful as a typical stagnant reading before this was 4 weeks.

It shows that in fact, as they have said they would, businesses have put hiring on hold until the elections and until the “fiscal cliff” is sorted out (last week’s reading was as of 11/4).  While the reality of whether or not Washington’s inability to perform even its basic function and provide a clear outlook to business has been debated, I think there is no clearer sign of that than this index.  It means as we look forward, we should not expect to see material jobs growth (other than seasonal) until business has clarity.

The “Great Recession” taught many a CEO that prudence was warranted. It should surprise no one that given the current environment out there they are reluctant to expand payrolls. Pick any issue: taxes, Dodd/Frank, health care, Fiscal Cliff etc etc, and you’ll note Washington has failed utterly in giving the business world any inclination what to expect not just three years from now, but next spring.  This cannot continue if anyone hopes to see more than the middling 1%-2% GDP growth we are now seeing.

Now, Sandy. I would expect to see some pretty heavy volatility in the index in the next few weeks, so gleaning much from a weekly number will be tough. As full time workers  file unemployment claims due to closed businesses, I’d expect temp help to rise as a huge number of cleanup workers are hired. This means a rise over the next 3-4 weeks is not indicative of future strength as it tends to rise through Christmas week anyway. We will have to discount readings unless they are abnormally strong and outside of what we would expect.

Here is the chart:

Temp Staffing In Neutral

By: valueplays



About the Author

valueplays
Todd Sullivan is a Massachusetts-based value investor and a General Partner in Rand Strategic Partners. He looks for investments he believes are selling for a discount to their intrinsic value given their current situation and future prospects. He holds them until that value is realized or the fundamentals change in a way that no longer support his thesis. His blog features his various ideas and commentary and he updates readers on their progress in a timely fashion. His commentary has been seen in the online versions of the Wall St. Journal, New York Times, CNN Money, Business Week, Crain’s NY, Kiplingers and other publications. He has also appeared on Fox Business News & Fox News and is a RealMoney.com contributor. His commentary on Starbucks during 2008 was recently quoted by its Founder Howard Schultz in his recent book “Onward”. In 2011 he was asked to present an investment idea at Bill Ackman’s “Harbor Investment Conference”.