Backlash: Expect unemployment to hit 10% by January 10… and 15% by April
Today's Financial News - Posted November 6, 2008
In the next two months, America may have succeeded inflicting on itself what neither the Internet crash nor 9/11 were able to achieve. Double-digit unemployment and a chronically crippled consumer base.
by J. Christoph Amberger
Baltimore — (TFN): The U.S. markets rallied on Election Day. The Dow closed up over 3%, the S&P500 over 4%.
Markets around the world have been plunging ever since.
Sharon Otterman of the New York Times went historical in her explanation of Tuesday’s pheonomenon: “Wall Street has enjoyed a bounce in the fourth quarter after a presidential election as investors breathe a sigh of relief that the long election cycle, with its accompanying uncertainty, has ended. Some analysts said investors seemed to be trying to get a jump on the expected rally by buying on Election Day.”
Problem is, there hasn’t been much uncertainty about the outcome. It wasn’t a matter of “Mac being back”. The percentage of Obama stickers on cars was indication enough that the majority of the American elctorate was ready: After a pretty darn decent 7-year ride, Joe Sixpack was ready to ditch free-market capitalism’s SUV for socialism’s rickshaw at the first sputter of the engine.
How that could possibly be bullish for the markets is anyone’s guess.
Especially small business owners are looking at the results with a jaundiced eye: Their companies may not be traded on the equity markets. Which means that they’re not responsible to amorphous shareholders. But to themselves and their families’ livelihoods. They may have resigned themselves that their costs, taxes and fees are going up in the next years.
Then again, costs are easily cut. Especially payrolls.
I received a bunch of emails today from people who run businesses. Some are doctors. Other run construction companies or retail businesses. One doctor wrote: “I do have 18 non-physician employees in my practice. We partners plan to have a meeting before the end of the year, and decide the 2-3 employees that will have to be eliminated. Obama’s help for the middle class better be good, because there’s going to be a lot more unemployed.”
Another approached the same problem with an almost Salomonic attitude:
“I figure that the customer will have to see an increase in my fees to them of about 8-10%. I will also have to lay off six of my employees. This really bothered me as I believe we are family here and didn’t know how to choose who will have to go. So, this is what I did. I strolled through the parking lot and found eight Obama bumper stickers on my employees’ cars. I have decided these folks will be the first to be laid off. It’s the fairest way I can think of to approach this problem.”
Think what you may about the selection method… Those layoffs will not make individual headlines. But in the next two months, America may have succeeded inflicting on itself what neither the Internet crash nor 9/11 were able to achieve. Double-digit unemployment and a chronically crippled consumer base.
Layoffs have begun already. Expect unemployment to hit 10% by January 10… and 15% by April.
At long last America may enjoy what its liberal protagonists have always aspired to: European economic conditions.
Next Article: Ford burns cash, unemployment soars
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