U.S. Payrolls Post Biggest Annual Drop Since 1945

U.S. Payrolls Post Biggest Annual Drop Since 1945
By Shobhana Chandra

HIGHLIGHTS

• Labor Department: U.S. lost more jobs in 2008 than any year since 1945 as employers fired another 524,000 people in December. In 2008, the nation lost 2.589 million jobs with the unemployment rate climbing more than economists forecast, to a 15-year high of 7.2 percent in December.
• Negative Feedback Loop: Analysts said the economy may be in danger of a reinforcing cycle of rising unemployment and declining household spending, what policy makers call a negative feedback loop, which is difficult to snap once it’s begun.
• Michael Darda: chief economist at MKM Partners LP stated, “This was the most rapid deterioration in the labor market over a six-month period since 1975,” “Policy makers will go full throttle” until “the labor market starts to turn,” he said.
• Average Work Week: shrank to a record-low 33.3 hours from 33.5 hours, today’s figures showed. Average weekly hours worked by production workers dropped to 39.9 hours from 40.3 hours, while overtime decreased to 3 hours from 3.3 hours. That brought the average weekly earnings down by $2 to $611.39.
• President Elect Obama: is pressing for a stimulus plan including tax cuts and spending on everything from roads and schools to the energy network. Yesterday he called for “dramatic action as soon as possible” to help pull the world’s largest economy out of a slump that’s in its second year. “If nothing is done, this recession could linger for years,” he said in Fairfax, Virginia.

COMMENTS:

Presidential Course of Action: Jobs, Jobs, Jobs, will be the mantra to try and turn momentum of the country around. With no silver bullet fixes in sight, the attempt to shore up the workers and middle class segment of the country will be a good start.

Old Faces New Policy: Not sure how that works, clearly recovery will be a difficult road to navigate and what we all have to admit is that legacy leadership confidently guided us all into this major world wide economic slow down. Whats worse, many of our governmental and business leaders never saw it coming. The financial system is faltering severely and putting together a fresh team of talent that will be capable of recognizing past failures and not defending previous career actions could get sticky.

Opportunity: Yes it is out there but be careful because the birds of 2009 have abandon their old nests of 2008 and will be finding new locations to feather their nests.

Solutions: Start with responsible management. I believe we will begin to see a major rotation of Legacy Leadership in business and government. Meaning, we will experience the injection of fresh faces in positions of leadership with passion, talent, and energy to carry the Country and the World into the new business and governmental paradigms that are being forged.

James Monachino