Yup. Here it is. . .
MY QUESTION:
I work full time as entry level Graphic Designer and freelance web design on the side. 28 yrs old and I live and work outside New York City. I am always looking for my next job, hoping to find that place I can stay at for 3-5 yrs.
After a downturn in the economy, how many quarters does it take to see increase in hiring? For example, say the stock market has already hit bottom TODAY, (we don?t go to war with Iraq, terrorism quiets down) on average, how many quarters will it take for the job market to follow in a positive manner? If you reference past examples, that will be helpful (1970s, 1980s, 1990s).
Not sure if this is the sort of questions you get. . . but I am curious what you think.
Thanks.
crmo
ANSWER:
Hi crmo... sorry for my delayed answer.
Well you're correct, this is not an average question... but it is refreshing to answer someone who seeks genuine information rather than students attempting to get a free ride with my services.
As I'm sure you're aware, your question is very vague, so any answer I supply certainly is not accurate, since I cannot gaze into the future and tell you with certainty what will occur... and no recession is identical to another, so I can't simply base my opinion on past observations (although I will factor these in).
In any event, since you asked a practical question, I will supply a practical answer, and thus try to leave the economic theory out.
SO, recessions in general don't last extremelly long... on average, they may last anywhere from 1 to 2 years. But, that is based on past observations, and I strongly suspect that this looming recession for the US (and subsequently for the rest of the world) may last longer than average since the circumstances are quite unique.
For instance, the US economy has been teeter-tottering on the brink of recession for the past year and half now... however, the central bank has been very aggressive in implementing monetary policy (lowering interest rates). Their goal obviously is to prevent a recession, however I believe that they simply prolonged the innevitable.... in other words, consumer spending can sustain the economy for only so long.
The consequences of such unprecedentedly low interest rates is that many people purchased big ticket items on credit... this had the effect of dramatically increasing debt in the US... and so consumer spending has slowed down, and I strongly suspect that it will come to a practical halt in the near future, as consumers re-evaluate their debt load, begin saving, and as they are uncertain about their job security.
Another major problem was that businesses were not investing into new capital projects... it is these investments that ultimately create new jobs and create economic growth. Despite the fact that for awhile (shortly after 9-11) interest rates were very low, and consumer spending was high, businesses still refused to invest into major projects. The reason is because they knew that the economy was on shaky ground (they hire economists too), so they were reluctant to spend too much.
And then, the ultimate external shock which propelled the economy into a downward spiral are the several uncovered accounting scandals by major corporations. Investors are dumping stock at a fast rate, people are loosing lots of money, and businesses are worth less and less every day it seems.
All this is certainly not good news for the labour market. Since investment by business is the main factor influencing economic growth, and that company stocks are plummeting, the prospects of investment in the medium to short term aren't good. Thus jobs will be lost, as companies may be forced to cut costs, and few new jobs will be created since few companies are expanding their productive capabilities.
Ultimately, I believe that we have only seen the beginning of a particularly nasty recession which may last for quite some time... there are other factors which must be considered here, such as the large percentage of the population (baby-boomers) which will soon retire, thus cutting back their spending dramatically. But I hope I'm wrong...
Eventually, things are bound to get better, since all of the seeds for a recovery have already been planted, as I have indirectly referred to in my answer. For instance, stocks are low, and thus weaker companies will be eliminated... people will then begin buying the undervalued stocks of the larger companies in large quantities... this creates liquid assets for the companies in question, which will lead to new investment (and thus new jobs and more growth)... people are saving their money, and a basic equation in economics is that savings=investment.
When will things get better?... well, that's the billion dollar question to which I have no answer.
The best advice I can give you is to attempt to position yourself in a stable job... or, if you were contemplating on returning to school to upgrade your skills, this may be a good time to do so (after all, another "boom" of some sorts is on the horizon, which will require skilled labour I'm sure).
Hope this is helpful...
Good luck,
Graxx
[This message has been edited by CRO8 (edited 09-05-2002).]
posted 09-05-2002 17:26
