expressed in this column are solely those of the author and do not reflect the
views of SVB Financial Group, or Silicon Valley Bank, or any of its
The following article
is reprinted from March 10, 2009. In March, 2009, the U.S. job market was in
freefall, losing an average of 650,000 jobs per month from September 2008
through April 2009. In the wake of the horrible disaster in Japan, there were
many pundits quick to point out the view that this was actually a "growth"
opportunity for the country. The logic — if you want to call it that — was that
necessary government spending to rebuild the country's infrastructure would
boost the economy. All that money being spent must be a good thing,
But why wait for a disaster? Why not simply encourage everyone to
throw their trash out of the window as they drive down the highway? Then the
government could hire workers to pick it up and the job recovery will be well on
In contrast, businesses have actually wrung terrific
productivity out of the remaining workforce, post eight million layoffs, and
perhaps they are now beginning to hire productively. Time will tell, but last
month's job figures were certainly encouraging. - Joe Morgan
B girl ain't lost the beat
Jumped over drama and I landed on my
Gotta keep goin'
No stoppin' me
And if you don't like it,
La la la la la la la
Thus far, the
government's attempts to jump over the drama of the current recession have had
less than spectacular results. To be sure, the American drive is alive and well,
but we've hit more than a bump in the road and now everyone is scrambling for
Driving home last Friday, soaking in the day's events including
the report of an additional 651 thousand jobs lost (net!) in February, I saw a
potential answer to the problem on the door panel of a pickup truck: garbage can
It's true; there are companies that you can hire to clean your
garbage can in either your home or office. According to this particular
company's website, the primary reasons to have your garbage can cleaned include
unpleasant enduring odors, the presence of flies and other insects, increased
risk of sickness or disease and - the real crowd pleaser - potential harm to the
environment. After all, who wants their garbage sitting in a dirty can?
So, perhaps the solution to our joblessness is to enact legislation
making it mandatory to have a bi-weekly cleaning of all garbage cans.
my completely unscientific estimation, there are more than 1 billion garbage
cans in the U.S. that must need a good scrubbing. That's got to be good for a
million jobs or so. And let's remember that since we haven't been told by the
government to clean these waste receptacles, they are surely spreading great
harm to the environment.
And imagine the healthcare savings! How many
deaths could have been avoided with a little government-mandated circular file
scrubbing? Wait a minute, deaths actually SAVE money on healthcare. Ah, but
perhaps that's a topic for another column.
Clearly, creating jobs alone
is not a worthy goal. In fact, creating jobs should not be a goal at all. It is
simply the outcome of a healthy economy.
Instead, we need to create
productive jobs. Because the government is not a profit-oriented entity, it has
no inherent need or desire to create productive jobs. Only private corporations
who face the threat of going out of business have an ingrained bias toward
creating productive jobs which lead to profitability.
jobs are created to fill a need and that need arises from consumer demand. It's
widely acknowledged that a vicious cycle exists today of job losses, leading to
lower income for the masses, leading to less demand, leading to further job
losses. But attempting to reverse this cycle at the "job loss" phase is
foolhardy. The best place to halt the vicious cycle and reverse momentum to a
virtuous cycle is at the demand level.
Increase consumer optimism and
stabilize consumer wealth and Americans will spend. This will lead to corporate
profits and job creation. The result: productive job creation.
reality, job losses did not appear in large number until we were at least nine
months into this recession. They are definitely a symptom and not the cause of
our woes today.
Applications for jobless
benefits fell by 16K to 385K in the past week and the four-week average of
claims dropped to the lowest level since July 2008, indicating progress in the
labor market. This follows the Fed comments this week that the expansion is
getting stronger and the labor market is "improving gradually." Continuing
Claims came in at 3786K.
The Consumer Price Index climbed 0.5 percent in
February from the previous month and 2.1 percent from a year ago. The higher
costs were driven by the recent increase in food and energy prices. Excluding
food and energy, the indicator rose 0.2 percent and 1.1 percent respectively.
The FOMC kept its target rate unchanged at 0-0.25 percent, commenting
that economic growth has improved but still requires an accommodative
environment. The Committee expects to continue their securities purchase
program, which should be completed by the end of the second quarter of this
The views expressed in this column are solely those of
the author and do not reflect the views of SVB Financial Group, or SVB Asset
Management, or any of its affiliates. This material, including without
limitation the statistical information herein, is provided for informational
purposes only. The material is based in part upon information from third-party
sources that we believe to be reliable, but which has not been independently
verified by us and, as such, we do not represent that the information is
accurate or complete. The information should not be viewed as tax, investment,
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decisions. You should obtain relevant and specific professional advice before
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of any investment or to engage in any other transaction.
Management, a registered investment advisor, is a non-bank affiliate of Silicon
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