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Gary, do you have a URL for that article, sure would like to read the whole
thing?
I have long believed that true economic strength is built upon a strong and
resilient manufacturing base. I have also been saying for many years that
the US would suffer deeply in the next recession/depression for having
converted to a service based economy.
Earl
----- Original Message -----
From: "Gary Funck" <gary@xxxxxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Saturday, September 21, 2002 3:23 PM
Subject: RE: [RT] 10 year note near 40 year highs ?
>
>
> > -----Original Message-----
> > From: Daniel Goncharoff [mailto:thegonch@xxxxxxxxxx]
> > Sent: Saturday, September 21, 2002 9:37 AM
> > To: realtraders@xxxxxxxxxxxxxxx
> > Subject: Re: [RT] 10 year note near 40 year highs ?
> >
> >
> > I think there are two sides to this point. Isn't a service-based economy
> > more flexible than one based on large factories? It may mean that
> > changes come more easily, and that new industries can develop using the
> > excess information-based labor from weaker sectors.
> >
> > In this respect, telecoms will be a good real-life example. It will be
> > interesting to see what happens to all the people getting laid off by
> > the telecoms firms that won't be growing for several years. If they end
> > up having no place to go, that would indicate your believe is validated.
> > If they find new jobs in a similar field, I think the economic hit will
> > not be very big at all.
> >
>
> In this week's Business Week, there's a rather disturbing article that
refutes
> the theory that a service based economy should be more resilient. Excerpts
> below:
>
> SEPTEMBER 30, 2002
>
> NEWS: ANALYSIS & COMMENTARY
>
> The Educated Unemployed
> The jobless rate for managers and professionals is likely to rise
>
> [...]
> Here's why joblessness is likely to rise: Across the board, companies are
> facing an unholy trio of low profits, weak demand, and falling
prices--with no
> relief in sight. Revenues for the companies in the Standard & Poor's
500-stock
> index are down 2% over the past year, adding to the pressure on businesses
to
> cut costs by cutting workforces. At the same time, productivity is soaring
at a
> rapid clip--a 6% gain over last year at nonfinancial corporations. That's
> allowing businesses to meet flat demand with fewer workers.
>
> Even more distressing, some of the sectors where the job market has stayed
> relatively strong--including health, education, finance, and retailing,
which
> together make up about 40% of the total workforce--are showing signs of
> cracking. And the already grim labor picture in the airline, energy,
> technology, telecom, and media sectors--some 7% of the workforce--keeps
> deteriorating.
> [...]
> This is the dark side of the productivity boom. During the second half of
the
> 1990s, output per worker rose, but soaring demand and revenues, driven in
part
> by the technology and telecom boom, helped boost hiring and push down the
> unemployment rate below 4%. Wages and bonuses soared, and it seemed like a
> golden age for workers.
>
> But rising productivity without rising demand is a recipe for disappearing
> jobs. If companies can't raise prices, the only way they can boost profits
is
> to cut workers--and higher productivity makes that possible.
> [...]
>
>
>
>
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>
>
>
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>
>
>
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