Mass Layoffs Sept 2009

22 10 2009

The Bureau of Labor Statistics today announced the Mass Layoffs from September.  The number of events (more than 50 people laid off) is down a little from August, but we are still seeing much larger levels than normal.  The September number of 2,561 layoff events is roughly 2x the normal average.

This is a slight sign the economy may be bottoming out.  What is still disturbing here is the consistency of the level of mass layoffs.  For the last 12 months (see blue box in chart) we have had over 2,000 events per month compared to a normal level of 1,250.  We are still adding too many people to the unemployed – and a system that is built to run on full employment.  Over the last 20 years we have only seen two other spikes, yet in both of those periods we only saw a brief period of spike.  And again in neither of those cases did we ever reach 2,500 events.  Over the last 12 months we have seen 5 months in excess of 2,500 events.  Not good news on any front.

Quite soon, we need to see a substantial drop in Mass Layoffs to give us a positive  indicator that the economy is turning around.  We see a good number of positive signs, but this one is still a big red flag.  Again, if we look at the post 9/11 trend you can tell this trend tapers back to normal.  Mass Layoff Events Sept 2009





The Dow (DJIA) hits 10,000

16 10 2009

On Wednesday this week (October 14, 2009) the Dow Jones Industrial Average topped 10,000.  Although it struggled out of the gate this morning, I am curious why we did not take the time to celebrate re-reaching this milestone.  Clearly, this is a sign that the economy is chugging forward again.

If we look back to September 19th, 2008, the DJIA closed at 11,388 and only days away from near free fall.  Over the next couple of days, panic would set in and the markets were paralleled to “The Great Depression.”  The DJIA at 10k represents we have recovered 70% of what we lost since September 19th, 2008.  We still have a way to go, but a little celebration might just be what we need right now.  Not much, we can’t afford the hangover, but perhaps a little toast to reaching 10k again and may we keep doing a little better every day.

Looking back…Between Oct 24th, 2007 and September 19th, 2008, the DJIA shed about 20% of its value (14,093 to 11,388).  It would then lose an additional 34.4% by March 9th 2009 when the market reached its lowest level in 12 years at 6,547.  If we start the clock at Oct 24th, in two years we have recovered about 45% of the losses we incurred during the recession of 2008 and 2009.  Perhaps not as happy a picture, but consistent progress in the right direction.  This still represents ~50% recovery in 6 months, what we lost over two years.  If the trend holds, perhaps we are back to 2007 levels within another 6-8 months, and then can continue to recover on the lost time.

DJIA Recovery

The other item worth noting is the declining variation in the closing gains.  Over the last three months, the variability has diminished to levels not seen during the recession.  This is another great sign indicator of stability and overall economic health.  The market likes gains, but it loves consistency.

DJIA Recovery Variation