Economy is Worse than You Think: Really

Posted on July 14th, 2009 by admin in Political Economy

Mort Zuckerman is is chairman and editor in chief of U.S. News and World Report. He writes in today’s Wall St. Journal (Tuesday, 14 JULY 09):

The prospects for job creation are equally distressing. The likelihood is that when economic activity picks up, employers will first choose to increase hours for existing workers and bring part-time workers back to full time. Many unemployed workers looking for jobs once the recovery begins will discover that jobs as good as the ones they lost are almost impossible to find because many layoffs have been permanent. Instead of shrinking operations, companies have shut down whole business units or made sweeping structural changes in the way they conduct business. General Motors and Chrysler, closed hundreds of dealerships and reduced brands. Citigroup and Bank of America cut tens of thousands of positions and exited many parts of the world of finance.

In this Op-Ed he explains 10 major reasons in detail all pointing to a sustained recession and slow recovery. This will affect corporate earnings and credit ratings.

His key point:

This process is nowhere near complete and, until it is, the economy will barely grow if it does at all, and it may well oscillate between sluggish growth and modest decline for the next several years until the rebalancing of excessive debt has been completed. Until then, the economy will be deprived of adequate profits and cash flow, and businesses will not start to hire nor race to make capital expenditures when they have vast idle capacity.

Think about it for your investing.

Read entire article in Wall St. Journal.

Leave a Reply

More News