Coming soon to an economy near you: 10% unemployment. Jeff Reeves details how weakness in the financial sector, tech, and aerospace are bringing us back to the double-digit blues.
But let’s think about that for just a moment.
Banking? That industry has been given jillions in liquidity injections and whatnot over the last 30 months. Yet they still can’t make enough money to keep people on the payrolls.
Tech? Tech has been on a buying binge, with lots of M&A action. I have a theory as to why. They’re sitting on lots of cash, but don’t feel confident enough to expand their own businesses. Better then just to buy somebody else’s. But M&A’s usually lead to layoffs — at best. Remember AOL/Time-Warner?
Aerospace? This is the crown jewel of American manufacturing. In passenger jets, there’s pretty much just Boeing here and Airbus in Europe. In military applications, there’s pretty much just the US and whatever Sukhoi and MiG retreads the Russians can peddle on the cheap.
But other than ULA, the less said about our current launch abilities the better — at least until the private sector picks up what NASA has dropped. The Pentagon is facing hundreds of billions in cuts, and commercial air travel will stay in the doldrums until the economy picks back up.
Oh, and you might have heard that the liquidation of Border’s retail — alone — wiped out most of last month’s meager jobs gains.
So that’s it. Take away banking, tech, and aerospace and you’re left with Starbucks and McDonald’s. But who can afford to eat out anymore? The Great Recession devastated blue-collar jobs as the construction industry collapsed. Now we’re talking about high tech and banking taking it on the chin.
If Reeves is right, the ripple effects are going to be near-catastrophic.