If you hate your boss, keep it to yourself. The reason: Not only will the jobless rolls continue to swell, as many economists expect, but one of them, Standard & Poor's chief economic poncho, David Wyss, usually conservative and non-flamboyant in his forecasts, figures another 900,000 people will be thrown out of work by the middle of next year. And that, would you believe, even includes Santa Claus.
Wyss, along with a bunch of his economic brethren, reckons that the economic recovery will be painfully slow as Corporate America, anxious to ensure profitability and stability, will almost certainly continue to chop costs. That, in turn, as he sees it, will push the jobless rate, now at 9.7%, to 10.4% in 2010.
As a rule of thumb, Wyss points out, each 1% up or down change in the unemployment rate is equivalent to a 1.5 million increase or decrease in the number of workers.
Some economists and market pros think Wyss could be low, with a number of projections running as high as 11% and 12%. From the current 9.7% unemployment rate, that would suggest additional job losses ranging from 1,225,000 to 2,225,000 people.
Presently, there are about 15.1 million unemployed workers, according to the U.S. Bureau of Labor Statistics, although figure would run higher if you were to include the number of people who have stopped hunting for a job. If Wyss is right in his assessment, the country's jobless ranks are on their way to 16 million.
As for a rebound in job hirings, it's generally felt that new job creations requires sustained GDP growth of a minimum of 3%. Wyss feels that kind of growth is a waiting game since he doesn't see that kind of a sustained rise until 2011, a year in which pegs GDP growth at 3.2%. That compares with his projected growth of 1.6% in 2010, versus an estimated 2.7% retreat this year.
Wyss's less than ecstatic view of the economy contrasts sharply with forecasts made earlier this year by a bevy of economists of a solid second-half recovery and recent comments from some prominent financial names that the recession has ended.
Money manager Arnold Silver of A Silver Associates, says "I'm no economist," "but we're at 12.2% unemployment in California and I think we're going to see that nationally" He notes that practically every store, restaurant and hotel he frequents in Beverly Hills is cutting staff, "and if they're doing it there," he says, "you know they're doing it everywhere."
"Even Santa Claus is getting the ax," Silver observes, noting that he's been told by some retailers in California and elsewhere that they won't hire any Santas this year -- or else hire far fewer of them -- in an effort to cut costs. "I think the Christmas shopping story this year will be Christmas on the cheap because everyone is trying to save a buck," Silver says. He notes that one of his clients, a well known actor, has told him "I'm not buying anything on Rodeo Drive this Christmas unless I get a good discount like I did last year."
One of the country's largest providers of Santas, Santa For Hire.Com. of Newport Beach, Ca.-- which provides live St. Nicks nationally for malls and parties -- looks for the U.S. population of Santas to be less conspicuous this year. Its owner, Bob Mindte, tells me he expects the company's business this year, reflecting the economic downturn, to drop about 10% from year-ago levels.
There's no doubt, of course, that the economy is beginning to show more pep, as seen in home sales and residential construction activity. But consumers, observes Scott Brown, the chief economist of Raymond James Financial, shouldn't get carried away because the economy has far from recovered. "We're in a state of flux and it will take years before non-farm payrolls return to their previous peak," he says. He notes that jobless claims have been trending lower since March, but the level remains uncomfortably high. He feels the elevated figure likely represents workers recycling through the system (landing and losing jobs repeatedly), as well as a high level of job losses. A sustainable recovery, he stresses, must eventually entail net job growth, but this may not happen for a while.
Wyss echoes such thinking, telling me he expects the unemployment rate to hold above 8% in 2012. "I've got a lot of worries," he says, pointing to international trade imbalances, savings imbalances, an unsustainable budget deficit and entitlement promises (Social Security and Medicare) that are not affordable under current tax rates.
The problem, Wyss says, is neither party is willing to tackle these issues because it would have to tell the public it can no longer continue to live beyond its means, and that's not what the public wants to hear.
As for the economy, Wyss likens it to "a turtle sticking its head out, but which can't do any jumping."
Write to Dan Dorfman at Dandordan@aol.com