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May 19, 2016

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THE ECONOMY. It's been a while since I have given a view on the state of the economy. As one of America's leading headhunting firms I have a fairly unique perspective on what businesses are doing. Here is what I see:

There are industries in which the employers are getting in trouble:

Why? For 7 years now employers have ignored hiring junior people into jobs and let them learn. The result is that now that there are some spots in the economy that are moving such as real estate there are no people to fill the 2-7 year jobs. They were not created and therefore they do not exist. That spells trouble for employers who want experience at lower salaries. In the long term when and if the economy gains some momentum we will see this inhibit expansion. Keep in mind that at the top 10,000 baby boomers are retiring a day for the next 15 years. While the 15 year workers can move up to fill those jobs, the "hole" created by this unprecedented 7 year recession will move forward and it will have an impact in many areas. Artificial intelligence and robots can displace many workers but it is difficult to replace experienced managers and specialists who provide the value to employers. We already see the 3 Million jobs going unfilled for IT educated mechanics. Donald Trump may order Apple to bring the assembly of I phones to America but where will he get the 300,000 mechanical engineers needed to do the work?

The strong dollar still exacts a toll on the Fortune 1000 international companies. They continue with marginal success to financially engineer profits per share and struggle to match their top line revenues. This lowers their use of small businesses and they continue not to replace retiring baby boomers or hire college grads. Small business despite huge head winds from this process and now facing regulations of the Executive Order type are still providing most of the employment gains in America. BUT, the new minimum wage laws and the newest OBAMA order to pay overtime for people making $23,000-47,000 will likely hit the small businesses hardest. They employ 75% of Americans and therefore the burden will be on them. More pressure to resort to part time workers and reduce benefits. WHY OH WHY do the DEMOCRATS continuously bite the hand that feeds them--small business? Especially this President.

There is on the other hand some hiring going on. Foreign countries are using the strong dollar to come to America and open businesses. That is producing some hiring as the first wave of hires are usually at a premium wage and there are millions Americans hungry for a raise. But overall, interview rates are about the same as the past 7 years. Hiring rates a bit higher. The Fed may raise but they know the economy is weak. The strong oil is not based on demand/supply it is based as always on games being played by the Saudi's and Russians with perceived supply constraints. And wildfires in Canada. Oil is a $20/barrel commodity. At $50 far more production comes on line. Supply will always keep up with demand. Ignore oil. The economy as described by our 0.5% 1st quarter GDP is weak and it is the strongest in the world. Sad that this country of such talent cannot produce leaders for the public sector. Perhaps we should try someone besides a lawyer. Oh, sorry Hillary is another lawyer isn't she?

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