NABE: A Jobless Recovery

Once again, some good news and some bad news. The good news is that confidence in the economy among business leaders has risen. In a recent survey by the National Association for Business Economics (NABE), business leaders were asked many questions regarding the economy. These included questions about GDP, unemployment, and more. The results were very revealing. 62% of respondents believed that the US would experience GDP growth of more than 2% this year, up from 16% last year. Of respondents from the finance, real estate, and insurance sectors, none reported that their sales had weakened. In addition, 30% reported that there was a rise in their profit margins, versus 15% who reported a fall. Finally, negating the idea that the Fed’s measures to loosen the money supply have raised the price level, none of the survey respondents expect their prices to rise or fall by more than 5% over the next quarter.

The downside to this? Almost two-thirds of the respondents expect unemployment to stay the same, and the number of respondents who expect it to fall has decreased. This supports the idea of a jobless recovery that so many economists and business leaders have been fretting about. Companies have realized that they don’t necessarily need more workers, they just need a few very good ones, and in many industries, the menial laborers (construction workers, etc.) are more of a burden than the companies they work for are willing to accept. This means that those people at the bottom of the pile are the first to get fired and the last to get hired, if they ever do get hired. This is supported by an unemployment rate that is routinely 1% higher for individuals with no college education than those that spent at least some time in college. In layman’s terms: anyone can make coffee. Not everyone can find where the highest quality and cheapest coffee is made, negotiate and develop relationships with suppliers to get a deal, and find a way to ship it to the US efficiently. Because of this difference in skill sets, more people are the former than the latter, and those people are the ones who are worrying the most about their job right now.