I have heard many cheerleader reports attempting to claim the recession is over and the recovery has begun. I’m not so certain especially when these people note the stock market as the leading indicator. This article from CNNMoney.com explains why this cheerleader approach is flawed (my bold):
Several experts point out than many of the relatively strong earnings reports helping to lift the markets in recent days are being driven by cost cuts, rather than strong revenue growth that would be a better indicator of consumers and businesses being willing to spend again. If businesses keep cutting costs to make the numbers that Wall Street wants to see, that can only put more downward pressure on jobs and wages, and result in weaker economic growth or another downturn.
“The companies are cutting fat, and in many cases cutting bone and muscle. There’s no organic economic growth there,” said Yamarone.
And then there is this crucial fact of which I was unaware:
Another reason that comparisons to Dow levels of a year ago are risky is that two of the more troubled components — General Motors and Citigroup (C, Fortune 500) — were dropped and replaced by stronger companies such as Cisco Systems (CSCO, Fortune 500) and Travelers Cos. (TRV, Fortune 500) in June.
The recover, when it starts, will take far longer to bring us back to our past levels. My question is this, how many Baby Boomers are going to simply leave the workforce after this extended recession? The rehiring that is sure to occur may accelerate due to the certain lack of candidates. I am hopeful that we see a sling shot of hiring once the corporate world is certain the recover has legs.