"If layoffs accelerate and the unemployment rate increases, households would end up spending less," he said. "If they spend less, then inventories at companies would start to balloon. If unwanted inventories start to balloon and companies are finding themselves stuck with goods they were hoping to sell, then they will stop ordering new supplies from factories. If factories start getting fewer orders, they lay people off. This is the vicious cycle that will ultimately cause a second recession."
During the worst of the recession in late 2008 and into 2009, as businesses absorbed the twin threat of rapidly declining sales and a severe pullback in credit, mass layoffs characterized the situation. And even as the fear subsided and modest economic growth resumed last year, tepid hiring remained the practice: The recession reinforced a predilection among American companies to find ways to rack up more sales with fewer people on their payrolls -- a task accomplished through increasing reliance on automation and outsourcing, along with the perpetual pursuit of more efficient means of production.
Today, companies are producing more goods and services than ever before -- with some 7 million fewer workers than were employed in late 2007, when the recession officially began.
Everyone should read this update in the economy. More lay off for Temporary workers, that tells you it is getting worse.
- Posts : 541
Join date : 2011-02-17
Businesses have apparently yet to gain sufficient confidence in improving sales prospects to invest in expansion. By eliminating paychecks, they are further weakening spending power throughout the broader economy.
"There's obviously been a decision made by businesses that the economic outlook is not as bright as it was three months ago," said Bernard Baumohl, chief global economist at The Economic Outlook Group, who last summer was envisioning a more vigorous economic recovery.
When businesses made a decision to start laying people off again, did they realize that this would further weaken spending power, thereby weakening demand for their products even more? Very short sighted if you ask me. But then again, this never stopped them from conducting mass layoffs in the past.
Of course these decisions are not made be each firm independently. Corporate heads, who have seats on eachother's board of directors decide amongst themselves during their meetings that this is the way they will go. I believe this is the definition of COLLUSION.
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Join date : 2011-02-24
Age : 58
Location : New Jersey
That was some positive news.
Thanks to all members for participating in the discussions.
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