An article yesterday titled ‘Stocks turn to jobs as first half draws to close’ says an ‘economist poll’ is predicting that a further 325,000 U.S. jobs will be reported lost in June when statistics are released later this week – resulting in an unemployment rate of 9.6%.  As those of you who follow my Blog posts know, I consider the monthly job figures of paramount importance to the timing of U.S. economic recovery.  Last month early ‘job loss poll reports’ suggested a much higher number of May job losses (over 500,000) than ultimately was reported (around 350,000).  Many of these statistics subsequently get adjusted from ‘those first reported’ so who really knows what the correct numbers are?  That said, continuing job losses at over 300,000 per month does not in my view auger well for U.S. economic recovery any time soon.

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A New York TImes article today titled ‘French Minister Says Retirement Age Will Rise’ comments on a French Government plan to raise the retirement age in one-year increments to ‘help offset growing pension obligations’, and says that “Until recently, altering the retirement age had been taboo for a government wary of stirring up unions …”.

Whether or not the French Government successfully pursues this course of action, as job losses are experienced in the U.S. and elsewhere and the elderly see their assets and retirement plans plans deteriorate inevitably older people nearing what is thought to be ‘normal retirement age’ will look to extend their working years, and those who are already ‘retired’ will look to find full time or part-time jobs. These are people who have had many years of on the job training, and assuming adequate health and energy, often are much easier for employers to integrate into their business with less training time required. To me, this again emphasizes the issue of the need for Governments to focus on ensuring youth and new graduate employment as a high priority item on their respective agendas. The problem is a circular one, and one not easily addressed or resolved. That said young people are the future. Without ensuring a business climate where they can gain meaningful and productive employment, economies face obvious and large problems going forward. From my point of view, I am not seeing enough written and debated on this issue.

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An article titled ‘World Bank cuts 2009 global growth forecast’ says the World Bank has cut its 2009 global growth forecast and now says the world economy will shrink 2.9% (an increase of 1.3% from its March forecast) this year as “The global recession has deepened”, that global trade is expected to drop by 9.7%, GDP now is expected to drop by 4.2% for high-income countries, and that economic growth in developing countries should slow to 1.2% percent – but excluding relatively strong China and India, developing economies will contract by 1.6%.

The article reports The World Bank also said in a report released yesterday that:

• economic damage to developing countries “has been much deeper and broader than previous crises”;

• unemployment is on the rise, and poverty is set to increase in developing economies. In this regard foreign direct investment in developing countries is projected to drop year/year in 2009 by 30% to U.S.$385 billion in 2009 (U.S.$707 billion in 2008, U.S.$1,159 billion in 2007);

• the global economy should start to grow again in late 2009, but “the expected recovery is projected to be much less vigorous than normal”;

• the ability of banks to finance investment and consumer spending would be hampered by the overhang of unpaid loans and devalued assets; and,

• “To break the cycle and revive lending and growth, bold policy measures, along with substantial international coordination, are needed”.

These new forecasts come as no great surprise to me as there is really nothing new here. The last bulleted point in my view is a broad statement that means nothing without detailed strategy and a ‘coordinator’ given the power to coordinate such an effort – I can’t see that happening any time soon. Accordingly, I will be surprised if the global economy starts to grow again in late 2009.

Early estimates of U.S. job losses for June ought to be reported in the next few days and I continue to believe that all of the talk about ‘green shoots’ will be for naught until the U.S. population ‘gets back to work’ and U.S. consumers again spend. If that happens I think the result may be short-term economic revival in the U.S. That said, I don’t believe that will solve the longer-term underlying U.S. economic issues of loss of manufacturing base (which will in a time of recovery lead to U.S. trade deficits increasing from current levels), continually escalating National Debt, and what must be a serious erosion in U.S. income tax revenues on all levels. While I sincerely hope I am wrong, I think the logical upshot of all of this going forward is reduced economic growth from prior levels and importantly, a reduced standard of living for U.S. residents from what they enjoyed up to mid-2008.

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A Wall Street Journal article titled ‘Belt-Tightening by States Squeezes Cities and Towns’ says that in a recent survey 18 U.S. States reported cutting local aid.  The Executive Director of the National Association of State Budget Officers is quoted as saying “we think that’s going to grow”.  The article also says U.S. “cities and towns are bracing for more big reductions in local aid and revenue-sharing from their state governments”, that “the cuts are forcing belt-tightening moves that are very visible to voters”, and in my view importantly that “for many cities, state-aid cuts come on top of falling local revenue” – all this at a time when States are running record budget gaps as their tax revenue plunges while expenses increase.

In the past I have commented frequently on this Blog about what I have said ‘Must be reducing revenues at all U.S. Government levels’, and continually address macro-issues at the U.S. Federal Government level.  At Federal and State levels it seems to me some of the more important things that need to be considered are infrastructure deterioration (particularly roads and bridges), and health/school/prison systems.  At the municipal level important ‘maintenance-type’ issues have to include municipal services including sanitary systems and waste disposal, policing, water purification, delivery systems, and so on.  If the current recession does not turn around in the near term it seems to me these and similar services will have to be reduced from prior levels and then maintained at those reduced levels – all of which will result in possible (or in some cases likely) reductions in safety, education, and – importantly – the general standard of living of the average citizen.  Since typically you can’t take things away from people and leave them happy, if these things occur it seems to me unhappy consequences may be a reduction in youth employment (since ‘family providers’ sensibly would be employed first) and a general increase in crime rates.

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