So, looks like unemployment numbers are falling and foreclosures are falling. This makes sense. As more people go back to work, they are able to pay their bills, to include their mortgage.
I’ve written about unemployment before, but we are now starting to see a downward trend in unemployment numbers. This is great news. Companies are hiring, which means that people are going back to work, which means spending may rise, which means tax revenue will go up, which means our government may actually be able to pay down some of this massive debt we’ve incurred.
That said, we’ve had some record profits for large corporations here recently. These companies managed to have record profits while cutting their workforce. Less people were asked to do more and they came through. The question now is, with people being re-hired, and overhead going up for these companies, will revenue also rise?
Unfortunately I believe the answer is no. It used to be as you added employees, you increased productivity. But most of the employees that were cut were likely either superfluous positions or positions that did not drive revenue (environmental director is a good example). These streamlined businesses will again become bloated. My fear is that as people become employed again, we will begin to see smaller profit margins, resulting in less of a return for shareholders.
Innovation is generally the key to recovery. But innovation has not been at the forefront in this recession. Unemployment benefits being extended allowed people to spend their time looking for jobs as opposed to creating businesses. Hopefully, entrepreneurship will not die and we will continue to innovate.
I am happy that people are going back to work, but I don’t like that it is because the larger corporations are hiring. When small business begins hiring again, I’ll believe the recovery is well on it’s way.