Manufacturing Activity Contracts, Can Service Sector Pick Up The Slack?
April 1st, 2008
According to the Institute for Supply Management reports this morning, American manufacturing activity again contracted in March. Other economic news points to continued pricing pressure (driven by commodities, like oil) and a sharp reduction in construction activity.
These issues are naturally intertwined and do not bode well for the future. Combine this with the massive effort to ship manufacturing jobs abroad and we are facing harsher and harsher economic downturns.
I have economic trends and investing successfully for over 25 years, so these I view these more drastic trends with concern.
Can the service sector pick up the slack? Every week I still hear about how these new service jobs are savior, but let’s take a look at what a lot these jobs are really - real estate agents, lawyers, and people pouring coffee. In California alone we have nearly a million people with real estate licenses. I must know at least 20.
It is actually hard for a company to close a major factory. There is a huge cost in doing it, where service jobs can be let go in a day. If they are lucky, the service worker might get two weeks of pay as severance. That won’t cover the mortgage for long.
Yes, there are some great service jobs in software, marketing, and finance, but do you think that cannot be done in India? As the economy soft companies will take another serious look at outsourcing service jobs abroad.
Still there is some real growth in service, but not nearly enough to offset the decline manufacturing. Most of the service related jobs are lower pay and are frankly insecure.
I went into my usual Starbucks today and instead of three of them, there was two (college grads). Even that job is so fleeting.
There is still hope, but we need to sit up and take notice. We need to have a plan that puts America first. We need real leadership.
www.MadeinUSAForever.com
Tuesday, April 1st, 2008 at 5:18 pmand is filed under USA Employment Issues.
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