Recession signals are growing more pronounced, especially in the jobs market, says David Rosenberg, head economist and investment strategist at Gluskin Sheff & Co.
The non-farm payrolls report last week contained some very worrying data, even as the unemployment rate dropped to a nine-year low of 4.7 percent. Thousands of Americans left the work force and weren’t counted as unemployed.
Even worse, manufacturing jobs fell, possibly signaling a recession, Rosenberg says.
“I don’t want to alarm anyone but the facts are the facts. Goods-producing employment declined 36,000, which was the steepest falloff since February 2010,” he says in a Business Insider opinion piece
. “This critical cyclically sensitive segment of the economy has contracted now for four months in a row and the cumulative damage is 77,000 jobs or a -1.2 percent annual rate.”
The decline in goods-producing jobs was last seen before significant economic slowdowns, including November 1969, May 1974, December 1979, October 1989, November 2000 and May 2007, Rosenberg says.
“Each one of these periods presaged a recession just a few months later — the average being five months,” he says.
Slowing productivity could also threaten pensions and health programs for the elderly, says Alan Greenspan, former chairman of the Federal Reserve.
“We have a global problem of a shortage in productivity growth, and it is not only the United States but it is pretty much around the world,” he told Neil Cavuto at Fox Business
. “Populations everywhere in the western world, for example, are aging and we're not committing enough of our resources to fund that.”
Productivity, the measure of hourly output per worker, has declined as businesses have slowed their investment in plant and equipment to boost efficiency. Meanwhile, the massive increase in private and public sector debt that has helped to boost the economy in the past is now dragging on growth.
Greenspan says governments are going to confront another major financial crisis as economies struggle to pay for entitlement programs.
“Entitlements are crowding out savings and hence, capital investment. Capital investment is the critical issue in productivity growth and productivity growth in turn is the crucial issue in economic growth,” he says. “We're running at the end of this period to a state of disaster unless we turn it around."
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