Last week, the Baltimore Sun laid off 61 employees. I heard that a couple reporters were actually called on the phone while they were sitting in the press box covering an Orioles game and told they were no longer Sun reporters.
It’s no secret that the newspaper biz has gotten tough. The Sun’s parent, the Tribune Company, filed for bankruptcy protection in December of 2008 after its chairman, Sam Zell, took the company private. Analysts knew he was loading too much debt on the company, but the decline in advertising revenues at newspaper was the nail in the Tribune’s coffin.
It’s an industry-wide problem. Advertising dollars are harder to come by, especially for print media. So what happens to the reporters and bureau chiefs that are getting canned? There probably aren’t enough blogs to employ them all.
The same thing is happening to autoworkers and finance industry people, too.
*****Bloomberg reports that 257,000 autoworkers have lost jobs in the last 18 months. GM plans to do away with another 137,000 jobs by 2010. No telling how many more will lose their jobs from the Chrysler bankruptcy and merger with Fiat.
The chief economist at the Center for Automotive Research, Sean McAlinden estimates that half of the auto industry’s job cuts are permanent. I can’t help but wonder how safe Mr. McAlinden’s job is.
*****The housing bubble cost plenty of jobs, too. Obviously, Wall Street’s investment bank implosion left many out of work. Bloomberg also reports that the finance sector has dropped 376,000 jobs, and that there are more on the way. It’s pretty easy to imagine that many of these job cuts are permanent, too.
But consider, too, the number of mortgage brokers and real estate agents that jumped on board only to find the ship was already taking on water. You can add construction workers, too.
*****America has lost a lot of jobs that aren’t coming back. That’s got some wondering what "full employment" will look like when the economy recovers.
Full employment is an equilibrium point for inflation. When inflation hits wages, it sets in motion a very damaging cycle as prices rise quickly to offset. Increased productivity is the check that balances wage inflation, and that’s allowed full employment to be around 5% for the last decade.
Going forward, though, full employment may mean an unemployment rate around 7%.
*****According to Bloomberg, the Obama administration is still counting on a return to 5% unemployment when it forecasts its budget. The discrepancy will mean higher budget expenses and lower tax revenues. That’s a bad combination.
*****I can’t look at a chart for Hovnanian (NYSE:HOV) anymore. It’s over $3 a share. That’s a 100% gain from where I told Daily Profit readers to buy it. And we could have had it too, if I hadn’t recommended you take the 37% gains when it was available – but either way, you made a healthy gain in a few short weeks.
At least Graham Corp. (AMEX:GHM) is still chugging away. It’s up nearly a buck to the $13.50 a share range today.
Jason Cimpl just added a solar stock to the TradeMaster Daily Stock Alerts arsenal. And SmallCapInvestor PRO subscribers are getting a couple Chinese infrastructure stocks later today. I also loaded up on a corporate bond fund yielding 9% in my Recovery Portfolio – and the fund is low risk, not some junk bond fund. We’re staying busy.
That’s it for today, I’ll talk to you tomorrow.