Share Price and Balance Sheet Improvements ... Employment will be Next

Those who follow the financial markets have plenty of reason to be optimistic. Share prices, credit spreads and company balance sheets have all improved. However, the number one concern for most workers is unemployment. What has happened to the unemployment rate?

Back in April there were signs that the world markets were starting to stabilize. We correctly predicted that JP morgan and Goldman Sachs would be left standing after the dust settled. If you bought JP Morgan back then you have made a 50% return in 6 months. So where are the financial jobs?

Usually, after companies recover, their earnings turn positive, and their stock rallies. This makes a lot of people happy and overall confidence starts to increase. As confidence increases people begin to buy more products and services creating a need for more production utilization and labour.

Ahhhh ... "need for more labour" ... so where are we in the whole process?

I believe we are at the confidence stage. It has been increasing which is a great sign. Thus, the next thing to watch is whether the consumer starts to increase his spending.

What can de-rail the recovery and hiring process?

In the United States, the government needs to avoid the the mistake of over-regulation. After having significantly aided the financial system with TARP support and various Federal Reserve guarantees, the federal and state governments need to be very careful to avoid putting put any barriers in the way of a normal economic recovery process.

For example, states raising the minimal wage is good for many teens who get a job but definitely reduces the total number who are hired. Healthcare costs per worker is a major concern of companies and certainly effects hiring. Government policies need to provide cost flexibilty options to employers. See this article www.forbes.com/2009/10/14/unemployment-efca-health-care-opinions-contributors-steven-j-davis.html  for an intelligent discussion of four things the government should do to aid the employment process.

I believe 2010 is going to see a better job market. There will be more opportunities for new graduates and displaced experienced workers. Just remember ... the last thing to improve in an economic recovery is usually the unemployment rate.