JOBS REPORT
Worst may be over
A look back at rapidly fading 2001 will recall the downfall not only of dot-com companies and their cybergeek progenitors, but also the demise of many thousands of jobs related to the Internet world.
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As the fairy tale structure of dot-com riches crashed in ruins, computer positions, fat contracts for a phalanx of consultants and dreams of telecom empires crumbled.
Yet all is not lost in the job market. Overall demand for workers may be picking up as job-seekers prepare for 2002.
That brings us to Friday’s December employment report. Chicago economist Robert Dederick is looking for joblessness to climb to 5.8 percent from 5.7 percent last month. He expects payrolls to show shrinkage of 250,000 positions, following losses of 331,000 in November and 468,000 in October.
And Dederick, a consultant to Northern Trust Co., believes the end is in sight for the job market’s malaise.
“Next year should be the mirror image of this year, with improvement starting to show up in March, which is when the recession began in 2001,” he said. “We are much closer to the end of the downturn than the beginning.”
Dederick doesn’t see the economic recovery setting off bells and whistles.
“The economy bent, but it never really broke,” he said. “The consumer placed a floor under the current slowdown. Unfortunately, it’s hard to anticipate a dynamic bounce-back after a downturn that has been relatively mild.”
RETAIL REVIEW
Holiday tally
It will be show-and-tell time for the nation’s retailers Thursday, as they report discount and department store sales for December. By any measure, the holiday shopping season is likely to be the worst in a decade.
Some retailers, however, said the days before and after Christmas showed a renewed enthusiasm among shoppers, especially those who trudged to the malls in search of steep discounts.
Retailers generally will be happy if holiday season revenues were 2 percent or more above the year-earlier period. A few discounters, including Wal-Mart, will show substantial gains, but traditional department stores seem doomed to show year-over-year declines.
VEHICLE SALES
Low on fuel
If one sector of the economy has played a heroic role since Sept. 11, it’s the auto industry. Sacrificing profits, Detroit has trotted out zero-percent financing and other incentives to keep sales moving. But some analysts say the carmakers have simply stolen sales that would have occurred in 2002.
Watch this week’s reports on December car and light-truck sales for indications that the cheap financing plans are running out of gas. Analysts expect the report to show an annual sales pace of about 16 million units. That would represent practically no gain from a year earlier, and a retreat from November and the record stampede of buyers in October. Even so, 2001 is expected to go down as the second-best industry sales year on record.
Also worth tabbing: Wednesday’s December survey results from the nation’s purchasing managers, renamed the Institute for Supply Management report; it is considered a highly sensitive gauge of the manufacturing sector. The nation’s factories have been in decline for nearly 15 months, and the survey is expected to show a rise to only a reading of 46, from 44.5 in November. Anything below 50 is considered evidence that manufacturing remains in recession.
EQUITIES
Old and new
The stock market–which wraps up 2001 on Monday before taking Tuesday off, along with other markets, banks and government offices–is rapidly turning its attention away from the losses of the old year, focusing on the promise of better profits in 2002.
But there still are some old scores to settle, namely meager corporate results for the fourth quarter, which will start to roll out in about a week.
Chicago investment manager Marshall Front says blue-chip corporate profits for 2001 will finish 32 percent below the year-earlier totals, “the worst showing since World War II.”
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For the year ahead, however, Front, of Front Barnett Associates, sees profits rising by 13 percent.
“Earnings momentum, which drives stock prices, will look increasingly strong as the year progresses,” he said.