Prediction: unemployment to continue rising
Shilling says the US economy will grow at an average rate of only 2 per cent a year — compared to the growth rate of 3.3 per cent needed just to keep unemployment stable, let alone soak up the existing pool of un- and under-employed. A study by the Federal Reserve of Kansas suggests this means that unemployment, instead of falling, will continue to worsen, at an average of nearly 1 per cent a year.
“The mind-set of American business will probably promote robust productivity growth in future years” from the internet, biotech, telecom and semiconductors. “As in the past decade, American businesses will likely continue to be more interested in not hiring people than in firing them.”
Over the next decade, because of slow economic growth, unemployment will be high and rising – unless there are huge job-creation programmes by the federal government. Shilling believes that is definitely going to happen as no government, whatever its economic philosophy, “can withstand high and rising joblessness for long.”
Shilling lists “12 investments to sell or avoid,” and “ten investments to buy.” I must warn that these recommendations are made from an American perspective. He largely ignores prospects in specific sectors of other economies, or for government bonds other than those of the US.
CopyRight – OnTarget March 2011 by Martin Spring
this article follows on from – A surfeit of leading-edge production plants
which was led by – Survive and Prosper in the Grim Decade