A decade later, cautious optimism still applies

March 21, 2013

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ManpowerGroup has released its latest Employment Outlook Survey findings, which suggest that employers worldwide are seeking signs of a robust global economy before labor markets are likely to achieve sustainable traction.

Despite the recent stock market gains, thought by some to be a barometer of a healthier U.S. economy, more than enough uncertainty remains to keep many employers from hiring. And it doesn’t appear that these concerns will be assuaged anytime soon.

As reported on cnbc.com, those who are bearish on the market insist that the global economy is not as healthy as the U.S. stock market indicates. They believe that the stock market is doing better for two reasons: An activist Federal Reserve, which is forcing investors into stocks and high-yielding instruments, and the fact that the U.S. economy, while tepid, is still better than most of the world.

The market rise continues, even in the face of lower-than-expected earnings from companies like Caterpillar and FedEx, the financial crisis in Cyprus, and the Fed’s prediction that high unemployment will extend into 2015. And I just don’t get it.

At the end of last year, I sat down with a financial planner to talk about what to do with my IRA that’s lost about half its value since the dawn of this century. Sure, downturns and the Great Recession contributed to the decline, but another factor largely responsible was the portfolio itself. My IRA was invested heavily in tech stocks—some that I had held since the 1980s, when these stocks would rise so sharply that they would split. Good, sound stocks, or so I thought—stocks that certainly would bounce back. I was wrong.

The FP had another plan in mind that relies less heavily on the stock market and certainly not so heavily on tech stocks. He predicted that the market would be in the doldrums this year, and I would be better off investing in funds rather than individual stocks. I hate to admit it, but I had become emotionally tied to my holdings. After all, we’d been together through thick and thin for three decades. But I made the decision to follow his advice, sell the Microsoft (this was difficult for me) and other stocks, and invest differently. Time will tell if this was the right decision.

And it’s going to take time and much sustainable economic improvement for employers to feel confident enough to add significantly to their payrolls. According to the Manpower survey, employers in 25 countries and territories reported weaker hiring forecasts compared to this time last year; outlooks improved from 12 months ago in 15 countries. The 10 surveyed countries in the Americas all reported positive hiring intentions for the coming quarter, with hiring plans strengthening in four, but declining in five in a quarter-over-quarter comparison.

"'There is a familiar story in the U.S and that is of employers taking a measured and positive approach to hiring. Companies remain cautious about making any drastic adjustments to their hiring plans, but the small steps forward indicate a continued trend of improved confidence,' said Jonas Prising, ManpowerGroup president."

Ten years ago this month, I wrote an article for thefabricator.com entitled “The age of cautious optimism.”  Somewhere in that article was the line, “When it comes to the economy, cautious optimism is as good as it gets.” Still applies.

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