One thing that bothers me about the news coverage of this “economic downturn” is structural changes that have occured in the retail segment of the economy. Computers have had a noticibly drastic effect on the financial markets so why wouldn’t they change everything else?<\/p>\n
I’m not suggesting that there has been some kind of quite revolution. There has been an evolution though in the way suppliers and retailers do business. Walmart is probably the best example of how things have changed. Time was when a retailer would keep a sizable stock “out back”. They took shipments from suppliers once a month and their supplier’s suppliers would do the same thing.<\/p>\n
What I find so facinating about this is the difference in time scales. Walmart figures out they are going to sell out of fabric softener by the end of the week and they immediatly set up to get just as much as they need by the end of the week. They don’t, in general, keep inventory outside of what is on their shelves. If they start selling less fabric softener their suppliers know within a few days and that same thing applies all the way up the supply chain.<\/p>\n
What is important is that changes in demand propigate more quickly through the supply chain. With recessions unemployment in general lags economic activity by several months or more. One assumption I am making is that the reason unemployment lags behind economic activity is that businesses don’t like to fire employees. Its messy, lowers moral, and you lose experiance which is worth quite alot. So you wait untill you find out just how many employees you need to fire to stay even. The sooner you know and the more accurately you can judge how this affects cash flow the sooner you can start adjusting your payroll.<\/p>\n
Which brings me to what bothers me most, that most estimates of depth and duration of this recession seemed to be based on the severity and rate of jobs lost. I feel that the process of sheding jobs has been compressed, if you will, increasing the rate and hence the apparent severity.<\/p>\n
How that affects everything is terribly difficult to tell. The steepness of the job loss spooks people, decreasing their confidence. Steeper job loses probably increase the finantial stability of the companies, making investors and lenders more confident. Its all speculation at this point. What I do maintain though is that job loss is no longer even a semi-reliable method for estimating the depth and duration of a recession.<\/p>\n","protected":false},"excerpt":{"rendered":"
One thing that bothers me about the news coverage of this “economic downturn” is structural changes that have occured in the retail segment of the economy. Computers have had a noticibly drastic effect on the financial markets so why wouldn’t they change everything else? I’m not suggesting that there has been some kind of quite […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-71","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"http:\/\/www.blog.craig.snoeyink.org\/index.php?rest_route=\/wp\/v2\/posts\/71","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.blog.craig.snoeyink.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.blog.craig.snoeyink.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.blog.craig.snoeyink.org\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"http:\/\/www.blog.craig.snoeyink.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=71"}],"version-history":[{"count":0,"href":"http:\/\/www.blog.craig.snoeyink.org\/index.php?rest_route=\/wp\/v2\/posts\/71\/revisions"}],"wp:attachment":[{"href":"http:\/\/www.blog.craig.snoeyink.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=71"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.blog.craig.snoeyink.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=71"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.blog.craig.snoeyink.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=71"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}