What can the US do to sustain job growth?
Michael Silverstein reacts to January's jobs report
- Duration 6:56
- Date Feb 1, 2013
Michael Silverstein reacts to January's jobs report
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TD ask some aren't sitting Eddie thank you so much for joining us this Friday the Friday before this -- -- we have big Super Bowl special show for you.
Today but we're gonna start with the news of the day and that is the fact that the Dow Industrials hit -- brief moment.
A level not seen since October of 2007.
It remains to be seen whether we close at that level.
But one of the -- some other right now -- -- slowly yet.
One -- things that is boosting as a hundred plus point rally for the blue chips and indeed for the S&P 500 getting well above 15100.
Is the jobs report that we got today -- -- a big economic report.
We got too big economic reports this week GDP for the end of 2000 in twelve.
As well as January job creation and they kind of go together.
It is -- theme of the report is the economy sputtered at the end of last year growth was weak much weaker than expected.
Yet we were still able to create jobs in all of 2012.
And then a little bit.
At the start of 2013.
So that's the theme that's why were rallying all of the jobs report didn't really impress anybody.
Let's not talk about this more in depth of Michael Silverstein joining me from Chicago.
It is senior partner and managing director at the bought the Boston Consulting Group Michael thank you happy Friday.
Nice to see you good to see you as well still a New York if we'd take this jobs report for the month of January what do you make of it.
So I would say the United States' economies very fragile.
And January is a -- month for many consumers they received lower paychecks because of the 2%.
For the top 10% of wage earners taxes increased 7%.
And actually think that there's a lot of exuberance in the market.
That will fall out over the next quarter.
Largely on the basis of reduced.
Net income for consumers.
And now that's giving and that's the problem for 2013.
And that's why I personally am shocked the stock market is rallying the latest.
2011 and twelve minded than -- -- with a 180000.
Or so jobs created a month on average but everyone's making less money because of the Social Security taxes.
And we have this slower growth environment.
I can we.
Sustained job growth where where are the jobs coming from.
So the truth is that the only way that you get jobs as if you have savings.
And what has happened with the most recent tax policy.
-- you've taken the group of savers in the United States the top 10% and you've decreased your incomes by 7%.
They were saving 15% of their incomes my guess is that they're gonna.
Split the difference between the increase in taxes and -- and a decrease in consumption.
And they will spend three or 4% less.
For the vast majority of Americans the ones that are seeing that 2%.
That 2% is larger than any gas price increase.
We've had last five years so they're actually going to be spending less so my expectation is is can be very cool year.
2013 is not going to be a year where the US economy dramatically advances in order to have the advance you need to have.
Around job growth you need to have investments.
Against capital need to have new competitive advantage for the United States and that's just not happening right now.
The real economy is not helping.
Bill Clinton is speaking about all of these issues yesterday at a forum that I was that -- we're actually gonna talk about this next week.
And at his point was is that one of the few areas where you can spark.
Job creation is an alternative energy and green energy and infrastructure.
But that's basically it where the jobs gonna come from that that's so there are out there aren't -- better that's a green suit to have.
Let's be clear green energy is not employment intensive it is capital intensive.
So it's about construction of large facilities and very few -- but if you get -- By creating engineers to build product by investing in information technology.
By the growth of health -- that's gonna happen misery as result demographics the ageing the population.
Let's -- -- there demographics that we saw on the January jobs report the unemployment rate among blacks nearly 14%.
The overall seven point 9% blacks thirteen point eight Hispanics at nine point seven.
White's seven and Asians six and a half percent those are fresh snow -- in the generate jobs report that.
And in the -- in the inner city you would see unemployment among.
Teenagers and twenty somethings in the inner city at 40%.
What is happening in the world is that you need to have an education in order to be able to get a job.
And high school graduation rates in urban markets are not advancing and that's one of the critical policy issues still you need to have a skill.
And there's this.
Battle between education.
Honestly verses incarceration.
In many inner cities that it's cheaper to educate then to incarcerate.
But it's we need the money from the government to enforce that education we need daycare centers for parents need to get jobs that need to go to work.
Where -- where's that money come from and where it is an -- start.
So what other things that I believe and have written I've written a couple books one was.
The most recent book is called the ten trillion dollar prize.
And that's the story of Chinese and Indian consumers and how they are getting educated.
There will be a hundred million university graduates in China in India over the next decade.
The United States will only produce 29 million.
What we need to do is increase education and increase.
We need to take inner city youth and help them get through high school for women.
What we need to do is we need to make daycare available and we need to give them.
Maternity leave and we need to provide.
Health care for children.
Are you worried about the United States global stance when it comes to education.
The United States is treading water right now.
The United States has opportunity.
It has tremendous natural resources it has an educated population.
But he needs some it needs to have a higher savings rate it needs to be making more capital investment.
It needs to have better tax policy it needs to encourage corporations to create jobs.
Yeah and repatriate some of that overseas and honey.
Thank you so much for coming -- Michael Silverstein managing director with the boss -- Consulting group and a pretty prominent author I was going through your biography has well.
Thanks so much have a great weekend -- enjoy receivable.
Thank you very --