Plenty of mainstream economists are already on edge about the job report the government released last week. And it’s no surprise—even on the face, those are the worst job numbers we’ve seen in six years.
But dig a little deeper and the situation is even bleaker.
First of all, the government numbers show that temporary workers have been hardest hit by economic uncertainty. That may seem less worrying than full-timers being laid off in droves because temporary workers are easier to hire and easier to fire, making many people believe they simply represent the ebb and flow of seasonal work.
But while some temporary worker layoffs are seasonal, what we’re witnessing now is a trend that has occurred before the last two major U.S. recessions.
Ahead of the Great Recession, for example, temporary staffing jobs began declining on a consistent basis in the spring of 2007, roughly a year before employment overall began to plummet. Coming out of the recession, temporary staffing levels started trending higher by September 2009, six months ahead of the comparable trend in wider employment.
Temporary workers faced a similar situation ahead of the 2001 recession.
So far this year, U.S. employers have already caned about 64,000 temporary workers, the biggest decline since August 2009. Temporary jobs fell by 21,000 in May alone.
Another less discussed economic eye-opener is the number of U.S. companies restructuring their debt, meaning filing for bankruptcy.
Consider this report from Wolf Street:
Standard & Poor’s reported that among the companies it rates there were 12 defaults in May, which pushed its speculative-grade corporate default rate up to 4.1%, the highest since December 2010 when it was recovering from the Financial Crisis.
In January, so just five months ago, the default rate was still 2.8%. That’s how fast credit is deteriorating.
Even during the early phase of the Financial Crisis, in September 2008, when Lehman Brothers filed for bankruptcy, and when all heck was breaking lose, the default rate was “only” 2.96%, before skyrocketing and eventually peaking at 12% in November 2009.
These are the largest US corporations, rated by Standard & Poor’s. But about 99% of the 19 million or so businesses in the US are small, generating less than $10 million a year in revenues, according to Dun & Bradstreet. None of them are rated by Standard & Poor’s, and none of them figure into its default rate.
Another 0.96% or 182,578 businesses are medium-size with sales between $10 million and $1 billion. Only a smallish portion of them are rated by Standard & Poor’s, and only those figure into its default rate. The rest, the vast majority, are flying under Standard & Poor’s radar.
If you’re wondering how the Mom ‘n Pop business world not seen in the S&P numbers are doing, just take a walk down your local Main Street and talk to a few small business owners.
Commercial bankruptcy filings have increased in the in the U.S. every year for the past seven years since the fabled economic recovery. Currently, they are up 32 percent from this time just a year ago.