Increased Quitting, Decreased Layoffs: A Recipe for Economic Recovery

Thursday, 14 Feb 2013 08:37 AM

By Dan Weil

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More people were quitting their jobs in December, and fewer people were getting laid off from them, an encouraging sign for the economy going forward.

Layoffs registered 1.57 million in December, the lowest total since the Bureau of Labor Statistics started releasing its Job Openings and Labor Turnover Survey in 2000, CNBC reports.

Meanwhile, 2.16 million people quit their jobs in December, the largest amount since June 2008. And that total accounts for 53 percent of all job separations in the month.

Editor's Note:
Economist Warns: 50% Unemployment, 100% Inflation Possible

"These points go against the popular notion that the economy ground to a halt while D.C. negotiated the fiscal cliff late last year, and supports the hope domestic labor markets can continue to improve in 2013," Beth Reed of ConvergEx Group, writes in a report obtained by CNBC.

"If lawmakers can reach consensus in Washington and allow businesses a sense of economic stability, then job growth might actually accelerate."

ConvergEx’ "Take this Job and Shove It" index of current/future consumer confidence hit a high for the economic recovery, Reed says. "You're not going to quit your job if you have no faith in your own economic status."

Non-farm payrolls rose 157,000 in January, but the unemployment rate inched higher to 7.9 percent in December from 7.8 percent in November.

The ConvergEx data suggest that the unemployment rate should start to go down again in February.

Other data are mixed as well. Retail sales gained only 0.1 percent in January after a 0.5 percent increase in December.

"We are starting to see the impact of higher taxes, but we have a positive wealth effect from increasing house prices and a boost from equities," Robert Dye, chief economist at Comerica bank in Dallas, tells Reuters.

"My expectation is that consumers are able to continue to increase spending but only moderately."

Russell Price, senior economist at Ameriprise Financial, agrees that the economy may be recovering.

“Despite concerns about the fiscal cliff, businesses were running so tight on labor that even a modest increase in demand forced them to hire,” he tells Bloomberg.

“As long as Washington is able to resolve many of the issues that remain on the table, the economy should get much stronger.”

Editor's Note: Economist Warns: 50% Unemployment, 100% Inflation Possible

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