Restaurant and Food Service Blog

The day after the election, the market plummeted in what analysts surmise was in anticipation of the challenges the new administration will have to face once it takes office in January including unemployment, the war in Iraq, and the economy in general. Was it a bad sign for things to come? Probably not. Daily Markets said that “investors must have felt the after-election fall wasn’t completely justified,” as the markets railed just three days later.

So what are the realistic expectations we should have about how employment will be affected by the new administration? Here we take a look at what is being said, what promises are being made, and what is realistic given our nation’s current situation.

Unemployment

In October 2008, we reached the highest unemployment rate our nation’s seen in 14 years. There are a huge amount of catalysts that can be blamed for this occurrence, but the bottom line is that all of them together made for the perfect storm – eliminating a total of 1.2 million jobs since January 1. While the restaurant industry has yet to feel as big of an impact from these conditions, as I have said in some of my other articles, the effects, to some degree, will be felt by all before this is all over. So, let’s take a look at what the administration is saying now about the problem and what you can expect in the near future.

The Plan from the President-Elect

On Friday, November 7, just three days after his historic win, Obama met with 17 high-level economic advisors to discuss the economy, and especially the state of employment. They primarily discussed the loss of an astounding 240,000 jobs in the service sector in just the month of October. Economist for Goldman Sachs, Jan Hatzius, said, “The U.S. labor market has moved into full recession mode with payrolls dropping sharply—and more than generally expected—in October and, on revision, in September as well.” What’s more, Goldman Sachs announced that the unemployment rate could reach as high as 8.5pc by the end of 2009. 

With this, Obama has said that the current state of economy is an urgent reminder of the need for swift action. In his first news conference on the afternoon of November 7, Obama said, “Immediately after I become president I will confront this economic crisis head-on by taking all necessary steps to ease the credit crisis, help hardworking families, and restore growth and prosperity.” To do so, Richard DeKaser, chief economist for American regional bank National City said, “This is going to increase the urgency for another stimulus package to staunch the slide.”

Expectations?

With all this said, what should your realistic expectations be about the job market? In my mind’s eye I see us with a difficult road ahead. I think it is going to get worse before it gets better, as predicted also by Goldman Sachs. When a movement such as a major bailout occurs, it takes a while for the domino effect to make its way around, so we need to be patient, as consistently reminded by the White House. There is relief in sight, but recovery from something like this takes time. My best advice is to stay informed and to formulate a back-up plan for your career. Don’t wait for the chips to fall – anticipate them before they do and be prepared with other options.