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Earnings linked to labor market, demand may signal if companies are ready to hire
By TALI ARBEL
AP Business Writer
(AP) 03:53:21 AM (ET), Sunday, October 25, 2009 (NEW YORK)
Wall Street may be roaring again and manufacturers see a bright future selling their wares in Asia. But for many Americans, it's still a downturn until the jobs come back.

This week, earnings from several companies with deep ties to corporate payrolls, consumer demand and the labor market will show whether employers are hiring, firing or holding off on filling vacancies.

This recession has already seen more than 7 million lost jobs. That's because shoppers slowed their spending, bank lending froze and businesses cut back on capital investments. So cash-strapped companies slashed payrolls _ and benefits _ in order to curb expenses as sales dropped.

With lending and spending still weak, companies may not be ready to start hiring again anytime soon.

The unemployment rate in September was 9.8 percent, a 26-year high. Layoffs are slowing, but joblessness is expected to peak above 10 percent early next year.

"You're looking at really sluggish growth," said Joel Naroff of Naroff Economic Advisors. Economic activity could grow 3 percent or less for years to come, he said, and productivity gains mean companies won't need to hire many people.

Private economists predict that the unemployment rate won't drop to a more normal 5 or 6 percent until 2013 or 2014.

In order for them to fill vacancies now, employers need to see increasing demand _ higher sales _ for their goods and services from U.S. shoppers and businesses.

"There's a few positive signs, but there's still a shortfall in (corporate) profits from where they were a year ago or two years ago especially," said Jeff Bergstrand, an economist at the University of Notre Dame's Mendoza College of Business. "There's still a lot of cost cutting going on."

* Positive signs are out there. We are working on it. *

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