MacroScope

After financial firms slashed hundreds of thousands of jobs in 2007 and 2008, the bloodletting slowed in 2009 as major banks rebounded from the financial crisis. Even though firms like Goldman Sachs Group Inc and JPMorgan Chase & Co reported billions of dollars in profit, they still did not announce major hiring initiatives.

Recession layoffs Headcount (end 2008) Headcount (end 2009) Bank of America 45,000 240,202 283,717* Citigroup 75,000 323,000 265,000 Goldman Sachs 4,800 34,500 32,500 J.P. Morgan 23,700 224,961 222,316 Morgan Stanley 8,680 45,295 61,388* UBS 19,700 77,783 65,233 Credit Suisse 7,320 47,800 47,600 Barclays 9,050 152,800 144,200 Deutsche Bank 1,380 80,456 77,053 Santander 2,600 170,961 169,460

* Includes additional employees from Morgan Stanley Smith Barney merger and Bank of America’s merger with Merrill Lynch, both of which were completed in 2009 (Steve Eder and Steve Slater)

Protesters in Pittsburgh ahead of the G20 meeting this week harnessed the legendary power of McFadden & Whitehead as they called on global leaders to do more to create jobs for the unemployed.

As if by magic, industry has become all upbeat about the prospects for the German economy – just in case anyone had the impression companies were about to start firing workers en masse after an upcoming federal election.

This was the tone of a German newspaper editorial this week which said “what a coincidence” it was that sentiment had shot up in the weeks before the Sept. 27 vote.

“Some pronouncements give rise to suspicion that interest groups are trying to pacify the electorate ahead of the ballot box,” the Neue Westfälische daily wrote. “The motto seems to be: don’t draw any more conclusions from the crisis, it really wasn’t that bad after all.”

In much the same way that analysts have been debating whether equities are in a bear market rally or a new bull market, economists now have to deal with the question of whether the global economy is just bottoming out or is now actually recovering. The two things are obviously linked as BlackRock equities chief Bob Doll indicated when he said this week that equity markets will require the economic backdrop to actually improve rather than simply grow less bad if rises are to be sustained.

The less-dreadful-than-feared syndrome has been around for some time. U.S. markets, for example, found themselves cheering the loss of  539,000 jobs in April simply because its was the smallest since October and looked to be an improvement.

But talk of green shoots, a somewhat overused euphemism for the start of economic revival, has also been on the increase: European Central Bank President Jean-Claude Trichet spoke on Monday about the pick-up in GDP evident in certain areas; China said its efforts to boost growth were working; and a lot of institutional investors are acting as if the worst is over.

The Federal Reserve role as a lender of last resort has never been more prominent than in the current crisis. But Martin Shubik, economics professor at Yale, argues in a policy note that the country might also need another kind of economic body: A Federal Employment Reserve Authority, or FERA, to stabilize labor markets in troubled times.

“In order to keep a socially acceptable index of unemployment below some specified level, a government agency similar in power and structure to the Fed would be appropriate,” Shubik writes in a research note published by the Levy Economics Institute.

The proposed agency would not in itself create jobs, but it would have the expertise to evaluate projects for their viability, keeping handy a list of so-called “shovel-ready” public works projects that would be easily implemented and yield the most bang for the taxpayer’s buck.

Markets might have rallied on relief that the jobs data this morning wasn't worse than expected, but there's no getting away from the fact that an 8.5 percent unemployment rate is an ugly number. The March jobs figures showed U.S. employers slashed 663,000 jobs in March. The unemployment rate was the highest since 1983. Here is some reaction from the market:

ROBERT MACINTOSH, CHIEF ECONOMIST, EATON VANCE CORP, BOSTON:
"It's telling you we're in a deep recession and it's still going to be a while to get out of it, especially on the employment side of things. But you have to keep in mind that this is a lagging indicator, we're going to get bad employment numbers, along with the employment rate, even if the economy is starting to turn."

PIERRE ELLIS, SENIOR ECONOMIST, DECISION ECONOMICS, NEW YORK:
"The report does not contradict the growing notion that the economy is finding a bottom. Employment will not turn on a dime and certainly there's no sign of strength, but at least it's not getting worse and worse and worse."

It’s no surprise that the U.S. Bureau of Labor Statistics report on state unemployment is grim reading. Unemployment is up in 49 of 50 states (go Louisiana!). 

It may also be telling us something troubling about the prospects for recovering from this recession quickly. The states with low unemployment aren’t exactly the most exciting places to live, and even if you were prepared to move there’s the not-so-small matter of trying to sell your home in the middle of a housing crisis.

The states with the lowest unemployment include Wyoming, North and South Dakota, and Nebraska — far from the coasts where populations — and unemployment — are higher. Which brings us to the Oswald Hypothesis (don’t worry — we didn’t know what it was either until JP Morgan economist Michael Feroli mentioned it). Higher homeownership rates may increase the natural unemployment rate, essentially because that makes it harder for people to pick up and move.

In Finland, public service messages have turned to pleading with people to consume more to stave off the recession.

The “Ala ruoki lamaa“, or “Don’t feed the recession”, campaign says being too cautious in consumption is one factor feeding the recession, and it seeks to make people understand the importance of private consumption to the economy.

Posters of a piggy bank equipped with fangs and horns greet travellers on tram stops in Helsinki, and television viewers see spots showing consumers feeding the recession by curbing consumption.

The U.S. Federal Reserve’s Beige Book survey of economic conditions is always chock full of goodies for the econ wonks among us. Today’s installment is a recession-era opus, chronicling in amazing detail just how sharply the economy is falling. Allow us to present a top 10 list of interesting observations:

10. Across the country, demand for professional services was down. “However, Dallas noted a modest increase, albeit less-than-expected, in demand for legal services due to increased bankruptcy proceedings.”

9. In New York City, revenues per hotel room were reported down a record 30 percent in January from a year earlier. Some 13 Broadway shows closed in January.