The U.S. government is in its 15th day of shutdown, and the debt ceiling is just two days away.
The warning signs of the many political fiascos plaguing America today were well-telegraphed last month when Challenger Grey & Christmas conducted its survey of planned corporate layoffs.
“Restructuring and closings continue to account for the bulk of job cuts, with the sequester, government budget cuts and loss of contract accounting for only around 6% of cuts,” noted Oppenheimer’s John Stoltzfus in a note to clients on Monday.
Indeed, the fiscal cliff, the sequester, Obamacare… none of this stuff out of Washington appears to be having an enormous direct impact on companies’ hiring and firing plans.
That’s not to say these forces are non-existant.
“The health care sector is adjusting workforce levels due to cutbacks in Medicare and Medicaid reimbursements initiated under the Affordable Care Act as well as overall reductions in federal spending due to sequestration,” said John Challenger, CEO of Challenger, Grey & Christmas. “A prime example of this occurred last month, when the Cleveland Clinic announced plans to reduce its headcount by 3,000, accounting for more than one-third of the health care cuts during the month. It attributed the cuts to lower government payments under health care reform.”
But ultimately, hiring and firing decisions are driven by demand or micro forces like restructuring, which in itself could be due to a number of factors.
Of course, should the shutdown persist and the U.S. default on its obligations, the problems manufactured by Washington will surely have an impact on the macro forces behind the labour market.