Five Under-the-Radar Trends for 2005

Whether this turns out to be a minor inconvenience or a full-blown debacle has yet to be determined.

2. Job Creation Still MIA

Will the decade's halfway point be where we finally see some honest-to goodness growth in jobs? Let's hope so -- so far this decade, the jobs data stink. Employment growth is significantly below par 44 months into the recovery. Compared to other post-WWII recoveries, as I've discussed before, the U.S. is net short some 7 million jobs, according to the Economic Policy Institute. That means the labor force contains 5% fewer people working (out of 135 million full-time employed) than is usual in a postrecession period. The U.S. economy requires about 150,000 new jobs per month just to tread water. Given the nation's annual population increase, to maintain the same percentage of people working requires about 1.7 million new jobs or so per year.

There's less to the actual jobs being created than meets the eye. A disproportionate percentage are courtesy of Uncle Sam rather than the private sector. And the private-sector jobs that are being created on average pay less and have fewer benefits than those that have been lost. And I don't believe tales about all the new eBay entrepreneurs. A very small percentage of people earn a full-time living via the auction giant. Most eBay entrepreneurs are casual buyers and sellers of tchotchkes.

Much of the job weakness is due to the nature of this postbubble, postrecession period. This has been a stimulus-driven recovery, with the economy grossly manipulated by the government and the Fed. For the expansion to continue, organic job growth is necessary. Continued soft job creation will be a significant negative for the economy.

3. Accelerated Depreciation Goes Buh-Bye

I discussed the Accelerated Depreciation of Capital Investment and its expiration extensively this summer. As of today, this May 2003 tax cut expires. This issue may have positive as well as negative consequences.

On the positive side, there was a terrific incentive to make capital expenditure purchases before the rule expired. A lot of goods, from jets to PCs, were purchased prior to the rule's expiration.

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At the time of publication, Ritholtz was long Ampex, although holdings can change at any time.

Barry Ritholtz is chief market strategist for Maxim Group, where his research and market analysis are used by the firm's portfolio managers and clients in the U.S., Europe and Japan. He also publishes The Big Picture, his macro perspectives on the economy and geopolitics, entertainment and technology industries, and is a member of the board of directors of Burst.com, a streaming media software company. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Ritholtz appreciates your feedback and invites you to send it to [e-mail].