Bruce Steinberg is my favorite analyst of employment numbers and data. Here’s his current view of economic conditions:

Recently a staffing company executive asked us to predict the change in GDP (gross domestic product, which is an accepted proxy for the entire economy) for the next few years. Well, trying to predict the strength of the overall economy can be a fool’s errand since so many variables are involved. And since many of those variables (just one being the overhang in the housing market and how well the banks and the federal budget can handle it) are in uncharted territory, making a prediction out to 2013, or even 2012, is really only a guessing game. Further, it’s very difficult, no matter what anyone says, to separate aspirations from expectations.

With that said, it would be safe to say that 2010 will likely see GDP growth something in the lower-mid 3 range, say around 3.2. Although the recession is likely over, it remains that if the 5.6 percent growth seen in Q409 is the best we’ll see for the ‘traditional’ rapid GDP growth after a recession is over. And there is a growing view that with such weak economic growth, we could easily slip back into a recession. There are too many unknowns out there and not a lot of confidence in Washington about having the ability to know what the right thing to do is. Without sounding redundant, we don’t think anyone really knows what the right thing is at this time since this economic cycle is fundamentally different.

So the question remains — will the following years will be stronger or weaker than 2010? Certainly a significant portion of growth in the second half of 2009 and thus far in 2010 is by ‘artificial means,’ meaning government programs (credits for first-time home buyers, the cash-for-clunkers programs, etc.) with limited time frames. And who knows what else Washington will bring to the table if the most recent growth proves not to be self-sustaining and ‘organic.’ More importantly, the longer term ramifications of what they have done and any new programs they come up with in the future is a big unknown. Obviously, future growth has three options — about the same, lower than 2010 or higher than 2010.

Quite frankly, we think the expected pent-up demand and associated inventory build-up may fail to materialize and create any great movement of the needle for both sociological as well as financial reasons.

First, people may have learned to do without, similar to my parent’s generation who grew up in the Depression. (It should be pointed out that was indeed a different time since it was fairly soon after the first World War nor did it follow 50 years of relatively stable economic prosperity.) Although consumer spending recently stalled, it generally has picked up again, and if one subscribes to the notion that the economic cycle’s trough was last summer, that means we are already a year into the recovery. Some — it remains to be seen how much — of that pent-up demand may already have been met.

We tend to think that the employment economy has a long way to go before it ends up back at the point that this whole mess began. Therefore, the immediate future, 2011, will likely see either the same or slightly less growth for GDP. As for 2012, it depends how well and fast the employment economy recovers … with many of the jobs lost from the recession not coming back. Because of the fundamental, structural changes in the overall economy, it takes time to retrain workers for jobs in the ‘new’ economy.  Certainly, some parts of the economy — and associated job growth — are doing fine now and will continue while others will languish and perhaps wither away. We depart from the consensus here and think 2012 could be better than 2011, especially if 2011 growth is relatively weak. And let’s not forget that 2012 is an election year — the economy is not independent of politics — and there may be a new president in January 2013. And, of course, in today’s interconnected global economy, the health of the world’s other economies also affect our own GDP.

One of the challenges of predicting the future is that something could come along to completely upset the trend. So, for example, just before the turn of the century as people were moving into urban areas and before the automobile, government statisticians empirically predicted — based on the rate of growth — that the cities would literally be buried in horse manure since the dominant form of transportation was via equine. But then the automobile came along and changed that trend line completely. There’s a joke somewhere in that pile of horse manure and government predictions, but we’ll leave it to you to dig it out for yourself.

What is behind the IT-staffing acquisition binge?

Another staffing executive asked us our thoughts regarding what could be behind the recent increase in IT-staffing acquisition activity. Beyond values being down since business has been down, the “big fellas” see an opportunity to buy market share in a sector they obviously like on a go-forward basis. We all realize that IT is a sector where job growth is occurring and is expected to continue into the foreseeable future. Acquisitions are simply a reflection of the confidence in this niche — and it bodes well for the future since that confidence is being expressed by the leaders in the employment services industry. A lot has been said how the jobs that were lost during this recession won’t be coming back — but new, different jobs are being created and IT jobs are certainly part of the new generation of jobs for the future.

A very experienced staffing executive agreed with us and added he “suspect[s] since companies see huge cost savings and information gains from ERP, the sector is flying. Our company is constrained by lack of contractors, not orders. Second, the move to Social networking is driving marketing like crazy so there is huge activity there.”