A while back, I said that if consulting services contracts in my industry decline, I would expect a recession. Well, it happened.

For a while now (since late November I believe), the entry-level consulting division that I am a part of has had an extra 'bootcamp class' waiting in the wings to help boost our revenues. Consulting is a very simple game - charge more for peoples' services than you pay them. Thus, in order to boost revenues, you either have to charge more per person or hire more people. Typically it's much easier to hire more people and simply generate additional consulting engagements in order to support such a payroll.

That 'bootcamp' class was supposed to enter training this February, but their start date has now been suspended indefinitely. This period of the year is typically slow in terms of new consulting engagements, but it is worrying.

HP is also rolling out a new bonus schedule for my division, which clearly shows to me that they are now focused on generating the maximum revenue from their current workforce as opposed to simply generating more gross revenue. The bonus program is loosely based on a sort of ass-backwards 'overtime-ish' compensation, but now they're throwing an extra few bones to people that focus on maximizing their billable hours.

This focus on maximizing existing infrastructure and avoiding growth is very telling, particularly in the growth industry that datawarehouse consulting represents.

As an aside, there are apparently 150 experienced consultants on the beach. However, they are attempting to hire at a rapid rate. There are rumors they are attempting to replace the higher-paid consultants in the company with ones at much lower salaries. This would fit in quite well with Mark Hurd's focus on the bottom line. In my relatively low-paid entry-level division, there are only about 2 people on the beach.

Does HP cutting costs mean anything?

Well, the signs are very clear that the next nine months will bring us mixed growth. Something that makes me feel more positive in the long term, is this graph of the historical unemployment rate. (source)

The author of the article where I originally saw this Bureau of Labor Statistics' graph points out that recessions of the past few decades have been much worse than it appears this one will be - if this is even the beginning of a true recession.

Perhaps I could argue that these softened peaks represent greater labor market efficiency. It's certainly comforting to think so.

A somewhat different picture emerges after we account for an extra decade or two on the graph.

This graph seems to show a convergence upon a mean unemployment level of about 4.5%. From this perspective, the whole period post-1968 was an employment recession, except for a bit of a blip below 4% right before the crash of 2001.

There's also the fact that these unemployment figures could be totally bogus... go here if you want to know how the US government actually comes up with these unemployment figures.

so recession or what?

Determining a recession or the possibility by using unemployment statistics is going to get you in trouble. It's obvious that we cannot use a single variable like this without context. I would like to see these graphs juxtaposed with GDP growth and population growth. I would also like to see consumer price and commodity/wholesale price indexes represented, as well as the prevailing interest rates. However, even if all these items were accounted for, the possibly unique nature of the current state of the financial markets may offer wildly misleading conclusions. Such situations simply may not be represented in the historical data. The subprime crisis is different from the dot-com crash is different from the 1970s recession is different from the... you get the point.

In the financial media I often see these items discussed, but rarely are they ever used in conjunction to tell a story. More often than not the facts are fit to the conclusion of the author rather than the other way around.

Anyone know how I can get/generate the sorts of charts I want to analyze quickly and easily?