“As long as we’re in a stimulus environment, and the Fed is talking $85 billion a month, there are lots of very high-end jobs that are available,” said Chris Martenson, Ph.D., an economic researcher who tracks economic trend on Wall Street. “It is a very rich and lucrative time to be close to the spigot.”
At the same time, Martenson told StreetID that he “can’t see the direct evidence” that regulation is hurting job growth, as some of have argued.
“Certainly it has a lot of additional costs that it is imposing,” he said. “And I think the regulatory environment is becoming more difficult over time, not less. Those are just additional burdens we’re gonna have to factor in.
“Right now there is just so much liquidity in the system that it’s pretty hard to dent it with anything. Should that turn around — should we enter a recession and liquidity gets tight again, or the Federal Reserve is forced to raise interest rates — then I would expect the impact on the financial industry to be fairly significant.”
By that same token, Martenson does not believe that the new regulations are creating jobs either. “If it is, it’s not really showing up in the data I’m looking at,” he said. “It’s such a small number relative to the pool.
“Remember that the government in total has about 22 million people working for it. So if they hire a few extra thousand, it really doesn’t show up in the numbers very strongly at this point.”
Looking ahead, Martenson believes that the industry trends are calling for more consolidation.
“Until and unless we get some really large broad-based organic recovery, and by which I mean one that is not directly tied to the Fed printing $85 billion a month or other stimulus efforts, the trend would call for a lot more consolidation within the industry,” said Martenson. “On a broad job numbers basis, I would expect that to fall most heavily on the mid- to low-end of that spectrum.”
Initially, the consolidations could have a familiar effect on the industry: additional jobs losses.
“At first it’s gonna be just job losses, I would imagine,” Martenson speculated. “There are certainly fewer jobs for middle- to lower-management around the financial sector at this point in time. It’s one of the trends I’ve been tracking for a while in the financial services industry.”
That is not the only important trend to watch.
“We’ve also got another fairly significant trend in here, which is that we have 10,000 Baby Boomers a day retiring,” Martenson added. “Many of them are becoming less and less active in the investment side of their lives, so there’s going to be less need for investment activities on their behalf. So it really remains to be seen if the younger generations can come in and enter the savings and investments cycle.”
That trend is one of the “primary reasons” Martenson is expecting more consolidation from the industry.
“The demographics are just not there to support the kind of industry we built up through the period of time when the Boomers started retiring, which was January 1, 2008, I believe,” he said.
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