Even in the outbreak of pessimism about the economy last week, few have touched on the effect of a prolonged bear market recession on employment patterns. Since this is a matter of huge importance to most of us, particularly young people entering the workforce and seeking a career path, I thought it worthwhile, starting from an appropriately bearish viewpoint, to examine the economy’s tea leaves and see what patterns result.

A recession and a bear stock market involve higher unemployment, of course, but they do not necessarily involve the kind of devastation seen in the United States in the 1930s. In Britain, for example, the lengthy period of under-employment in the 1920s and 1930s was heavily concentrated in declining industries and geographical areas, and some sectors, including notably housing and motor vehicle production, provided excellent employment opportunities more or less throughout the inter-war period.

In Japan, too, the decline in output since 1990 has resulted in an increase in unemployment, but the increase has been by no means uniform, with particular concentrations in the sectors such as real estate and banking that are especially uncompetitive internationally, while other sectors, dependent on exports and the world market, have held up relatively well. Here, however, the high value of the yen since 1990 has played an inhibiting role; it is of little value for a Japanese worker at Sony or Toshiba to know that their company is doing well, if at the same time much of its production is being outsourced to China and elsewhere.

In the United States, the combination of the huge influx of resources into certain technology and financial sectors, and demographic trends, can give some pointers as to future job opportunities. It is likely, for example, that there are currently more fully qualified and trained telecoms engineers than can find jobs over the next few years!

Demographics first. The U.S. population of 35-54 year olds, the peak consumers and acquirers of real estate, will peak in 2002 (absent massive immigration in that age bracket, which is unlikely — most immigrants are younger) and begin to decline thereafter. The first baby boomers will reach retirement age in 2006-10, and the number of senior citizens, and their percentage of the U.S. population, will then increase for a couple of decades. This doesn’t mean that nursing home managers are due for a huge boom — we’re still two decades away from that. However it is likely that retirement-friendly areas, such as Arizona and central Florida, will see demographic growth at the expense of big city suburbs with high real estate prices, and that outpatient medical care, for example, will continue to grow as the aging population discovers that it can no longer afford to ignore its health.

Another corollary of this demographic trend is a relative decline in the retail sector, already visible but due to extend much further. In particular, the upscale retail sector, both in department stores and of luxury goods will be adversely affected by demographics, by the impending exhaustion of the American consumer’s borrowing capacity, by the decline in stock portfolios, and by the elimination of the huge stock option grants that were seen in the late ’90s. In terms of consumption, this last trend is likely to be very important, and affect not only the top executives who hit the headlines but, more important in terms of overall volume, middle management, who will find their stock option grants very much smaller than in the past, and option exercise less immediately profitable. There are a number of trades which will be very severely affected by this; interior decorators, luxury car salesmen, and upscale retail sales clerks are all going to find it much more difficult to make an honest buck.

In real estate, I expect the continuing boom of the last two years to fade gradually, with prices declining generally and properties being hard to sell. Mortgage finance is likely to remain both cheap and readily available, so the biggest declines in real estate prices will be seen in areas where the fall in employment is greatest, such as New York and San Francisco. Conversely, areas such as Washington and Los Angeles, which may see growth in employment (for different reasons) will also see steadier real estate markets, although suburban Virginia, in particular, is heavily overbuilt and will continue to suffer from the tech debacle. More affected than homeowners will be those trades which depend on a healthy flow of transactions, such as realtors and home building companies, especially those concentrating on the upper end of the market.

At the same time, assuming immigration continues at a fairly high level, and the economy remains healthy enough to assimilate immigrants, the middle and lower levels of the housing market should be fairly healthy, with only modest price declines and continuing first time buyer demand from the youthful immigrant population as they build equity and settle into middle-aged family creation.

Employment in the federal government will probably continue to increase, because there are no firm budget constraints at the federal level, and politicians will be tempted to engage in contra-cyclical Keynesian deficit spending (this won’t work, but they’ll try it anyway.) Further, the political cycle seems likely to swing leftwards in the next couple of years, always good news for the bureaucrat class. Expect growth in anything that can be plausibly related to “homeland security,” and a surge in environmental and diversity enforcement employment if the leftward political swing takes place. Conversely, state government spending, which ballooned in the late ’90s, will be sharply constrained by budget deficits and voter opposition to a resumption of tax increases in difficult times.

Much of the investment in the Internet, and in the telecom sector, has clearly been wasted, and much of the very high quality talent lured into these sectors in the late 1990s will find employment opportunities very limited, particularly compared to what they expected. However, the existence of a high quality high speed cable network, and the beginnings of a 3G, or third generation, mobile telephone network, is likely to lure companies into trying to attract consumers to use these expensive fixed assets in order to begin to amortize their costs. There should thus be a continued boom for media content, not so much print content, which can already be carried on existing networks, and the capacity to produce which has already been ramped up, but graphic content — TV-style programming of various types.

While money will flow to the owners of high quality existing content, such as film libraries, there should be continued strong demand for new material to feed the ever-expanding digital distribution channels. Most of the new content demanded will of course be fairly low quality — not much opera or Shakespeare — but you can expect to see the producers of cleverly marketed non-traditional sports content, fashion and music features, game shows, soft core pornography, and no doubt currently unimaginable features combining elements of all these to continue to thrive. Major league sports, on the other hand, being finite in quantity and burdened by an excessive cost base, are likely to find it difficult to compete in the new world of multi-faceted content distribution.

Finance is likely to have a grim couple of decades. On the positive side, there will be increased demand for annuity products of one sort or another, probably combined with medical insurance, as the baby boomers start to retire. On the other hand, the flow of funds into baby boomers’ retirement accounts will slow and then reverse, their credit card debt, swollen by spending patterns developed in the late-’90s, will spiral into high loss levels and little growth, and stock market trading volumes and prices will shrivel — the likely explosion in government debt will not make up for this, as government debt carries much lower commissions than stocks.

Further, the advent of the Internet has made traditional retail brokerage a service that is, in comparison with its electronic competitor, impossibly expensive and inefficient. Expect employment in both commercial and investment banking to drop to a much lower level, and not to resume its growth for decades.

Finally, there are a number of areas that depend on political decisions. The Bush administration appears pulled between the political joys of protectionism and the economic benefits of free trade; if protectionism wins then world trade (and services relating thereto) will suffer. In that case the recession will be much worse and longer lasting but there might be jobs available in sectors such as steel, textiles, lumber and agriculture (automobiles, garment retailing, homebuilding and food processing will suffer, on the other hand.)

Again, since healthcare spending depends on adequate funding; a move towards a British-style “National Health Service,” for example after a leftward political swing, will increase job possibilities in public sector healthcare administration, but reduce those in the pharmaceutical sector, and biotech generally. Regulation (for example, of cloning technology), nationalization and price controls may drive a substantial portion of the healthcare sector offshore, to the detriment of U.S. job opportunities.

The future pattern of U.S. employment is highly uncertain. However, job seekers animated by this column’s Bear perspective can discern some trends, and thereby make decisions that steer them towards an attractive sector or at least avoid career suicide.

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(The Bear’s Lair is a weekly column that is intended to appear each Monday, an appropriately gloomy day of the week. Its rationale is that the proportion of “sell” recommendations put out by Wall Street houses remains far below that of “buy” recommendations. Accordingly, investors have an excess of positive information and very little negative information. The column thus takes the ursine view of life and the market, in the hope that it may be usefully different from what investors see elsewhere.)

This article originally appeared on United Press International.