From the WSJ.com:
The U.S. unemployment rate rose to 8.3% in July and a broader measure ticked up to 15%, even as the economy added 163,000 jobs.
Why the increase?
The key reason is because the two numbers come from separate reports. The number of jobs added — the 163,000 figure — comes from a survey of business, while the unemployment rate comes from a survey of U.S. households.... the household survey was telling a darker tale than the poll of establishments...
150,000 people left the labor force, lowering what is known as the participation rate...
A further worrying sign came in the count of persons counted as employed, which fell by 195,000 last month.
Meanwhile, the broader unemployment rate, known as the “U-6″ for its data classification by the Labor Department, was up to 15% in July....
In July, the increase in the U-6 rate was driven by a jump in both the number of part-time workers who would prefer a full-time job and the number of discouraged workers.
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Link: http://blogs.wsj.com/economics/2012/08/03/why-did-unemployment-rate-increase/
Friday, August 3, 2012
Thursday, August 2, 2012
U.S. recovery weakest in the world since 1970
From James Pethokoukis blogging at AEI-ideas.org :
The Obama administration says one reason the U.S. economic recovery has been so slow is that it is still suffering from the aftermath of the financial crisis. But the U.S. is not the first country to suffer a recession and a financial crisis. And the U.S. recovery is doing worse than all of them.
In a new research note, JPMorgan points out that since 1970, Japan, Finland and Sweden have all gone through what the U.S. is currently going through. And all three of them had recoveries stronger than America’s....
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Link: http://www.aei-ideas.org/2012/07/u-s-recovery-weakest-of-any-in-the-world-since-1970/
The Obama administration says one reason the U.S. economic recovery has been so slow is that it is still suffering from the aftermath of the financial crisis. But the U.S. is not the first country to suffer a recession and a financial crisis. And the U.S. recovery is doing worse than all of them.
In a new research note, JPMorgan points out that since 1970, Japan, Finland and Sweden have all gone through what the U.S. is currently going through. And all three of them had recoveries stronger than America’s....
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Link: http://www.aei-ideas.org/2012/07/u-s-recovery-weakest-of-any-in-the-world-since-1970/
Under-Employment rate much, much worse
From the Real Time Economics blog at the WSJ.com:
While it’s the government’s unemployment rate that moves headlines every month — the latest, for July, comes out Friday — the “under-employment” rate, or “U-6” rate, includes everyone else affected by the moribund job market: people who want to work but haven’t looked in the last four weeks because they figured no jobs were available and those working part-time gigs but would prefer full-time positions.
(By the way, the government’s number-crunchers prefer “four-quarter moving averages” when it comes to state data because of it’s smaller sample size. By taking in longer time spans, the government may boost the reliability of the findings.)....
Michigan (4 quarter average)
Unemployment: 9.4%
UNDER-employment: 17.4%
Difference: + 8.0
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Link: http://data.bls.gov/cgi-bin/print.pl/lau/stalt.htm
While it’s the government’s unemployment rate that moves headlines every month — the latest, for July, comes out Friday — the “under-employment” rate, or “U-6” rate, includes everyone else affected by the moribund job market: people who want to work but haven’t looked in the last four weeks because they figured no jobs were available and those working part-time gigs but would prefer full-time positions.
(By the way, the government’s number-crunchers prefer “four-quarter moving averages” when it comes to state data because of it’s smaller sample size. By taking in longer time spans, the government may boost the reliability of the findings.)....
Michigan (4 quarter average)
Unemployment: 9.4%
UNDER-employment: 17.4%
Difference: + 8.0
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Link: http://data.bls.gov/cgi-bin/print.pl/lau/stalt.htm
Weak Labor Report Fans Fears
From online.WSJ.com:
U.S. employers added 80,000 jobs in June, barely better than the 77,000 they added in May. The monthly report from the Labor Department provided the clearest evidence yet that job growth has slowed sharply from earlier this year. The U.S. gained just 225,000 jobs in the past three months combined, making it the weakest quarter of job growth since the labor market began to recover in 2010. The unemployment rate remained stuck at 8.2%.
The report echoes recent data that suggest the U.S. economy is losing steam. This week, the Institute for Supply Management said the manufacturing sector contracted in June for the first time since the first month of the recovery in July 2009. ...
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Link: http://online.wsj.com/article/SB10001424052702303962304577510461710030258.html
U.S. employers added 80,000 jobs in June, barely better than the 77,000 they added in May. The monthly report from the Labor Department provided the clearest evidence yet that job growth has slowed sharply from earlier this year. The U.S. gained just 225,000 jobs in the past three months combined, making it the weakest quarter of job growth since the labor market began to recover in 2010. The unemployment rate remained stuck at 8.2%.
The report echoes recent data that suggest the U.S. economy is losing steam. This week, the Institute for Supply Management said the manufacturing sector contracted in June for the first time since the first month of the recovery in July 2009. ...
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Link: http://online.wsj.com/article/SB10001424052702303962304577510461710030258.html
Saturday, July 7, 2012
Broader Jobless Rate Ticks Up to 14.9%
From the WSJ.com:
The U.S. unemployment rate was unchanged at 8.2% in June but a broader measure rose to 14.9% as the ranks of the underemployed grew.
The jobless rate was unchanged even at the number of people who consider themselves employed jumped by 128,000...
Meanwhile, the broader unemployment rate, known as the “U-6″ for its data classification by the Labor Department, was up even higher in June. The U-6 figure includes everyone in the official rate plus “marginally attached workers” — those who are neither working nor looking for work, but say they want a job and have looked for work recently; and people who are employed part-time for economic reasons, meaning they want full-time work but took a part-time schedule instead because that’s all they could find....
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Link: http://blogs.wsj.com/economics/2012/07/06/broader-jobless-rate-ticks-up-to-14-9/
The U.S. unemployment rate was unchanged at 8.2% in June but a broader measure rose to 14.9% as the ranks of the underemployed grew.
The jobless rate was unchanged even at the number of people who consider themselves employed jumped by 128,000...
Meanwhile, the broader unemployment rate, known as the “U-6″ for its data classification by the Labor Department, was up even higher in June. The U-6 figure includes everyone in the official rate plus “marginally attached workers” — those who are neither working nor looking for work, but say they want a job and have looked for work recently; and people who are employed part-time for economic reasons, meaning they want full-time work but took a part-time schedule instead because that’s all they could find....
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Link: http://blogs.wsj.com/economics/2012/07/06/broader-jobless-rate-ticks-up-to-14-9/
Disability Ranks Outpace New Jobs
From Investor's Business Daily online:
More workers joined the federal government's disability program in June than got new jobs, according to two new government reports, a clear indicator of how bleak the nation's jobs picture is after three full years of economic recovery.
The economy created just 80,000 jobs in June, the Bureau of Labor Statistics reported Friday. But that same month, 85,000 workers left the workforce entirely to enroll in the Social Security Disability Insurance program, according to the Social Security Administration....
Other indicators show that the three-year-old economic recovery isn't producing jobs in adequate numbers:
The unemployment rate has been above 8% for 41 consecutive months. In the previous 60 years, the jobless topped 8% in a total of only 39 months.
The number of people with jobs is still nearly 5 million below its pre-recession peak.
The number of long-term unemployed — those out of work 27 weeks or more — is still 5.4 million — almost 1 million higher than when the recovery began...
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Link: http://news.investors.com/article/617233/201207061636/disability-climbs-faster-than-jobs-under-obama.htm?p=full
More workers joined the federal government's disability program in June than got new jobs, according to two new government reports, a clear indicator of how bleak the nation's jobs picture is after three full years of economic recovery.
The economy created just 80,000 jobs in June, the Bureau of Labor Statistics reported Friday. But that same month, 85,000 workers left the workforce entirely to enroll in the Social Security Disability Insurance program, according to the Social Security Administration....
Other indicators show that the three-year-old economic recovery isn't producing jobs in adequate numbers:
The unemployment rate has been above 8% for 41 consecutive months. In the previous 60 years, the jobless topped 8% in a total of only 39 months.
The number of people with jobs is still nearly 5 million below its pre-recession peak.
The number of long-term unemployed — those out of work 27 weeks or more — is still 5.4 million — almost 1 million higher than when the recovery began...
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Link: http://news.investors.com/article/617233/201207061636/disability-climbs-faster-than-jobs-under-obama.htm?p=full
Tuesday, July 3, 2012
Sluggish Economy Plagues Europe
From the WSJ.com:
Euro-zone manufacturing activity contracted sharply in June and unemployment hit a record, in the latest sign that Europe's economic problems are worsening amid the region's debt crisis and a broader global slowdown.
The data put added pressure on the European Central Bank to reduce its key interest rate when it meets Thursday, a move that would bring the euro bloc's monetary policy into expansionary territory unmatched even in the aftermath of the Lehman Brothers collapse in September 2008....
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Link: http://online.wsj.com/public/page/news-economy.html
Euro-zone manufacturing activity contracted sharply in June and unemployment hit a record, in the latest sign that Europe's economic problems are worsening amid the region's debt crisis and a broader global slowdown.
The data put added pressure on the European Central Bank to reduce its key interest rate when it meets Thursday, a move that would bring the euro bloc's monetary policy into expansionary territory unmatched even in the aftermath of the Lehman Brothers collapse in September 2008....
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Link: http://online.wsj.com/public/page/news-economy.html
Monday, July 2, 2012
Manufacturing shrinks: first time in three years
From Reuters.com:
U.S. manufacturing shrank in June for the first time in nearly three years as new orders plummeted, one measure of the sector that showed the starkest sign yet of the extent of the slowdown in the economy....
It was the first time since July 2009 that the index has fallen below the 50 mark that separates expansion from contraction. That was shortly after the U.S. economy emerged from recession.
Manufacturing has been one of the drivers of the U.S. economic recovery, which now appears to be losing momentum over fears about the euro zone's debt crisis, a slowdown in China and uncertainty over domestic fiscal policy.
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Link: http://www.reuters.com/article/2012/07/02/us-usa-economy-manufacturing-idUSBRE8610QT20120702
U.S. manufacturing shrank in June for the first time in nearly three years as new orders plummeted, one measure of the sector that showed the starkest sign yet of the extent of the slowdown in the economy....
It was the first time since July 2009 that the index has fallen below the 50 mark that separates expansion from contraction. That was shortly after the U.S. economy emerged from recession.
Manufacturing has been one of the drivers of the U.S. economic recovery, which now appears to be losing momentum over fears about the euro zone's debt crisis, a slowdown in China and uncertainty over domestic fiscal policy.
-----------------
Link: http://www.reuters.com/article/2012/07/02/us-usa-economy-manufacturing-idUSBRE8610QT20120702
U.S. hires Private Lawyers to grab Bank Account of 1st Grade teacher for loan default
From Bloomberg.com:
Lawyers drained Linda Brice’s bank account and seized a quarter of her take-home pay, or more than $900 a month. Brice, a first-grade teacher and Coast Guard veteran, begged for mercy, saying she couldn’t afford food, gas or utilities.
Brice’s transgression: she defaulted on $3,100 she had borrowed more than 30 years ago to pay for college. The chief federal judge in Los Angeles took her side, ruling that Brice should pay only $25 a month. The law firm of Goldsmith & Hull -- representing the federal government -- then withdrew $2,496 from her bank account.
“I am at the end of my rope,” Brice wrote in a May 2009 court filing. “I apologize for taking the court’s time, but I simply do not know what to do....”
When the U.S. Education Department fails to get repaid, the agency can turn borrowers’ names over to federal prosecutors. In turn, U.S. attorneys are hiring private law firms to retrieve money for taxpayers -- after the firms keep a cut for themselves....
----------------
Link: http://www.bloomberg.com/news/2012-07-02/teacher-s-wages-garnished-as-u-s-goes-after-loan-default.html
Lawyers drained Linda Brice’s bank account and seized a quarter of her take-home pay, or more than $900 a month. Brice, a first-grade teacher and Coast Guard veteran, begged for mercy, saying she couldn’t afford food, gas or utilities.
Brice’s transgression: she defaulted on $3,100 she had borrowed more than 30 years ago to pay for college. The chief federal judge in Los Angeles took her side, ruling that Brice should pay only $25 a month. The law firm of Goldsmith & Hull -- representing the federal government -- then withdrew $2,496 from her bank account.
“I am at the end of my rope,” Brice wrote in a May 2009 court filing. “I apologize for taking the court’s time, but I simply do not know what to do....”
When the U.S. Education Department fails to get repaid, the agency can turn borrowers’ names over to federal prosecutors. In turn, U.S. attorneys are hiring private law firms to retrieve money for taxpayers -- after the firms keep a cut for themselves....
----------------
Link: http://www.bloomberg.com/news/2012-07-02/teacher-s-wages-garnished-as-u-s-goes-after-loan-default.html
Factory slump in Asia - more to come?
From Reuters.com:
A factory slump in Asia's two biggest exporters China and Japan deepened in June as crumbling orders from abroad dragged activity to seven-month lows, heightening worries that the health of the global economy is deteriorating.
...The data increases the risk that the economies of major demand centers Europe and the United States may be weaker than previously thought. Purchasing managers' reports on the two regions are due to be published later on Monday.
The latest sign that China's economy is struggling came on Monday with a private purchasing managers' index (PMI) showing factory activity shrank at its fastest pace in seven months in June....
-----------
Link: http://www.reuters.com/article/2012/07/02/us-global-economy-idUSBRE86107X20120702
A factory slump in Asia's two biggest exporters China and Japan deepened in June as crumbling orders from abroad dragged activity to seven-month lows, heightening worries that the health of the global economy is deteriorating.
...The data increases the risk that the economies of major demand centers Europe and the United States may be weaker than previously thought. Purchasing managers' reports on the two regions are due to be published later on Monday.
The latest sign that China's economy is struggling came on Monday with a private purchasing managers' index (PMI) showing factory activity shrank at its fastest pace in seven months in June....
-----------
Link: http://www.reuters.com/article/2012/07/02/us-global-economy-idUSBRE86107X20120702
Friday, June 29, 2012
Consumer Spending Stalls
from Bloomberg.com:
Consumer spending stalled in May as stagnant wages and slackening employment held back the biggest part of the U.S. economy.
Purchases were little changed after a 0.1 percent rise the prior month that was smaller than initially reported, according to Commerce Department figures issued today in Washington....
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Link: http://www.bloomberg.com/news/2012-06-29/u-s-consumer-spending-unchanged-in-may-weakest-in-six-months.html
______________________
From the WSJ.com:
Consumers Become More Pessimistic
U.S. consumers were more worried about the economy at the end of June than they were last month, according to data released Friday....
Consumers are benefiting from a decline in gasoline prices, but they are worried about weaker labor markets and financial-market volatility caused by uncertainty about the euro-zone debt crisis...
The sentiment drop clouds the outlook for the important consumer sector which accounts for the bulk of U.S. economic activity. Earlier Friday, the government reported household spending was flat in May....
------------------
Link: http://blogs.wsj.com/economics/2012/06/29/consumers-become-more-pessimistic/
Consumer spending stalled in May as stagnant wages and slackening employment held back the biggest part of the U.S. economy.
Purchases were little changed after a 0.1 percent rise the prior month that was smaller than initially reported, according to Commerce Department figures issued today in Washington....
---------------
Link: http://www.bloomberg.com/news/2012-06-29/u-s-consumer-spending-unchanged-in-may-weakest-in-six-months.html
______________________
From the WSJ.com:
Consumers Become More Pessimistic
U.S. consumers were more worried about the economy at the end of June than they were last month, according to data released Friday....
Consumers are benefiting from a decline in gasoline prices, but they are worried about weaker labor markets and financial-market volatility caused by uncertainty about the euro-zone debt crisis...
The sentiment drop clouds the outlook for the important consumer sector which accounts for the bulk of U.S. economic activity. Earlier Friday, the government reported household spending was flat in May....
------------------
Link: http://blogs.wsj.com/economics/2012/06/29/consumers-become-more-pessimistic/
Thursday, June 28, 2012
42 Straight Months of Stupidly Optimistic Official Predictions About Economic Recovery
From Reason.com:
Once-a-month quotes from the Obama administration and the media about how the economy will be booming any minute now:
Washington economic experts have been proclaiming that economic recovery is right around the corner since before they were sure the patient was sick.
For those of us who have been saying all along that none of the economic interventions since 2007 would revive the economy—
not the rescue of Bear Stearns and other financial institutions; not the Troubled Asset Relief Program; not the American Recovery and Reinvestment Act; not Quantitative Easings I, II, and III; not the Patient Protection and Affordable Care Act; not Cash for Clunkers or Solyndra or the bailouts of Chrysler and General Motors—
the cavalcade of wrongheaded, fantastical economic analysis coming out of official Washington and its media in recent years would be hilarious if it were not so infuriating.
The granddaddy of these economic inanities is Federal Reserve Bank chairman Ben Bernanke's March 2009 declaration that he could see economic "green shoots":
"I think as those green shoots begin to appear in different markets and as some confidence begins to come back, that will begin the positive dynamic that brings our economy back."
Copy and paste this link for all 42 quotes:
http://reason.com/archives/2012/06/27/economic-recovery-stupid-predictions
Once-a-month quotes from the Obama administration and the media about how the economy will be booming any minute now:
Washington economic experts have been proclaiming that economic recovery is right around the corner since before they were sure the patient was sick.
For those of us who have been saying all along that none of the economic interventions since 2007 would revive the economy—
not the rescue of Bear Stearns and other financial institutions; not the Troubled Asset Relief Program; not the American Recovery and Reinvestment Act; not Quantitative Easings I, II, and III; not the Patient Protection and Affordable Care Act; not Cash for Clunkers or Solyndra or the bailouts of Chrysler and General Motors—
the cavalcade of wrongheaded, fantastical economic analysis coming out of official Washington and its media in recent years would be hilarious if it were not so infuriating.
The granddaddy of these economic inanities is Federal Reserve Bank chairman Ben Bernanke's March 2009 declaration that he could see economic "green shoots":
"I think as those green shoots begin to appear in different markets and as some confidence begins to come back, that will begin the positive dynamic that brings our economy back."
Copy and paste this link for all 42 quotes:
http://reason.com/archives/2012/06/27/economic-recovery-stupid-predictions
Monday, June 25, 2012
Treasury Yields Could Hit 1% by Year End
From CNBC:
U.S. 10-year Treasury yields will hit 1 percent by the end of the year, as the so-called "fiscal cliff" has investors running to the safety of government debt, several market watchers told CNBC on Monday.
Gerard Minack, Asset Manager at Morgan Stanley, got the bearish ball rolling on CNBC Asia's "Squawk Box." He said investor anxiety about the tax increases and spending cuts which will happen at the start of next year, could be the catalyst for a U.S. recession and a fresh plunge in yields.
"We know exactly when the next U.S. recession is going to start. It'll start January 1, 2013," said Minack. "We see a very small window from ... (election day) to December 31 to sort that mess out. It's going to make last year's debt ceiling debate look like a walk in the park."
The debt-ceiling debate was a major risk event in the U.S. last year which triggered a plunge in stock markets....
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Link: http://www.cnbc.com/id/47942700
U.S. 10-year Treasury yields will hit 1 percent by the end of the year, as the so-called "fiscal cliff" has investors running to the safety of government debt, several market watchers told CNBC on Monday.
Gerard Minack, Asset Manager at Morgan Stanley, got the bearish ball rolling on CNBC Asia's "Squawk Box." He said investor anxiety about the tax increases and spending cuts which will happen at the start of next year, could be the catalyst for a U.S. recession and a fresh plunge in yields.
"We know exactly when the next U.S. recession is going to start. It'll start January 1, 2013," said Minack. "We see a very small window from ... (election day) to December 31 to sort that mess out. It's going to make last year's debt ceiling debate look like a walk in the park."
The debt-ceiling debate was a major risk event in the U.S. last year which triggered a plunge in stock markets....
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Link: http://www.cnbc.com/id/47942700
Saturday, June 23, 2012
For Middle-Aged Job Seekers, a Long Road Back
From the Wall Street Journal online:
...Much of the attention during the prolonged U.S. employment crisis has been on high rates of joblessness among young people.
Less noticed, but no less significant to many economists, has been the plight of the middle-aged.
More than 3.5 million Americans between the ages of 45 and 64 were unemployed as of May, 39% of them for a year or more—a rate of long-term unemployment that is unprecedented in modern U.S. history, and far higher than among younger workers. Millions more have quit looking for work or ... have taken part-time jobs to get by.
"I try not to think that this is the end and I'm just going to have to shut everything down," Mr. Daniel says. "My mind doesn't work that way. I think that if I can get up I'll find something. I've got to keep moving."
The two decades between 40 and 60 are meant to be workers' prime years for earning and building wealth, the period when they buy homes, send children to college and save for retirement.
Unemployment, especially for an extended period, can short-circuit that process. The effect can span generations, because middle-age workers are more likely to be supporting retired parents, sending their children to college or supporting adult children.
Part of what set the most recent recession apart from the milder downturns of the 1990s and early 2000s, argues Steven Davis, an economist at the University of Chicago, is that this recession didn't primarily strike young workers, or those with erratic work histories. It also hit productive, steady workers in the prime of their careers—people who are ordinarily the backbone of the economy.
In the 1990s, the unemployment rate among 45- to 64-year-olds peaked at 5.7%. In the brutal downturn of the 1980s, that jobless rate barely topped 7%. This time, it topped out at 8.2%....
----------------
Link: http://online.wsj.com/article/SB10001424052702303506404577448751320412974.html
...Much of the attention during the prolonged U.S. employment crisis has been on high rates of joblessness among young people.
Less noticed, but no less significant to many economists, has been the plight of the middle-aged.
More than 3.5 million Americans between the ages of 45 and 64 were unemployed as of May, 39% of them for a year or more—a rate of long-term unemployment that is unprecedented in modern U.S. history, and far higher than among younger workers. Millions more have quit looking for work or ... have taken part-time jobs to get by.
"I try not to think that this is the end and I'm just going to have to shut everything down," Mr. Daniel says. "My mind doesn't work that way. I think that if I can get up I'll find something. I've got to keep moving."
The two decades between 40 and 60 are meant to be workers' prime years for earning and building wealth, the period when they buy homes, send children to college and save for retirement.
Unemployment, especially for an extended period, can short-circuit that process. The effect can span generations, because middle-age workers are more likely to be supporting retired parents, sending their children to college or supporting adult children.
Part of what set the most recent recession apart from the milder downturns of the 1990s and early 2000s, argues Steven Davis, an economist at the University of Chicago, is that this recession didn't primarily strike young workers, or those with erratic work histories. It also hit productive, steady workers in the prime of their careers—people who are ordinarily the backbone of the economy.
In the 1990s, the unemployment rate among 45- to 64-year-olds peaked at 5.7%. In the brutal downturn of the 1980s, that jobless rate barely topped 7%. This time, it topped out at 8.2%....
----------------
Link: http://online.wsj.com/article/SB10001424052702303506404577448751320412974.html
Get used to your crummy shopping center
From MarketWatch.com:
If there’s a crummy shopping center in your neighborhood, it will probably only get crummier....
“How many times have you passed something in your own neighborhood and asked ‘why don’t they do something about that eyesore?’” Don Wood [chief executive officer of Federal Realty Investment Trust] said ... on Wednesday. “Why do things stay crummy year in and year out, and why will they stay crummy year in and year out?”
The nation is increasingly dotted with unsightly boxes that used to be Circuit City, Borders and Best Buy stores. Nobody has written a book called “101 Uses For A Used Blockbuster.” And there are only so many churches, tanning salons and “We Buy Gold” stores to fill these deteriorating spaces...
“Redevelopment is more likely to happen in places that don’t really need it,” said Wood. “In places that are great already.”
Nevertheless, almost every city official in the nation wants to turn their local retail blights into lovely mixed-use monoliths with fancy stores and restaurants on ground floors and pricey lofts and condos upstairs.
This simply isn’t going to work without a high density of upper-income households, Wood said, and in places where it will work, the development process takes years....
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Link: http://www.marketwatch.com/story/get-used-to-your-crummy-shopping-center-2012-06-22
If there’s a crummy shopping center in your neighborhood, it will probably only get crummier....
“How many times have you passed something in your own neighborhood and asked ‘why don’t they do something about that eyesore?’” Don Wood [chief executive officer of Federal Realty Investment Trust] said ... on Wednesday. “Why do things stay crummy year in and year out, and why will they stay crummy year in and year out?”
The nation is increasingly dotted with unsightly boxes that used to be Circuit City, Borders and Best Buy stores. Nobody has written a book called “101 Uses For A Used Blockbuster.” And there are only so many churches, tanning salons and “We Buy Gold” stores to fill these deteriorating spaces...
“Redevelopment is more likely to happen in places that don’t really need it,” said Wood. “In places that are great already.”
Nevertheless, almost every city official in the nation wants to turn their local retail blights into lovely mixed-use monoliths with fancy stores and restaurants on ground floors and pricey lofts and condos upstairs.
This simply isn’t going to work without a high density of upper-income households, Wood said, and in places where it will work, the development process takes years....
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Link: http://www.marketwatch.com/story/get-used-to-your-crummy-shopping-center-2012-06-22
Friday, June 22, 2012
Jobs Get Posted, Few Get Filled
From today's WSJ.com:
...Now the recovery appears to be faltering again, giving companies even less incentive to hire. That could spell further trouble for job growth in months ahead, especially if companies go back to slashing payrolls.
There are signs this already is happening. Private employers laid off 71,000 more workers in April than the month before. New claims for jobless benefits, which had been falling steadily since last fall, have trended upward in recent weeks.... the four-week moving average, which smooths out weekly volatility, reached its highest level last week since December.
Such a relatively modest uptick in layoffs wouldn't matter much if healthy companies were stepping up the pace at which they were adding jobs. But the recovery's repeated starts and stops have left even growing companies nervous about hiring too quickly—a caution that has only increased as Europe's debt crisis has raised the risk of a new global slowdown....
The collapse of the labor market in 2008 and 2009 stemmed from both a plunge in hiring and a surge in layoffs. Before the recession, private companies generally hired close to five million workers a month, a figure that dropped as low as 3.4 million in the depths of the recession. Monthly layoffs and firings, meanwhile, rose from about 1.7 million to a peak of nearly 2.5 million in early 2009....
There are signs of hope for the unemployed. Job openings have been steadily rising since the recession ended, though openings fell slightly in April. Historically, vacant positions have translated into increased hiring in the coming months.
So far, however, that hasn't happened. Many companies say they are filling positions slowly in part because they can't find the workers they need....
But many experts say that companies' complaints mask the real issue: They are in no hurry to hire when the economy is on such shaky ground. A recent study by Mr. Faberman and a Chicago Fed colleague found that a mismatch between workers' skills and employers' needs played a relatively small role in explaining the slow rate of hiring. Meanwhile, a separate measure of "recruiting intensity"—how hard companies are trying to fill jobs—shows that even as companies have posted more jobs, they haven't stepped up their efforts to fill them....
---------------------
Link: http://online.wsj.com/article/SB10001424052702304441404577480771351072052.html
...Now the recovery appears to be faltering again, giving companies even less incentive to hire. That could spell further trouble for job growth in months ahead, especially if companies go back to slashing payrolls.
There are signs this already is happening. Private employers laid off 71,000 more workers in April than the month before. New claims for jobless benefits, which had been falling steadily since last fall, have trended upward in recent weeks.... the four-week moving average, which smooths out weekly volatility, reached its highest level last week since December.
Such a relatively modest uptick in layoffs wouldn't matter much if healthy companies were stepping up the pace at which they were adding jobs. But the recovery's repeated starts and stops have left even growing companies nervous about hiring too quickly—a caution that has only increased as Europe's debt crisis has raised the risk of a new global slowdown....
The collapse of the labor market in 2008 and 2009 stemmed from both a plunge in hiring and a surge in layoffs. Before the recession, private companies generally hired close to five million workers a month, a figure that dropped as low as 3.4 million in the depths of the recession. Monthly layoffs and firings, meanwhile, rose from about 1.7 million to a peak of nearly 2.5 million in early 2009....
There are signs of hope for the unemployed. Job openings have been steadily rising since the recession ended, though openings fell slightly in April. Historically, vacant positions have translated into increased hiring in the coming months.
So far, however, that hasn't happened. Many companies say they are filling positions slowly in part because they can't find the workers they need....
But many experts say that companies' complaints mask the real issue: They are in no hurry to hire when the economy is on such shaky ground. A recent study by Mr. Faberman and a Chicago Fed colleague found that a mismatch between workers' skills and employers' needs played a relatively small role in explaining the slow rate of hiring. Meanwhile, a separate measure of "recruiting intensity"—how hard companies are trying to fill jobs—shows that even as companies have posted more jobs, they haven't stepped up their efforts to fill them....
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Link: http://online.wsj.com/article/SB10001424052702304441404577480771351072052.html
Thursday, June 21, 2012
Up to 95 Million Low-Skill Workers in Danger of Being Left Behind
From the WSJ.com:
Between 90 and 95 million low-skill workers around the world could be without jobs by 2020 because there simply won’t be enough positions available for them to apply for, according to a new report from the McKinsey Global Institute.
The report said both the private and public sector should make a “concerted” effort to alleviate this and that if little is done, those low-skill workers could be doomed to long-term joblessness.
“If we don’t up the efforts we make to increase the skills of the labor force and at the same time create jobs for low-skilled people at a much higher pace, we’re going to face a world where we’re going to have a long-term group of unemployed people with all of the social costs that that brings,” said McKinsey Global Institute director Richard Dobbs...
------------------
Link: http://blogs.wsj.com/economics/2012/06/21/up-to-95-million-low-skill-workers-in-danger-of-being-left-behind/?
Between 90 and 95 million low-skill workers around the world could be without jobs by 2020 because there simply won’t be enough positions available for them to apply for, according to a new report from the McKinsey Global Institute.
The report said both the private and public sector should make a “concerted” effort to alleviate this and that if little is done, those low-skill workers could be doomed to long-term joblessness.
“If we don’t up the efforts we make to increase the skills of the labor force and at the same time create jobs for low-skilled people at a much higher pace, we’re going to face a world where we’re going to have a long-term group of unemployed people with all of the social costs that that brings,” said McKinsey Global Institute director Richard Dobbs...
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Link: http://blogs.wsj.com/economics/2012/06/21/up-to-95-million-low-skill-workers-in-danger-of-being-left-behind/?
Wednesday, June 20, 2012
Fed sharply lowers forecast for 2012
From the Associated Press:
The Federal Reserve has sharply lowered its outlook for U.S. economic growth and thinks the unemployment rate won't fall much further this year.
...the Fed (now) says it expects the economy will grow no more than 2.4 percent this year. That's much slower than its forecast in April, when it predicted growth as fast as 2.9 percent. And it isn't much better than the 1.9 percent annual pace of growth in the first three months of 2012....
The number of people seeking unemployment benefits has risen about 5 percent in the past six weeks. And employers posted sharply fewer job openings in April compared to the previous month.
...consumers have pulled back on spending. Retail sales have fallen for the past two months....
Businesses also appear less confident about the economy... placing fewer orders at factories, which has slowed manufacturing output. A measure of companies' investment spending has dropped for two straight months.
------------
Link: http://hosted.ap.org/dynamic/stories/U/US_FED_FORECASTS?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2012-06-20-14-26-15
The Federal Reserve has sharply lowered its outlook for U.S. economic growth and thinks the unemployment rate won't fall much further this year.
...the Fed (now) says it expects the economy will grow no more than 2.4 percent this year. That's much slower than its forecast in April, when it predicted growth as fast as 2.9 percent. And it isn't much better than the 1.9 percent annual pace of growth in the first three months of 2012....
The number of people seeking unemployment benefits has risen about 5 percent in the past six weeks. And employers posted sharply fewer job openings in April compared to the previous month.
...consumers have pulled back on spending. Retail sales have fallen for the past two months....
Businesses also appear less confident about the economy... placing fewer orders at factories, which has slowed manufacturing output. A measure of companies' investment spending has dropped for two straight months.
------------
Link: http://hosted.ap.org/dynamic/stories/U/US_FED_FORECASTS?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2012-06-20-14-26-15
Monday, June 18, 2012
Sad summer in the city for job-hunting teens
From Reuters:
Job-hunting teenagers in cities across the United States face the third bleak summer in a row. They must compete for scarce slots in scaled-back government work programs and against adults forced into low-paying positions by the unemployment crisis.
The harsh summer job market for teens is compounded by this: The country has recovered only half the jobs lost from December 2007 through June 2009, the worst recession in 70 years.
Teens - often the last hired and first fired - suffered the toughest summers on the job front since World War II in 2010 and 2011. This summer, the outlook is chilly - again.
In April, the U.S. unemployment rate for 16- to 19-year-olds was 24.9 percent - and much higher in some major metropolitan areas....
---------------
Link: http://www.reuters.com/article/2012/06/18/us-usa-cities-teens-idUSBRE85F0B020120618?
Job-hunting teenagers in cities across the United States face the third bleak summer in a row. They must compete for scarce slots in scaled-back government work programs and against adults forced into low-paying positions by the unemployment crisis.
The harsh summer job market for teens is compounded by this: The country has recovered only half the jobs lost from December 2007 through June 2009, the worst recession in 70 years.
Teens - often the last hired and first fired - suffered the toughest summers on the job front since World War II in 2010 and 2011. This summer, the outlook is chilly - again.
In April, the U.S. unemployment rate for 16- to 19-year-olds was 24.9 percent - and much higher in some major metropolitan areas....
---------------
Link: http://www.reuters.com/article/2012/06/18/us-usa-cities-teens-idUSBRE85F0B020120618?
Saturday, June 16, 2012
Desperate Greeks Withdraw Money from Accounts
From Spiegel online:
Many Greeks are emptying their bank accounts out of fear that the country may return to the drachma. But most of the money is not going abroad. Instead, individuals are storing cash in safe deposit boxes or at home -- leading to an increase in burglaries....
---------------
Link: http://www.spiegel.de/international/europe/greeks-emptying-bank-accounts-a-839160.html
Many Greeks are emptying their bank accounts out of fear that the country may return to the drachma. But most of the money is not going abroad. Instead, individuals are storing cash in safe deposit boxes or at home -- leading to an increase in burglaries....
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Link: http://www.spiegel.de/international/europe/greeks-emptying-bank-accounts-a-839160.html
Thursday, June 14, 2012
U.S. weekly jobless claims: 386,000; Applications for unemployment rise 5th time in 6 weeks
From MarketWatch.com:
The number of people who applied for jobless benefits last week rose again ... in another sign that the U.S. labor market has cooled off.
Jobless claims climbed by 6,000 to a seasonally adjusted 386,000 in the week ended June 9, the Labor Department said. Claims from two weeks ago were revised up to 380,000 from an original reading of 377,000, based on more complete data collected at the state level....
The weaker pace of job creation has been reflected in the monthly employment report, a more accurate calculation of whether companies are hiring. The U.S. unemployment rate rose in May to 8.2%, its first increase in nearly a year....
---------
Link: http://www.marketwatch.com/story/us-weekly-jobless-claims-climb-to-386000-2012-06-14
The number of people who applied for jobless benefits last week rose again ... in another sign that the U.S. labor market has cooled off.
Jobless claims climbed by 6,000 to a seasonally adjusted 386,000 in the week ended June 9, the Labor Department said. Claims from two weeks ago were revised up to 380,000 from an original reading of 377,000, based on more complete data collected at the state level....
The weaker pace of job creation has been reflected in the monthly employment report, a more accurate calculation of whether companies are hiring. The U.S. unemployment rate rose in May to 8.2%, its first increase in nearly a year....
---------
Link: http://www.marketwatch.com/story/us-weekly-jobless-claims-climb-to-386000-2012-06-14
Obama's United Auto Workers Bailout
From the WSJ.com:
If the administration treated the UAW in the manner required by bankruptcy law, it could have saved U.S. taxpayers $26.5 billion....
The preferential treatment given to the United Auto Workers accounts for the American taxpayers' entire losses from the bailout. Had the UAW received normal treatment in standard bankruptcy proceedings, the Treasury would have recouped its entire investment. Three irregularities in the bankruptcy case resulted in a windfall to the UAW.
--------------------
Link: http://online.wsj.com/article/SB10001424052702303768104577462650268680454.html
If the administration treated the UAW in the manner required by bankruptcy law, it could have saved U.S. taxpayers $26.5 billion....
The preferential treatment given to the United Auto Workers accounts for the American taxpayers' entire losses from the bailout. Had the UAW received normal treatment in standard bankruptcy proceedings, the Treasury would have recouped its entire investment. Three irregularities in the bankruptcy case resulted in a windfall to the UAW.
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Link: http://online.wsj.com/article/SB10001424052702303768104577462650268680454.html
Foreclosures up for first time in 27 months
From Reuters:
Foreclosure starts rose year-over-year in May for the first time in more than two years - though they fell on a month-to-month basis - as banks resumed dealing with distressed properties after a mortgage abuse settlement earlier this year, data firm RealtyTrac said on Thursday.
The $25 billion settlement between major banks and states, formally approved in April, had been expected to jump-start foreclosure proceedings that were previously stalled by uncertainty about the liability of banks....
By moving houses out of the so-called "shadow inventory" and onto the market, the increase in foreclosures could be a drag on the fragile U.S. housing recovery.
-----------
Link: http://www.reuters.com/article/2012/06/14/us-usa-housing-realtytrac-idUSBRE85D05P20120614
Foreclosure starts rose year-over-year in May for the first time in more than two years - though they fell on a month-to-month basis - as banks resumed dealing with distressed properties after a mortgage abuse settlement earlier this year, data firm RealtyTrac said on Thursday.
The $25 billion settlement between major banks and states, formally approved in April, had been expected to jump-start foreclosure proceedings that were previously stalled by uncertainty about the liability of banks....
By moving houses out of the so-called "shadow inventory" and onto the market, the increase in foreclosures could be a drag on the fragile U.S. housing recovery.
-----------
Link: http://www.reuters.com/article/2012/06/14/us-usa-housing-realtytrac-idUSBRE85D05P20120614
Nokia to cut 10,000 jobs after weak 2nd quarter
From Reuters.com:
Loss-making Finnish cellphone maker Nokia plans to cut another 10,000 jobs globally in its biggest revamp in recent history, while it warned the second-quarter loss from its cellphone business would be larger than expected.
The cuts, which include the closure of Nokia's only plant in Finland, bring total planned job cuts at the group since ... 2010 to more than 40,000.
-----------
Link: http://www.reuters.com/article/2012/06/14/us-nokia-restructuring-jobs-idUSBRE85D09K20120614
Loss-making Finnish cellphone maker Nokia plans to cut another 10,000 jobs globally in its biggest revamp in recent history, while it warned the second-quarter loss from its cellphone business would be larger than expected.
The cuts, which include the closure of Nokia's only plant in Finland, bring total planned job cuts at the group since ... 2010 to more than 40,000.
-----------
Link: http://www.reuters.com/article/2012/06/14/us-nokia-restructuring-jobs-idUSBRE85D09K20120614
Tuesday, June 12, 2012
The Fed is Killing S&Ls, and Why You Should Care
From CNBC:
Savings and loans ... finally may have met their maker, and that could be a bad thing for consumers.
Last week's Federal Reserve announcement that S&Ls would have to increase their capital requirements could doom an industry that has been able to thrive largely on its ability to lend large amounts of money, primarily through mortgages, while keeping relatively low capital.
The changes are part of the new regulatory landscape that has come about in response to the 2008 financial crisis.
While the good news is that mega-failures like Washington Mutual, which was sold to JPMorgan Chase during the crisis, are taken out of play, the bad news is that consumers may feel the pain of mortgage rates that start rising off record lows....
"Bank mortgage lenders will need to carry higher capital against mortgage loans, demanding higher returns," KBW continued. "Higher capital requirements will not support the revitalization of the thrift industry, in our opinion, and as a result the industry will continue to fade away."
The result, KBW says, is that a reduction in competition will allow institutions in the mortgage business to charge higher rates to consumers....
KBW asserts this could open up a big gap in the mortgage business, reducing competition and providing opportunities for investors. Mortgage-based real estate investment trusts could benefit in particular, KBW said.
But for consumers, the likely consequence will be higher mortgage costs as there is less competition in the industry, thus allowing room to raise rates, particularly on adjustable-rate loans.
"The financial metrics that allowed thrifts to be profitable — high loan-to-deposit ratios, low expenses, and high leverage — are no longer possible," KBW said. "The loss of the thrift industry has broad implications for mortgage finance in the future."
---------------
Link: http://www.cnbc.com//id/47766439
Savings and loans ... finally may have met their maker, and that could be a bad thing for consumers.
Last week's Federal Reserve announcement that S&Ls would have to increase their capital requirements could doom an industry that has been able to thrive largely on its ability to lend large amounts of money, primarily through mortgages, while keeping relatively low capital.
The changes are part of the new regulatory landscape that has come about in response to the 2008 financial crisis.
While the good news is that mega-failures like Washington Mutual, which was sold to JPMorgan Chase during the crisis, are taken out of play, the bad news is that consumers may feel the pain of mortgage rates that start rising off record lows....
"Bank mortgage lenders will need to carry higher capital against mortgage loans, demanding higher returns," KBW continued. "Higher capital requirements will not support the revitalization of the thrift industry, in our opinion, and as a result the industry will continue to fade away."
The result, KBW says, is that a reduction in competition will allow institutions in the mortgage business to charge higher rates to consumers....
KBW asserts this could open up a big gap in the mortgage business, reducing competition and providing opportunities for investors. Mortgage-based real estate investment trusts could benefit in particular, KBW said.
But for consumers, the likely consequence will be higher mortgage costs as there is less competition in the industry, thus allowing room to raise rates, particularly on adjustable-rate loans.
"The financial metrics that allowed thrifts to be profitable — high loan-to-deposit ratios, low expenses, and high leverage — are no longer possible," KBW said. "The loss of the thrift industry has broad implications for mortgage finance in the future."
---------------
Link: http://www.cnbc.com//id/47766439
Monday, June 11, 2012
Who didn't know this? Family Net Worth fell 40% between 2007-2010
From the WSJ.com:
Families’ median net worth fell almost 40% between 2007 and 2010, down to levels last seen in 1992, the Federal Reserve said in a report Monday.
As the U.S. economy roiled for three tumultuous years, families saw corresponding drops in their income and net wealth, according to the Fed’s Survey of Consumer Finances, a detailed snapshot of household finances conducted every three years.
Median net worth of families fell to $77,300 in 2010 from $126,400 in 2007, a drop of 38.8%–the largest drop since the current survey began in 1989, Fed economists said Monday. Net worth represents the difference between a family’s gross assets and its liabilities. Average net worth fell 14.7% during the same three-year period.
Much of that drop was driven by the housing market’s collapse. Families whose assets were tied up more in housing saw their net worth decline by more. Among families that owned homes, their median home equity declined to $75,000 in 2010, down from $110,000 three years earlier.
Between 2007 and 2010, incomes also dropped sharply. In 2010, median family income fell to $45,800 from $49,600 in 2007, a drop of 7.7%. Average income fell 11.1% to $78,500, down from $88,300. That was a departure from earlier in the decade. During the preceding three years, median income had been constant, while the mean had climbed 8.5%.
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Link: http://blogs.wsj.com/economics/2012/06/11/family-net-worth-fell-almost-40-between-2007-2010/
Families’ median net worth fell almost 40% between 2007 and 2010, down to levels last seen in 1992, the Federal Reserve said in a report Monday.
As the U.S. economy roiled for three tumultuous years, families saw corresponding drops in their income and net wealth, according to the Fed’s Survey of Consumer Finances, a detailed snapshot of household finances conducted every three years.
Median net worth of families fell to $77,300 in 2010 from $126,400 in 2007, a drop of 38.8%–the largest drop since the current survey began in 1989, Fed economists said Monday. Net worth represents the difference between a family’s gross assets and its liabilities. Average net worth fell 14.7% during the same three-year period.
Much of that drop was driven by the housing market’s collapse. Families whose assets were tied up more in housing saw their net worth decline by more. Among families that owned homes, their median home equity declined to $75,000 in 2010, down from $110,000 three years earlier.
Between 2007 and 2010, incomes also dropped sharply. In 2010, median family income fell to $45,800 from $49,600 in 2007, a drop of 7.7%. Average income fell 11.1% to $78,500, down from $88,300. That was a departure from earlier in the decade. During the preceding three years, median income had been constant, while the mean had climbed 8.5%.
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Link: http://blogs.wsj.com/economics/2012/06/11/family-net-worth-fell-almost-40-between-2007-2010/
Economy takes toll on older workers
From the Detroit News online:
The Great Recession of 2007-09 didn't spare anyone, but no group is more vulnerable to the downturn's lingering effects than older workers who've lost their jobs.
They have fewer years than younger people to shore up tattered savings plans, and they're finding it much harder to land new jobs.
Nationwide, more than a third of job-seekers 55 and older have been out of work for more than a year. The majority have been out of work for six months or longer, according to the U.S. GAO....
According to the GAO, the proportion of older U.S. job-seekers out of work for six months or longer has more than doubled, to 55 percent in five years. In the U.S. manufacturing sector, 63 percent of older unemployed people have been looking for work for 27 months or longer...
--------------------
Link: http://www.detroitnews.com/article/20120611/BIZ01/206110348/Economy-takes-toll-older-workers
(We highlighted similar stories on May 18 and May 30, links to the right.)
The Great Recession of 2007-09 didn't spare anyone, but no group is more vulnerable to the downturn's lingering effects than older workers who've lost their jobs.
They have fewer years than younger people to shore up tattered savings plans, and they're finding it much harder to land new jobs.
Nationwide, more than a third of job-seekers 55 and older have been out of work for more than a year. The majority have been out of work for six months or longer, according to the U.S. GAO....
According to the GAO, the proportion of older U.S. job-seekers out of work for six months or longer has more than doubled, to 55 percent in five years. In the U.S. manufacturing sector, 63 percent of older unemployed people have been looking for work for 27 months or longer...
--------------------
Link: http://www.detroitnews.com/article/20120611/BIZ01/206110348/Economy-takes-toll-older-workers
(We highlighted similar stories on May 18 and May 30, links to the right.)
Saturday, June 9, 2012
Forget 'Fear Factor': Banks, Market Set to Soar
Comments from bank analyst Dick Bove on CNBC:
Bank stocks are offering compelling value—while the broader market is poised for substantial gains ahead, said analyst Dick Bove, who believes investors are too caught up in the "fear factor...."
That pesky euro zone debt crisis? It needs only to be removed from investors' consciousness for the market to get roaring again, he said.
"The fundamentals of the industry have never been better. It is only the unknown, unquantifiable, contagion risk which is keeping these stocks down," Bove said in a nearly euphoric note to clients. "Take this issue away and investors may realize that banks are massively oversold relative to the power of their balance sheets and their earnings potential...."
Trouble in Greece and elsewhere, Bove has long contended, will only strengthen American banks, which will get the business that European institutions lose....
Bove, in fact, says the U.S. will thrive in spite of itself and its many policy missteps.
"The United States may be in a 1969 to 1982 economy at present; it may be doing everything it can to pull down a very successful system," he said. "But once the European economies are stabilized, animal spirits will re-emerge in this country and the funds necessary for growth will pour out from every corner."
----------------
Link: http://www.cnbc.com/id/47723931
Bank stocks are offering compelling value—while the broader market is poised for substantial gains ahead, said analyst Dick Bove, who believes investors are too caught up in the "fear factor...."
That pesky euro zone debt crisis? It needs only to be removed from investors' consciousness for the market to get roaring again, he said.
"The fundamentals of the industry have never been better. It is only the unknown, unquantifiable, contagion risk which is keeping these stocks down," Bove said in a nearly euphoric note to clients. "Take this issue away and investors may realize that banks are massively oversold relative to the power of their balance sheets and their earnings potential...."
Trouble in Greece and elsewhere, Bove has long contended, will only strengthen American banks, which will get the business that European institutions lose....
Bove, in fact, says the U.S. will thrive in spite of itself and its many policy missteps.
"The United States may be in a 1969 to 1982 economy at present; it may be doing everything it can to pull down a very successful system," he said. "But once the European economies are stabilized, animal spirits will re-emerge in this country and the funds necessary for growth will pour out from every corner."
----------------
Link: http://www.cnbc.com/id/47723931
Gallup: U.S. Investors See Trade-Offs With Low Interest Rates
From Gallup.com:
Nearly two in three investors (63%) say they think policymakers should take into account the harm low interest rates do to older Americans when they seek to keep interest rates low for an extended period of time. This includes 61% of nonretirees and 68% of retirees. Low rates tend to be more of an issue for retirees, given their greater dependence on low-risk investments for their retirement income....
More than three in 10 investors say they fear outliving their retirement savings (42%), that they expect to live or are living less comfortably in retirement (38%), that they are forced to delay their retirement (33%), or are saving less for retirement (31%). The only non-retirement concern above the 30% level is giving less money to charity (35%).
------------------
Link: http://www.gallup.com/poll/155096/Investors-Trade-Offs-Low-Interest-Rates.aspx
Nearly two in three investors (63%) say they think policymakers should take into account the harm low interest rates do to older Americans when they seek to keep interest rates low for an extended period of time. This includes 61% of nonretirees and 68% of retirees. Low rates tend to be more of an issue for retirees, given their greater dependence on low-risk investments for their retirement income....
More than three in 10 investors say they fear outliving their retirement savings (42%), that they expect to live or are living less comfortably in retirement (38%), that they are forced to delay their retirement (33%), or are saving less for retirement (31%). The only non-retirement concern above the 30% level is giving less money to charity (35%).
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Link: http://www.gallup.com/poll/155096/Investors-Trade-Offs-Low-Interest-Rates.aspx
Wednesday, June 6, 2012
Remember Those Oil Speculators?
From ThinkMarkets, a blog from NYU:
Less than two months ago, President Obama claimed that speculators were ... artificially driving up the price of oil—a notion that some politician or pundit brings up every time gasoline looks expensive. The idea fades when the market changes direction. Thus in recent weeks, economies worldwide took a turn for the worse and the price of oil came down a notch....
(Yesterday's national average gas price per gallon: $3.565; see AAA's www.fuelgagereport.aaa.com)
“We can’t afford a situation where speculators artificially manipulate markets by buying up oil, creating the perception of a shortage, and driving prices higher–only to flip the oil for a quick profit,” the President said at that time. The extra budget he requested was for the Commodity Futures Trading Commission to monitor the market.
How would a regulator know that someone bought oil futures to create “the perception of a shortage” rather than simply to benefit from an expected price movement? The action of buying is the same whether you expect the price to go up or you want to push it up. There is no way to distinguish one motive from the other by watching the trades.
The fact is, this does not matter. The point of the regulatory initiative was to send the public a message that something is being done. That the policy is incoherent is beside the point. The purpose was for Mr. Obama to make a political statement; the effect on markets is likely minimal anyway....
The price of gasoline is only one example of the broader problem of political-regulatory ratcheting up. With oil, the political issue is its being expensive, so traders get the blame for driving the price higher, not lower—
as the price heads down, we have not been told that speculators are manipulating the market downward.
By contrast in stock markets traders are often blamed for falling prices. Thus in the financial crisis, banks complained of short sellers driving down their share price. Thereupon the US Securities and Exchange Commission banned the short selling of financial stocks.
So depending on what the political agenda of the day is, speculators can be taken to task for either a high price or a low price.
Either way, the political mood tends to be ephemeral but the regulation it helps create stays on and we all bear the costs.
What we need is a waiting period for all regulatory proposals—say five years. Each proposal should be considered only after its waiting period is up, if it does not sound silly by then.
-----------------
Link: http://thinkmarkets.wordpress.com/2012/06/05/remember-those-oil-speculators/
Less than two months ago, President Obama claimed that speculators were ... artificially driving up the price of oil—a notion that some politician or pundit brings up every time gasoline looks expensive. The idea fades when the market changes direction. Thus in recent weeks, economies worldwide took a turn for the worse and the price of oil came down a notch....
(Yesterday's national average gas price per gallon: $3.565; see AAA's www.fuelgagereport.aaa.com)
“We can’t afford a situation where speculators artificially manipulate markets by buying up oil, creating the perception of a shortage, and driving prices higher–only to flip the oil for a quick profit,” the President said at that time. The extra budget he requested was for the Commodity Futures Trading Commission to monitor the market.
How would a regulator know that someone bought oil futures to create “the perception of a shortage” rather than simply to benefit from an expected price movement? The action of buying is the same whether you expect the price to go up or you want to push it up. There is no way to distinguish one motive from the other by watching the trades.
The fact is, this does not matter. The point of the regulatory initiative was to send the public a message that something is being done. That the policy is incoherent is beside the point. The purpose was for Mr. Obama to make a political statement; the effect on markets is likely minimal anyway....
The price of gasoline is only one example of the broader problem of political-regulatory ratcheting up. With oil, the political issue is its being expensive, so traders get the blame for driving the price higher, not lower—
as the price heads down, we have not been told that speculators are manipulating the market downward.
By contrast in stock markets traders are often blamed for falling prices. Thus in the financial crisis, banks complained of short sellers driving down their share price. Thereupon the US Securities and Exchange Commission banned the short selling of financial stocks.
So depending on what the political agenda of the day is, speculators can be taken to task for either a high price or a low price.
Either way, the political mood tends to be ephemeral but the regulation it helps create stays on and we all bear the costs.
What we need is a waiting period for all regulatory proposals—say five years. Each proposal should be considered only after its waiting period is up, if it does not sound silly by then.
-----------------
Link: http://thinkmarkets.wordpress.com/2012/06/05/remember-those-oil-speculators/
Tuesday, June 5, 2012
New Hires Getting Left Behind on Pay
From the Real Time Economics blog at WSJ.com:
The weak pace of hiring in May cast a big cloud on the future of consumer spending. But the outlook dims more when you consider even those fortunate to get jobs are generally earning less than the average worker.
Economists ... found that new-hire pay is starting to lag behind that of embedded workers...
It also suggests that, with so many job-seekers in the labor markets, businesses are able to offer lower starting salaries for higher-skilled, professional jobs.
Slower income growth will limit future gains in consumer spending, which remains the main engine of growth in the U.S. economy....
The pay gap is another example of how the Great Recession has split the consumer sector. Even if they are now back at work, people who lost their jobs over the past few years have fallen further behind workers who stayed employed.
Worse still, in the long run, few of the left-behind workers make up the lost ground, putting consumer spending, home-buying and tax collections at risk. Each percentage-based pay raise will give them a smaller dollar amount than the average worker. So, not only do the new workers not catch up, the pay gap can widen over time.
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Link: http://blogs.wsj.com/economics/2012/06/05/new-hires-getting-left-behind-on-pay/
The weak pace of hiring in May cast a big cloud on the future of consumer spending. But the outlook dims more when you consider even those fortunate to get jobs are generally earning less than the average worker.
Economists ... found that new-hire pay is starting to lag behind that of embedded workers...
It also suggests that, with so many job-seekers in the labor markets, businesses are able to offer lower starting salaries for higher-skilled, professional jobs.
Slower income growth will limit future gains in consumer spending, which remains the main engine of growth in the U.S. economy....
The pay gap is another example of how the Great Recession has split the consumer sector. Even if they are now back at work, people who lost their jobs over the past few years have fallen further behind workers who stayed employed.
Worse still, in the long run, few of the left-behind workers make up the lost ground, putting consumer spending, home-buying and tax collections at risk. Each percentage-based pay raise will give them a smaller dollar amount than the average worker. So, not only do the new workers not catch up, the pay gap can widen over time.
----------------
Link: http://blogs.wsj.com/economics/2012/06/05/new-hires-getting-left-behind-on-pay/
Monday, June 4, 2012
Ultra-Wealthy Are Shunning Stocks
From Robert Frank writing at CNBC.com:
Wealthy investors are shying away from U.S. stocks and putting more money into private companies, real estate and commodities, according to a study.
The Institute for Private Investors ... polled families with at least $30 million in investable assets. IPI found that the wealthy are shifting away from U.S. stocks in the search of safety and yield....
According to IPI, the moves are part of a broader shift, with the wealthy looking for hard assets rather than more speculative financial investments. “We are seeing a general movement toward owning real assets, and backing companies with real businesses, including startups..."
Should everyday investors follow the lead of the $30-million-plus crowd?
Not necessarily. Buying a private company, for instance, isn’t in the cards for most investors saving for retirement. Acquiring a business often requires millions of dollars in capital....
What’s more, wealthy investors haven’t always been right when it comes to the stock market. Some studies show they were late getting out of the market pre-2008, and late coming back in before the rebound in 2009.
But there is one reason we should care about the investing patterns of the rich: they set the tone for the broader market. With the one percent owning more than 50 percent of the individually held stocks in the U.S., their lack of confidence in stocks can only make it harder for the market to move higher.
-------------
Link: http://www.cnbc.com/id/47675207
Wealthy investors are shying away from U.S. stocks and putting more money into private companies, real estate and commodities, according to a study.
The Institute for Private Investors ... polled families with at least $30 million in investable assets. IPI found that the wealthy are shifting away from U.S. stocks in the search of safety and yield....
According to IPI, the moves are part of a broader shift, with the wealthy looking for hard assets rather than more speculative financial investments. “We are seeing a general movement toward owning real assets, and backing companies with real businesses, including startups..."
Should everyday investors follow the lead of the $30-million-plus crowd?
Not necessarily. Buying a private company, for instance, isn’t in the cards for most investors saving for retirement. Acquiring a business often requires millions of dollars in capital....
What’s more, wealthy investors haven’t always been right when it comes to the stock market. Some studies show they were late getting out of the market pre-2008, and late coming back in before the rebound in 2009.
But there is one reason we should care about the investing patterns of the rich: they set the tone for the broader market. With the one percent owning more than 50 percent of the individually held stocks in the U.S., their lack of confidence in stocks can only make it harder for the market to move higher.
-------------
Link: http://www.cnbc.com/id/47675207
Saturday, June 2, 2012
Most Unemployed Have College Experience
From the WSJ.com:
52%: Percent of the unemployed who have spent at least some time in college.
In a significant shift in the labor market, the majority of people who are unemployed have some college education, reversing the situation that prevailed for decades. In 1992, only 37% of the unemployed had some college experience...
Since it is more likely that a younger worker will have some college experience, older workers retiring or dropping out of the labor force exacerbate the trend. The share of the workforce with a degree has been rising for decades, while the % with a high-school diploma or less has been falling.
For the first time in 2003, the average person in the labor force was more likely to have a bachelor’s degree or higher than to be just a high-school graduate...
--------
Link: http://blogs.wsj.com/economics/2012/06/02/number-of-the-week-most-unemployed-have-college-experience/
52%: Percent of the unemployed who have spent at least some time in college.
In a significant shift in the labor market, the majority of people who are unemployed have some college education, reversing the situation that prevailed for decades. In 1992, only 37% of the unemployed had some college experience...
Since it is more likely that a younger worker will have some college experience, older workers retiring or dropping out of the labor force exacerbate the trend. The share of the workforce with a degree has been rising for decades, while the % with a high-school diploma or less has been falling.
For the first time in 2003, the average person in the labor force was more likely to have a bachelor’s degree or higher than to be just a high-school graduate...
--------
Link: http://blogs.wsj.com/economics/2012/06/02/number-of-the-week-most-unemployed-have-college-experience/
Friday, June 1, 2012
Mediocre Job Growth Coming From Wrong Places
From the Real Time Economics blog at the WSJ.com:
Job growth was weak in May. Just as bad: the type of jobs the economy did manage to add....
... the job growth is coming entirely from workers getting part-time jobs. The number of Americans working full-time fell by 266,000 in May, erasing all the gains of the past three months.
The total employment figure only rose because 618,000 more people got part-time jobs. Many of those people would rather be working full-time: The number of people classified as “part time for economic reasons” — meaning they’re working part-time because they can’t find a full-time job — rose by 245,000 to 8.1 million.
---------------------
Link: http://blogs.wsj.com/economics/2012/06/01/even-mediocre-job-growth-coming-from-wrong-places/?mod=WSJBlog&mod=marketbeat
Job growth was weak in May. Just as bad: the type of jobs the economy did manage to add....
... the job growth is coming entirely from workers getting part-time jobs. The number of Americans working full-time fell by 266,000 in May, erasing all the gains of the past three months.
The total employment figure only rose because 618,000 more people got part-time jobs. Many of those people would rather be working full-time: The number of people classified as “part time for economic reasons” — meaning they’re working part-time because they can’t find a full-time job — rose by 245,000 to 8.1 million.
---------------------
Link: http://blogs.wsj.com/economics/2012/06/01/even-mediocre-job-growth-coming-from-wrong-places/?mod=WSJBlog&mod=marketbeat
The War over Class War
From the Economist.com:
Economic misunderstanding, not overblown rhetoric, is the real problem with the president
... the election will revolve not around fairness, but competence. Mr Romney is fond of saying that Mr Obama has no idea how the economy works and how jobs are created. The way the Obama campaign talks about Bain Capital suggests that his criticism is correct.
Mr Obama, as noted above, likes to insinuate that there is a conflict between pursuing profits and creating jobs.
In the long run, however, in a competitive economy, that is nonsense.
Only profitable firms can sustain any jobs, and the more profitable they are, the more money they have to invest in new ventures with new workers.
Mr Obama is guilty not of rhetorical excess but of economic muddle.
That is far more worrying.
----------------
Link: http://www.economist.com/node/21556243
Economic misunderstanding, not overblown rhetoric, is the real problem with the president
... the election will revolve not around fairness, but competence. Mr Romney is fond of saying that Mr Obama has no idea how the economy works and how jobs are created. The way the Obama campaign talks about Bain Capital suggests that his criticism is correct.
Mr Obama, as noted above, likes to insinuate that there is a conflict between pursuing profits and creating jobs.
In the long run, however, in a competitive economy, that is nonsense.
Only profitable firms can sustain any jobs, and the more profitable they are, the more money they have to invest in new ventures with new workers.
Mr Obama is guilty not of rhetorical excess but of economic muddle.
That is far more worrying.
----------------
Link: http://www.economist.com/node/21556243
'Official' Jobless U3 Rate, 8.2%; U6 Rate, 14.8%; Jobless in Europe 11%
----------------
From the NYTimes.com:
The United States economy gained a net 69,000 jobs in May ...
a dismal showing that reflected mounting fears of a global slowdown.
The unemployment rate rose to 8.2 percent from 8.1 percent in April.
It was the third mediocre performance by the job market in three months, after a period of solid growth over the winter that raised hopes that the recovery was gaining momentum.
(Link: http://www.nytimes.com/2012/06/02/business/economy/us-added-69000-jobs-in-may-jobless-rate-at-8-2.html)
----------------
From CNBC.com:
Labor force participation remains near 30-year lows though incrementally better than last month, rising to 63.8 percent.
The unemployment rate that counts discouraged workers rose as well, swelling to 14.8 percent form 14.5 percent in April.
(Link: http://www.cnbc.com/id/47643788)
---------------
From the Bureau of Labor Statistics press release:
Among the major worker groups, the unemployment rates for adult men (7.8 percent) and Hispanics (11.0 percent) edged up in May, while the rates for adult women (7.4 percent), teenagers (24.6 percent), whites (7.4 percent), and blacks (13.6 percent) showed little or no change.
(Link: http://www.bls.gov/news.release/empsit.nr0.htm)
------------------
From Bloomberg.com:
Euro-Area Unemployment Reaches Record 11%, Led by Spain
Euro-area unemployment reached the highest on record as a deepening economic slump and budget cuts prompted companies from Spain to Italy to reduce their workforces.
The jobless rate in the 17-nation euro zone was at 11 percent in April and March, the European Union’s statistics office in Luxembourg said today. That’s the highest since the data series started in 1995. The March figure was revised higher to 11 percent from 10.9 percent estimated earlier.
From the NYTimes.com:
The United States economy gained a net 69,000 jobs in May ...
a dismal showing that reflected mounting fears of a global slowdown.
The unemployment rate rose to 8.2 percent from 8.1 percent in April.
It was the third mediocre performance by the job market in three months, after a period of solid growth over the winter that raised hopes that the recovery was gaining momentum.
(Link: http://www.nytimes.com/2012/06/02/business/economy/us-added-69000-jobs-in-may-jobless-rate-at-8-2.html)
----------------
From CNBC.com:
Labor force participation remains near 30-year lows though incrementally better than last month, rising to 63.8 percent.
The unemployment rate that counts discouraged workers rose as well, swelling to 14.8 percent form 14.5 percent in April.
(Link: http://www.cnbc.com/id/47643788)
---------------
From the Bureau of Labor Statistics press release:
Among the major worker groups, the unemployment rates for adult men (7.8 percent) and Hispanics (11.0 percent) edged up in May, while the rates for adult women (7.4 percent), teenagers (24.6 percent), whites (7.4 percent), and blacks (13.6 percent) showed little or no change.
(Link: http://www.bls.gov/news.release/empsit.nr0.htm)
------------------
From Bloomberg.com:
Euro-Area Unemployment Reaches Record 11%, Led by Spain
Euro-area unemployment reached the highest on record as a deepening economic slump and budget cuts prompted companies from Spain to Italy to reduce their workforces.
The jobless rate in the 17-nation euro zone was at 11 percent in April and March, the European Union’s statistics office in Luxembourg said today. That’s the highest since the data series started in 1995. The March figure was revised higher to 11 percent from 10.9 percent estimated earlier.
Thursday, May 31, 2012
Job Creation Light, Claims Up, Economy Grows Just 1.9%
From CNBC.com:
Private employers created 133,000 jobs in May, payrolls processor ADP said. That was below economists' expectations for 148,000 jobs.
The report comes ahead of Friday's closely watched employment report for May, which is expected to show that nonfarm payrolls increased 150,000, up from a paltry 115,000 in April.....
Employers announced 61,887 jobs cuts this month, a surge of 52.6 percent from 40,559 in April, according to Challenger, Gray & Christmas Inc....
Separately, gross domestic product increased at a 1.9 percent annual rate in the first quarter, down from the 2.2 percent the Commerce Department had estimated last month. The economy grew at a 3.0 percent rate in the fourth quarter.
The report also showed that after-tax corporate profits dropped for the first time in three years last quarter....
----------------
Link: http://www.cnbc.com/id/47627947
Private employers created 133,000 jobs in May, payrolls processor ADP said. That was below economists' expectations for 148,000 jobs.
The report comes ahead of Friday's closely watched employment report for May, which is expected to show that nonfarm payrolls increased 150,000, up from a paltry 115,000 in April.....
Employers announced 61,887 jobs cuts this month, a surge of 52.6 percent from 40,559 in April, according to Challenger, Gray & Christmas Inc....
Separately, gross domestic product increased at a 1.9 percent annual rate in the first quarter, down from the 2.2 percent the Commerce Department had estimated last month. The economy grew at a 3.0 percent rate in the fourth quarter.
The report also showed that after-tax corporate profits dropped for the first time in three years last quarter....
----------------
Link: http://www.cnbc.com/id/47627947
Beware Bank Runs: money flies out of Spain
From Reuters:
Spaniards alarmed by the dire state of their banks are squirreling money abroad at the fastest rate since records began, figures showed on Thursday, and the credit ratings of eight regions were cut.
Spain is the next country in the firing line of the euro zone's debt crisis, with spendthrift regions and shaky banks threatening to blow a hole in state finances and pushing funding costs towards levels that signal the need for a bailout....
Bank of Spain data showed a net 66.2 billion euros ($82.0 billion) was sent abroad last month, the most since records began in 1990. The figure compares to a 5.4 billion net entry of funds during the same month one year ago.
Spaniards are worried about the health of their banks, hit by their exposure to a 2008 property crash, and have been sending money to deposit accounts in stronger economies of northern Europe....
-------------
Link: http://www.reuters.com/article/2012/05/31/us-spain-economy-idUSBRE84U08N20120531
Spaniards alarmed by the dire state of their banks are squirreling money abroad at the fastest rate since records began, figures showed on Thursday, and the credit ratings of eight regions were cut.
Spain is the next country in the firing line of the euro zone's debt crisis, with spendthrift regions and shaky banks threatening to blow a hole in state finances and pushing funding costs towards levels that signal the need for a bailout....
Bank of Spain data showed a net 66.2 billion euros ($82.0 billion) was sent abroad last month, the most since records began in 1990. The figure compares to a 5.4 billion net entry of funds during the same month one year ago.
Spaniards are worried about the health of their banks, hit by their exposure to a 2008 property crash, and have been sending money to deposit accounts in stronger economies of northern Europe....
-------------
Link: http://www.reuters.com/article/2012/05/31/us-spain-economy-idUSBRE84U08N20120531
Wednesday, May 30, 2012
Job recovery is scant for Americans in prime working years
From the Washington Post online:
The proportion of Americans in their prime working years who have jobs is smaller than it has been at any time in the 23 years before the recession....
By this measure, the jobs situation has improved little in recent years...
While the unemployment rate may be the most closely watched gauge of the economy in the presidential campaign, this measure of prime-age workers captures more of the ongoing turbulence in the job market. It reflects “missing workers” who have stopped looking for work and aren’t included in the unemployment rate.
During their prime years, Americans are supposed to be building careers and wealth to prepare for their retirement. Instead, as the indicator reveals, huge numbers are on the sidelines....
The falloff has been sharpest for men, for whom the proportion had been on a slow decline before the recession. The percentage of prime-age men who are working is smaller now than it has been in any time before the recession, going all the way back to 1948, according to federal statistics. The proportion of prime-age women is at a low not seen since 1988....
...last month, the unemployment rate ticked down from 8.2 percent to 8.1 percent. Ordinarily, a drop in unemployment would be interpreted as a sign of improving economic health. But it dropped largely because so many people stopped looking for jobs.
Shierholz estimates that about 4 million workers have simply stopped looking, and so do not show up in the tally used for the unemployment rate.
------------
Link: http://www.washingtonpost.com/business/economy/job-recovery-is-scant-for-americans-in-prime-working-years/2012/05/29.html
The proportion of Americans in their prime working years who have jobs is smaller than it has been at any time in the 23 years before the recession....
By this measure, the jobs situation has improved little in recent years...
While the unemployment rate may be the most closely watched gauge of the economy in the presidential campaign, this measure of prime-age workers captures more of the ongoing turbulence in the job market. It reflects “missing workers” who have stopped looking for work and aren’t included in the unemployment rate.
During their prime years, Americans are supposed to be building careers and wealth to prepare for their retirement. Instead, as the indicator reveals, huge numbers are on the sidelines....
The falloff has been sharpest for men, for whom the proportion had been on a slow decline before the recession. The percentage of prime-age men who are working is smaller now than it has been in any time before the recession, going all the way back to 1948, according to federal statistics. The proportion of prime-age women is at a low not seen since 1988....
...last month, the unemployment rate ticked down from 8.2 percent to 8.1 percent. Ordinarily, a drop in unemployment would be interpreted as a sign of improving economic health. But it dropped largely because so many people stopped looking for jobs.
Shierholz estimates that about 4 million workers have simply stopped looking, and so do not show up in the tally used for the unemployment rate.
------------
Link: http://www.washingtonpost.com/business/economy/job-recovery-is-scant-for-americans-in-prime-working-years/2012/05/29.html
Quote of the Month:
From Holman Jenkins writing at WSJ.com:
"Mr. Obama's great political talent has been his knack for granting his admirers permission to think highly of themselves for thinking highly of him....
But now there's a problem. In a presidential re-election race, the formula is inconvenienced by the existence of a very public record of things done and said, of persistent joblessness and sluggish growth, and one big issue that threatens to dwarf the Obama allure altogether—the entire industrial world's rendezvous with insolvency."
------------
Link: http://online.wsj.com/article/SB10001424052702303674004577434210092475908.html?mod=WSJ_Opinion_LEADTop
"Mr. Obama's great political talent has been his knack for granting his admirers permission to think highly of themselves for thinking highly of him....
But now there's a problem. In a presidential re-election race, the formula is inconvenienced by the existence of a very public record of things done and said, of persistent joblessness and sluggish growth, and one big issue that threatens to dwarf the Obama allure altogether—the entire industrial world's rendezvous with insolvency."
------------
Link: http://online.wsj.com/article/SB10001424052702303674004577434210092475908.html?mod=WSJ_Opinion_LEADTop
Monday, May 28, 2012
Bernie Madoff Case: $554 Million to Attorneys / $330 Million to Victims
From Andrew Ross Sorkin at Dealbook.nytimes.com:
Irving H. Picard, the court-appointed trustee seeking to recover funds for the victims of Bernard L. Madoff’s multibillion-dollar Ponzi scheme, has been described as a modern-day Robin Hood. For nearly four years, he has been working to pay back those who were swindled by Mr. Madoff, some who lost their entire life savings.
Yet a look at recent court filings shows Mr. Picard has had much more success collecting money for himself and a dozen law firms and consultants than any victim of Mr. Madoff’s crime.
So far, Mr. Picard’s efforts have created a whopping $554 million in legal and other fees. How much have Mr. Madoff’s victims actually received from all of the cases and motions he’s made? Only $330 million. And how much does Mr. Picard estimate the fee spigot will pour out by 2014? A mere $1 billion.
At $850 an hour, Mr. Picard and his law firm, Baker & Hostetler, are starting to look more like the princes of the Full Employment Act for Lawyers than storybook heroes....
---------------
Link: http://dealbook.nytimes.com/2012/05/28/madoff-case-is-paying-off-for-trustee-850-an-hour/
Irving H. Picard, the court-appointed trustee seeking to recover funds for the victims of Bernard L. Madoff’s multibillion-dollar Ponzi scheme, has been described as a modern-day Robin Hood. For nearly four years, he has been working to pay back those who were swindled by Mr. Madoff, some who lost their entire life savings.
Yet a look at recent court filings shows Mr. Picard has had much more success collecting money for himself and a dozen law firms and consultants than any victim of Mr. Madoff’s crime.
So far, Mr. Picard’s efforts have created a whopping $554 million in legal and other fees. How much have Mr. Madoff’s victims actually received from all of the cases and motions he’s made? Only $330 million. And how much does Mr. Picard estimate the fee spigot will pour out by 2014? A mere $1 billion.
At $850 an hour, Mr. Picard and his law firm, Baker & Hostetler, are starting to look more like the princes of the Full Employment Act for Lawyers than storybook heroes....
---------------
Link: http://dealbook.nytimes.com/2012/05/28/madoff-case-is-paying-off-for-trustee-850-an-hour/
The Facebook Illusion
From Ross Douthat at the NYTimes.com:
There were two grand illusions about the American economy in the first decade of the 21st century. One was the idea that housing prices were no longer tethered to normal economic trends, and instead would just keep going up and up. The second was the idea that in the age of Web 2.0, we were well on our way to figuring out how to make lots and lots of money on the Internet.
The first idea collapsed along with housing prices and the stock market in 2007 and 2008. But the Web 2.0 illusion survived long enough to cost credulous investors a small fortune last week, in Facebook’s disaster of an initial public offering....
Of all the major hubs of Internet-era excitement, Mark Zuckerberg’s social networking site has always struck me as one of the most noxious, dependent for its success on the darker aspects of online life: the zeal for constant self-fashioning and self-promotion, the pursuit of virtual forms of “community” and “friendship” that bear only a passing resemblance to the genuine article, and the relentless diminution of the private sphere in the quest for advertising dollars.
But even readers who love Facebook, or at least cannot imagine life without it, should see its stock market failure as a sign of the commercial limits of the Internet. As The New Yorker’s John Cassidy pointed out in one of the more perceptive prelaunch pieces, the problem is not that Facebook doesn’t make money. It’s that it doesn’t make that much money, and doesn’t have an obvious way to make that much more of it, because (like so many online concerns) it hasn’t figured out how to effectively monetize its million upon millions of users. The result is a company that’s successful, certainly, but whose balance sheet is much less impressive than its ubiquitous online presence would suggest....
It’s telling, in this regard, that the companies most often cited as digital-era successes, Apple and Amazon, both have business models that are firmly rooted in the production and delivery of non-virtual goods. Apple’s core competency is building better and more beautiful appliances; Amazon’s is delivering everything from appliances to DVDs to diapers more swiftly and cheaply to your door....
-----------
Link: http://www.nytimes.com/2012/05/27/opinion/sunday/douthat-the-facebook-illusion.html
There were two grand illusions about the American economy in the first decade of the 21st century. One was the idea that housing prices were no longer tethered to normal economic trends, and instead would just keep going up and up. The second was the idea that in the age of Web 2.0, we were well on our way to figuring out how to make lots and lots of money on the Internet.
The first idea collapsed along with housing prices and the stock market in 2007 and 2008. But the Web 2.0 illusion survived long enough to cost credulous investors a small fortune last week, in Facebook’s disaster of an initial public offering....
Of all the major hubs of Internet-era excitement, Mark Zuckerberg’s social networking site has always struck me as one of the most noxious, dependent for its success on the darker aspects of online life: the zeal for constant self-fashioning and self-promotion, the pursuit of virtual forms of “community” and “friendship” that bear only a passing resemblance to the genuine article, and the relentless diminution of the private sphere in the quest for advertising dollars.
But even readers who love Facebook, or at least cannot imagine life without it, should see its stock market failure as a sign of the commercial limits of the Internet. As The New Yorker’s John Cassidy pointed out in one of the more perceptive prelaunch pieces, the problem is not that Facebook doesn’t make money. It’s that it doesn’t make that much money, and doesn’t have an obvious way to make that much more of it, because (like so many online concerns) it hasn’t figured out how to effectively monetize its million upon millions of users. The result is a company that’s successful, certainly, but whose balance sheet is much less impressive than its ubiquitous online presence would suggest....
It’s telling, in this regard, that the companies most often cited as digital-era successes, Apple and Amazon, both have business models that are firmly rooted in the production and delivery of non-virtual goods. Apple’s core competency is building better and more beautiful appliances; Amazon’s is delivering everything from appliances to DVDs to diapers more swiftly and cheaply to your door....
-----------
Link: http://www.nytimes.com/2012/05/27/opinion/sunday/douthat-the-facebook-illusion.html
Members of the Class of 2012: You're screwed.
From former Labor Secretary Robert Reich:
Members of the Class of 2012:
As a former secretary of labor and current professor, I feel I owe it to you to tell you the truth about the pieces of parchment you're picking up today.
You're screwed.
Well, not exactly. But you won't have it easy.
First, you're going to have a hell of a hard time finding a job. The job market you're heading into is still bad. Fewer than half of the graduates from last year's class have as yet found full-time jobs. Most are still looking.
That's been the pattern over the last three graduating classes: It's been taking graduates more than a year to land the first job. And those who still haven't found a job will be competing with you, making your job search even harder.
Contrast this with the class of 2008, whose members were lucky enough to get out of here and into the job market before the Great Recession really hit. Almost three-quarters of them found jobs within the year.
You're still better off than your friends who didn't graduate. Overall, the unemployment rate among young people (21 to 24 years old) with four-year college degrees is now 6.4 percent. With just a high school diploma, the rate is double that.
But even when you get a job, it's likely to pay peanuts.
Last year's young college graduates lucky enough to land jobs had an average hourly wage of only $16.81, according to a new study by the Economic Policy Institute. That's about $35,000 a year - lower than the yearly earnings of young college graduates in 2007, before the Great Recession. The typical wage of young college graduates dropped 4.6 percent between 2007 and 2011, adjusted for inflation....
--------------
Link: http://www.sfgate.com/columns/reich/
Members of the Class of 2012:
As a former secretary of labor and current professor, I feel I owe it to you to tell you the truth about the pieces of parchment you're picking up today.
You're screwed.
Well, not exactly. But you won't have it easy.
First, you're going to have a hell of a hard time finding a job. The job market you're heading into is still bad. Fewer than half of the graduates from last year's class have as yet found full-time jobs. Most are still looking.
That's been the pattern over the last three graduating classes: It's been taking graduates more than a year to land the first job. And those who still haven't found a job will be competing with you, making your job search even harder.
Contrast this with the class of 2008, whose members were lucky enough to get out of here and into the job market before the Great Recession really hit. Almost three-quarters of them found jobs within the year.
You're still better off than your friends who didn't graduate. Overall, the unemployment rate among young people (21 to 24 years old) with four-year college degrees is now 6.4 percent. With just a high school diploma, the rate is double that.
But even when you get a job, it's likely to pay peanuts.
Last year's young college graduates lucky enough to land jobs had an average hourly wage of only $16.81, according to a new study by the Economic Policy Institute. That's about $35,000 a year - lower than the yearly earnings of young college graduates in 2007, before the Great Recession. The typical wage of young college graduates dropped 4.6 percent between 2007 and 2011, adjusted for inflation....
--------------
Link: http://www.sfgate.com/columns/reich/
Friday, May 25, 2012
Are baby boomers to blame?
From MSN Money:
Behind a lot of our current economic woes and hanging over the future is a simple problem: A huge generation that has to keep working because it hasn't saved enough for retirement.
...the longer-term picture is even scarier: If nothing is done, by 2024 -- according to a Credit Suisse estimate -- 100% of U.S. tax revenues will go to entitlement spending and interest payments on the federal debt. That's it. Nothing left for tanks, jets, food stamps and SEC regulators. Nada.
While this seems intractable, the root of the problem is really quite simple: too many old people.
Specifically, the nearly 80 million members of the baby boom generation are quickly aging, with most in their mid-50s now. This simple dynamic is the undercurrent beneath many of our problems, from a stagnant stock market to a bleak jobs outlook and the debt/deficit problem....
Thus, instead of enjoying the twilight of life atop a Harley or upon white sandy beaches, a lot of these folks will be staying in the workforce -- often at low-paying, menial positions -- just to survive. The percentage of respondents expecting to retire before the age of 60 has fallen from nearly 20% in 1991 to just 8% now, while the percentage of workers expecting to clock out at 70 or older has jumped from 9% to 26% over the same period...
It's a vicious cycle. Boomers are working longer because they can't retire, and they can't retire because their homes and nest eggs aren't holding their value, much less gaining. This keeps younger folks from taking over their jobs, which would allow the younger folks to buy those homes and start building their own nest eggs, pouring fresh cash into investments. (Instead, it seems, a lot of those younger folks are moving back in with their boomer parents. The cycle of misery is complete.)...
--------
Link: http://money.msn.com/investing/are-baby-boomers-to-blame-mirhaydari.aspx
Behind a lot of our current economic woes and hanging over the future is a simple problem: A huge generation that has to keep working because it hasn't saved enough for retirement.
...the longer-term picture is even scarier: If nothing is done, by 2024 -- according to a Credit Suisse estimate -- 100% of U.S. tax revenues will go to entitlement spending and interest payments on the federal debt. That's it. Nothing left for tanks, jets, food stamps and SEC regulators. Nada.
While this seems intractable, the root of the problem is really quite simple: too many old people.
Specifically, the nearly 80 million members of the baby boom generation are quickly aging, with most in their mid-50s now. This simple dynamic is the undercurrent beneath many of our problems, from a stagnant stock market to a bleak jobs outlook and the debt/deficit problem....
Thus, instead of enjoying the twilight of life atop a Harley or upon white sandy beaches, a lot of these folks will be staying in the workforce -- often at low-paying, menial positions -- just to survive. The percentage of respondents expecting to retire before the age of 60 has fallen from nearly 20% in 1991 to just 8% now, while the percentage of workers expecting to clock out at 70 or older has jumped from 9% to 26% over the same period...
It's a vicious cycle. Boomers are working longer because they can't retire, and they can't retire because their homes and nest eggs aren't holding their value, much less gaining. This keeps younger folks from taking over their jobs, which would allow the younger folks to buy those homes and start building their own nest eggs, pouring fresh cash into investments. (Instead, it seems, a lot of those younger folks are moving back in with their boomer parents. The cycle of misery is complete.)...
--------
Link: http://money.msn.com/investing/are-baby-boomers-to-blame-mirhaydari.aspx
Wednesday, May 23, 2012
6 Reasons You'll Never Retire
From Forbes.com:
1. Corporate pension slashed
2. Dropping income
3. Higher childcare expenses due to rise in dual working couples
4. Collapsing investment returns
5. Insufficient savings
6. Inheritance too small
Link to full article: http://www.forbes.com/sites/petercohan/2012/05/21/six-reasons-youll-never-retire/
1. Corporate pension slashed
2. Dropping income
3. Higher childcare expenses due to rise in dual working couples
4. Collapsing investment returns
5. Insufficient savings
6. Inheritance too small
Link to full article: http://www.forbes.com/sites/petercohan/2012/05/21/six-reasons-youll-never-retire/
How the Recovery Went Wrong
At the WSJ.com, Harvey Golub, former chairman of American Express, writes:
Of the 11 recoveries in the last 60 years, this one is at or near the bottom in job growth and every other economic indicator.
President Obama, in speech after speech, proudly makes the following point: Although we inherited the worst recession since the Great Depression, we have generated net new jobs every month, and while we need to do more, we are going in the right direction.
Of course, recoveries always go in the right direction—that is, things get better over time. But merely going in the right direction is an incredibly low performance standard. Moreover, since deep recessions are generally followed by more robust recoveries, this should have been one of the strongest recoveries ever...
There's little doubt that this level of spending—$5 trillion in an economy with an annual GDP of about $15 trillion—has a temporary stimulative effect. The question is, was it a good investment? For the most part the money was spent poorly and we will get very little future value from it. Billions were spent to reward favored constituencies like government employees and the auto industry. Billions more were spent on training programs that don't work and unemployment insurance that reduces incentives to actually find work. Little went toward building infrastructure or other assets that will help the nation create wealth over time.
So, yes, we are going in the right direction—but far too slowly to create reasonable economic growth and needed jobs. By their very nature, recoveries involve people and businesses making investments and spending money and borrowing to do both. However, for rational people to spend or invest requires confidence in the future. The "animal spirits" so necessary for a true recovery have been dampened by this administration's policies and rhetoric.
Indeed, this administration has been overtly hostile to business across the economy except for progressive favorites like electric cars or wind and solar power.....
In this negative environment, businesses are less willing to invest in the future, and individuals are less willing to spend what they can. Meanwhile, savers and retirees have seen much of their income decline because of low interest rates. The massive costs of all the stimulus have been wasted because of the heavy counterweight put on the economy by the administration's antibusiness and pro-redistribution policies.
---------------
Link: http://online.wsj.com/article/SB10001424052702304019404577418311631098508.html
Of the 11 recoveries in the last 60 years, this one is at or near the bottom in job growth and every other economic indicator.
President Obama, in speech after speech, proudly makes the following point: Although we inherited the worst recession since the Great Depression, we have generated net new jobs every month, and while we need to do more, we are going in the right direction.
Of course, recoveries always go in the right direction—that is, things get better over time. But merely going in the right direction is an incredibly low performance standard. Moreover, since deep recessions are generally followed by more robust recoveries, this should have been one of the strongest recoveries ever...
There's little doubt that this level of spending—$5 trillion in an economy with an annual GDP of about $15 trillion—has a temporary stimulative effect. The question is, was it a good investment? For the most part the money was spent poorly and we will get very little future value from it. Billions were spent to reward favored constituencies like government employees and the auto industry. Billions more were spent on training programs that don't work and unemployment insurance that reduces incentives to actually find work. Little went toward building infrastructure or other assets that will help the nation create wealth over time.
So, yes, we are going in the right direction—but far too slowly to create reasonable economic growth and needed jobs. By their very nature, recoveries involve people and businesses making investments and spending money and borrowing to do both. However, for rational people to spend or invest requires confidence in the future. The "animal spirits" so necessary for a true recovery have been dampened by this administration's policies and rhetoric.
Indeed, this administration has been overtly hostile to business across the economy except for progressive favorites like electric cars or wind and solar power.....
In this negative environment, businesses are less willing to invest in the future, and individuals are less willing to spend what they can. Meanwhile, savers and retirees have seen much of their income decline because of low interest rates. The massive costs of all the stimulus have been wasted because of the heavy counterweight put on the economy by the administration's antibusiness and pro-redistribution policies.
---------------
Link: http://online.wsj.com/article/SB10001424052702304019404577418311631098508.html
Tuesday, May 22, 2012
UPDATED: Auto Industry Rebound Fires Animal Spirits
From today's WSJ.com:
What a difference a year has made to the auto industry.
A survey of some 200 auto industry executives by Booz & Co. finds that 94% of the auto maker executives and 92% of automotive-technology-supplier executives are bullish, saying the sector is somewhat better off or much better off than last year.
...Significant majorities of supplier and auto-company executives — 86% and 72% respectively, — said they expect the Detroit Three auto makers to hold or gain market share next year. Those beliefs that could translate to increased production and hiring in North America.
At the same time, industry executives voted Hyundai/Kia and Volkswagen AG as most likely to increase their market shares over the next five years. More than half the executives surveyed said they expect Chinese auto makers will achieve a 4% share of the U.S. market by 2020...
(Link: http://blogs.wsj.com/economics/2012/05/22/auto-industry-rebound-fires-animal-spirits)
---------------------
UPDATE:
Flat U.S. Wages Help Fuel Rebound in Manufacturing
The celebrated revival of U.S. manufacturing employment has been accompanied by a less-lauded fact: Wages for many manufacturing workers aren't keeping up with inflation.
The wage lag is a key factor contributing to the rebounding competitiveness of U.S. industry. A recent uptick in factory employment and the return of some production to U.S. shores from abroad both added jobs that probably otherwise wouldn't exist. But sluggish wages also are squeezing workers' incomes and spending. That, in turn, hurts retailers who target middle-income earners and restrains the vigor of the economic recovery....
Manufacturing wage trends:
---------------------------
Link: http://online.wsj.com/article/SB10001424052702304065704577421960042778548.html
What a difference a year has made to the auto industry.
A survey of some 200 auto industry executives by Booz & Co. finds that 94% of the auto maker executives and 92% of automotive-technology-supplier executives are bullish, saying the sector is somewhat better off or much better off than last year.
...Significant majorities of supplier and auto-company executives — 86% and 72% respectively, — said they expect the Detroit Three auto makers to hold or gain market share next year. Those beliefs that could translate to increased production and hiring in North America.
At the same time, industry executives voted Hyundai/Kia and Volkswagen AG as most likely to increase their market shares over the next five years. More than half the executives surveyed said they expect Chinese auto makers will achieve a 4% share of the U.S. market by 2020...
(Link: http://blogs.wsj.com/economics/2012/05/22/auto-industry-rebound-fires-animal-spirits)
---------------------
UPDATE:
Flat U.S. Wages Help Fuel Rebound in Manufacturing
The celebrated revival of U.S. manufacturing employment has been accompanied by a less-lauded fact: Wages for many manufacturing workers aren't keeping up with inflation.
The wage lag is a key factor contributing to the rebounding competitiveness of U.S. industry. A recent uptick in factory employment and the return of some production to U.S. shores from abroad both added jobs that probably otherwise wouldn't exist. But sluggish wages also are squeezing workers' incomes and spending. That, in turn, hurts retailers who target middle-income earners and restrains the vigor of the economic recovery....
Manufacturing wage trends:
---------------------------
Link: http://online.wsj.com/article/SB10001424052702304065704577421960042778548.html
Friday, May 18, 2012
An Unemployment Crisis for Older or Younger Workers?
From RealClearMarkets.com:
Diana Furchtgott-Roth writing about her testimony before the Senate Special Committee on Aging:
Workers in their fifties are at their peak earnings, and there are fewer openings at these levels than entry-level positions....
It's important to examine unemployment among older Americans because of the aging of the workforce, which is accelerating now that the Baby Boomers are approaching retirement. On average, older workers can expect to live until their mid-80s, and dropping out of the labor force at 55 could mean 30 years of retirement. Not many have saved for 30 years of retirement. One implication is that a larger older population is supported by a smaller younger population, the essential problem going forward with Social Security.
But despite the narrow focus of the Senate Special Committee on Aging (note that the House has no such panel), the unemployment problem is not age-limited. It is general, and worrisome for all ages....
In fact, the problems facing older workers are not dissimilar from the problems facing all other workers, the lack of robust job growth. America needs policies that will contribute to stronger job growth broadly, policies that will benefit all....
Tougher regulations lead employers to locate elsewhere. Friendlier regulations draw them back home.
Already, it is easier to employ workers overseas than in the United States. The Wall Street Journal reported on April 27 that three-quarters of new jobs created by U.S. multinationals were offshore over the past two years.
The larger reality is that this administration's policies have failed across the board and resulted in a serious deficit of job opportunities for all workers. The problem will not be solved by special policies that favor one group over another.
The GAO report advocates shifting some jobs to older workers but at the expense of younger workers. This sort of redistributionist policy is both unfair and unwise. It amounts to intergenerational class warfare. What we need are policies that broadly create more job opportunities for all.
------------
Link:http://www.realclearmarkets.com/articles/2012/05/17/an_unemployment_crisis_for_older_or_younger_workers_99672.html
Diana Furchtgott-Roth writing about her testimony before the Senate Special Committee on Aging:
Workers in their fifties are at their peak earnings, and there are fewer openings at these levels than entry-level positions....
It's important to examine unemployment among older Americans because of the aging of the workforce, which is accelerating now that the Baby Boomers are approaching retirement. On average, older workers can expect to live until their mid-80s, and dropping out of the labor force at 55 could mean 30 years of retirement. Not many have saved for 30 years of retirement. One implication is that a larger older population is supported by a smaller younger population, the essential problem going forward with Social Security.
But despite the narrow focus of the Senate Special Committee on Aging (note that the House has no such panel), the unemployment problem is not age-limited. It is general, and worrisome for all ages....
In fact, the problems facing older workers are not dissimilar from the problems facing all other workers, the lack of robust job growth. America needs policies that will contribute to stronger job growth broadly, policies that will benefit all....
Tougher regulations lead employers to locate elsewhere. Friendlier regulations draw them back home.
Already, it is easier to employ workers overseas than in the United States. The Wall Street Journal reported on April 27 that three-quarters of new jobs created by U.S. multinationals were offshore over the past two years.
The larger reality is that this administration's policies have failed across the board and resulted in a serious deficit of job opportunities for all workers. The problem will not be solved by special policies that favor one group over another.
The GAO report advocates shifting some jobs to older workers but at the expense of younger workers. This sort of redistributionist policy is both unfair and unwise. It amounts to intergenerational class warfare. What we need are policies that broadly create more job opportunities for all.
------------
Link:http://www.realclearmarkets.com/articles/2012/05/17/an_unemployment_crisis_for_older_or_younger_workers_99672.html
Thursday, May 17, 2012
Greeks not alone in bank savings exodus
From Reuters:
Worries about a run on Greek banks has rattled Athens this week, after savers withdrew at least 700 million euros on Monday alone...
It is not only Greeks who are worried about their savings. Data shows depositors have taken flight from banks in Belgium, France and Italy....
-----------
Link: http://www.reuters.com/article/2012/05/17/us-banks-deposits-idUSBRE84G0MG20120517
Worries about a run on Greek banks has rattled Athens this week, after savers withdrew at least 700 million euros on Monday alone...
It is not only Greeks who are worried about their savings. Data shows depositors have taken flight from banks in Belgium, France and Italy....
-----------
Link: http://www.reuters.com/article/2012/05/17/us-banks-deposits-idUSBRE84G0MG20120517
Job Market's Vanishing Act
From David Wessel at the WSJ.com:
Where have all the workers gone?
In the past two years, the number of people in the U.S. who are older than 16 (and not in the military or prison) has grown by 5.4 million. The number of people working or looking for work hasn't grown at all.
Is this because members of the big baby-boom generation are now beginning to retire? Have a lot of people dropped out of the workforce temporarily, and are likely to return when there are more jobs to be had? Or are more of the long-term unemployed becoming the never-again employed?
The short answer is yes. But how much of each? The mystery of the missing five million is preoccupying Federal Reserve policy makers....
But the falling participation rate could signal a more worrisome dynamic: More jobless and disheartened workers turning to disability benefits or reluctant retirement, or otherwise leaving the workforce for good.
Not only is this a waste of human potential, but it diminishes the rate at which the U.S. economy can safely grow. It also creates a growing cadre of Americans who will need the support of the working population and makes the government budget deficit worse because there will be fewer workers to pay taxes. There's no precise way to measure the size of this contingent. Official estimates of "discouraged workers" understate the problem; they count only those who say they want to work and have looked for a job in the past 12 months.
One thing is clear: The longer people remain out of work, the more risk they will fall out of the workforce altogether.
---------------
Link: http://online.wsj.com/article/SB10001424052702303879604577407864232528118.html
Where have all the workers gone?
In the past two years, the number of people in the U.S. who are older than 16 (and not in the military or prison) has grown by 5.4 million. The number of people working or looking for work hasn't grown at all.
Is this because members of the big baby-boom generation are now beginning to retire? Have a lot of people dropped out of the workforce temporarily, and are likely to return when there are more jobs to be had? Or are more of the long-term unemployed becoming the never-again employed?
The short answer is yes. But how much of each? The mystery of the missing five million is preoccupying Federal Reserve policy makers....
But the falling participation rate could signal a more worrisome dynamic: More jobless and disheartened workers turning to disability benefits or reluctant retirement, or otherwise leaving the workforce for good.
Not only is this a waste of human potential, but it diminishes the rate at which the U.S. economy can safely grow. It also creates a growing cadre of Americans who will need the support of the working population and makes the government budget deficit worse because there will be fewer workers to pay taxes. There's no precise way to measure the size of this contingent. Official estimates of "discouraged workers" understate the problem; they count only those who say they want to work and have looked for a job in the past 12 months.
One thing is clear: The longer people remain out of work, the more risk they will fall out of the workforce altogether.
---------------
Link: http://online.wsj.com/article/SB10001424052702303879604577407864232528118.html
Jobless Claims in U.S. Were Unchanged
From Bloomberg.com:
"More Americans than forecast filed applications for unemployment benefits last week, a sign the labor market is making little progress.
Jobless claims were unchanged at 370,000 in the week ended May 12, Labor Department figures showed today in Washington..."
"The number of people continuing to receive jobless benefits rose by 18,000 in the week ended May 5 to 3.27 million. The continuing claims figure does not include the number of Americans receiving extended benefits under federal programs.
Those who’ve used up their traditional benefits and are now collecting emergency and extended payments decreased by about 68,000 to 2.97 million in the week ended April 28...."
-------------------
NOTE: Over 6 million people collect one or another form of unemployment.
-------------
Link: http://www.bloomberg.com/news/2012-05-17/jobless-claims-in-u-s-were-unchanged-at-370-000-last-week.html
"More Americans than forecast filed applications for unemployment benefits last week, a sign the labor market is making little progress.
Jobless claims were unchanged at 370,000 in the week ended May 12, Labor Department figures showed today in Washington..."
"The number of people continuing to receive jobless benefits rose by 18,000 in the week ended May 5 to 3.27 million. The continuing claims figure does not include the number of Americans receiving extended benefits under federal programs.
Those who’ve used up their traditional benefits and are now collecting emergency and extended payments decreased by about 68,000 to 2.97 million in the week ended April 28...."
-------------------
NOTE: Over 6 million people collect one or another form of unemployment.
-------------
Link: http://www.bloomberg.com/news/2012-05-17/jobless-claims-in-u-s-were-unchanged-at-370-000-last-week.html
Spanish banks next?
From Forbes.com:
Moody’s has already slashed its ratings on European banks, which remain in the spotlight Thursday after reports that the European Central Bank has halted some liquidity operations with Greek banks and that the country is seeing depositors move cash outside its borders.
Meanwhlie, Bankia, the subject of a recent bailout by the state, has reportedly seen over $1 billion in withdrawals over just a few days since the Spanish government takeover, sending its shares down more than 11% in Madrid....
--------------
Link: http://www.forbes.com/sites/steveschaefer/2012/05/17/as-european-bank-run-threatens-fitch-says-global-firms-need-another
Moody’s has already slashed its ratings on European banks, which remain in the spotlight Thursday after reports that the European Central Bank has halted some liquidity operations with Greek banks and that the country is seeing depositors move cash outside its borders.
Meanwhlie, Bankia, the subject of a recent bailout by the state, has reportedly seen over $1 billion in withdrawals over just a few days since the Spanish government takeover, sending its shares down more than 11% in Madrid....
--------------
Link: http://www.forbes.com/sites/steveschaefer/2012/05/17/as-european-bank-run-threatens-fitch-says-global-firms-need-another
Wednesday, May 16, 2012
Greek Bank Run?
From Bloomberg.com:
Greek President Karolos Papoulias was told by the nation’s central bank chief that financial institutions are worried about their survival as Greeks pull out euros amid a deepening political crisis.
Central bank head George Provopoulos told Papoulias that Greeks have withdrawn as much as 700 million euros ($891 million) and the situation could worsen, according to the transcript of the president’s meeting with party leaders on May 14 that was published yesterday....
The risk of a run on Greek banks is “a very serious problem,” Yannis Ioannides, professor of economics at Tufts University in Massachusetts, told Bloomberg Television. He said the European Central Bank needs to guarantee deposits held by the region’s lenders to guard against contagion. “That’s the only way to kill a bank run: not words but deeds.”
----------
Link: http://www.bloomberg.com/news/2012-05-15/greek-president-told-banks-anxious-as-deposits-pulled.html
Greek President Karolos Papoulias was told by the nation’s central bank chief that financial institutions are worried about their survival as Greeks pull out euros amid a deepening political crisis.
Central bank head George Provopoulos told Papoulias that Greeks have withdrawn as much as 700 million euros ($891 million) and the situation could worsen, according to the transcript of the president’s meeting with party leaders on May 14 that was published yesterday....
The risk of a run on Greek banks is “a very serious problem,” Yannis Ioannides, professor of economics at Tufts University in Massachusetts, told Bloomberg Television. He said the European Central Bank needs to guarantee deposits held by the region’s lenders to guard against contagion. “That’s the only way to kill a bank run: not words but deeds.”
----------
Link: http://www.bloomberg.com/news/2012-05-15/greek-president-told-banks-anxious-as-deposits-pulled.html
Tuesday, May 15, 2012
Let’s bring back Glass-Steagall
From MarketWatch.com:
You remember Glass-Steagall. It was the Depression-era law that separated investment banking and trading activities from retail and commercial banking. It split, for example, J.P. Morgan’s empire into a bank, J.P. Morgan & Co., and a brokerage, Morgan Stanley.
When the law was repealed in 1999, the brokerages and banks were allowed to come together again. And, of course, that’s when the problems began, the biggest of which was the use of traditional banking assets as chips in the casino, mortgages as mortgage-backed securities, for instance.
Actually by 1999, most traditional commercial banks were doing some form of securities dealing through loopholes created in the 1990s. J.P. Morgan, for instance, had actually migrated to an investment bank, and a minority of its business was commercial banking.
After the financial crisis in 2008 and 2009, regulators and lawmakers tried to scale back the free-for-all that “financial modernization” had wrought. The Dodd-Frank Act clocked in at 849 pages in an effort to basically regulate every little piece of the financial markets.
By contrast, Glass-Steagall comprised 37 pages....
-----------
Link: http://www.marketwatch.com/story/dimon-may-be-stupid-but-hes-right-on-banks-2012-05-15
You remember Glass-Steagall. It was the Depression-era law that separated investment banking and trading activities from retail and commercial banking. It split, for example, J.P. Morgan’s empire into a bank, J.P. Morgan & Co., and a brokerage, Morgan Stanley.
When the law was repealed in 1999, the brokerages and banks were allowed to come together again. And, of course, that’s when the problems began, the biggest of which was the use of traditional banking assets as chips in the casino, mortgages as mortgage-backed securities, for instance.
Actually by 1999, most traditional commercial banks were doing some form of securities dealing through loopholes created in the 1990s. J.P. Morgan, for instance, had actually migrated to an investment bank, and a minority of its business was commercial banking.
After the financial crisis in 2008 and 2009, regulators and lawmakers tried to scale back the free-for-all that “financial modernization” had wrought. The Dodd-Frank Act clocked in at 849 pages in an effort to basically regulate every little piece of the financial markets.
By contrast, Glass-Steagall comprised 37 pages....
-----------
Link: http://www.marketwatch.com/story/dimon-may-be-stupid-but-hes-right-on-banks-2012-05-15
Monday, May 14, 2012
The Expansion Limps Ahead
From Gene Epstein at Barrons.com:
Rumors of its death have been greatly exaggerated, although it has often resembled the walking wounded, if not occasionally the walking dead. While the economic expansion has set records for sickliness, it does celebrate its third birthday next month, which offers some evidence of its durability....
Growth over the 12 calendar quarters has averaged a bit less than an annual 2.4%, assuming the Blue Chip consensus of 50 forecasters is right about real GDP growth in the current quarter (+2.2%). How sickly is that? So sickly, in fact, that if you go back to 1950, and examine all previous cycles of expansion, you find there has never been a 12-quarter period of expansion that ran as slow as 2.4%.
Add the fact that growth usually runs much faster following a deep recession, and this three-year period's dubious distinction gets even starker. Following the deep recessions of 1974-75 and 1981-82, the first 12 quarters of growth averaged 4.5% and 5.8%, respectively.
Even following the mild recessions of 1990-91 and 2001, growth over the first 12 quarters ran, respectively, 3.2% and 2.9%....
----------
Link: http://online.barrons.com/article/SB50001424053111904370004577398063019217658.html?mod=BOL_hpp_dc
Rumors of its death have been greatly exaggerated, although it has often resembled the walking wounded, if not occasionally the walking dead. While the economic expansion has set records for sickliness, it does celebrate its third birthday next month, which offers some evidence of its durability....
Growth over the 12 calendar quarters has averaged a bit less than an annual 2.4%, assuming the Blue Chip consensus of 50 forecasters is right about real GDP growth in the current quarter (+2.2%). How sickly is that? So sickly, in fact, that if you go back to 1950, and examine all previous cycles of expansion, you find there has never been a 12-quarter period of expansion that ran as slow as 2.4%.
Add the fact that growth usually runs much faster following a deep recession, and this three-year period's dubious distinction gets even starker. Following the deep recessions of 1974-75 and 1981-82, the first 12 quarters of growth averaged 4.5% and 5.8%, respectively.
Even following the mild recessions of 1990-91 and 2001, growth over the first 12 quarters ran, respectively, 3.2% and 2.9%....
----------
Link: http://online.barrons.com/article/SB50001424053111904370004577398063019217658.html?mod=BOL_hpp_dc
NYT: The Human Disaster of Unemployment
From the NYTimes.com:
The American economy is experiencing a crisis in long-term unemployment that has enormous human and economic costs.
In 2007, before the Great Recession, people who were looking for work for more than six months — the definition of long-term unemployment — accounted for just 0.8 percent of the labor force. The recession has radically changed this picture. In 2010, the long-term unemployed accounted for 4.2 percent of the work force. That figure would be 50 percent higher if we added the people who gave up looking for work....
While older workers are less likely to be laid off than younger workers, they are about half as likely to be rehired .... older workers have seen the largest proportionate increase in unemployment in this downturn. The number of unemployed people between ages 50 and 65 has more than doubled.
The prospects for the re-employment of older workers deteriorate sharply the longer they are unemployed. A worker between ages 50 and 61 who has been unemployed for 17 months has only about a 9 percent chance of finding a new job in the next three months. A worker who is 62 or older and in the same situation has only about a 6 percent chance. As unemployment increases in duration, these slim chances drop steadily.
The result is nothing short of a national emergency. Millions of workers have been disconnected from the work force, and possibly even from society. If they are not reconnected, the costs to them and to society will be grim....
-------------
Link: http://www.nytimes.com/2012/05/13/opinion/sunday/the-human-disaster-of-unemployment.html
The American economy is experiencing a crisis in long-term unemployment that has enormous human and economic costs.
In 2007, before the Great Recession, people who were looking for work for more than six months — the definition of long-term unemployment — accounted for just 0.8 percent of the labor force. The recession has radically changed this picture. In 2010, the long-term unemployed accounted for 4.2 percent of the work force. That figure would be 50 percent higher if we added the people who gave up looking for work....
While older workers are less likely to be laid off than younger workers, they are about half as likely to be rehired .... older workers have seen the largest proportionate increase in unemployment in this downturn. The number of unemployed people between ages 50 and 65 has more than doubled.
The prospects for the re-employment of older workers deteriorate sharply the longer they are unemployed. A worker between ages 50 and 61 who has been unemployed for 17 months has only about a 9 percent chance of finding a new job in the next three months. A worker who is 62 or older and in the same situation has only about a 6 percent chance. As unemployment increases in duration, these slim chances drop steadily.
The result is nothing short of a national emergency. Millions of workers have been disconnected from the work force, and possibly even from society. If they are not reconnected, the costs to them and to society will be grim....
-------------
Link: http://www.nytimes.com/2012/05/13/opinion/sunday/the-human-disaster-of-unemployment.html
Sunday, May 13, 2012
At JPMorgan: What goes around comes around
From Gretchen Morgenson at the NYTimes.com:
What goes around comes around. Sometimes it happens sooner than you’d think.
That round wheel turned on JPMorgan Chase last week, which disclosed that it had suffered a $2 billion trading loss in credit derivatives. That such a hit had befallen the mightiest of banks was perhaps more stunning than the size of the loss.
The loss, and the embarrassment it held for Jamie Dimon, the bank’s imperious chief executive, came just one month after a private dinner party in Dallas at which he assailed two respected public figures who have pushed for policies that would make banks like JPMorgan smaller and less risky.
One was Paul Volcker, the former Federal Reserve chairman, whose remedy for risky trading by too-big-to-fail banks is known as the Volcker Rule. The other was Richard W. Fisher, president of the Federal Reserve Bank of Dallas, who has also argued that large institutions should be slimmed down or limited in their risky trading practices....
During the party, Mr. Dimon took questions from the crowd, according to an attendee who spoke on condition of anonymity for fear of alienating the bank. One guest asked about the problem of too-big-to-fail banks and the arguments made by Mr. Volcker and Mr. Fisher.
Mr. Dimon responded that he had just two words to describe them: “infantile” and “nonfactual.”
...Mr. Dimon has gained in stature in recent years. Hailed for his management skill, he has also become the financial industry’s point man in the war against tighter regulation of derivatives and proprietary trading. Almost since the financial crisis began, JPMorgan Chase and its legion of lobbyists have swarmed lawmakers and regulators in an effort to beat back efforts to bring transparency to derivatives and to separate risk-taking activities like proprietary trading from commercial lending units....
The hypocrisy is that our nation’s big financial institutions, protected by implied taxpayer guarantees, oppose regulation on the grounds that it would increase their costs and reduce their profit. Such rules are unfair, they contend. But in discussing fairness, they never talk about how fair it is to require taxpayers to bail out reckless institutions when their trades imperil them. That’s a question for another day....
--------
Link: http://www.nytimes.com/2012/05/13/business/jpmorgan-shooting-itself-in-the-foot-fair-game.html
What goes around comes around. Sometimes it happens sooner than you’d think.
That round wheel turned on JPMorgan Chase last week, which disclosed that it had suffered a $2 billion trading loss in credit derivatives. That such a hit had befallen the mightiest of banks was perhaps more stunning than the size of the loss.
The loss, and the embarrassment it held for Jamie Dimon, the bank’s imperious chief executive, came just one month after a private dinner party in Dallas at which he assailed two respected public figures who have pushed for policies that would make banks like JPMorgan smaller and less risky.
One was Paul Volcker, the former Federal Reserve chairman, whose remedy for risky trading by too-big-to-fail banks is known as the Volcker Rule. The other was Richard W. Fisher, president of the Federal Reserve Bank of Dallas, who has also argued that large institutions should be slimmed down or limited in their risky trading practices....
During the party, Mr. Dimon took questions from the crowd, according to an attendee who spoke on condition of anonymity for fear of alienating the bank. One guest asked about the problem of too-big-to-fail banks and the arguments made by Mr. Volcker and Mr. Fisher.
Mr. Dimon responded that he had just two words to describe them: “infantile” and “nonfactual.”
...Mr. Dimon has gained in stature in recent years. Hailed for his management skill, he has also become the financial industry’s point man in the war against tighter regulation of derivatives and proprietary trading. Almost since the financial crisis began, JPMorgan Chase and its legion of lobbyists have swarmed lawmakers and regulators in an effort to beat back efforts to bring transparency to derivatives and to separate risk-taking activities like proprietary trading from commercial lending units....
The hypocrisy is that our nation’s big financial institutions, protected by implied taxpayer guarantees, oppose regulation on the grounds that it would increase their costs and reduce their profit. Such rules are unfair, they contend. But in discussing fairness, they never talk about how fair it is to require taxpayers to bail out reckless institutions when their trades imperil them. That’s a question for another day....
--------
Link: http://www.nytimes.com/2012/05/13/business/jpmorgan-shooting-itself-in-the-foot-fair-game.html
Friday, May 11, 2012
High Unemployment the New Normal
From Reason.com:
...The unemployment rate headline number would actually be higher if it counted people who want a job, but have not looked for one in the past month because they are so discouraged by their prospects...
In April 2012, labor force participation was 63.4, the lowest rate since January 1981...
Over the last 20 years, the usual trend is for labor participation to expand as unemployment falls. This is because workers are being added to payrolls, and thus cutting down on unemployment. However ... after the recession ended in the summer of 2009, both participation in the labor market and unemployment numbers have been falling. This suggests that the lower unemployment number is really just because so many people have stopped looking for work. Annoyingly, it doesn’t mean that the nation has increasing employment....
Labor force participation is important for economic growth because productivity is directly related to the number of people working in an economy. You can get productivity (increased economic output) from efficiency gains — i.e., bringing in robots to make goods in a factory faster then 100 people can. But usually, American economic output comes from innovation and new businesses that are staffed with living, breathing humans.
Different workers have different productive values, but it is a general rule that as a nation increases its labor pool, its economic growth expands. So part of the reason for the jobless faux-recovery has been the declining size of the American productive work force....
Ironically, the growing productivity numbers actually help make the case that the labor market and economy could be setting into a “new normal” pattern. Consider that growing productivity despite high unemployment does not create incentives for firms to hire. A circular problem then develops where the productivity from efficiency gains leads to weak hiring practices pushing labor force participation further down, which in turn leads to more output gains coming from efficiency rather than economic expansion.
This cycle can be broken, and perhaps it will in the coming years. However, the Congressional Budget Office suggested earlier this year that because the labor force decline is so “unusually large decline over so short a time,” it does not anticipate the situation will change for at least another five years.
-------------
Link: http://reason.com/archives/2012/05/10/high-unemployment-the-new-normal
The headline unemployment statistics are wrong. Unemployment is higher than 8.1 percent and it will be for a while.
...The unemployment rate headline number would actually be higher if it counted people who want a job, but have not looked for one in the past month because they are so discouraged by their prospects...
In April 2012, labor force participation was 63.4, the lowest rate since January 1981...
Over the last 20 years, the usual trend is for labor participation to expand as unemployment falls. This is because workers are being added to payrolls, and thus cutting down on unemployment. However ... after the recession ended in the summer of 2009, both participation in the labor market and unemployment numbers have been falling. This suggests that the lower unemployment number is really just because so many people have stopped looking for work. Annoyingly, it doesn’t mean that the nation has increasing employment....
Labor force participation is important for economic growth because productivity is directly related to the number of people working in an economy. You can get productivity (increased economic output) from efficiency gains — i.e., bringing in robots to make goods in a factory faster then 100 people can. But usually, American economic output comes from innovation and new businesses that are staffed with living, breathing humans.
Different workers have different productive values, but it is a general rule that as a nation increases its labor pool, its economic growth expands. So part of the reason for the jobless faux-recovery has been the declining size of the American productive work force....
Ironically, the growing productivity numbers actually help make the case that the labor market and economy could be setting into a “new normal” pattern. Consider that growing productivity despite high unemployment does not create incentives for firms to hire. A circular problem then develops where the productivity from efficiency gains leads to weak hiring practices pushing labor force participation further down, which in turn leads to more output gains coming from efficiency rather than economic expansion.
This cycle can be broken, and perhaps it will in the coming years. However, the Congressional Budget Office suggested earlier this year that because the labor force decline is so “unusually large decline over so short a time,” it does not anticipate the situation will change for at least another five years.
-------------
Link: http://reason.com/archives/2012/05/10/high-unemployment-the-new-normal
Thursday, May 10, 2012
One in Three Young U.S. Workers Are "Underemployed"
From Gallup.com:
Gallup's unemployment measures show that April has also brought gloomy job news for young Americans and underscores that this group has been struggling disproportionately for some time. Those aged 18 to 29 are more than twice as likely as those in any other age group to be underemployed.
Additionally, while the unemployment rate among young adults in April is unchanged year over year, the underemployment rate has increased.
A larger percentage of younger American workers are working part time but looking for full-time work today than were doing so in April 2011. That is, employers appear to be hiring younger Americans in greater numbers on a part-time basis this year than last, possibly in response to the current high level of economic uncertainty.
Not surprisingly, given their relative lack of resources and experience, only 3.1% of young adults in April say they are self-employed. This compares with the 7.3% of all Americans in the workforce who report being self-employed. Thus, self-employment is also a job alternative that is less available to younger, less experienced Americans.
Today's slow economic growth is a disaster for those unemployed and underemployed as they look for jobs when so few new jobs are being created. For younger Americans as a group, this is a particularly acute issue.
Nearly one in three young adults in the workforce are not now able to gain full-time job experience. This not only hurts them temporarily, but deprives them of the experience they need to get a better job in the future. It also deprives U.S. companies of the skilled and experienced workers they will need for their businesses to prosper in the years ahead.
-------
Link: http://www.gallup.com/poll/154553/One-Three-Young-Underemployed.aspx
Gallup's unemployment measures show that April has also brought gloomy job news for young Americans and underscores that this group has been struggling disproportionately for some time. Those aged 18 to 29 are more than twice as likely as those in any other age group to be underemployed.
Additionally, while the unemployment rate among young adults in April is unchanged year over year, the underemployment rate has increased.
A larger percentage of younger American workers are working part time but looking for full-time work today than were doing so in April 2011. That is, employers appear to be hiring younger Americans in greater numbers on a part-time basis this year than last, possibly in response to the current high level of economic uncertainty.
Not surprisingly, given their relative lack of resources and experience, only 3.1% of young adults in April say they are self-employed. This compares with the 7.3% of all Americans in the workforce who report being self-employed. Thus, self-employment is also a job alternative that is less available to younger, less experienced Americans.
Today's slow economic growth is a disaster for those unemployed and underemployed as they look for jobs when so few new jobs are being created. For younger Americans as a group, this is a particularly acute issue.
Nearly one in three young adults in the workforce are not now able to gain full-time job experience. This not only hurts them temporarily, but deprives them of the experience they need to get a better job in the future. It also deprives U.S. companies of the skilled and experienced workers they will need for their businesses to prosper in the years ahead.
-------
Link: http://www.gallup.com/poll/154553/One-Three-Young-Underemployed.aspx
Sunday, May 6, 2012
A teen with a job becomes a rarity in US economy
From MSNBC:
Only about 25 percent of 16- to 19-year-olds currently are working, a drop of 10 percentage points from just five years ago, according to the Bureau of Labor Statistics.
The percentage of teenagers who have jobs, expressed as the ratio of employment to population, hovered between 40 and 50 percent for much of the 1980s and 1990s. The percentage began dropping about a decade ago, but the declines have been especially steep since the beginning of the Great Recession in late 2007....
The job market is unquestionably difficult for all teens, but experts say it’s especially hard for those who may need the money most: Teens from poor families and families in which a parent is out of work.
“It’s the opposite of what everybody thinks,” said Andrew Sum, director of the Center for Labor Market Studies at Northeastern University.
Sum said the disparity is partly because many kids get jobs through family and community connections such as parents, neighbors or relatives.
That can also have a ripple effect: The likelihood of working increases significantly once a teen has already held a job, according to his research....
----------
Link: http://lifeinc.today.msnbc.msn.com/_news/2012/05/03/11489527-a-teen-with-a-job-becomes-a-rarity-in-us-economy?lite
Only about 25 percent of 16- to 19-year-olds currently are working, a drop of 10 percentage points from just five years ago, according to the Bureau of Labor Statistics.
The percentage of teenagers who have jobs, expressed as the ratio of employment to population, hovered between 40 and 50 percent for much of the 1980s and 1990s. The percentage began dropping about a decade ago, but the declines have been especially steep since the beginning of the Great Recession in late 2007....
The job market is unquestionably difficult for all teens, but experts say it’s especially hard for those who may need the money most: Teens from poor families and families in which a parent is out of work.
“It’s the opposite of what everybody thinks,” said Andrew Sum, director of the Center for Labor Market Studies at Northeastern University.
Sum said the disparity is partly because many kids get jobs through family and community connections such as parents, neighbors or relatives.
That can also have a ripple effect: The likelihood of working increases significantly once a teen has already held a job, according to his research....
----------
Link: http://lifeinc.today.msnbc.msn.com/_news/2012/05/03/11489527-a-teen-with-a-job-becomes-a-rarity-in-us-economy?lite
People Not In Labor Force Soar By 522,000
From Zerohedge.com:
It is just getting sad now.
In April the number of people not in the labor force rose by a whopping 522,000 from 87,897,000 to
88,419,000. This is the highest on record.
The flip side, and the reason why the unemployment dropped to 8.1% is that the labor force participation rate just dipped to a new 30 year low of 64.3%.
Labor force participation Rate:
People not in labor force:
----------
Link: http://www.zerohedge.com/news/people-not-labor-force-soar-522000-labor-force-participation-rate-lowest-1981
It is just getting sad now.
In April the number of people not in the labor force rose by a whopping 522,000 from 87,897,000 to
88,419,000. This is the highest on record.
The flip side, and the reason why the unemployment dropped to 8.1% is that the labor force participation rate just dipped to a new 30 year low of 64.3%.
Labor force participation Rate:
People not in labor force:
----------
Link: http://www.zerohedge.com/news/people-not-labor-force-soar-522000-labor-force-participation-rate-lowest-1981
Friday, May 4, 2012
CYNICAL: Unemployment Rate drops because more people without work are not counted
From Markets Pulse at the WSJ.com:
So another 522,000 people are counted as out of the work force last month. And unemployment falls a tick to 8.1%.
Remind us again how that’s good news? There are 2.7 million more people out of the work force the past year, versus a mere 945,000 going into it. As such, the participation rate hits another cycle low of 63.6%. No worries, somehow today’s news–including the lower-than-expected job growth–will be spun positively....
The U.S. unemployment rate dropped to 8.1% in April but a broader measure was unchanged at 14.5% and a separate survey noted that the economy added a paltry 115,000. Why the drop?
This month, the decline in the jobless rate wasn’t a positive sign, as it primarily came from people dropping out of the labor force....
Even though the broader rate dropped, there were more discouraged workers in April and the number of part-time employees who want full-time work also increased.
------------
Link: http://stream.wsj.com/story/markets/SS-2-5/
So another 522,000 people are counted as out of the work force last month. And unemployment falls a tick to 8.1%.
Remind us again how that’s good news? There are 2.7 million more people out of the work force the past year, versus a mere 945,000 going into it. As such, the participation rate hits another cycle low of 63.6%. No worries, somehow today’s news–including the lower-than-expected job growth–will be spun positively....
The U.S. unemployment rate dropped to 8.1% in April but a broader measure was unchanged at 14.5% and a separate survey noted that the economy added a paltry 115,000. Why the drop?
This month, the decline in the jobless rate wasn’t a positive sign, as it primarily came from people dropping out of the labor force....
Even though the broader rate dropped, there were more discouraged workers in April and the number of part-time employees who want full-time work also increased.
------------
Link: http://stream.wsj.com/story/markets/SS-2-5/
Thursday, May 3, 2012
Even After Jobless Claims, Jobs Picture Isn’t Pretty: real rate over 14% unemployed
From the Market Beat blog at WSJ.com:
(W)here exactly do we stand on the jobs front? Here’s a scorecard:
-Weekly jobless claims are sitting around 383,000, the four-week average.
-ADP pegs April private-sector job growth at 119,000.
-TrimTabs pegged April jobs growth at 116,000.
-Announced layoffs are rising, as per Challenger, Gray.
-Last month, the BLS reported 120,000 jobs were created in March. The Street expects that tomorrow, the BLS will report 168,000 jobs were created.
-The official unemployment rate is 8.2% — the so-called U-3 — but everybody understands by now that numbers excludes millions who have either dropped out of the labor force, or can’t find full-time work. A broader measure, the U-6, is at 14.5%.
Where’s that leave us? Well, it leaves us where our doctor said it does. People without jobs are still having a hard time finding jobs.
And take two of these and call him in the morning.
--------------
Link: http://blogs.wsj.com/marketbeat/2012/05/03/after-jobless-claims-a-scorecard-and-new-jobs-measuring-tool/
(W)here exactly do we stand on the jobs front? Here’s a scorecard:
-Weekly jobless claims are sitting around 383,000, the four-week average.
-ADP pegs April private-sector job growth at 119,000.
-TrimTabs pegged April jobs growth at 116,000.
-Announced layoffs are rising, as per Challenger, Gray.
-Last month, the BLS reported 120,000 jobs were created in March. The Street expects that tomorrow, the BLS will report 168,000 jobs were created.
-The official unemployment rate is 8.2% — the so-called U-3 — but everybody understands by now that numbers excludes millions who have either dropped out of the labor force, or can’t find full-time work. A broader measure, the U-6, is at 14.5%.
Where’s that leave us? Well, it leaves us where our doctor said it does. People without jobs are still having a hard time finding jobs.
And take two of these and call him in the morning.
--------------
Link: http://blogs.wsj.com/marketbeat/2012/05/03/after-jobless-claims-a-scorecard-and-new-jobs-measuring-tool/
Why Small Business Owners Are Hesitant to Hire
From CNBC:
Many small business owners aren't hiring or expanding because the outlook for the economy, or their own companies, is uncertain.
That raises the question of whether small businesses will give the economy the boost that it needs. Economists say that in past recoveries, small companies were the first to hire. When the economy was improving, they were more nimble than large companies because they didn't have the bureaucracy that can slow the hiring process. Their hiring helped propel the economy forward.
The economy is growing, but that growth has slowed — and so has the pace of hiring among business with less than 500 employees. The U.S. economy grew at an annual rate of just 2.2 percent from January through March, according to government figures. That's down from the moderate 3 percent growth during the last three months of 2011...
Small business owners don't want to take chances because they can see how troubled the national economy is, says Paul Merski, chief economist with the Independent Community Bankers of America, a banking trade group.
"If you go through the litany of economic data, it is just not giving small businesses the confidence to hire, to expand," Merski says. "They don't see the future return on that (expansion), or the future cash flow to take on additional debt." One sign that small businesses may be poised to do more hiring is that they would take out loans to fuel expansion.
But it's not just that companies aren't applying for loans.
"Small businesses haven't even tapped their open lines of credit," Merski says. "I hear from community bankers saying, `I wish I had loan demand."
Wells Fargo & Co. is seeing the trend firsthand. "More people are paying down their lines of credit than are drawing down on them," says Mark Bernstein, head of the bank's small business division.
The Great Recession is still fresh in the minds of many small business owners. "Who would expect small business people not to be a little bit cautious after this experience?" Bernstein says...
----------------
Link: http://www.cnbc.com/id/47278193
Many small business owners aren't hiring or expanding because the outlook for the economy, or their own companies, is uncertain.
That raises the question of whether small businesses will give the economy the boost that it needs. Economists say that in past recoveries, small companies were the first to hire. When the economy was improving, they were more nimble than large companies because they didn't have the bureaucracy that can slow the hiring process. Their hiring helped propel the economy forward.
The economy is growing, but that growth has slowed — and so has the pace of hiring among business with less than 500 employees. The U.S. economy grew at an annual rate of just 2.2 percent from January through March, according to government figures. That's down from the moderate 3 percent growth during the last three months of 2011...
Small business owners don't want to take chances because they can see how troubled the national economy is, says Paul Merski, chief economist with the Independent Community Bankers of America, a banking trade group.
"If you go through the litany of economic data, it is just not giving small businesses the confidence to hire, to expand," Merski says. "They don't see the future return on that (expansion), or the future cash flow to take on additional debt." One sign that small businesses may be poised to do more hiring is that they would take out loans to fuel expansion.
But it's not just that companies aren't applying for loans.
"Small businesses haven't even tapped their open lines of credit," Merski says. "I hear from community bankers saying, `I wish I had loan demand."
Wells Fargo & Co. is seeing the trend firsthand. "More people are paying down their lines of credit than are drawing down on them," says Mark Bernstein, head of the bank's small business division.
The Great Recession is still fresh in the minds of many small business owners. "Who would expect small business people not to be a little bit cautious after this experience?" Bernstein says...
----------------
Link: http://www.cnbc.com/id/47278193
Wednesday, May 2, 2012
Drop in private-sector hiring spurs worry
From Reuters:
The S&P 500 and the Dow edged lower on Wednesday as data showed that private sector hiring fell far more than expected in April, sparking concerns that Friday's U.S. jobs report will also disappoint investors.
Private employers added 119,000 jobs in April, well short of the 177,000 expected, the ADP report showed. That sparked market rumors that Friday's payrolls data will show the economy added just 125,000 to 150,000 jobs last month, well below a Reuters consensus forecast of 170,000....
Link: http://www.reuters.com/article/2012/05/02/us-markets-stocks
---------------------
From WSJ.com:
Hiring Data Reinforce View That Job Market Has Cooled
A gauge of private-sector hiring showed weakness in April, the latest data to suggest the labor market has cooled a bit from its healthy early-year pace.
The U.S. added 119,000 nonfarm private-sector jobs last month, the slowest pace since September, according to a report Wednesday by payroll giant Automatic Data Processing Inc. and forecasting firm Macroeconomic Advisers.
Link: http://online.wsj.com/article/SB10001424052702304743704577379702035789484.html
The S&P 500 and the Dow edged lower on Wednesday as data showed that private sector hiring fell far more than expected in April, sparking concerns that Friday's U.S. jobs report will also disappoint investors.
Private employers added 119,000 jobs in April, well short of the 177,000 expected, the ADP report showed. That sparked market rumors that Friday's payrolls data will show the economy added just 125,000 to 150,000 jobs last month, well below a Reuters consensus forecast of 170,000....
Link: http://www.reuters.com/article/2012/05/02/us-markets-stocks
---------------------
From WSJ.com:
Hiring Data Reinforce View That Job Market Has Cooled
A gauge of private-sector hiring showed weakness in April, the latest data to suggest the labor market has cooled a bit from its healthy early-year pace.
The U.S. added 119,000 nonfarm private-sector jobs last month, the slowest pace since September, according to a report Wednesday by payroll giant Automatic Data Processing Inc. and forecasting firm Macroeconomic Advisers.
Link: http://online.wsj.com/article/SB10001424052702304743704577379702035789484.html
Is the GM Success Story false?
From Investors Business Daily:
The Obama camp can't stop clucking about how he saved GM and the car industry. But if the GM bailout is such a success story, why can't it pay back its debt to taxpayers?
...Of the top bailout recipients, GM is the biggest laggard, the TARP watchdog says in his latest quarterly report to Congress. Bank of America, Citigroup, Chrysler and Chrysler Financial all have paid off their debt and left the TARP program. Even AIG has paid back more than 75% of what it owes taxpayers.
GM, on the other hand, still owes more than half the $50 billion in federal funds it received when the combination of the recession and its costly union contracts drove it into bankruptcy. And its lending arm, GMAC (now Ally Financial), still owes $14.5 billion.
What's worse, it's not clear that GM actually repaid what it's gotten credit for repaying. Check out this note buried in the inspector's report: "As part of a credit agreement with Treasury, $16.4 billion in TARP funds were placed in an escrow account that GM could access only with Treasury's permission."
As it turns out, GM got Treasury's OK to "repay" more than $6.7 billion "using a portion of the escrow account that had been funded with TARP funds." So GM is merely paying the government back with government money, not money GM is earning selling cars, as the administration has claimed.
Worse, GM in effect is still borrowing money. Consider this item from the report: "What remained in escrow was released to GM." Bottom line: Taxpayers have not been paid back and are still on the hook as GM continues to require government help. Yet Obama has hailed the GM bailout as the signature achievement of his big government programs....
------------
Link: http://news.investors.com/article/609777/201204301847/general-motors-not-really-repaying-taxpayer-bailout.htm
The Obama camp can't stop clucking about how he saved GM and the car industry. But if the GM bailout is such a success story, why can't it pay back its debt to taxpayers?
...Of the top bailout recipients, GM is the biggest laggard, the TARP watchdog says in his latest quarterly report to Congress. Bank of America, Citigroup, Chrysler and Chrysler Financial all have paid off their debt and left the TARP program. Even AIG has paid back more than 75% of what it owes taxpayers.
GM, on the other hand, still owes more than half the $50 billion in federal funds it received when the combination of the recession and its costly union contracts drove it into bankruptcy. And its lending arm, GMAC (now Ally Financial), still owes $14.5 billion.
What's worse, it's not clear that GM actually repaid what it's gotten credit for repaying. Check out this note buried in the inspector's report: "As part of a credit agreement with Treasury, $16.4 billion in TARP funds were placed in an escrow account that GM could access only with Treasury's permission."
As it turns out, GM got Treasury's OK to "repay" more than $6.7 billion "using a portion of the escrow account that had been funded with TARP funds." So GM is merely paying the government back with government money, not money GM is earning selling cars, as the administration has claimed.
Worse, GM in effect is still borrowing money. Consider this item from the report: "What remained in escrow was released to GM." Bottom line: Taxpayers have not been paid back and are still on the hook as GM continues to require government help. Yet Obama has hailed the GM bailout as the signature achievement of his big government programs....
------------
Link: http://news.investors.com/article/609777/201204301847/general-motors-not-really-repaying-taxpayer-bailout.htm
Tuesday, May 1, 2012
Obama Fails to Stem Middle-Class Slide He Blamed on Bush
From Bloomberg.com:
Barack Obama campaigned four years ago assailing President George W. Bush for wage losses suffered by the middle class.
More than three years into Obama’s own presidency, those declines have only deepened.
The rebound from the worst recession since the 1930s has generated relatively few of the moderately skilled jobs that once supported the middle class, tightening the financial squeeze on many Americans, even those who are employed.
“It started long before Obama, but he hasn’t done anything,” said John Forsyth, 58, a railroad-car inspector and political independent from Lebanon, Ohio. “He kept pushing this change, change, change, and he hasn’t done anything.”
---
...As a candidate in 2008, Obama blamed the reversals largely on the policies of Bush and other Republicans. He cited census figures showing that median income for working-age households -- those headed by someone younger than 65 -- had dropped more than $2,000 after inflation during the first seven years of Bush’s time in office.
Yet real median household income in March was down $4,300 since Obama took office in January 2009 and down $2,900 since the June 2009 start of the economic recovery, according to an analysis of census data by Sentier Research, an economic- consulting firm in Annapolis, Maryland....
While there is no settled definition of middle class, the middle 60 percent of households nationwide in 2010 earned between $20,000 and $100,000, according to the U.S. Census....
---
...Ninety-five percent of the net job losses during the recession were in middle-skill occupations, such as office workers, bank tellers and machine operators, according to research by economists Nir Jaimovich of Duke University in Durham, North Carolina, and Henry Siu of the University of British Columbia in Vancouver.
The job growth since has been clustered in either high- skill fields inaccessible to workers without advanced education or low-paying industries, they found.
In March, 3.2 million fewer Americans held sales and office jobs than five years earlier, and 1.2 million fewer were employed in transportation and production fields, all areas that typically pay middle-income wages, according to the Bureau of Labor Statistics....
-----------
Link: http://www.bloomberg.com/news/2012-05-01/obama-fails-to-stem-middle-class-slide-he-blamed-on-bush.html
Barack Obama campaigned four years ago assailing President George W. Bush for wage losses suffered by the middle class.
More than three years into Obama’s own presidency, those declines have only deepened.
The rebound from the worst recession since the 1930s has generated relatively few of the moderately skilled jobs that once supported the middle class, tightening the financial squeeze on many Americans, even those who are employed.
“It started long before Obama, but he hasn’t done anything,” said John Forsyth, 58, a railroad-car inspector and political independent from Lebanon, Ohio. “He kept pushing this change, change, change, and he hasn’t done anything.”
---
...As a candidate in 2008, Obama blamed the reversals largely on the policies of Bush and other Republicans. He cited census figures showing that median income for working-age households -- those headed by someone younger than 65 -- had dropped more than $2,000 after inflation during the first seven years of Bush’s time in office.
Yet real median household income in March was down $4,300 since Obama took office in January 2009 and down $2,900 since the June 2009 start of the economic recovery, according to an analysis of census data by Sentier Research, an economic- consulting firm in Annapolis, Maryland....
While there is no settled definition of middle class, the middle 60 percent of households nationwide in 2010 earned between $20,000 and $100,000, according to the U.S. Census....
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...Ninety-five percent of the net job losses during the recession were in middle-skill occupations, such as office workers, bank tellers and machine operators, according to research by economists Nir Jaimovich of Duke University in Durham, North Carolina, and Henry Siu of the University of British Columbia in Vancouver.
The job growth since has been clustered in either high- skill fields inaccessible to workers without advanced education or low-paying industries, they found.
In March, 3.2 million fewer Americans held sales and office jobs than five years earlier, and 1.2 million fewer were employed in transportation and production fields, all areas that typically pay middle-income wages, according to the Bureau of Labor Statistics....
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Link: http://www.bloomberg.com/news/2012-05-01/obama-fails-to-stem-middle-class-slide-he-blamed-on-bush.html
Saturday, April 28, 2012
Why Businesses Aren't Investing in the US
From CNBC:
Businesses aren’t investing in the United States because of a lack of consumer demand, International Paper CEO John Faraci said Friday.
“I think this was all about consumer spending and demand. You know, the problem we have is there’s inadequate demand to create jobs. We know how to respond when there is demand,” he said on CNBC’s “The Kudlow Report.”...
Consumer spending has been damped partly because the nationwide housing market has yet to recover, he said.
“Until it does, we’re not going to see the kind of consumer spending you would expect coming out of a recovery,” he said...
--
Don Peebles, CEO of Peebles Corp., a real estate developer, said that housing remains a drag on the economy.
A strong market, cheap money and high leverage fueled growth before the financial crisis, he said.
“What’s happening now is the housing market is not able to carry the economy,” he said. “Americans’ wealth has been decimated as a result of the lost value in their homes.” ....
--
Mort Zuckerman, founder of real estate investment trust Boston Properties and publisher of the New York Daily News and U.S. News & World Report, took aim at the slow growth.
Zuckerman blamed the housing-market collapse, as well as health-care costs and what he called an “inadequate, badly structured stimulus program.”
“Clearly, you should’ve had a GDP growth now of somewhere between 6 and 8 percent, with the degree of monetary and fiscal stimulus,” he said.
--------------
Link: http://www.cnbc.com/id/47212263
Businesses aren’t investing in the United States because of a lack of consumer demand, International Paper CEO John Faraci said Friday.
“I think this was all about consumer spending and demand. You know, the problem we have is there’s inadequate demand to create jobs. We know how to respond when there is demand,” he said on CNBC’s “The Kudlow Report.”...
Consumer spending has been damped partly because the nationwide housing market has yet to recover, he said.
“Until it does, we’re not going to see the kind of consumer spending you would expect coming out of a recovery,” he said...
--
Don Peebles, CEO of Peebles Corp., a real estate developer, said that housing remains a drag on the economy.
A strong market, cheap money and high leverage fueled growth before the financial crisis, he said.
“What’s happening now is the housing market is not able to carry the economy,” he said. “Americans’ wealth has been decimated as a result of the lost value in their homes.” ....
--
Mort Zuckerman, founder of real estate investment trust Boston Properties and publisher of the New York Daily News and U.S. News & World Report, took aim at the slow growth.
Zuckerman blamed the housing-market collapse, as well as health-care costs and what he called an “inadequate, badly structured stimulus program.”
“Clearly, you should’ve had a GDP growth now of somewhere between 6 and 8 percent, with the degree of monetary and fiscal stimulus,” he said.
--------------
Link: http://www.cnbc.com/id/47212263
Economy in U.S. Grew Less Than Forecast in First Quarter
From Bloomberg.com:
The U.S. economy expanded less than forecast in the first quarter as a smaller contribution from inventories overshadowed the biggest gain in consumer spending in more than a year.
Gross domestic product, the value of all goods and services produced in the U.S., rose at a 2.2 percent annual rate after a 3 percent pace, Commerce Department figures showed yesterday in Washington. The median projection of economists surveyed by Bloomberg News called for a 2.5 percent gain....
--
“People have been spending -- whether they continue to spend is a function of what happens with the labor market,” said Joseph Lavorgna, chief economist at Deutsche Bank Securities Inc. in New York.
Americans dipped into savings as they increased their purchases, yesterday’s data showed. Disposable income after inflation rose 0.4 percent in the first quarter following a 1.7 percent gain. The saving rate from January through March eased to 3.9 percent from 4.5 percent.
The drop “raises the question, ‘How long can we continue to consume by saving less?’” said Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., the world’s biggest manager of bond funds.
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Link: http://www.bloomberg.com/news/2012-04-27/economy-in-u-s-expands-at-2-2-annual-rate-less-than-forecast.html
The U.S. economy expanded less than forecast in the first quarter as a smaller contribution from inventories overshadowed the biggest gain in consumer spending in more than a year.
Gross domestic product, the value of all goods and services produced in the U.S., rose at a 2.2 percent annual rate after a 3 percent pace, Commerce Department figures showed yesterday in Washington. The median projection of economists surveyed by Bloomberg News called for a 2.5 percent gain....
--
“People have been spending -- whether they continue to spend is a function of what happens with the labor market,” said Joseph Lavorgna, chief economist at Deutsche Bank Securities Inc. in New York.
Americans dipped into savings as they increased their purchases, yesterday’s data showed. Disposable income after inflation rose 0.4 percent in the first quarter following a 1.7 percent gain. The saving rate from January through March eased to 3.9 percent from 4.5 percent.
The drop “raises the question, ‘How long can we continue to consume by saving less?’” said Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., the world’s biggest manager of bond funds.
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Link: http://www.bloomberg.com/news/2012-04-27/economy-in-u-s-expands-at-2-2-annual-rate-less-than-forecast.html
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