7 Million Jobs Lost Forever?
January 8, 2010 by joel
Filed under Government
January 08, 2010
CNN Money
By Chris Isidore
A two-year string of job losses appears to be near an end, if it hasn’t ended already.
When the government releases its jobs report for December on Friday morning, some believe it will show an increase in hiring. That would be the first rise in payrolls in two years, although the consensus of economists surveyed by Briefing.com is for another loss of 35,000 jobs.
Most economists don’t expect the employment picture to significantly improve anytime this year — or over the next few years for that matter.
The unemployment rate, which stood at 10% in November, is expected to stay uncomfortably high for the foreseeable future. Some experts even suggest that the labor market won’t be able to fully recover from the 7.2 million jobs lost since the start of 2008 before another recession and round of job losses.
This probably won’t be a jobless recovery, like the 21-month period that followed the 2001 recession during which an additional 1.1 million jobs were lost. Most economists are looking for employers to start adding to U.S. payrolls early this year.
10 Best Places for jobs
The first step of climbing out of the job hole is to stop digging. So a positive payroll number would be significant. But the hole the economy fell into during the Great Recession is so deep, the return of hiring won’t do much to significantly fix the weak job market.
“The problem is recovery doesn’t mean recovered,” said Lakshman Achuthan, managing director of Economic Cycle Research Institute. “We need a long recovery to get back 7 million jobs.”
Achuthan believes even if there is decent growth this year, there will be slow growth over the course of the expansion. That means it could take as long as 10 years to recover all the lost jobs — and that assumes that there isn’t another recession in that time frame. Achuthan believes another recession later this decade is likely.
Unemployment heading up. The unemployment rate is forecast to be unchanged for December. But most economists expect it to rise during the course of 2010, even as employers start adding jobs.
Part of that is because the economy needs a gain of more than 100,000 jobs a month just to keep pace with population growth.
The other part of the problem is that there is a large pool of 6 million out-of-work adults who have become discouraged and stopped looking for work and are therefore not counted as unemployed. As employers start hiring again, many of those will flood back into the labor force .That will drive up the unemployment rate.
Gad Lavanon, associate director of macroeconomic research for the Conference Board said he is looking for unemployment at or above 10% all the way through 2010. He doesn’t expect unemployment to return to pre-recession levels of under 5% anytime in the next six years.
“Our forecast is for a very mild jobs recovery probably throughout 2010,” he said. He said low consumer confidence and tight credit will keep consumer spending in check, which in turn will stop employers from adding staff in significant numbers.
“If you look at previous expansions, consumer confidence was at a much higher level than it is now at this point in the cycle,” he said.
Barney Frank To Get Give Bankers $4 Trillion
December 30, 2009 by joel
Filed under Government
December 30, 2009
Bloomberg
By David Reilly
To close out 2009, I decided to do something I bet no member of Congress has done — actually read from cover to cover one of the pieces of sweeping legislation bouncing around Capitol Hill.
Hunkering down by the fire, I snuggled up with H.R. 4173, the financial-reform legislation passed earlier this month by the House of Representatives. The Senate has yet to pass its own reform plan. The baby of Financial Services Committee Chairman Barney Frank, the House bill is meant to address everything from too-big-to-fail banks to asleep-at-the-switch credit-ratings companies to the protection of consumers from greedy lenders.
I quickly discovered why members of Congress rarely read legislation like this. At 1,279 pages, the “Wall Street Reform and Consumer Protection Act” is a real slog. And yes, I plowed through all those pages. (Memo to Chairman Frank: “ystem” at line 14, page 258 is missing the first “s”.)
The reading was especially painful since this reform sausage is stuffed with more gristle than meat. At least, that is, if you are a taxpayer hoping the bailout train is coming to a halt.
If you’re a banker, the bill is tastier. While banks opposed the legislation, they should cheer for its passage by the full Congress in the New Year: There are huge giveaways insuring the government will again rescue banks and Wall Street if the need arises.
Nuggets Gleaned
Here are some of the nuggets I gleaned from days spent reading Frank’s handiwork:
– For all its heft, the bill doesn’t once mention the words “too-big-to-fail,” the main issue confronting the financial system. Admitting you have a problem, as any 12- stepper knows, is the crucial first step toward recovery.
– Instead, it supports the biggest banks. It authorizes Federal Reserve banks to provide as much as $4 trillion in emergency funding the next time Wall Street crashes. So much for “no-more-bailouts” talk. That is more than twice what the Fed pumped into markets this time around. The size of the fund makes the bribes in the Senate’s health-care bill look minuscule.
– Oh, hold on, the Federal Reserve and Treasury Secretary can’t authorize these funds unless “there is at least a 99 percent likelihood that all funds and interest will be paid back.” Too bad the same models used to foresee the housing meltdown probably will be used to predict this likelihood as well.
Economists Warn Against Federal Debt Spending
December 18, 2009
Info Wars
222 economists have signed on to the following statement:
The country’s economic future depends on Congress’ ability to rein in the growth of federal spending. Failing to restrict spending growth will further balloon the national debt, impede economic growth, and threaten the long-term economic health of our Nation. Controlling spending growth to reverse our dangerous debt accumulation can be done without endangering the near-term economic recovery, and will prove beneficial over the longer horizon.
The 2009 near-term “stimulus” has proven to be an inefficient spur to job creation and does not merit repeating. Any further policy efforts should be focused on opening borders to free trade, cutting burdensome regulations, and providing necessary tax relief to employers and employees.
Unemployment Claims Rise
December 11, 2009 by Andrew
Filed under Government
December 11, 2009
The Raw Story
New US claims for unemployment benefits rose in the past week but held below the level of 500,000, government data showed Thursday.
New unemployment claims in the week ending December 5 climbed to 474,000 from the prior week’s unrevised 457,000, the Labor Department said.
Private economists had expected a drop in new claims to 455,000.
Overall, the report showed further stabilization of a labor market hit hard by the recession.
The four-week moving average, which smooths out week-to-week volatility, fell 7,750 to 473,750.
The insured unemployment rate was 3.9 percent for the week ending November 28, a decrease of 0.2 percentage points from the prior week.
Additionally, the number of people receiving benefits for the week to November 28 was 5,157,000, a decrease of 303,000 from the preceding week.
The weekly report offers an up-to-date snapshot of the job market, critical to US economic recovery from recession.
The report came less than a week after data showing the official unemployment rate fell in November to 10.0 percent from 10.2 percent, suggesting the problems in the job market had peaked. The report showed 11,000 jobs were lost in the month, a sharp drop from previous months.
Geither Wants TARP Extension Until October
December 9, 2009 by Andrew
Filed under Government
December 9, 2009
Bloomberg
By Robert Schmidt and Rebecca Christie
Treasury Secretary Timothy Geithner plans to tell Congress that the Obama administration will extend the $700 billion financial-rescue program until next October, according to people familiar with the matter.
While the Troubled Asset Relief Program expires on Dec. 31, Geithner can extend it by notifying Congress. A letter notifying Congress of the extension could come as soon as today, said the people, who declined to be identified. Andrew Williams, a Treasury Department spokesman, declined to comment.
The TARP, passed in October 2008 to prevent a collapse of the financial system, has drawn criticism from Congressional opponents of taxpayer-funded bailouts of banks including Citigroup Inc. The Obama administration, preparing the ground for an extension, has emphasized that the program may also be used to aid homeowners and small companies.
“There has rarely been a less loved or more necessary emergency program than TARP,” President Barack Obama said yesterday in a speech in Washington. “I’m asking my Treasury secretary to continue mobilizing the remaining TARP funds to facilitate lending to small businesses.”
In public comments about the program over the past several weeks, Geithner has cautioned that shutting it down too soon could hurt the economic recovery.
Unemployment Rate
Unemployment at 10 percent has sapped Obama’s approval ratings and threatens to cut into the Democratic Party’s majorities in Congress.
A year into Obama’s presidency, only 32 percent of poll respondents believe the country is headed in the right direction, down from 40 percent who said so in September, according to a Bloomberg National Poll.
The poll of 1,000 U.S. adults was conducted Dec. 3-7 by Selzer & Co., a Des Moines, Iowa-based firm. The margin of error is plus or minus 3.1 percentage points.
Economy’s Rebound Not as Strong as Experts Thought
November 25, 2009
My Way
By Jeannie Aversa
The economy grew at a 2.8 percent pace last quarter, as the recovery got off to a slower start than first thought.
The Commerce Department’s new reading on gross domestic product wasn’t as energetic as the 3.5 percent growth rate for the July-September period estimated just a month ago.
The main factors behind the downgrade: consumers didn’t spend as much, commercial construction was weaker and the nation’s trade deficit was more of a drag on growth. Businesses also trimmed more of their stockpiles, another restraining factor.
The new reading on GDP, which measures the value of all goods and services produced in the United States – from machinery to manicures – was a tad weaker than the 2.9 percent growth rate economists surveyed by Thomson Reuters had expected.
Still, the good news is that the economy finally started to grow again, after a record four straight losing quarters. The bad news is that the rebound, now and in the months ahead, probably will be lethargic.
The worst recession since the 1930s is very likely over, but the economy’s return to good health will take time, Fed officials and economists say.
Growth probably won’t be strong enough to quickly drive down the nation’s unemployment rate, currently at 10.2 percent. It’s only the second time in the post-World War II period that unemployment has topped 10 percent.
Some economists think economic growth will slow to around a 2.5 percent pace in the current quarter, although others say it could clock in at about 3 percent if holiday sales are better than expected.
Most say they think the economy will weaken again next year, with growth at a pace of around 1 percent as the impact of the $787 billion stimulus package fades and consumers keep tightening their belts under the strain of high unemployment and hard-to-get credit.
Number of Troubled Banks Rises to 552
November 25, 2009
The Wall Street Journal
By Damian Paletta
U.S. lenders saw loans fall by the largest amount since the government began tracking such data, suggesting that nervousness among banks continues to hamper economic recovery.
Total loan balances fell by $210.4 billion, or 3%, in the third quarter, the biggest decline since data collection began in 1984, according to a report released Tuesday by the Federal Deposit Insurance Corp. The FDIC also said its fund to backstop deposits fell into negative territory for just the second time in its history, pushed down by a wave of bank failures.
The decline in total loans showed how banks remain reluctant to lend, despite the hundreds of billions of dollars the government has spent to prop up ailing banks and jump-start lending. The issue has taken on greater urgency with the U.S. unemployment rate hitting 10.2% in October, even as the economy appears to be stabilizing.
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“There is no question that credit availability is an important issue for the economic recovery,” FDIC Chairman Sheila Bair told reporters Tuesday. “We need to see banks making more loans to their business customers.”
She said large banks — which account for 56% of industry assets and received a large share of the government’s bailout funds — accounted for 75% of the decline.
James Chessen, chief economist at the American Bankers Association, an industry trade group, said, “It’s a very risky time for any lender because the probability of loss is greater, and they are being prudent in their approach to lending. Their regulators are demanding it.”
The FDIC’s quarterly banking profile, which analyzed data from 8,099 federally insured banks, reported that 552 financial institutions, with combined assets of $345.9 billion, were on the government’s problem list at the end of September, up from 416 with $299.8 billion of assets at the end of June. That means roughly 7% of all U.S. banks are on the list and face a higher probability of failure.
FDIC officials don’t disclose the names of banks on the list, in part because it could lead to bank runs.
Many banks on the problem list are expected to return to health, but the FDIC is seeing a jump in the number of failures. Fifty banks failed in the third quarter, the most in a single quarter since the fourth quarter of 1992. Three new banks were chartered in the third quarter, the lowest quarterly number since World War II.
The FDIC said its deposit-insurance fund, which backstops trillions of dollars in deposit accounts, fell to a negative $8.2 billion at the end of September, an $18.6 billion drop from the end of June. The FDIC said one reason for the decrease was that the agency shifted $21.7 billion from the fund into reserves for bank failures over the next 12 months.
Even though the FDIC’s fund balance was negative, it still had reserves of cash. The FDIC said it had $23.3 billion in cash at the end of September to help resolve future bank failures.
Increased Debt Could Fuel Double-Dip Recession
November 18, 2009
Reuters
By John O’Callaghan
President Barack Obama gave his sternest warning yet about the need to contain rising U.S. deficits, saying on Wednesday that if government debt were to pile up too much, it could lead to a double-dip recession.
With the U.S. unemployment rate at 10.2 percent, Obama told Fox News his administration faces a delicate balance of trying to boost the economy and spur job creation while putting the economy on a path toward long-term deficit reduction.
His administration was considering ways to accelerate economic growth, with tax measures among the options to give companies incentives to hire, Obama said in the interview with Fox conducted in Beijing during his nine-day trip to Asia.
“It is important though to recognize if we keep on adding to the debt, even in the midst of this recovery, that at some point, people could lose confidence in the U.S. economy in a way that could actually lead to a double-dip recession,” he said.
Fox News, which released a transcript of the interview, showed that comment by Obama on Wednesday morning and said the full discussion would be broadcast later in the day.
Deficits Funded with Monetization and Hyperinflation
November 06, 2009
The International Forecaster
Old bubble mentality still remains, economic problems not over, banking and Wall Street to blame for our state of affairs, There is now a warning that conditions could come about to extend the current economic troubles for a long time. Almost all the excessive hedge fund de-leveraging is over. Banks have continued to hold 40 to 1 leveraged positions, because they cannot exit them without a major economic recovery without going bankrupt. Our government remains trapped in the same old bubble mentality in its activist control banking and policymaking having issued $1.9 trillion in additional debt over the past year. Banks and government still do not see the warning signals. Any sane businessman who views the continued leverage being used by Fannie, Freddie, Ginnie and the FHA has to cringe in horror, as leverage increases daily without end. We predicted six years ago that the government would end up owning all the mortgages in a bankrupt nationalization process and that is exactly what is happening. Mind you this has been going on worldwide in order to deter financial collapse. Papering over the problem is not a solution. We are starting to see governments worldwide begin to raise interest rates and begin to withdraw loans in order to bring back financial normality. Wait until they discover such well-intentioned moves will cause a relapse in economic and financial activity and they begin to slip back into the morass from which they thought they were ascending. If rates are raised and funds withdrawn from the system the world financial system will fall into depression. They know that, but they are hoping hope against hope they are wrong and that it will work. They do not want it discovered that they created this monstrous problem deliberately.
Already we are seeing global leveraged speculation growing. They believe the problems are over and they are wrong, it isn’t over, nor will it be for a long time to come.
They are even moving headlong to destroy the US dollar as the world’s reserve, certainly a reversal of fortune. Since 8/15/71 this same group has been destroying the dollar in their greed for money and power by abandoning the gold standard. They knew exactly what they were doing. It is now official worldwide. The Illuminists have decreed officially that the US dollar is being phased out after they managed to destroy the manufacturing and service base of our economy via free trade, globalization, offshoring and outsourcing. A deliberate attempt to destroy our country and for transnational conglomerates to hide their ill-gotten profits in offshore entities, which pay no taxation to our government.
There is still nothing constrained about what banks and brokerage houses are doing. They are still leveraged and the credit crisis is not over. We may get a respite over the next nine months, but if $2 trillion in stimulus and increased bank loans are not forthcoming, it won’t work. If the money and credit is put into the system they’ll extend another year and if not the house will come tumbling down. Even if they expand that will be negatively affected by selective higher interest rates, withdrawal of government loans and a cutback in money and credit, which is already in process.
All of the foregoing will lead to even more volatility in markets. Economies will not improve for any lasting period of time,. All of this will also be negatively affected by the deliberate attempt by elitists to end the reign of the US and European economies. Get ready for ever lower wages in Western economies and permanent unemployment of 15% to 25%, while the transnational conglomerates and the third world prosper. This pandemonium of change will drive investors away from stock and bond markets and into commodities and gold and silver. Wealth preservation and safety will become the watchword by investing. This in part will be caused by falling stock markets, financial crisis and continued monetary disorder. Making matters worse re-flation has been underway since May. The inflation will manifest itself this coming year, as official inflation numbers hit 5% and real inflation rises above 14%. This game is not for everyone, but like it or not we are all in the game.
In America governmental policy has been dreadful, but more importantly those policies are formulated, paid for and executed, by forces behind the scenes. Elected representatives have done a terrible job, but banking and Wall Street are what have brought us to our present state of affairs. There has been nothing well intentioned that has expired.
When Will Jobs Return
October 30, 2009
CNN Money
By Chris Isidore
The economy is growing again. So when are the jobs that go with growth going to get here?
Not anytime soon, unfortunately.
The consensus forecast is that job losses will continue through the end of this year, with many economists not expecting unemployment to peak until next summer. That will add to the 7.2 million jobs already lost in this downturn.
Even with Thursday’s report that showed the economy grew at a 3.5% annual rate in the third quarter, the continued job losses are not a shock.
Jobs are what are known as a trailing or lagging indicator, meaning that they change in response to other economic events, rather than predicting changes the way a leading indicator, such as the stock market, does. That’s because even after a recession has ended, employers are slow to add staff until they’re sure that demand has returned.
The real worry is that the deepest and longest recession since the Great Depression will be followed by a jobless recovery, just like what happened after the recessions in 1990-1991 and 2001.
50 Best Jobs in America
It took almost two years after the end of the 2001 recession before the economy started adding jobs on a consistent basis. And it wasn’t until February 2005 until the job market got back to the employment levels of four years earlier.
Some economists argue that the job losses in this downturn will prompt employers to start hiring at a rapid clip soon after the economy starts to improve.
“People cut so quickly that they cut things they shouldn’t have, not just fat but also muscle and bone,” said Robert Brusca of FAO Economics.
Many other economists were already looking for a tough labor market for at least the next year.
According to a survey by the National Association of Business Economics, the consensus forecast of 44 top economists is for an addition of only 12,000 jobs a month in the first quarter of next year.
The economists surveyed also indicated they don’t expect monthly job gains to top the 150,000 level — which is generally thought of as what is needed to keep pace with population growth — until the end of 2010.
And in the most troubling sign, more than a half of the economists surveyed said they didn’t expect a recovery to pre-recession levels in the job market until 2012 while a third said they didn’t believe a full job recovery would occur until 2013 or beyond. There are number of reasons for this pessimism.
Money to hire is tight
Small businesses are typically the engine of job growth, but their access to credit is still severely limited. That means that even if they’re confident about their future prospects, many small employers won’t be able to afford to add staff.
“Recessions that involve a financial crisis take a much longer time for there to be a jobs recovery,” said Heidi Shierholz, labor economist for the Economic Policy Institute, a liberal think tank. “The credit crunch isn’t getting worse, but it’s still very tight.”
