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Thawing of the Frozen Job Market?
Submitted by Leo Kolivakis, publisher of Pension Pulse.
David Leonhardt of the NYT reports, In Tracking Recovery, Jagged Lines:
Could the economy be at risk of a double dip?
We’re now in the midst of the worst run of economic news in almost a
year. Home sales have dropped. So has consumer confidence. Stocks
peaked on Jan. 19.
This
Friday may well bring the darkest piece of news yet, at least on the
surface. Forecasters are predicting that the Labor Department will
report that job losses accelerated in February, perhaps back above
100,000. The main reason will be the temporary hit from the big
snowstorms last month. Yet there is reason to wonder if the economy
also has bigger problems.
The weekly data on jobless
benefits are narrower and less consistent than the monthly jobs report,
but they have the advantage of being more current. From early January
to late February, the number of workers filing new claims for jobless
benefits rose 15 percent. Over the previous nine months, this number
was generally falling.
Economies rarely move in a straight
line, and — as the better-than-expected numbers on Tuesday on vehicle
sales suggested — the recent run of bad data is probably overstating
the troubles. But whatever you thought at the start of the year about
the recovery — strong, moderate, fragile — you probably need to be more
pessimistic today.
“The strength of data we saw at the end of
last year exaggerated the strength of the underlying economy,” Richard
Berner of Morgan Stanley, says. “And now we’re seeing some pullback.”
This is especially troubling because the economy is still such a long
way from being healthy. Lawrence Katz, the Harvard labor economist,
estimates that 10.6 million jobs would need to materialize immediately
to return the job market to its condition when the Great Recession
began. For it to get there four years from now, the economy would have
to add 316,000 jobs a month. That pace would be faster than in any
four-year stretch of the 1990s boom.
The
economy’s biggest problem has not changed. When bubbles pop, they wreak
enormous, lasting damage. Credit stays hard to get for years because
banks need to rebuild their balance sheets. Families and businesses,
whose net worth isn’t what they thought it was, have debts to pay off.
Over the last two years, households have been paying down their debts
at a fairly good pace. But they aren’t yet close to being finished.
The average household still has debt that eats up roughly 17.5 percent
of its disposable income — in mortgage payments, minimum credit card
payments and the like. That’s down from a peak of 18.9 percent in 2008.
It is still above the 1980-95 average of about 16.6 percent, according
to the Federal Reserve. So debt payments will continue to hold down
spending in the months ahead.
The economy did so well late
last year in large part because companies began building up inventories
they had whittled when they cut production during the recession. What
worries some forecasters is that this buildup won’t last. Consumer
spending, they say, will remain too weak to get companies to keep
increasing production and to begin adding workers. “Not too long from
now,” says Joshua Shapiro of MFR, a research firm in New York, “you’re
going to need other demand to kick in.”
The second problem is that the stimulus program and the Fed’s emergency programs are in the early stages of slowing down.
These programs have done tremendous good, as I’ve written before. The
bubbles in housing and stocks over the last decade were far larger than
an average bubble, and yet the resulting bust is on pace to be shorter
and less severe than the typical one in the wake of a financial crisis.
That’s not an accident. It’s a result of an incredibly aggressive
response by the Fed, Congress, the Bush administration and the Obama
administration.Just consider home sales. The stimulus bill
last year included a tax credit for first-time home buyers that
originally expired on Dec. 1. Like clockwork, home sales fell 16
percent in December. From March to November, sales rose 36 percent.
The credit has since been extended, but if you combine the other fading
parts of the stimulus with household debt burdens, you can see why some
economists are concerned. Mr. Shapiro predicts monthly job growth will
be only 50,000 to 75,000 by the end of this year. To keep up with
population growth — to keep unemployment from rising — the economy
needs to add more than 100,000 jobs a month.
Recent events in
Congress, however, have offered some cause for optimism. Last week, the
Senate passed a small-bore $15 billion jobs bill, focused on road
building and employer tax credits. But on Monday, Democratic leaders
announced a proposal that would do more: a $150 billion bill to extend
jobless benefits, Medicaid payments to states and some tax cuts.
Some of the extensions last through the end of the year, rather than
for just a few months, as is typical. Senator Jack Reed, Democrat of
Rhode Island, told me the bill was meant to prevent what he called the
“Perils of Pauline” problem — referring to the silent movie serial that
placed its heroine in repeated danger.
The most recent
extension of jobless benefits expired on Sunday. The Senate voted
Tuesday night to extend the benefits for 30 more days after Senator Jim
Bunning, Republican of Kentucky, dropped his opposition to the measure.
If Congress passes a longer-term extension and adds some
measures — like more aid to struggling states, maybe the single most
effective form of stimulus — it can offset the winding down of other
government programs. (Yes, these efforts to prop up the economy will
have to end sometime soon, and debt reduction will have to begin. But
the main historical lesson of financial crises is that governments are
too timid and too quick to step back.)
It’s also possible
that Mr. Shapiro and his fellow pessimists are being a bit too dire
about the private sector. Inventories are still quite lean, and some
restocking is likely to continue. Banks are becoming more willing to
lend, Fed surveys show. Strong growth in China and other emerging
markets will help American exporters like General Motors and Cargill.
To my mind, these forces make a true double dip unlikely.
Still,
the jobs number on Friday will be ugly. Macroeconomic Advisers, a
research firm, estimates that the snow kept 150,000 to 220,000 people
off a payroll when the government conducted its jobs survey in early
February. But most of those jobs will reappear in March — the month
when many economists think job growth will, at long last, resume.
Here’s the thing, though. Even the optimists are not very optimistic.
Morgan Stanley expects average monthly job growth of just 110,000 this
year. The great jobs deficit — 10.6 million and counting — will be with
us for years.
So no matter when the recent run of bad news comes to an end, the economy is still going to need help.
While
February payrolls will likely disappoint, don't be surprised if they
come in stronger than expected. Ive been expecting job growth in the
last couple of months but it has yet to materialize.
But there are some encouraging signs on the horizon. Reuters reports that three forward-looking surveys of U.S. hiring intentions point to a tentative jobs recovery in coming months:
The
surveys by U.S. staffing and payroll companies suggest businesses are
cautiously rebuilding staff, especially in professional areas such as
finance and accounting, information technology, and legal. Another poll
finds increased optimism about small-business employers.
A
survey by Robert Half International Inc of 4,000 executives found 10
percent expect to increase hiring in the second quarter, compared with
6 percent who anticipate cutting jobs. However, the vast majority -- 82
percent -- plan no change in hiring.
"Many firms,
especially those that found they cut staff too aggressively during the
worst of the recession, may need to add personnel at the first sign of
a pickup in business," Max Messmer, chief executive of Robert Half,
said in a statement.
A net 9 percent of executives in the
finance, insurance and real estate sector plan to add
professional-level staff, while a net 26 percent will add in the legal
field, according to Robert Half. More than one third of executives said
they were having trouble finding skilled professionals.
Meanwhile,
the number of positions posted on the U.S. edition of eFinancialCareers
is up 15 percent from the same time a year ago. The unit of Dice
Holdings Inc said on Thursday the number of accounting jobs posted is
up by half from a year ago, while compliance and legal job postings are
up 45 percent.
"We've heard isolated reports of firms
losing out on their top choices, because financial professionals are
being courted by more than one prospective employer," said Constance
Melrose, managing director of eFinancialCareers North America.
To be sure, improving sentiment may not immediately translate into
concrete job gains on a national scale. And while job prospects have
improved in some areas, they are worse in others. For example, job
postings in hedge funds, private banking and commodities are lower,
eFinancialCareers said.
Friday's February jobs report is
expected to show a decline of 50,000 nonfarm payrolls, possibly
reflecting heavy snowfall in the U.S. Northeast. Forecasts range from a
decline of 150,000 jobs to an increase of 100,000.
SMALL BUSINESS HIRING
A
separate survey of small-business sentiment found optimism jumped 16
percentage points in February from the prior month. According to
SurePayroll Inc, which processes paychecks for 25,000 small businesses,
61 percent of small-business owners are optimistic about the future of
the small-business economy.
Small-business hiring
increased 1.9 percent nationwide last month, led by gains in western
states including California and Nevada, though without higher wages.
SurePayroll said its pay index was flat last month, after 23 months of
declines.
The private-sector surveys come amid tentative signs of improvement in the U.S. economy.
Most retailers posted better-than-expected February sales results.
The number of U.S. workers filing new applications for unemployment
insurance fell last week, a government report showed on Thursday, while
those continuing to receive benefits dropped to the lowest level in
over a year.
While these surveys are encouraging, at
the end of the day all that counts is full-time jobs. Intentions to
hire are meaningless unless firms actually hire. And given the damage
that was done, job growth can't come soon enough for millions of
Americans looking for work. Let's hope some good news on jobs front
lies ahead and that the long deep freeze in the US labor market begins
thawing away.
»
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How's this for improving long term job creation prospects? Strong legislation to stop offshoring & playing financial games versus creating jobs & rebuilding industrial capacity here in the US. Pure capitalism is destroying the fiber of the country, the people, NOT THE BANKERS, are the country. All efforts need to be applied to preserve the country, NOT THE BANKERS. Capitalism must be shaped to build the country up, not tear it down. One thing that is especially needed is to re-empower organized labor. This IS NOT SOCIALISM. There is a big imbalance of power in the country now, towards big business & big money. Government cannot restore this imbalance alone, parts of it are sold out to big money & big business. This is about restoring a balance to the voices in our national debate. Labor needs to once again be a real voice in our country. President Obama promised this but has yet to deliver.
Leo, are you a Greek? If so, why would anybody listen to a Greek?
Why read Aristotle when you can skim through Playboy? Ya dumbass!
Rosy? Is that you again? Rosy-I found you in yet another posting!
Well done, posting the NYT writer's column under your name.
Get some glasses and read the first sentence: "David Leonhardt of the NYT reports,...".
All usa needs to get jobs back from china is a VAT !!!!!!!!!!!!!!! Game over wall street !!!!!!!!!!
Everybody would HATE a VAT (me included) but so much business activity has gone over to the internet UNTAXED that something really needs to be done. It's the two ton purple elephant in the corner (with green spots). Wouldn't it be better if CHINA had the VAT?
This revolting little hound Leo. What is he afraid of? Why is he afraid to think? Why is he wringing his feeble little hands hoping his outmoded view of the economy and society will somehow still come to pass.
What a CREEP!
Many economists say that currently we have to create around 4-6$ (depends on the guy giving his opinion) of credit to expand GDP by 1$
Let’s do quick calculation:
To produce1$ of GDP I borrow 4-6$ for 30 years at 7%
In 30 years I’ve produced 30$ in GDP and in the same time I paid banks 9.5-14.2$ in principal and interest, so it looks to me that 31.5%- 47.3% of whatever I produced I returned to the banks.
Now there is question how we can be profitable and get out of national debt when banks take 31-47% of whatever we make? What about our costs and profits? Thanks to that scheme all profits of the nation go to them and we are left with debt, which will never be paid back, but stream of ever growing interest payments on national debt will be maintained keeping banks in very good shape. Not only that, if something happens, we as taxpayers have to bail them out!
Looking at these numbers I can understand that there is no way we can run normal business, in this situation we can count only on jobs in businesses like Wal-Mart, middle man for Chinese, real estate sales, anyway in all kinds of sales. If there is any optimist thinking he would borrow money, start business and hire people, he must be some kind of coo-coo!
Good luck with recovery in such environment!
Is there anything wrong with my rough calculations?
You know those preachers that preach outside at university campuses and other settings and scream at people about how evil they are and how they are going to hell if they don't listen to him? And how the people will gather around the preacher and scream back?
.....?
Let Leo have his say. I still am trying to wrap my head around the dizzying array of manufactured statistics today that spell "sunny days are here again," and worry about my capacity for judgment and rational thought if Leo's predictions prove true.
Leo, though, I warn you: just to mess with your mojo, and test the absurdity of the universe, I may buy Chinese solar stocks. My karma, which tends to cause beautiful illusions to crumble into harsh, unpleasant realities wherever I go, is coming for you.
Sure, I have a nice bag of crack right here when the pipe empties Leo.
You can't have job creation without investment.
Do you see any investment in Montreal Leo?
Check out corporate profits and new orders of core capital goods. Investment is already coming back.
http://www.liveinaustralia.com/
I have an idea, American men can emigrate to Australia and dig shit up for the Chinese and women can emigrate to Shanghai as 20 years of the one child policy has left the Chinese a tad short on poon.
QE can go on forever but the Fed has already taken the foot off the pedal. We shall see how jobs recover over the next quarter, year.
Leo continues to live in the land of sugarplum fairies.
Today's number was yet another joke signifying nothing.
Wake me up when we can add 150,000 a month just to stay
even.
Nice short squeeze by the prop desks, though, Leo. Maybe
Benny will keep QE liquidity on forever.
sugarplum fairies tripping their balls off.
leo what do you do for a job
And don't know about you, but it's beautiful and SUNNY over here in Montreal. Get off your Bloombergs and go get some fresh air!
On capitalism and job creation: http://2.bp.blogspot.com/_wkgIzuqJM0w/S5BPiF1Li3I/AAAAAAAAC1Y/_Z_9Yr2Oft...
leo spring for a couple bucks and get the truth on unemplyment
This excellent report is much more than a few bullet points, it is a complete discretion of each im report style.
I find it a must so I understand the real condition being misreported.
"No. 284: February Employment and Unemployment "
http://www.shadowstats.com
- Payroll Drop of 36,000 was 51,000 Net of Census Hiring
- Broader February Unemployment Measures Rose:
U.6 at 16.8% (up 0.3%), SGS at 21.6% (up 0.4%)
- Economy Remains Headed into Deepening Downturn
leo read before we quote you in april
http://theeconomiccollapseblog.com/archives/the-2009-financial-report-of-the-u-s-government-is-out-americas-economic-goose-is-cooked
Household survey saw gains of 308,000 jobs and second consecutive gains in full-time jobs??? Who do they survey??? Here is your survey list Leo... Now be a good little Government Serf and call all these people on the list and ask them how their new job at the Government or Wal-Mart is working out.
Wait till April, then you will really see huge gains in payrolls. And you can quote me on that!
this will be a big event ,, quote leo .. lol
that does not create jobs .. do you have an idea what does ,, have you every created a job .. through savings , .. would you yourself be able to support another ,,
just hire some one . pay him .. 50,000 thousand a year ,, plus burden of government taxes,, health insurance , laws.
call in leos quote machine lol
leo get a grip
dennenger
We claim to have "decent" growth now, running about 3.5% (expected) for the full year of 2010. But that growth is false; Government is borrowing and spending an additional 9% of GDP beyond what it was before the disaster began, it has been doing so now for two years, and there is no inclination that it is going to slow down or stop. Indeed, there is every reason to believe that the government can't stop, lest the economy instantly implode, as final, true demand simply has not recovered. It is, in fact, at depression levels - right now.
a first their must be a death .. before easter lol watch out below
Wait till April, then you will really see huge gains in payrolls. And you can quote me on that!
What is going to happen in April? Construction lending???? I would laugh if I wasn't dead.
Talk to any architects you know about how busy it has been.
Hope those census workers can hold on to that cash until Christmas. Would hate to see another retail bloodbath again this year.........
I agree Leo. There is always more work available coming out of the winter doldrums. The telephone is starting to ring again in my neck of the woods. I'll take the shortterm blip up and breath a little easier for another year.
Employment/adult population ratio equivalent to 1983, which was equivalent to 1977.
15000 of the new jobs were census. Well, count on a goodly number of those getting killed off, so there'll be some turnover.
But, oh, I suppose it's worth billions in total market cap that things are collapsing *ever* so much more slowly.
The bls numbers left out a few letters....ulhit! Here let me pull a report out of my ass and sell it to you as a chocolate donut instead of the terd that it is. Why is it the the initial jobless claims for unemployment keep rising yet the unemployment rate keeps going down? What happened to the million jobs lost they miscalculated last month? That didn't seem to change the number at all? Acually I take that back, it dropped the rate. Just like every other number coming out of the White House, Better then expected seems to be the new norm. The only jobs being created are related to the 1 trillion dollar stimulus or the 3 Trillion in liquidity being passed around at 0% creating finance jobs that will come to a screeching halt when the money exits the system. We have got a new society hooked on the Government morphine and now it's time to take it away. There will be a lot of people going through serious withdrawals as the money dries up. Just scratch below the surface and take a real survey on Main St. and you will find truth in the numbers.
All I need to see is your name on the byline and I know that there will be Kool-Aid stains on the words that follow as your "skepticism" spills onto the screen.
Leo is standing over the groundhog with a dozen umbrellas and it still doesn't work.
The groundhog keeps seeing his shadow.
Call back in 8 months.
Household survey saw gains of 308,000 jobs and second consecutive gains in full-time jobs....very encouraging for future job growth. Keep your chin up!
What about the down 580k month? Oh, right you only look at good numbers.
Are you a performance artist who likes to rile up audiences, but really, you are goofing on them?
propaganda ... says who ? lol
"A lot of ZH unemployed regulars have already found a new job and are now no longer coming on the site."
Errm, how do you know? Do you have proof? If so, I'll be pleased to hear it.
DavidC
No proof. A deduction.
US people are used to congregating on their perceived vision of reality.
People flocking at ZH flocks here because it suits their perceived vision of reality: the world is going to end.
A centric vision of the world as it is not the world which ended but their world as many of them were thrown into unemployment by this crisis( my world has ended. This can only happen if the entire world is going to end)
As some of them have found a new job, their perceived self centered vision of reality have changed. They no longer need to come here to congregate with people who are not longer in unison with their perceived vision of the world.
They are no longer part of the club.
Take information from anywhere you can.
I think most of these polls should be read as indicating the success and infiltration rates of a sort of Kool-Aid being passed around to the effect that we have turned the corner and sunny days lie just ahead, as if this were merely a recession like that of 2001. Memories are fleeting and attention spans challenged, and humans need optimism and a reason to believe.
Wall street is celebrating because they have figured out how to outseource the consumer.
Yeah! Then we outsource
outsourcing.
selling to emerging market consumers has several advantages, lax regulation, and cheap labor. you see the donnybrook in Greece which demonstrates that the central banks have been, and will continue supporting consumers in these places, (lower taxes, and now taxpayer bailout packages, you give it to Wall Street, they send it overseas, from the industrial nations to prop up consumers in emerging markets, PF Changs is opening franchises in the Phillipines? Watch corporate Un-America open more foreign kiosks, MCD, STBX) These people would still be too poor to enjoy any of this, - do they have your education, your skills - but you subsidized them, or what do you think allowing the Yuan/Dollar peg means? Small business is complaining because there is no lending, well duh? Corporate Un-America tells the Congress what to do. Congress says piss on small business. Corporate profits are strong.
"the resurection has plenty of meaning for us Christians"
Holding hands and singing "God will provide" only works on sundays...if it does at all.
That explains alot about you Leo...
MS
May God have mercy on you naysayers! LOL, I am not a religious zealot, you idiots, but call it like I see it. Labour market is finally showing signs of improvement but we have a long way to go.
Cheers up folks, it's spring, Easter is around the corner, the resurection has plenty of meaning for us Christians, even for those of us that are secular in our ways...lol!
No wonder you cant think or see reality, suffering from one of the many religious disorders... "roseyetis" or being reality challenged.
right another false hope ..leo get a grip lol jobs are not coming back,, real unemplyment close to 20%..
these constant dreams to shore up pensions are misleading and show a distinct lack of understanding of austrian economics,
government can not creaet jobs .. they pick the pockets of the many for the few,,
and who pray tell will be able to go into debt further to purchase china ,,