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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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Nonsense, as usual.
http://www.zerohedge.com/article/real-unemployment-rises-03-168-non-seas...
Don't worry folks. I recently read a report out of some think tank that there will be an impending labour shortage as the aging population drops out of the workforce. The suggestion was to start thinking about stepping up the immigration rate to meet the impending demands. So relax, jobs are coming our way, especially if you cater to the elderly. I'm thinking of going into a state of hibernation for the next ten years. Wake me up when it's over.
that was more hopium you read....americans who
thought 3 years ago that they could retire and
retire early have dropped dramatically....they
are in fact clinging to their jobs longer than
thought keeping many entry level workers on
the unemployed sidelines....
at some point it is true that they will have to
give up the ghost but not nearly in the short
time period you imagine....
Immigration is just another globalism scam, I imagine that will end soon. If only because the planes won't be flying with $200/bbl oil.
The suggestion was to start thinking about stepping up the immigration rate to meet the impending demands.
...one suggestion that shouldn't be implemented as the US already has the people to meet those demands.
Kill offshoring, only return to it when U-6 & extended is < 2% under current metrics.
Numbers don't lie, but the folks who "punch" in the numbers do, especially if they work for the Guv.
Fundamentals and common sense should tell you that the whole system was/is unsustainable, and any attempt to prolong or reinvigorate said unsustainability is futile and downright infantile; not to mention self-serving to a chosen few.
The US, taken as a single entity, is undereducated, over-medicated, over-indulgent, imperialistic, dogmatic, broke, arrogant and too damn proud to appreciate said facts.
It's time for this country to grow out of it's terrible-twos phase, grow up, and start talking the talk when it comes to democracy and world leadership - leadership via example.
"... not to mention self-serving to a chosen few."
Tis the part of what you said that is particularly galling. We have been single-mindedly set on policies designed solely to keep the plutocrats well stocked with Beluga caviar and fine wines. F*ck the commoners and their problems. We deserve the best because we are the best and brightest, blah blah blah BANG.
So what's the problem. Sure, they have their caviar.
But we can still eat cake, right?
I'm mad as hell and I'm not going to take it any longer.
Whot chu gonna do bout it?
The propaganda spin on this NFP number (i don't pay much attention to anything that comes for the BLS as they have historically lied and a President can change the numbers and they have: LBJ notorious for it) is one of the most intense that I've seen in some time i.e. the world fell apart because of a couple of snowstorms. I've lived in the N'east U.S. my entire life and there are always snowstorms......it's propaganda folks and after all the propaganda of the last several months, we have jumped the shark and it is getting downright silly.
as to the equity market, if one can't see the current Ponzi scheme (particularly on US banks) one really needs to get their eyes examined. They are desperate to keep a floor under bank common and when the music stops (it will) the selling will be vicious.
by the way, the picture accompanying the headline is ironic: that man appears to be working because of the snow. where i live, the biggest burst of economic activity this past month is all those guys out there with their pickup trucks plowing snow.
on the other hand, municipalities and states have gotten killed on it as snow removal is a budget buster and their labor forces were intact anyways....net is yet another drain.
I imagine the proverbial April showers will be devastating to the jobs number this spring....
It snows every year, but come on, this year was a record setter. The federal government, which rarely closes, closed for 4 days.
I do agree the numbers are slanted towards a positive bias. I also think the gov't has been involved either directly or indirectly in the purchase of index futures. Most politicians believe the solution to our problems is to keep housing and equity prices inflated. It probably helps their re-election out, but low house and equity prices are a symptom of the problem, not a cause.
Oh, come on. Yes, it snows every year. Yes, this year might have been worse than other years. Weather is variable, always has been, always will be.
But when there were severe snow or freezing rain storms in the past, the Fed wasn't putting out reports blaming weather for job losses, and the president didn't preface the monthy jobs report with a weather report.
What will justify the bad March numbers? "Unusual" spring thaw? Bad July numbers blamed on "unusual" heat wave? Bad September numbers on heavy fall rains?
Where does this end? They're grasping at straws here, pure and simple, nothing justifies these sorts of excuses.
The numbers are slanted at keeping up a politically necessary fantasy. Telling the truth is bad for a pol's health.
Mind you, I'm all for keeping housing and equity prices shored up, if I could get to the Fed window. If I had access to Fed rate lending at 0.5% interest, my monthly payments would be fantastically affordable. Heck, even 2% would be great. Just think, the lender who borrows for 0.5% and loans at 2% is getting back triple his lending costs. In the (hypothetically) propped up universe, that's an amazing thing. But the Vampire Squids want more than fantastic, and therefore my dinner must be sucked up directly by the parasites latched onto me.
Jobs in law, finance and accounting just steal from the economy - they have the same long term negative impact as adding another public servant.
Jobs that are based only on passing pieces of paper to each other build no underlying national wealth.
+1
Who the hell need reports just look around you or talk to everyone you have daily contact with . Ask the 40 year old waiter what he did before . He will probably tell you he had a 50k job before having to work as a waiter. Ask the 30yo waiter how long he has had his MBA and can't get a real job ask him if his friends are in the same position . Talk to your friends/family out of state and see what they say . Try and sell your house ,see what kind of offers you get. Ask a plumber/ an electrician or carpenter how things are going. How many of your friends have taken huge paycuts but are lucky to still have their office jobs ? I just think a person can do a much better job of assessing the economy than the gov't can .And just for the record not everybody you will talk to will have a doom and gloom scenario ,just the majority.
Something strange is going on in the DC area. Two months ago my phone started ringing again. I'm as busy now as I was during the housing bubble. Went to get permits at the county yesterday and had to wait over two hours-it rarely takes more than 45 minutes even during the busiest of times.
No idea how long it will last, but perhaps I'll be able to buy some gold (bitches) after I pay off the massive debts accumulated over the past year and a half.
+21
Bullshit. Optimism is your enemy. Just read "Aftershock" for the big picture... dollar collapse and soverign defaults including the US in the next few years including massive unemployment. Their main recommendation, friends, is gold.
But, go ahead, sheeple, drown in paper promises. One million lemmings cant be wrong.
"One million lemmings cant be wrong."
Whew, that's reassuring. For a while there, I was concerned.
Seriously, the economy will recover. I don't think gov't policy is helping. It seems to be actually hurting. But the policies are helping a certain class of people to get rich so don't expect changes any time soon.
Offshoring. Kill it. Now.
Ignore the repeated cries from NASSCOM, Mitch McConnell(by virtue of his China-connected companion, Elaine Chao), and do it.
When U3-U6 are at more respectable (low and not cooked) numbers, then we can start talking about its reinstatement.
I didn't know there was a Ching-Chong connection. Of course we are talking Taiwan here. No wonder nothing ever got done about cheap foreign imports & offshoring. Can't have the old lady mad now then can we? Somebody tip off the Tea Party crowd & watch this jerk get flushed like a dead goldfish. Not nice to have it both ways.
Won't work.
Who's going to be willing to pay enough for American-made products to support American wages and living standards? The whole idea of trade is to use the advantages of specialization: do you want $200 Japanese (made in China) TVs or merely equal quality $1200 American ones?
Either Americans find something they can do better (and cheaper) than anyone else OR they lower their standard of living such that they can once again compete with the rest of the world. Or you close the borders to foreign products and labour and live in a planned economy like that of the Soviet Union or Cuba, where Americans pretend to work and their employers pretend to pay them - with 5-cent U.S. dollars...
Oh, bullcrap.
Just one example...
I went to Wal-Mart earlier this week to pick up a plastic pot for a plant.
Found a size I wanted. Two very similar pots right next to each other.
Flipped over one: Made in China.
Flipped over the second: Made in USA.
The one made in USA? Literally 10 cents more.
I gladly paid that "whole" dime more.
P.S. Why not stop bitching and moaning here, and instead go put that energy of yours to work by contacting Wal-Mart and other retailers and DEMANDING that they carry more products made in the USA. And then? Put your wallet where your mouth is. I know I do.
The last time I went (willingly) into a Wal-Mart, Sam Walton was still alive. Their stores proudly carried US products by the boatload.
I put my wallet where my mouth is by not spending anything at that store.
See my post to sethstorm above. Stop propping up banks balance sheets with mark to fantasy assets. Let the prices fall to a place where folks can afford them again.
As I stated above, I'm fine with that if it pulls everything down, nationally and internationally.
The (worse) alternative is a trade bloc that consists of the NATO-defined First World + EU.
The job market has rebounded. A lot of ZH unemployed regulars have already found a new job and are now no longer coming on the site.
Take information from any possible source.
Ok, I'm convinced.
So, when bubbles pop "credit stays hard to get for years"?
Is that a problem? Or a blessing?
If credit goes back to EASY, there can be no real economic growth. Just ersatz GDP inflation; just money passing from hand to hand faster and faster as prices of real goods rise...
Today, westerners seem to expect two-car families, 3000sq. ft. houses, two TVs, cell phones for their kids... But when most of the jobs consist of retailing cars, dog grooming, pizzas, financial advice, DvDs, dentistry, cell phones, make-up, pop-tarts and legal services to one another - all at what are in global terms outrageously high prices - no new wealth is being created.
Where are the sustainable jobs? It all comes down to mining, farming, logging, agriculture...or to the ability to EXPORT something or some service, at a price high enough to support the U.S. worker's entirely unearned standard of living. That's not going to happen.
When currency and credit change hands faster and faster, going in ever-smaller circles around and around, something has to give. It will be the value of the dollar. Look out for more years of sinking standards of living.
That's still not enough of a reason to lower the nation down closer to Europe or (worse yet) the Third World.
Bring the work back instead of heading down that path.
They won't bring the jobs back because everyone is trying to save money with cheap help. Even our own damn government is outsourcing some of the phone work to India!
What they need to understand is when they send a job overseas, they are reducing the purchasing power of those left in the system.
So short sighted. If they are going to do this, they cannot support policies designed to prop up asset prices.
It may be the case that we need to let if all fail so that people can afford to have lower salaries to afford goods and housing. Then the jobs would be back because employers could afford Americans.
There's your hope Leo.
If the costs of everything go down in the same manner through said failure, fine.
The problem is that what happens when they don't aside from specific rent-seekers.
You are joking, right? I mean, you are being facetious? You can't really be serious?
Greed and control, a consistent march to neofeudalism. I realize real economics may be beyond some (as well as real math), but it isn't simply labor arbitrage --- it goes far beyond that.
Likewise, once a country is de-industrialized don't expect things to automatically return to some kind of previous condition? No one is that ignorant?
You might appreciate this post below (this fellow is beginning to get it):
http://vituscapital.blogspot.com/2010/03/banks-arent-lending-issue-once-more.html
(BTW, there was a study done several years back that demonstrated how flawed the record was for those Robert Half "surveys"....)
Wage, legal, regulatory, and tax arbitrage continue to drive competitive, productive businesses to set up foreign subsidiaries and offshore as much of their operations as feasible. If labor prices fell drastically in the United States, many other disincentives remain that would compel these businesses to stay offshore. Ironically, falling U.S. labor prices would entail falling domestic purchasing power, and businesses could find their income from overseas markets exceeding U.S.-based income-- capital flight from U.S. oversight and taxation would only increase. Perhaps this is why, over ten years ago, strong rules were set in place to punish economic emigration by citizens.
And just who will buy these cheap foreign goods after Americans have all been pauperized? The overseas workers are already paupers & paupers don't buy Ipods & flat screen tvs. Besides all your different flavors of 'Arbitrage' are driven by the business/banking community's control of our government. What does 'economic emigration' mean? Tax cheating in the Cayman Is or Switzerland?
"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."
Leo - those on EUC and beyond don't count on the official unemployment roles.
Just because the measurement system is flawed does not mean that the unemployment problem is better or rises.
Those that do not work DO not buy. I'm one (unemployed)... and I have cut back my spending by 50%.
Multiply that by 7.5 million.
HOPE??? That's all you can say Leo??? We are in a Depression and the system is Broken.
He didn't say much of anything, just cross posted some articles. While the articles may be warrantable for posting and discussions, Leo isn't presenting an analysis of his own.
"While February payrolls will likely disappoint, don't be surprised if they come in stronger than expected."
The system is broken but don't discount the ability of manipulated statistics to stave off a reckoning for...well...for much longer than you would expect.
We need more optimists to go shopping. Send us some Chinese customers, they still got money, dont they?
Leo, until we begin to manufacture again, we are dead! And no one is gonna front money to build in a country thats going down. And we are going down.
Going down because of imbalances.
Going down because of dishonesty
going down because of distrust
going down because of math
I am all out of hope and dont think we can do an honest rebuild with the people in power now.
Blah, blah, blah.... One picture worth thousands of blah-blah.
http://i45.tinypic.com/10ehvtl.jpg
Wow. Young men are an endangered species.
Perhaps they're hanging out at home with Mom & Dad? Too bad they will never see what the dynamic economy the US once possessed at its zenith. Very sad.
I know the ladies won't like this, but the Womens' Liberation movement began in the period between 1967 and 1969, roughly speaking. At the time, I thought that doubling the workforce had to ultimately put downward pressure on wages. What's surprising about your chart is that the process began almost immediately around the same time. Looking at the chart the break point wasn't 1996 as indicated but started breaking lower very early in the 1970s.
Now you're really in for it. If any one political movement is radioactive sacred it's Women's Lib. Doubling the workforce was only the start; then there was the little matter of the disintegration of the family & children receiving no guidance & parenting. Thank God both of us are posting Anon.
"Looking at the chart the break point wasn't 1996 as indicated but started breaking lower very early in the 1970s."
That is correct; the trend changed during/after the 1974 recession. The "tipping point."