A majority of companies in the Standard & Poor’s 500 stock index increased cash to a combined $1.19 trillion while simultaneously reducing spending, keeping a jobs recovery on hold.

Caterpillar Inc., Eaton Corp., Walgreen Co. and General Electric Co. are among 260 companies that ended last quarter with $522 billion more than a year earlier after cutting capital spending by 42 percent. Economists say the dearth of investment is keeping the jobless rate at about 10 percent as the U.S. emerges from its worst recession since the 1930s.

“It’s not clear we are going to see the type of growth following this recession that we’ve seen in previous recessions,” Sandy Cutler, Eaton’s chief executive officer, said in an interview yesterday. That view “is leading people to be cautious as to their rate of reinvestment, and right in parallel with that, in terms of hiring additional employees.”

Source/Full Story: Bloomberg.com

The unemployment rate dropped unexpectedly in January to 9.7
percent, while employers shed 20,000 jobs, according to a report that
offered hope the economy will add jobs soon.

The unemployment rate dropped from 10 percent because a survey of
households found the number of employed Americans rose by 541,000, the
Labor Department said Friday. The job losses are calculated from a
separate survey of employers.

The department also revised its past employment estimates to show
that job losses from the Great Recession have been much worse than
previously stated. The economy has shed 8.4 million jobs since the
downturn began in December 2007, up from a previous figure of 7.2
million.

That’s the most jobs lost in any recession, as a percent of total employment, since World War II.

The figure for November was revised higher, however, to show a gain
of 64,000 jobs. That was initially reported as a gain of 4,000.

Source/Full Story: FOXNews.com

Europe’s unemployment rate unexpectedly increased to the highest in more than 11 years in November as companies cut costs in the wake of the worst recession in more than six decades.

Unemployment in the euro area rose to 10 percent from a revised 9.9 percent in October, the European Union statistics office in Luxembourg said today. That’s the highest since August 1998. Economists forecast a November rate of 9.9 percent after the 9.8 percent initially reported for October, a Bloomberg survey showed. The euro-area economy expanded 0.4 percent in the third quarter from the previous three months, according to a separate report.

European companies are cutting jobs and paring wages to shore up earnings battered by the global slump. While economic confidence has risen to a level last seen before the 2008 demise of Lehman Brothers Holdings Inc., a surge in energy costs and a stronger euro threaten to damp the recovery.

“We’ll probably see further gains in unemployment over the coming months, with the jobless rate peaking at 10.7 percent in the second half,” said Juergen Michels, chief euro-region economist at Citigroup Inc. in London. “That’s obviously bad news to consumers, which will be hurt by job cuts, lower wage growth and rising energy costs.”

The euro pared its gains against the dollar after the data and traded at $1.4317 at 10:31 a.m. in London, up less than 0.1 percent on the day. The yield on the German 10-year benchmark bond rose 0.2 basis point to 3.38 percent.

Source/Full Story: BusinessWeek

Homeowners with the best credit are the next big risk for the U.S. housing market.

An increase in mortgage defaults among prime borrowers in 2009 is likely to accelerate this year, slowing the real estate recovery even as Americans become more optimistic about the economy, said Robert Shiller and Karl Case, the economists who created the S&P/Case-Shiller Home Price Index.

“There will be continuing foreclosures, and not just subprime, it will be prime mortgages,” Shiller, a professor at Yale University, said in an interview. “This is creating a huge shadow inventory of homes that are still owned, but they’re going to be on the market in the next year or so.”

The number of prime mortgages overdue by at least 60 days more than doubled in the third quarter from a year earlier to 838,000, according to a Dec. 21 report from the Office of the Comptroller of the Currency and the Office of Thrift Supervision. Unemployed homeowners struggling to pay their bills will default on their home loans and increase foreclosures, Shiller and Wellesley College’s Case said.

Employers have cut more than 7.2 million jobs in the last two years, the biggest employment loss since the Great Depression. Measured annually, the U.S. jobless rate probably will average 10 percent in 2010, according to the median estimates of economists surveyed by Bloomberg. That would be the highest rate in government records dating to 1948, after rising to a 26-year high of 9.3 percent last year.

Source/Full Story:  Bloomberg.com

A record 37.2 million people, or about one out of every eight Americans, received food stamps in September, as the recession drove a surging jobless rate, according to a government report.

Recipients of the subsidy for retail-food purchases climbed 18 percent from a year earlier, according to a statement posted today on the U.S. Department of Agriculture’s Web site. Participation has set records for 10 straight months.

The government boosted food aid as unemployment soared, heading to a 26-year high of 10.2 percent in October. The jobless rate cooled to 10 percent last month, the Labor Department said on Dec. 4.

“We’ve been working to get that money out the door” to families that need assistance, Deputy Agriculture Secretary Kathleen Merrigan said last week in an interview.

Nevada had the biggest increase in food-stamp participation rates from a year earlier, surging 54 percent, followed by a 46.5 percent jump in Utah, according to the USDA. Texas had the most recipients at 3.1 million, followed by California with 2.9 million and New York with 2.6 million.

Recipients increased in every state and the District of Columbia, except Louisiana. Because of a sharp rise after Hurricanes Ike and Gustav in 2008, the number of people in Louisiana getting food stamps fell 65 percent in September from a year earlier. Gains of more than 30 percent from 2008 were reported in 18 states.

Source/Full Story: Bloomberg.com

What economic challenges are still ahead? I thought the economy was recovering, and green shoots abound.

US unemployment surged above 10 per cent for the first time in more than a quarter of a century in October, increasing political pressure on the Obama administration.

According to figures revealed on Friday, the unemployment rate rose to 10.2 per cent, its highest since 1983, as companies continued to shed jobs in spite of a return to economic growth. Non-farm payrolls were down 190,0000, slightly more than analysts expected, taking the total of jobs lost since the recession began to 7.3m.

In a televised statement, President Barack Obama called the unemployment rate “a sobering number that underscores the economic challenge ahead”.

Source/Full Story: FT.com

Confronted with big job losses and no sign the U.S. economy is ready to stand on its own, Democrats are working on a growing list of relief efforts, leaving for later how to pay for them, or whether even to bother.

Proposals include extending and perhaps expanding a popular tax credit for first-time home buyers, and creating a new credit for companies that add jobs. Taken together, the proposals look a lot like another economic stimulus package, though congressional leaders don’t want to call it that.

Democratic leaders in Congress and the White House say they have no appetite for another big spending package that adds to the federal budget deficit, which hit a record $1.4 trillion for the budget year that ended last week.

But with unemployment reaching nearly 10 percent, many lawmakers are feeling pressure to act. Some of the proposals come from the Republicans’ playbook and focus on tax cuts, even though they, too, would swell the deficit.

“We have to do something for the unemployed, politically and economically,” said Rep. Charles Rangel, D-N.Y., chairman of the tax-writing Ways and Means Committee.

The House already has voted to extend unemployment benefits an additional 13 weeks for laid off workers in the 27 states where the jobless rate is 8.5 percent or above. Senate Democrats reached a deal Thursday to extend the benefits an additional 14 weeks in every state. Both proposals are paid for by extending a federal unemployment tax.

Also on the table: extending subsidies for laid-off workers to help them keep the health insurance their former employers provided, known as COBRA. The current program, which covers workers laid off through the end of the year, costs nearly $25 billion.

Congressional leaders haven’t settled on the length of an extension, or how to pay for it.

Source/Full Story: FOXNews.com

Former Federal Reserve Chairman Alan Greenspan predicted on Sunday that the jobless rate will pass 10 per cent and stay there for a while, and a second stimulus plan is not needed now.

He spoke favourably of extending unemployment benefits and tax credits for health insurance, options the Obama administration is considering for helping people laid off during the recession. With more than 15 million people out of work, unemployment reached 9.8 per cent in September, the highest rate in 26 years.

“This is an extraordinary period and temporary actions must be taken, especially to assuage the angst of a very substantial part of our population,” Mr. Greenspan said on ABC’s This Week .

“I don’t actually consider those types of actions stimulus programs. I think that they are essentially programs which support people – essentially their living standards in part. I grant you it has a stimulus effect, but that would be my primary focus,” he said.

Calling the jobs report released Friday “pretty awful,” Mr. Greenspan said he is particularly concerned with statistics showing the number of people out of work for six months or more has reached 5 million after going up sharply last month.

“People who are out of work for very protracted periods of time lose their skills eventually,” he said. “What makes an economy great is a combination of the capital assets of the economy and the people who run it. And if you erode the human skills that are involved there, there is a real and, in one sense, an irretrievable loss.”

Looking ahead on the unemployment picture, he said his “own suspicion is that we’re going to penetrate the 10 per cent barrier and stay there for a while before we start down.”

The former Fed chief said he would recommend that President Barack Obama focus on trying to get the economy going but without doing so much that the government’s action are counterproductive. With growth for the third quarter appearing to reach or surpass 3 per cent, Mr. Greenspan said he would not propose a second stimulus package.

“In my judgment it’s far better to wait and see how this momentum that has already begun to develop in the economy carries forward,” he said.

Mr. Greenspan against expressed his concern over the growing size of the federal deficit and the federal debt.

Sen. Evan Bayh, who’s on the Senate Banking, Housing and Urban Affairs Committee, said he, too, is waiting for the remainder of the job-related stimulus initiatives to take effect.

“If I’d been drafting the package, I would have tried to have it go into effect sooner and have more of it directly related to jobs,” Mr. Bayh, a Democrat from Indiana, said on Fox News Sunday. “But it is what it is at this point. It continues to go into the economic bloodstream and to keep things, which, as unsatisfying as they are, from being a whole lot worse.”

Source/Full Story:  The Globe and Mail
Technorati Tags: Alan Greenspan, unemployment

Unemployment has jumped to its highest level since mid-1995, pushing the jobless rate up to nearly 8%, official data showed today.

The Office for National Statistics (ONS) said the jobless total on the broad International Labour Office measure rose by 210,000 in the three months to July, taking the total to 2.47 million. That rise was broadly in line with those of recent months and economists said there was little to suggest that the rises in unemployment were slowing.

The narrower claimant count measure, which only picks up those claiming unemployment benefit, rose by 24,400 in August to 1.6 million, the highest since May 1997, and a rate of 5%, the worst since September of that year. That increase was in line with those of the previous two months too.

The ONS also reported that average earnings growth slowed sharply to just 1.7% in the three months to July versus the same period last year, down from 2.5% in the three months to June.

TUC General Secretary Brendan Barber said: “There are now over a million people out of work for more than six months, one in three of them under 25. There are no signs of recovery here.

Source/Full Story:: guardian.co.uk
Technorati Tags: Unemployment

Full Story/Source: Reuters

U.S. job losses fell to their lowest level in a year last month, but the unemployment rate jumped to a 26-year high, painting a mixed picture of an economic recovery hindered by weakness in the labor market.

The Labor Department said on Friday the jobless rate climbed to 9.7 percent in August, the highest since June 1983. The bigger-than-expected rise suggested weak consumer spending would impede recovery from the worst slump in seven decades.

Employers cut 216,000 jobs, the smallest since August 2008, but the department revised upward the June and July job losses by 49,000.

“Things are much better than they were six months ago, but the patient is still somewhat sick and on the road to recovery,” said Jack Bauer, a senior economist at Manning & Napier in Rochester, New York. “The recession ended probably somewhere around June, but the recovery is going to be muted.”

The jobs report confirmed the pace of layoffs had eased from early this year. Nearly three-quarters of a million jobs were lost in January alone.

Technorati Tags: unemployment

Rhode Island will shut down its state government for 12 days and hopes to trim millions of dollars in funding for local governments under a plan Gov. Don Carcieri outlined Monday to balance a budget hammered by surging unemployment and plummeting tax revenue.

The shutdown will force 81 percent of the roughly 13,550-member state work force, excluding its college system, to stay home a dozen days without pay before the start of the new fiscal year in July.

The closures come as the worst recession in decades has eliminated hundreds of millions of dollars in tax collections and pushed unemployment to 12.7 percent, the second-highest jobless rate in the nation behind Michigan.

Carcieri predicted the state’s fiscal future could grow even bleaker.

Source/Full Story: sfgate.com

Unemployment in Britain jumped by 220,000 in the three months to June to 2.435 million, official data showed today, the highest level since 1995.

The Office for National Statistics said that the jobless rate was now 7.8% of the workforce – the highest since 1996, before Labour came to power.

The figures also showed a huge 271,000 drop in the number of people in work – the biggest fall since records began in 1971, although there was a similar fall in the February to April period this year.

The ONS also reported a relatively small rise of 25,000 in the number of people claiming job seeker’s allowance. Under that measure there are now 1.58 million people claiming benefit, equivalent to 4.9% of the workforce which is the highest rate since October 1997.

There is now widespread suspicion among experts that the claimant count figures are not representing the true state of joblessness since many unemployed people are unable to claim benefit. Yesterday the Department for Work and Pensions announced an inquiry into the recent divergence between the two measures of unemployment.

Source/Full Story: guardian.co.uk

Unemployment climbed by a record 281,000 to hit 2.38 million in the three months to May, the highest level since October 1995.

The bigger-than-expected jump in unemployment, which includes those not claiming jobless benefits, is the largest rise since records began in 1971.

The jobless rate has climbed to 7.6 per cent — the highest since January 1997.

However, the number of people claiming jobless benefits rose by a smaller than expected 23,800 in June, lower than May’s increase of 30,800. Analysts had expected a rise of around 41,000.

Economists said that despite this lower than expected rise in the claimant count, the rise in unemployment was unlikely to stop. Vicky Redwood, UK economist at Capital Economics, said: “we doubt that unemployment will start falling again until GDP growth has got back towards its trend rate — and that is unlikely to happen for a long time yet.”

Unemployment is expected to continue growing until next year, when economists predict it will peak at more than 3 million.

The number of people out of work has already risen by 753,000 over the last year alone.

Source/Full Story: Times Online

A record 33.8 million people received food stamps in April, up 20 percent from a year earlier, as unemployment surged toward a 26-year high, government figures show. Spending also jumped, as the average benefit rose.

It was the fifth straight month of record participation in the Supplemental Nutrition Assistance Program, according to the U.S. Department of Agriculture, and up 1.8 percent from the prior month. Total spending was $4.5 billion, up 19 percent from the previous all-time high reached in March, the USDA said.

The government is boosting food aid in response to a jobless rate that rose to 9.5 percent in June from 9.4 percent in May. An additional $20 billion over five years was authorized for nutrition assistance in the $787 billion stimulus bill Congress passed in February.

Utah had the biggest increase in the number of recipients from a year earlier, 46 percent, while South Dakota had the steepest jump from March, 6.4 percent.

Texas was the only state where the number of participants declined from the previous month. It still had the most recipients, 2.92 million, followed by California with 2.7 million and New York with 2.34 million. The average monthly benefit for an individual rose 17 percent from March to $133.28.

An average of about 35 million people are expected to be receiving food stamps each month in the year that begins Oct. 1, according to the budget President Barack Obama sent to Congress in May.

Source/Full Story: Bloomberg.com

The Centre for Labour Market Studies (CLMS) in Boston says US unemployment is now 18.2pc, counting the old-fashioned way. The reason why this does not “feel” like the 1930s is that we tend to compress the chronology of the Depression. It takes time for people to deplete their savings and sink into destitution. Perhaps our greater cushion of wealth today will prevent another Grapes of Wrath, but 20m US homeowners are already in negative equity (zillow.com data). Evictions are running at a terrifying pace.

Some 342,000 homes were foreclosed in April, pushing a small army of children into a network of charity shelters. This compares to 273,000 homes lost in the entire year of 1932. Sheriffs in Michigan and Illinois are quietly refusing to toss families on to the streets, like the non-compliance of Catholic police in the Slump.

Europe is a year or so behind, but catching up fast. Unemployment has reached 18.7pc in Spain (37pc for youths), and 16.3pc in Latvia. Germany has delayed the cliff-edge effect by paying companies to keep furloughed workers through “Kurzarbeit”. Germany’s “Wise Men” fear that the jobless rate will jump from 3.7m to 5.1m by next year. The OECD expects unemployment to reach 57m in the rich countries by the end of next year.

Source/Full Story: Telegraph