US unemployment rate rose again to seven month high of 9.8 percent, US labour department said on Friday, December 3. Only 39,000 jobs were created in November much less than analysts’ expectations. In addition, this figure is very lower than the figure of 172,000 jobs created in October.
Most of the western stock indices were closed down on the back of US unemployment report. The UK’s FTSE 100, Germany’s DAX and France’s CAC fell back registering negative change. Euro inched up to $1.335. However, the jobs number is the first estimate and optimists are expecting the figure may be revised upwards. Jobs were created in the business services, healthcare and mining sectors, but job numbers in the retail and manufacturing sectors fell.
The labour department of the US said there were 15.1 million unemployed in the US, which is equal to 9.8 percent. This is greater than 9.6 percent figure recorded past three months. Analysts say that many people are giving up seeking new jobs there by disappearing from official unemployed people. There was also rise in long term unemployed labour department revealed.
Rise unemployed means less people coming to shops to buy goods. Less consumer spending contributes to slower GDP growth. Many US citizens ceased to be eligible for claiming unemployment benefits by November as per BBC news.
Is this a case for shallowness of freedom of speech in the US? Velma Hart, the chief financial officer for Am Vets, a veteran services organization based in Maryland, is laid off two months after she criticized the US President Obama while directly talking to him in a town hall style meeting in September. The programme was telecast on CNBC.
Velma reportedly told Obama that she was exhausted from defending him and his economic policies and waiting for the change, she expected after voting for him. Obama reportedly admitted it was tough time. The Am Vets’ executive director was quoted by the Washington Post as saying the laying-off action had nothing to do with the Velma’s criticism on Obama’s policies.
The director said, "She got bit by the same snake that has bit a lot of people. It was a move to cut our bottom line." But, removing a chief officer as part of cutting expenditure seems somewhat odd, as the firm will have to lose her experience with the firm and its operations and expertise acquired with that experience.
Velma told CNBC television that she was still supporter of Obama. Her family was facing hard times with the loss of job, she said. She is expecting that there is a job looking for her in coming days. Let us expect the same.
Germany has been skeptical of its immigration policy recently as per the statement of the Chancellor Angela Merkel. She said, “Germany’s attempts to create multicultural society have failed.” One of her party colleagues said, “Multikulti is dead.” A board member of the German central bank Thilo Sarrazin went too far by saying, “Muslims have become burden to the German society.” He alleged that no immigrant group other than Muslims was so strongly connected with claims on the welfare state and crime. Interestingly, he received widespread support after his statement, and his book on the same subject received good readership.
Germany Chancellor said that her government needed skilled people to keep the German economy’s growth pace faster. At the same time, she cautioned against unskilled people as they come to Germany for social benefits. While Angela’s invitation to skilled people was economically oriented, her rejection of unskilled people was socially oriented. Maybe the Chancellor has to understand that the economic prizes are always associated with social costs in unequally developed societies. Inviting economic fruits but denying social costs is something equal to rejecting that a coin has two sides.
A leading German demographer Reiner Klinghoiz, director of the Berlin Institute for Population and Development, said Germany desperately needed immigrants and it should ease restrictions on immigration to provide the skilled workers, from engineers to computer experts to ensure the future economic success, as per Reuters. He informed that immigration to German had come to a virtual halt in the last two years.
Though Germany has three million unemployed, Mr Klinghoiz said Germany could not wait ten years for those on unemployment to become trained engineers. Klinghoiz said further that Germany had an annual influx of 200,000 immigrants but in the last two years had seen a net exodus of 15,000. Restrictions like language tests had stopped migrations from Turkey almost completely, he added. German Chamber of Industry and Commerce was quoted as saying Germany lacked about 400,000 skilled workers and it sought more immigration. Continue reading
Reuters | Aug 27, 2010 | 10:45pm IST
It could be 10 years before economic growth in the United States and elsewhere returns to pre-recession norms and employment rates may never regain lost ground if past history is any guide, two prominent economists said in a paper presented on Friday. Carmen Reinhart and Vincent Reinhart, in a paper presented at an annual conference hosted by the Federal Reserve, found that growth in gross domestic product is significantly lower during the decade after a severe financial crisis that is felt world-wide, as was the case with the recent meltdown. Their assessment could damp the spirits of central bankers gathered at the annual Fed enclave in Jackson Hole, Wyoming, who are already anxious that the recovery from the painful recession has run out of gas and they may be forced to take further steps to stimulate growth.
The authors, a husband and wife team — she is an economics professor at the University of Maryland and he is a former director of the Fed’s division of monetary affairs who is now a resident scholar at the American Enterprise Institute — drew their conclusions from studying global and country-specific crashes, including the 2007 subprime mortgage collapse, the 1973 oil shock, and the 1929 Great Depression. Policy makers should consider that growth, employment and credit may never regain levels attained before 2007, they said. "Recent discussions about the ‘new normal’ in reference to the post-crisis landscape leave the impression that the pre-crisis environment was ‘normal,’" they wrote. "In fact, there are reasons to believe that the pre-crisis decade set a high water-mark distorted by a variety of forces."
Bloomberg Businessweek | July 29, 2010 | 5:00PM EST
The recession, economists say, technically ended in mid-2009. A year later the unemployment rate is still stuck above 9 percent, and it may take until 2012 for it to reach 8 percent, according to a survey of economists by Bloomberg News. The general explanation for this stubbornly high rate is that companies face an unprecedented era of uncertainty, with questions on the impact of health-care reform, the strength of the real estate market, and the cost of financial regulations all remaining unanswered. Until companies get clarity, they will be reluctant to hire new full-time employees.The job crisis could be seen another way: as a continuation of a trend that started 20 years ago. Before 1990, recessions in the U.S. followed a similar pattern. The downturn would end, and companies would start adding jobs in a little more than two months, according to the National Bureau of Economic Research. In 1990-91 hiring began outpacing firing three months after the end of the recession. It took seven months after the 2001 recession’s technical end before hiring trends turned positive, and 27 months before companies hired in large enough numbers to cut seriously into unemployment. This time the lag is even longer.
Economist Allen Sinai, who runs the consulting firm Decision Economics, has an explanation for this emerging pattern. He sees the capital-labor ratio—total capital invested as a percentage of hours worked—as the key to the puzzle. Capital spending boosts productivity and, in the short run at least, often eliminates the need for extra workers on the factory floor or in the office. Continue reading
Bloomberg News | Aug 9, 2010 | 10:03 AM GMT+0530
Goldman Sachs Group Inc. cut its growth forecasts for the world’s two largest economies on signs that stimulus boosts will wane. Japan will grow 1.4 percent in 2011, compared with an earlier forecast of a 1.7 percent expansion, Tokyo-based senior economist Chiwoong Lee said in a report dated Aug. 7. Goldman last week lowered its projection of U.S. growth for the same year to 1.9 percent from 2.5 percent. A report today showed Japan’s current-account surplus narrowed for a second month as export gains cooled, adding to concerns that the recovery is losing steam. Government incentives that have bolstered spending at home are wearing off, with economists forecasting second quarter gross domestic product grew at half the pace of the previous period.
“We expect signs that growth is slowing to gradually emerge in line with the disappearance of the government stimulus boost both in Japan and abroad,” Lee wrote in a separate report dated today. “The U.S. economic recovery has lost a considerable amount of its momentum.” Japan will experience a “significant falloff” in consumer spending, which has so far been propped up by government measures, according to Lee. He noted that there is “little chance” Prime Minister Naoto Kan will extend a program scheduled to expire in December that encourages household to buy energy-efficient electronics. Continue reading
U.S. private employers added fewer workers to their payrolls in July than expected and hiring in June was much weaker than had been thought, a big blow to an already feeble economic recovery. The dismal news on jobs poses a challenge to officials at the Federal Reserve who are debating whether more needs to be done to foster growth, as well as to Democrats hoping to retain their congressional majorities in November elections. “The labor market improvement has slowed to a glacial pace, consistent with third-quarter growth even slower than the second,” said Nigel Gault, chief U.S. Economist at IHS Global Insight in Lexington Massachusetts. “It doesn’t look like a double-dip, but it looks like very weak growth.” Overall non-farm payrolls fell 131,000 last month, the Labor Department said on Friday, the second straight monthly decline as temporary government jobs to conduct the decennial census dropped by 143,000.
Private employment, a better gauge of labor market health, rose a modest 71,000 after gaining just 31,000 in June. The government revised payrolls for May and June to show 97,000 fewer jobs than previously reported. Financial markets had expected overall employment to fall 65,000 in July, with private-sector hiring increasing 90,000. Prices for safe-haven U.S. government bonds rallied, driving benchmark 10-year Treasury debt yields to a 15-month low, and the dollar tumbled to near a 15-year low against the yen. Given the poor state of the labor market, discouraged workers gave up the search for jobs in droves last month. That kept the jobless rate steady at 9.5 percent since people not looking for work are not counted as being in the labor force.
POLITICS AND THE FED
Job growth has taken a step back after fairly strong gains between February and April, putting in jeopardy the economy’s recovery from its worst downturn since the 1930s. Still, the pace of layoffs has moderated significantly from the first quarter of last year, when employers were culling an average of 752,000 jobs a month. Growing unease over the health of the economy is Continue reading
Bloomberg | Jul 15, 2010
Democrats, facing a U.S. electorate angry about the economy and other issues, still have one political asset: George W. Bush. The former Republican president is blamed more than President Barack Obama for the budget deficit, unemployment and illegal immigration, according to a Bloomberg National Poll conducted July 9-12. Most surprising is that 60 percent say Bush is primarily responsible for the current situation in Afghanistan. Just 10 percent point to Obama, who has ordered 51,000 additional troops to that country since taking office, doubling the number deployed by Bush. When Obama entered office in January 2009, there had been 568 U.S. casualties associated with the Afghanistan conflict, a number that has grown to 1,086, as of yesterday, according to the Defense Department. The president has vowed to start withdrawing forces in July 2011, with the pacing determined by conditions on the ground. “The public remembers the Bush years as a tumultuous time of costly wars, and the years when a budget surplus became a deficit,” said J. Ann Selzer, president of Selzer & Co., a Des Moines, Iowa-based firm that conducted the survey.
Katrina, Gulf Spill
Asked to compare Bush’s response to Hurricane Katrina with Obama’s handling of the oil spill in the Gulf of Mexico, 51 percent say Bush’s performance was worse, while 35 percent name Obama. Republicans are more likely to pan Obama’s performance on the oil spill, with 69 percent saying he did worse than Bush. Facing a tough environment in the November congressional elections, when their control of both chambers may be at stake, Obama and his fellow Democrats often mention the problems they inherited from the previous administration, which left the White House 18 months ago. “They spent a decade driving the economy into a ditch,” Obama, 48, said at a Las Vegas fundraiser on July 8 for Senate Majority Leader Harry Reid of Nevada. “And now they’re asking for the keys back. And my answer is, ‘no, you can’t have the keys. You can’t drive. You don’t know how to drive. You drive in the wrong direction.’” Still, Bush won’t be on the ballot and there has been no indication that he will campaign for congressional candidates. Democratic and Republican lawmakers share some of the blame for the country’s problems, including the increasing cost of Medicare and Social Security, as well the failure to fix the nation’s immigration system, according to the poll.
Reuters | Thu Jul 8, 2010 | 8:07am IST
U.S. and European financial firms have cut back on cash bonuses, moving instead to higher base salaries, a survey released on Wednesday showed. Mercer, a consulting and investment firm said its survey of 39 financial services firms revealed almost all of the participants rejiggered pay formulas, with 70 percent increasing base salaries and decreasing annual cash bonuses. The shift occurred in the wake of the 2007-2009 financial crisis, during which bonuses were blamed for encouraging wild risk-taking that fueled the global meltdown. Bonuses became a flash point, with the Obama administration railing against Wall Street pay as U.S. unemployment soared. "For a bunch of reasons, including regulatory and political pressure, base salary has increased, which I think is by and large a good thing," said Alan Johnson, a Wall Street compensation consultant.
Mercer said financial firms have made significant progress reforming pay practices, but noted more work needs to be done, particularly to ensure pay is linked to long-term performance. The survey, which was conducted in April and included banks, insurance companies and other financial services organizations, found 56 percent of the respondents increased the importance of long-term incentives, while 38 percent have reduced the weight of stock options in the mix. Almost two thirds of the firms require bonus payments to be deferred — but only about 40 percent of the surveyed firms have linked these deferred bonus payments to performance by workers. Only 10 percent of North American firms have performance-based deferrals, compared with over half of the European respondents in the survey.
BBC News | Thursday, 6 May 2010 | 14:52 GMT
US productivity grew at a better-than expected annual rate of 3.6% in the first quarter of 2010, figures show. Separate figures also showed that applications for jobless benefits dropped for a third week in a row. The US economy has been growing since last summer, but firms have been reluctant to take workers back on. Instead, they are pushing smaller workforces to produce more which has increased productivity – measured as the amount of output per hour of work.
The combination of better productivity and lower wage costs is good for firms’ profits, but is bad for household incomes. That lack of household spending power could in turn be bad for the overall US economy, where consumer spending accounts for two-thirds of economic activity. For all of 2009, productivity rose at a rate of 3.7%, compared with a 2% increase in 2008. It was the fastest annual increase in productivity in seven years. On Friday, the April unemployment figures will be released and are expected to show the unemployment rate remaining at 9.7% for a fourth month in a row.
BBC News | Wednesday, 31 March 2010 | 11:14 GMT
The unemployment rate across the 16-nation eurozone hit 10% in February, the first time it has reached double figures since the euro was introduced. The jobless figures, from the Eurostat agency, showed large variations between nations in the eurozone. The unemployment rate was 19% in Spain, whereas in the Netherlands, the rate was just 4%. Separate figures showed eurozone inflation hit a 15-month high in March, rising to 1.5% from 0.9% in February. The inflation figure was higher than expected, with analysts blaming recent rises in energy prices for the increase. However, inflation still remains below the European Central Bank’s inflation target of just below 2%, and analysts do not expect the bank to change its key interest rate from 1% for several months.
The rise in the unemployment rate is being seen as a further sign that the eurozone’s recovery from recession remains slow. The Eurostat figures showed that 15.749 million people were unemployed in the eurozone during February, up 61,000 from the month before. Across the 27-nation European Union, the unemployment rate rose to 9.6% in February, from 9.5% in January.
AP | Washington | March 9, 2010 | 3:53 pm ET
Legislation to give additional months of unemployment benefits to people who have been out of a job for more than half a year cleared a key hurdle Tuesday that guarantees it will soon pass the Senate. The sweeping bill also would prevent doctors from absorbing a crippling cut in Medicare payments and extends health insurance subsidies for the unemployed through December. It would add $132 billion to the budget deficit over the next year and a half. Eight Republicans voted with Democrats to defeat a GOP filibuster of the measure, setting up a final vote as soon as later on Tuesday. The measure illustrates the great extent to which direct help for the jobless and the poor makes up a large portion of Democrats’ election-year agenda on jobs — and that it threatens to squeeze out other items on that agenda amid concerns about a budget deficit projected at a record $1.6 trillion this year. The bill also provides the annual extension of $26 billion worth of tax breaks for businesses and individuals that are popular with senators in both parties.
The $66 billion cost of providing the extended unemployment checks is added directly to a budget deficit expected to hit $1.6 trillion this year. In states with the highest jobless rates people are eligible to receive benefits for up to 99 weeks. A 65 percent health insurance subsidy for the unemployed under the COBRA program adds about another $10 billion. Federal cash to help states with Medicaid adds about $25 billion more. "Even though these programs may be good for your state, a senator has an obligation to stand up and say ‘no more,’" said freshman GOP Sen. George Lemieux of Florida. "No more spending our kids’ future. No more bankrupting the promise of this country."
BBC NEWS | 2010/01/29 | 11:25:43 GMT
EU Unemployment Rates
- Highest: Latvia – 22.8%, Spain – 19.5%, Estonia – 15.2%
- Lowest: Netherlands – 4.0%, Austria – 5.4%, Cyprus – 6.1%
- Source: Eurostat
Unemployment in the 16 countries that use the euro hit 10% in December for the first time since the single currency was introduced in 1999. It had been reported that the rate hit 10% in November, but this has subsequently been revised down to 9.9%. Some 15.8 million people are now out of work in the eurozone, according to Eurostat. Across all 27 countries that make up the EU, there are now 23 million people unemployed.
Latvia has the highest jobless rate in the EU at 22.8%. Spain continues to have the highest rate in the eurozone – rising to 19.5% in December, up from 19.4% in November. The Netherlands has the lowest jobless rate at 4%, followed by Austria at 5.4%. Some 21% of under-25s in the eurozone were unemployed in December 2009, with Spain suffering the highest rate of all, at 44.5%. According to Eurostat, a total of 87,000 jobs were lost across the eurozone during December. That was the lowest increase since May 2008.
Responding to the figures, Howard Archer from IHS Global Insight says eurozone unemployment will increase further in the coming year. “Although the rise in eurozone unemployment has slowed in recent months, it still seems poised to trend higher during much, if not all, of 2010,” he said. Separate figures released by the country’s National Statistics Institute show that in the final three months of 2009, 4.33 million people were unemployed in Spain.
ABC News | Dec. 7, 2009
The $700 billion financial bailout has caused controversy and outrage from the moment it was enacted last fall, an attempt by the Bush administration to save the financial system from a collapse that could imperil the overall economy. A year later, critics argue, the bailout has only helped Wall Street, not Main Street. But the Obama administration Monday revealed that the program’s 10-year cost to taxpayers would be $200 billion less than expected — and now a chunk of the remaining funds could be used to help put Americans on Main Street back to work. “We’ve been very successful in bringing stability back to the financial system and that’s going to create very substantial resources for the president and the Congress to devote to the immediate priorities to the country,” Treasury Secretary Tim Geithner said in an interview with ABC News’ Jake Tapper.
The administration’s immediate priorities include job creation and continuing to stimulate economic growth, issues that the president will address in a speech on Tuesday. Obama is expected to focus on three main areas: energy, small businesses and infrastructure. House Democrats are reportedly eying a $70 billion chunk of bailout money to use in any jobs growth effort. “Having gotten the financial crisis under control, having finally moved into a positive territory when it comes to economic growth, our biggest challenge now is making sure that job Continue reading
BBC NEWS | 2009/12/04 22:38:38 GMT
The US unemployment rate fell in November to 10% from 10.2% in October, Labor Department figures show. Employers in November cut the lowest number of jobs since the recession began in December 2007. In all, 11,000 jobs went over the month. That was far fewer than the 130,000 expected by most analysts. President Barack Obama said the figures were “good news”, but warned that there were “more bumps in the road to economic recovery”. “There is a lot more to do before we can celebrate… good trends don’t pay the rent,” he said. For an economy the size of the US, the change was so small that the Labor Department described employment as “essentially unchanged”. In further good news for the US economy, factory orders rose by 0.6% in October, Commerce Department figures showed. Analysts had expected orders to remain unchanged. The good data pushed the dollar higher against major currencies.
Payrolls have fallen every month for almost two years, but this year, the pace of decline has slowed sharply. Revised figures for October also showed an improving trend. Originally, official estimates said 190,000 jobs were lost, that was revised down to 111,000. The White House spokesman, Robert Gibbs, said the sharp slowdown in job losses showed “much-needed progress”, but added that the Obama administration was still looking at providing help to the labour market. More than 15 million Americans are out of work, twice the number at the start of the Continue reading