Jobless Claims in the U.S. Rose 26,000 Last Week to 397,000

Last week the total number of first-time claims for unemployment benefits rose, which has many economists worried about economic recovery. As they should be!

Bloomberg.com reports:

Applications for first-time unemployment benefits increased by 26,000 to 397,000 in the week ended March 5, Labor Department figures showed today. Economists forecast claims would climb to 376,000, according to the median estimate in a Bloomberg News survey. The total number of people receiving benefits in the prior week fell to the lowest since October 2008.

The rebound in the world’s largest economy has curbed firings, paving the way for employers such as Boeing Co. (BA) and Home Depot Inc. (HD) to add jobs and spur household spending. A Labor Department official said claims generally rise the week after a federal holiday and some New England states reported more claims due to school holidays.

“It’s the volatility around the Presidents’ Day holiday,” Jonathan Basile, director of U.S. economics at Credit Suisse Holdings USA Inc. in New York said before the report. “The swings around this moving holiday sometimes distort the trend. The labor market has been improving. Firms feel better about the outlook because their sales have improved and the need to cut costs” has decreased. The Presidents’ Day holiday was Feb. 21.

Read more here

December Jobs Report: Unemployment Rate at 9.4%

According to the Labor Department, unemployment rates dropped from 9.8% to 9.4% in December. Sounds like great news! However the economy only added 103,000 jobs; significantly fewer than experts had predicted. So far, I’m calling “Cautious Optimism” the theme for 2011.

CNN reports:

While a sharply lower unemployment rate was a welcome surprise, some experts said that drop was mostly due to a shrinking workforce.

"A lower unemployment rate is a mixed blessing," John Silvia, chief economist at Wells Fargo said in a note. "Yes, we are getting more people employed but we appear to be losing people into the woodwork -- not a good sign long term."

Economists surveyed by CNNMoney were expecting the unemployment rate to ease to 9.7%, from 9.8% in the previous month.

The payroll number was a clear disappointment. Economists predicted a gain of 150,000 jobs, and many had boosted their forecasts earlier in the week, after private payroll processor ADP released a shockingly strong report.

While that report is often seen as a bellwether for the Labor Department's number, this is the second month in a row that the government figures came in disappointingly lower.

California unemployment falls to 12.4 percent

Here in California the unemployment rate is falling, but not making much of a difference. It fell to 12.4 percent in California last month and the state had its fifth straight month of job growth, but the numbers are still very weak, according to the California Employment Development Department. The statewide unemployment rate fell only a tenth of a point, from 12.5 percent in May, while 28,300 jobs were added. However, most of the jobs were temporary government jobs, probably those from the Census.

In May, California still had the third highest unemployment rate in the U.S., trailing Nevada (14 percent) and Michigan (13.6 percent). May marked the first time since April 2006 that a state other than Michigan had the worst unemployment in the nation.

Can We Afford $100 Billion Jobs Bill?

In a new opinion piece at CNN.com, Maya MacGuineas (president of the Committee for a Responsible Federal Budget and the director of the Fiscal Policy Program at the New America Foundation) examines the American Jobs and Closing Tax Loopholes Act recently passed by the House of Representatives. As she explains, the legislation would cost more than $100 billion and add about $50 billion to the deficit.

This does not include the tens of billions that will be part of a supplemental spending measure, which will deficit-finance war spending and other "emergency" measures.

That's a lot of borrowing to add to a debt that already exceeds $8 trillion. It raises a host of questions. Does the economy need measures to help with job creation? Are these the best measures? Should they be paid for or simply added to the deficit?

Obviously, the unemployment rate is still far too high. Although there are pockets of growing employment and other encouraging economic signs, job growth will likely lag during the recovery. As the unemployment rate hovers close to 10 percent and families struggle to deal with the potentially devastating effects of sustained joblessness, efforts to ease the pain are indeed warranted.

The problem is that no clear-cut way exists to use federal dollars to promote sustainable job growth. The House bill includes an extension of unemployment benefits, a bump-up in slated federally-funded physician payments, and an extension of some expiring tax breaks. Would this create a host of shiny new jobs? Unlikely!

Continue reading at CNN.com…

March Unemployment Rate Unchanged At 9.7%

Over the past two years financial experts and economists have been monitoring changes to the unemployment rate as an indicator the country’s economic climate. However, last month the unemployment rate did not change and stayed at 9.7%.

While this is certainly a positive report, some are warning that these numbers could be a result of temporary census related jobs. The Washington Post has published an article discussing the unchanged unemployment rate; you can find a section of their story below or find the full text here.

A total of 162,000 new jobs were created on non-farm payrolls--the biggest one-month jobs gain in the past three years, but still well below what economists were predicting.

Most forecasters had expected about 200,000 new jobs to be created in March. The difference is largely attributable to fewer census workers than expected being hired by the government. But analysts say the numbers also illustrate the slow and wobbly nature of the ongoing economic recovery.

Christina Roemer, chair of the White House's Council of Economic Advisers, said the monthly employment report offered evidence of "gradual labor market healing."

"...[I]t is obvious that the American labor market remains severely distressed," Roemer said in a statement. "...While this is the most positive jobs report we have had in three years, there will likely be bumps in the road ahead."

California's Tax Tactics Undermine Prosperity

From the San Francisco Gate:

California's bond rating is the country's lowest. The state faces near unprecedented unemployment and underemployment. State government and most counties face deficits for the foreseeable future. The solution to this predicament, some Sacramento politicians believe, is more taxes.

The underlying assumption of such an approach is that taxes don't have much impact on economic performance and that tax competition among states is irrelevant. But both matter a great deal and lie at the heart of why the state's economy is struggling.

The first faulty premise pervading Sacramento is that taxes don't influence economic decisions and performance. Volumes of research show how taxes change behavior and how they affect the economy.

When we tax something, we get less of it. In other words, much of the foundation for a prosperous society, like work effort, savings, investment and entrepreneurship, is influenced by taxes. Unfortunately, California has gone out of its way to tax these very things.

California imposes America's fourth-highest top marginal personal income tax rate, behind only Hawaii, Oregon and New Jersey. Progressivity of our personal income taxes is the nation's third steepest. That is, when Californians are successful and begin to earn more income, they face higher rates both absolutely and compared to other states.

Shrinking U.S. Labor Force Keeps Unemployment Rate From Rising

From Bloomberg.com:

An exodus of discouraged workers from the job market kept the U.S. unemployment rate from climbing above 10 percent in December, economists said.

Had the labor force not decreased by 661,000 last month, the jobless rate would have been 10.4 percent, according to economists including David Rosenberg at Gluskin Sheff & Associates in Toronto and Harm Bandholz at UniCredit Research in New York.

“The actual unemployment rate is higher than shown by the official numbers,” Bandholz said yesterday after a Labor Department report released in Washington showed the economy unexpectedly lost 85,000 jobs in December while the jobless rate was unchanged.

About 1.7 million Americans opted out of the workforce from July through December, representing a 1.1 percent drop that marks the biggest six-month decrease since 1961, the Labor Department report showed. The share of the population in the labor force last month fell to the lowest level in 24 years.

December’s 10 percent unemployment rate matched the median forecast of economists surveyed by Bloomberg News. It was shy of the 26-year high of 10.1 percent reached two months earlier.

The so-called underemployment rate -- which includes part- time workers who’d prefer a full-time position and people who want work but have given up looking -- rose to 17.3 percent in December from 17.2 percent.

The number of discouraged workers, those not looking for work because they believe none is available, climbed to 929,000 last month, the most since records began in 1994.

Unemployment Claims Rise Unexpectedly

Despite predictions of a decline, unemployment claims in the U.S rose by 7,000 last week for a total of 480,000. Leading economists had expected the number of claims to decrease to 465,000, however the opposite turned out to be true. This news is especially trouble as holiday season usually brings additional employment opportunities. Checkout the following article from CNNMoney.com on the startling announcement.

There were 480,000 initial job claims filed in the week ended Dec. 12, up 7,000 from the previous week's revised 473,000, the Labor Department said.

A consensus estimate of economists surveyed by Briefing.com expected claims to decline to 465,000.

The 4-week moving average of initial claims totaled 467,000, down 5,250 from the previous week's revised average of 472,750.

This marks the second consecutive week that claims have climbed. But weekly claims have proven to be volatile with some pops but overall maintaining a downward trajectory. Analysts say that's normal for this time of year.

"With all the seasonal factors in play at this time of year, I'm not going to get too concerned over a couple of weeks of increases," said Robert Dye, senior economist at PNC Financial Services Group. "I expect the downward trend to steadily continue, but it wouldn't surprise me if we get another erratic week or two."

California Was Among States With Record Unemployment

According to an article on Bloomberg.com, the jobless rate rose in 29 of states across the country last month. California, Delaware, South Carolina and Florida were all among the list of states with record unemployment rates, while Michigan, Nevada, and Rhode Island had the highest jobless rates with 15.1%, 13%, and 12.9% respectively.

The national rate last month reached a 26-year high of 10.2 percent, weighing on consumer spending that accounts for about 70 percent of the economy. Federal Reserve Chairman Ben S. Bernanke said Nov. 17 that joblessness “likely will decline only slowly,” a reason policy makers will keep interest rates near zero to ensure growth is sustained.

“We’ve had a surprisingly sharp jump in the jobless rate,” said Richard DeKaser, president of Woodley Park Research in Washington. “Businesses have truly been doing an extraordinary job of wringing out productivity from the labor force.”

Stocks fell for a third day, with the Standard & Poor’s 500 Index declining 0.3 percent to 1,091.38 at 4:03 p.m. in New York. Dell Inc., the third-largest maker of personal computers, dropped 10 percent after reporting a 54 percent drop in profit.

The unemployment rate fell in 13 states, including Massachusetts, where it declined to 8.9 percent from 9.3 percent; New Hampshire, with a drop to 6.8 percent from 7.2 percent; and West Virginia, which fell to 8.5 percent from 8.9 percent.

Obama: Too Much Debt Could Fuel Double-Dip Recession

According to Reuters, President Obama warned the country about the need to stop rising federal deficits yesterday. He asserted that if government debts continue to pile up, that it could result in a “double-dip” recession.

With the U.S. unemployment rate at 10.2 percent, Obama told FOX News his administration faces a delicate balance of trying to boost the economy and spur job creation while putting the economy on a path toward long-term deficit reduction.

His administration was considering ways to accelerate economic growth, with tax measures among the options to give companies incentives to hire, Obama said in the interview with FOX conducted in Beijing during his nine-day trip to Asia.

"It is important though to recognize if we keep on adding to the debt, even in the midst of this recovery, that at some point, people could lose confidence in the U.S. economy in a way that could actually lead to a double-dip recession," he said.

Unemployment to Peak in 8-12 Months

As the United States continues to struggle with unemployment, the head of the International Monetary Fund (Dominique Strauss-Kahn) announced yesterday that the world’s unemployment will not peak for at least another eight months. According to Breitbart.com, Strauss-Kahn warned that unemployment rates and economic conditions are not likely to improve as quickly as many economists would like.

"The problem we are going to face in the coming year may be much more important, much more difficult to solve in low-income countries and some emerging countries than in advanced economies," he said.

Compared with advanced countries, where the recession has meant a couple of percentage point changes in purchasing power or unemployment, in low-income countries "it goes to a question of life and death, or starvation," he said.

Strauss-Kahn said the issue of how to fight unemployment was at the top of the agenda of a meeting held by the Development Committee, representing all 186 members of the Washington-based IMF and World Bank. Its decisions largely affect the strategic direction of the World Bank.

Strauss-Kahn called for members to increase the resources of World Bank so it can aid developing and poor countries cope with rising unemployment.

Unemployment Among Youths Skyrockets to 52.2%

It was recently announced that the unemployment rate for young Americans (between 16 and 24 years old) has increased to a staggering 52.2%. This is the highest it has been since World War II and represents a significant problem for the county’s economic recovery. There has not been any real mention at any plans aimed at creating new entry-level jobs, meaning many of these youths are entering the work force with expectations of low earning potential, and a fierce job market.

"It's an extremely dire situation in the short run," said Heidi Shierholz, an economist with the Washington-based Economic Policy Institute. "This group won't do as well as their parents unless the jobs situation changes."

Al Angrisani, the former assistant Labor Department secretary under President Reagan, doesn't see a turnaround in the jobs picture for entry-level workers and places the blame squarely on the Obama administration and the construction of its stimulus bill.

"There is no assistance provided for the development of job growth through small businesses, which create 70 percent of the jobs in the country," Angrisani said in an interview last week. "All those [unemployed young people] should be getting hired by small businesses."

There are six million small businesses in the country, those that employ less than 100 people, and a jobs stimulus bill should include tax credits to give incentives to those businesses to hire people, the former Labor official said.