U.S. Initial Jobless Claims Fell 22,000 to 391,000

Last week the number of Americans filing first-time claims for unemployment insurance decreased by 22,000 to 391,000. The drop greatly exceeded expectations, as many economists had predicted the claims would total at least 405,000. These numbers push the national average down to the lowest levels since July of 2008. Still not exactly great news, but better than the alternative.

Bloomger.com reports:

Companies may begin to ratchet up hiring after reducing firings, which will bring unemployment down further. That would help allay concerns from Federal Reserve policy makers who expressed “disappointment in both the pace and the unevenness of the improvements in labor markets” in the minutes of their Jan. 25-26 meeting released last week.

“The labor market has been on the upswing,” Millan Mulraine, a senior U.S. strategist at TD Securities Inc. in New York, said before the report. “As the pace of layoffs continues to decline, it is an indication that not only are businesses not firing as fast they used to, but they may in fact begin hiring.”

Jobless claims estimates in the Bloomberg News survey of 51 economists ranged from 375,000 to 420,000. The Labor Department initially reported the prior week’s figures at 410,000.

There were no special factors affecting the figures, a Labor Department official said today.

The four-week moving average, a less volatile measure, fell to 402,000 from 418,500 last week.

The number of people continuing to collect jobless benefits fell by 145,000 in the week ended Feb. 12 to 3.79 million.

Continue reading at Bloomberg.com...

Jobless Claims Jump

According to new reports, the number of jobless claims have surged to 454,000 last week, up from 403,000 the week prior. One of the largest increases we've seen lately.

Should it be cause for worry? Time magazine author Rana Foroohar says no, not yet.

Terrible weather throughout the Midwest and East Coast has skewed the figures, and the underlying data shows the labor market to be steady as she goes, on track to generate the 100-125,000 jobs a month that we need to at least hold the unemployment rate steady. Getting it down will require around 135,000 new jobs a month for quite some time, a questionable proposition - companies are still sitting on cash, and there's even evidence that despite all the Immelt chatter about bringing jobs home, a number of American multinationals are actually speeding up outsourcing to emerging market nations post recession.

For a sense of where the economy is headed, the number to watch is next week's unemployment report, out on Friday. That's going to include the annual revision to historic jobs data. If that revision shows that even fewer jobs were created during the recovery than we thought (a distinct possibility), it could have important effects – not so much on the unemployment rate itself, which will probably be flat or only slightly up – but on the direction of economic policy in the U.S. As Paul Dales of Capital Economics notes, fewer jobs created will mean the Fed will probably push full steam ahead with “quantitative easing,” or the buying up of stocks and bonds—the very thing that inflation hawks worry could lead us down a 1970s style path of stagflation.

Continue reading at Time.com...

2011 Job Forecast

According to reports, more employers plan to add full-time permanent jobs in 2011 as compared to 2010. Good news for the millions of unemployed. Now let’s see those unemployment numbers drop!

From AOL.com:

The survey included more than 2,400 hiring managers and human resource professionals across several industries and a range of company sizes. Here's what the survey revealed.

Full-time hiring

Twenty-four percent of employers surveyed plan to hire full-time, permanent employees in 2011, up from 20 percent in 2010, and 14 percent in 2009. Only 7 percent plan to decrease headcount, an improvement from 9 percent in 2010 and 16 percent in 2009. Fifty-eight percent anticipate no change in their staff levels while 11 percent are unsure.

Part-time hiring

Thirteen percent of these employers expect to hire part-time employees in the next 12 months, up from 11 percent in 2010, and 9 percent in 2009. Five percent plan to decrease part-time help, an improvement from 8 percent in 2010, and 14 percent in 2009. Seventy-one percent anticipate no change in their staff levels while 12 percent are unsure.

Contract/temporary hiring

Thirty-four percent of those hiring reported they will hire contract or temporary workers in 2011, up from 30 percent last year, and 28 percent in 2009. Of those hiring, 24 percent expect to add more staff than last year. Thirty-nine percent of employers plan to transition some contract or temporary staff into full-time, permanent employees.

Continue reading at AOL.com...

Jobless Claims Drift Lower; Prices Rise, Trade Gap Cut

Yesterday the Labor Department released new data showing that initial claims for jobless benefits hit a four-month low last week. The trade gap also narrowed, which is providing optimism about the ever-struggling economy. We are all desperate for signs our economy is improving, so we might be jumping the gun. On the other hand, we’ll take any good news we get on the economic front.

CNBC reports

The number of workers filing initial claims for unemployment benefits fell to a seasonally adjusted 435,000 in the week to Nov. 6 from a revised 459,000 for the prior week.

The bigger-than-expected dropped was underscored by the four-week moving average of claims which fell to its lowest since just before Lehman Brothers filed for bankruptcy in September 2008 in the depths of the financial crisis.

Meanwhile, a separate Commerce Department report showed the U.S. trade deficit narrowed more than expected in September, despite near record imports from China, as a weak U.S. dollar helped American exports grow for the third consecutive month.

A narrower deficit is positive for U.S. economic growth since it suggests more demand is being met by U.S. production.

A third government report showed a jump in petroleum prices in October pushed overall import prices to their highest since April, but the rise was less than analysts expected.

Read more here

California's Unemployment Fund has Deficit of $10.3 Billion

California businesses already pay some of the highest unemployment taxes in the country – and the tab is likely to increase.

The recession and the Legislature's decision years ago to raise benefits have drained the state unemployment insurance fund, which now has a estimated $10.3 billion deficit.

The nonpartisan Legislative Analyst's Office, in a recent report titled "California's Other Budget Deficit," said the state will probably need to raise unemployment taxes on employers as well as reduce benefits to bring the fund back in balance.

Raising the tax would require a two-thirds vote in both houses of the Legislature and might be politically impossible. Gov.-elect Jerry Brown has promised not to raise taxes without voter approval.

But pressure is growing on Sacramento to fix the system soon – whether it wants to or not. California has borrowed about $8.5 billion from the federal government to keep benefits flowing, and the repayment obligations are coming due.

"The longer we go without a fix, the bigger the hole becomes," said Loree Levy, a spokeswoman for the Employment Development Department, which doles out the benefits.

New Figures Detail Depth Of Unemployment Misery

According to data from a new Social Security report one out of every 34 Americans that earned wages in 2008, had no income whatsoever in 2009. Although the report came out earlier in the month, this article on Tax.com has brought the data back into the spotlight.

Huffington Post.com reports:

It's not just every 34th earner whose financial situation has been upended by the financial crisis. Average wages, median wages, and total wages have all declined -- except at the very top, where they leaped dramatically, increasing five-fold.

Johnston writes that while the number of Americans earning more than $50 million fell from 131 in 2008 to 74 in 2009, those that remained at the top increased their income from an average of $91.2 million in 2008 to almost $519 million.

The wealth is astounding, says Johnston. "That's nearly $10 million in weekly pay!... These 74 people made as much as the 19 million lowest-paid people in America, who constitute one in every eight workers."

Read more here

The Overseas Profits Elephant in the Room

From the Wall Street Journal:

During last year's "Jobs Summit," President Obama said he was open to any good idea to get the economy moving again. Today he should be especially so, since Washington's many monetary and fiscal policy decisions have not been able to spur the robust growth or job expansion that we all would like. And yet there is a simple idea—the trillion-dollar elephant in the room—that has apparently been dismissed for no good reason.

One trillion dollars is roughly the amount of earnings that American companies have in their foreign operations—and that they could repatriate to the United States. That money, in turn, could be invested in U.S. jobs, capital assets, research and development, and more.

But for U.S companies such repatriation of earnings carries a significant penalty: a federal tax of up to 35%. This means that U.S. companies can, without significant consequence, use their foreign earnings to invest in any country in the world—except here.

The U.S. government's treatment of repatriated foreign earnings stands in marked contrast to the tax practices of almost every major developed economy, including Germany, Japan, the United Kingdom, France, Spain, Italy, Russia, Australia and Canada, to name a few. Companies headquartered in any of these countries can repatriate foreign earnings to their home countries at a tax rate of 0%-2%. That's because those countries realize that choking off foreign capital from their economies is decidedly against their national interests.

Rise In Jobless Claims Boosts Fed Easing Expectations

From MSNMoney.com:

New U.S. claims for jobless benefits rose last week, hardening the view the central bank will pump more money into the economy, and keeping pressure on Democrats poised to lose congressional seats in November 2 polls.

At the same time, record-high imports from China helped push the U.S. trade deficit wider in August, while rising food and energy prices pushed inflation at the wholesale level up twice as fast as expected last month.

Initial claims for state unemployment benefits rose to a higher-than-expected 462,000 in the latest week, the Labor Department said on Thursday.

Economists polled by Reuters had expected initial claims at 445,000 in the latest week.

"These numbers don't fall out of the range of expectations, so they don't move the needle too much," said Jason Pride, director of investment strategy at Glenmede Investment and Wealth Management in Philadelphia.

Read the full article on MSNMoney.com here.

What Banks Say About The Economy

Although the economy continues to struggle, and unemployment numbers continue to increase, financial institutions are showing profits. This suggests the worst of the credit crisis is over, as many banks are charging less to cover bad loan losses. Read more from CNNMoney.com.

As the economy goes, so goes the financial sector, which explains why bank shares have taken a hit ever since fears of another slowdown emerged. But you can't just look at stock prices. You have to weigh the performance of the underlying businesses. When you do, you may be in for a bit of a surprise.

With unemployment about as high as it's been in 30 years and the nastiest real estate bust in almost a century still playing out, you'd think that big banks would be having a rough time making money, right?

Actually, they're pretty much printing profits. The big four -- Wells Fargo, Bank of America, Citi-group, and J.P. Morgan Chase -- collectively earned almost $14 billion in the second quarter.

The good news: Fewer deadbeat borrowers

This is a reflection that banks are having to charge off less to cover bad loans, which suggests the worst of the credit mess is really behind us. Wells recently trimmed its loan-loss reserves by $500 million, which went straight to its bottom line. Over the next few years, it could release as much as $11 billion more.

Another plus for banks: Funding costs are incredibly low right now. While you may be frustrated with the paltry interest rates you're getting on your CDs, these low rates are manna from heaven for banks.

Continue reading at CNN.com…

Jobs Picture gets Worse in 27 States

Although the recession may have officially come to an end, 27 states saw higher unemployment rates in August. This is almost double the number of states that saw jobless rates increase in July. According to CNN Money, the unemployment rate remained at 9.6% for the country and states such as Nevada, Michigan, and California are seeing rates above 12%.

Nevada had the worst rate for the fourth month in a row, at a record high of 14.4%, up from 14.3% in July. Michigan followed with 13.1% unemployment, unchanged from the prior rate, and California was third with a 12.4% rate, an increase from 12.3% in July.

Where does your state rank?

After Kentucky and Georgia joined the list, 13 states had unemployment rates above 10% in August, as opposed to 11 the previous month.

The jobless rates fell in 13 states, as opposed to 18 that saw decreases in July. Ten states and the District of Columbia had no rate change.

North Dakota remained the state with the lowest unemployment, posting a 3.7% rate, followed by South Dakota with 4.5% and Nebraska with 4.6%

Do Unemployment Checks Keep the Jobless at Home?

From CNNMoney.com:

Does allowing the jobless to get nearly two-years of unemployment checks give them an incentive to not work?

When Congress debated whether to extend unemployment to a record 99 weeks, some Republicans said that the unemployed are staying home collecting benefits when they could otherwise be working.

"[An unemployment extension] doesn't create new jobs. In fact, if anything, continuing to pay people unemployment compensation is a disincentive for them to seek new work," Jon Kyl, R-Ariz., argued during Senate debate in March.

And with the current extended benefits due to expire soon after November's mid-term elections, that argument seem to be gaining some traction.

The extension of benefits "is almost surely the culprit" behind sky-high unemployment, argued Robert Barro, Harvard University economics professor, in a recent Wall Street Journal column.

New Claims for Unemployment Aid Reach 484K

Last week, claims for unemployment benefits rose to the highest point in over 5 months. Although a drop was anticipated, instead claims rose by 2,000.

Read more from the Forbes.com story below.

New applications for unemployment insurance rose last week to their highest level in almost six months, a sign that employers are still cutting their staffs.

The Labor Department says first-time claims for jobless benefits edged up by 2,000 to a seasonally adjusted 484,000. Analysts had expected a drop. That's the highest total since the week of Feb. 20.

Initial claims have now risen in three of the last four weeks and are close to their high point for the year of 490,000, reached in late January. The four-week average, which smooths volatility, soared by 14,250 to 473,500, also the highest since late February.

The total number of people receiving benefits dropped 118,000 to 4.45 million, the department said.

Questions for the Tax Lady: July 12th, 2010

Check out the following new Questions for the Tax Lady answers and feel free to ask me questions through one of the links below. You can send me an email, direct message or @ reply, and I will do my best to get an answer for you!

Question #1: Is it possible to have federal taxes withheld from my unemployment check?

Yes. To have taxes withheld from your unemployment compensation you will need to file IRS Form W-4V, Voluntary Withholding Request.

Question #2: What are the differences between traditional and Roth IRAs?

The largest difference between traditional and Roth IRAs are their tax implications. When you have a Roth IRA contributions are made from income that has already been taxed. These contributions are not tax deductible, but future withdrawals are not subject to an income tax. On the other hand, traditional IRA contributions are tax deductible, but you will have to pay income taxes on future withdrawals.

Labor Dept. Estimates $7.1 Billion in Overpayments to Unemployed

Although headlines are focusing on the thousands of Americans that are losing, or have lost their unemployment benefits, the U.S. Labor Department is reporting over $7 billion in overpayment to the unemployed. As this story from ABC News explains, the total amount of unemployment benefits paid in 2009 was $76.8 billion, compared to $41.6 billion in 2008.

Fraud accounted for $1.55 billion in estimated overpayments last year, while errors by state agencies were blamed for $2.27 billion, according to the Labor Department. The department's final report will be released next month.

Some of the overpayments likely can be traced back to the overwhelming workloads facing state employment agencies during the recession, said George Wentworth, a policy analyst for the National Employment Law Project.

"You've got a system that's been under siege like the unemployment insurance system has been for the last two years," Wentworth said. "You've got a lot of new staff coming into the system; there's been a lot of federal extensions [to unemployment insurance benefits] that have had to be programmed in and so on. There's just been a lot of change that states have had to handle. ... I just think the volume and the new staff have made the systems more susceptible to error."

Continue reading at ABC News.com…

Hire Now, Save Later

Earlier in the week a new article of mine was published on WomenEntrepreneur.com. In the new piece, I explained to readers of the site how to save thousands of dollars by taking advantage of the tax incentives for hiring new employees who were previously unemployed.

The first tax break offsets the employer's portion of Social Security taxes on the new employee's wages from March 19, 2010, to Dec. 31, 2010. So, the 6.2 percent of the employee's wages you would normally contribute to Social Security stays in your business. This does not alter the employee's future Social Security benefits. You are still responsible for withholding the employee's share of payroll and income taxes, and paying the regular Medicare taxes.

The second tax benefit from the HIRE Act allows you to claim a general business tax credit for each new hire still employed after one year, as long as that employee's wages did not significantly decrease over the course of the year. The credit is worth up to $1,000, or 6.2 percent of the employee's total wages, whichever is less. Since you can only claim the credit after the employee completes one full year of service, you would claim the credit on your 2011 tax return. A bit of a delayed benefit, but $1,000 is nothing to sneeze at.

Between these two breaks, you can save thousands of dollars in taxes. Better still, if you need to do a lot of hiring, there is no limit on the number of employees for whom you can claim the credits.

Of course, with anything involving the IRS, there are rules and restrictions. Here is what you need to know:

Continue reading at WomenEntrepreneur.com…

Unemployment Benefits Extension Nixed for Nearly 1 Million

According to CNN Money, over a million Americans have lost their unemployment benefits as Senators failed to pass an extension last Thursday. There were 57 votes for the legislation, but it was not enough to overcome the GOP filibuster of the bill.

Hoping to overcome deficit concerns, the Senate trimmed down the bill yet again on Wednesday night so that it would only increase the deficit by $33.3 billion over 10 years, instead of $55.1 billion. The main changes were to scale back additional Medicaid funding for the states and to reallocate some stimulus and Defense Department spending.

The bill will now be pulled, according to two Democratic leadership aides. This leaves many groups in flux, including the jobless who have lost their safety net, companies who are waiting to learn what tax breaks are extended, and governors who were counting on the additional funds to balance their budgets.

The grab-bag legislation pushes back the deadline to file for federal unemployment benefits until the end of November, renews expired tax provisions, lengthens a small business lending program and adds to infrastructure investments.

Continue reading at CNN.com…

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.

Will a Call Center Tax Improve the Unemployment Problem?

Many of you may not be familiar with the newly proposed “call center tax,” however the topic is likely to gain a decent amount of attention over the next few weeks. To help all of my readers stay updated on this recent tax law development, I have put together the following article explaining this new and controversial tax proposal.

The Basics

Senator Charles Schumer (D, NY) recently proposed new legislation to tax US companies - $0.25 per call that is outsourced to a foreign call center. The idea behind the suggestion is to encourage businesses to use domestic call centers, in hopes that this would help reduce unemployment numbers. The proposed law would also require that consumers are warned that their call was being transferred to a foreign call center.

No tax would be imposed on domestic call centers, as Schumer is hoping this will “provide a reason for companies that have already outsourced jobs to bring them back.”

History of Job Losses

Statistics from the Technology Marketing Corp. show that between 2001 and 2003 the United States lost approximately 250,000 call center jobs to India and the Philippines alone. Additionally, reports show calls from within the U.S. are often routed to Indonesia, Ireland, Canada, and South Africa. Wages are much lower in these countries and companies operated in the United States can often reduce expenses by outsourcing calls.

Cost Effective?

Since 2003 the country has gone through an economic recession and more Americans are willing to take lower paying positions as unemployment problems continue. In fact, new call centers have been set up in North Dakota, Michigan and Nebraska that have become increasingly competitive with off shore centers.

Breaks, Not Penalties

As opposed to enacting a “penalty” excise tax on businesses that do outsource, some experts are suggesting that the government provide tax breaks to domestic call centers. This would help the economies of the states like North Dakota, Michigan and Nebraska and also provide incentive to businesses to keep call center and related jobs in the United States. However, other economists argue that in today’s international economy, call centers could easily reduce prices to stay competitive no matter what the federal government does.

Protection for Consumers

Senator Schumer claims the proposed law would serve to protect the privacy of American consumers. Many of the places to which calls are currently being outsourced do not have the same strict regulations regarding the storing of personal information such as credit card numbers. Therefore, to incentivize the use of domestic call centers by US companies, more consumers would know their personal information is being stored securely.

Potential Issues with WTO

Some critics of the proposal are warning that it could raise the potential of retaliation from other countries because of WTO agreements. Reportedly, taxing only international calls violates the “basic principle of national treatment.” According to WTO.org “imported and locally-produced goods should be treated equally — at least after the foreign goods have entered the market. The same should apply to foreign and domestic services.”

Senate Plan For Oil Company Tax Has Sparks Flying

Yesterday, Democrats in the Senate unveiled legislation aiming to increase taxes on oil companies, and provide tax breaks for individuals, businesses, and the unemployed. The huge measure is already drawing criticism from conservative members of congress that do not approve of the $60 million tax increases included in the legislation.

The bill contains many long-pending provisions, including the renewal of dozens of popular tax breaks for individuals and businesses.

Many elements of the bill, like the tax cuts and further unemployment benefits for people out of a job for more than six months, enjoy broad support. But Republicans generally oppose the measure’s nearly $60 billion in tax increases.

Even with those levies — on investment fund managers, oil companies, and some international businesses, among others — the measure would add about $80 billion to the deficit over the next decade, congressional analysts said.

It closely resembles a bill the House passed last month, with a handful of exceptions.

Continue reading at Boston.com…

Wanted: 400,000 truck drivers

It is well known that unemployment is still at an all time high in our country. The problem is nationwide and each individual state is looking for ways to get their residents back into the job force. Businesses are doing their part too—in Sacramento, California where I am located, 1500 people showed up to apply for limited employment positions at the local Campbell’s Soup Factory. While I love that businesses are trying to be a solution to the unemployment problem, it is just unfortunate that there are way too many people who are unemployed and this number outweighs the available job opportunities. This morning, I came across an industry that is calling out to the employed.

According to CNN Money, the U.S. trucking industry will need to hire about 200,000 drivers by the end of this year, and will need to add another 200,000 by the end of 2011, according to the Council of Supply Chain Management Professionals. Overall the industry lost almost 150,000 driving jobs since the start of 2008.

Rosalyn Wilson, the author of the report that was sponsored by Penske Logistics, states that the forecasts is for only a 4% to 6% growth in freight traffic for trucks this year and next, which Wilson says is a conservative estimate. Typically freight grows by about 10% coming out of a recession, she said.

I find it very interesting to know that freight grows by such high percentages after a recession—Read more here and tweet me your thoughts.

www.twitter.com/ronideutch