U.S. Economy
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Americans have rebuilt less than half of wealth lost to the recession, study says
Americans have rebuilt less than half of wealth lost to the recession, study says
By Ylan Q. Mui,
Published: May 30
American households have rebuilt less than half of the wealth lost during the recession, leaving them without the spending power to fuel a robust economic recovery, according to a new analysis from the Federal Reserve.
From the peak of the boom to the bottom of the bust, households watched a total of $16 trillion in wealth disappear amid sinking stock prices and the rubble of the real estate market. Since then, Americans have only been able to recapture 45 percent of that amount on average, after adjusting for inflation and population growth, according to the report from the St. Louis Fed released Thursday.
In addition, the report showed most of the improvement was due to gains in the stock market, which primarily benefit wealthy families. That means the recovery for other households has been even weaker.
“A conclusion that the financial damage of the crisis and recession largely has been repaired is not justified,” the report stated.
The study is part of a growing body of research on the role of household wealth — or lack thereof — in amplifying the impact of the recession and slowing the rate of recovery. Traditionally, economists and policymakers have focused on the effects of employment and income. But the report from the St. Louis Fed argued that swings in household balance sheets — which include home values, stock prices, savings and debt — were critical in determining which families weathered the financial storm and which got swept away.
The report found that the most fragile households were not well educated, relatively young or black or Hispanic, or some combination of those characteristics. Those families tended to have low savings combined with high debt and accrued much of their wealth through housing.
How those households respond to the changes in wealth is a critical component of the recovery. Top officials, including Chairman Ben S. Bernanke, have pointed to the rebound in real estate and the soaring stock market as evidence of the success of the central bank’s policies.
The Fed is spending $85 billion a month to lower long-term interest rates and stimulate the economy. It has also kept short-term interest rates to near zero. That has helped push stock markets to record highs, while home prices have jumped by the most in seven years. Consumer confidence is at its highest point since February 2008. Officials hope those factors will eventually result in more consumer spending power.
“I think we’re at an inflection point,” said Beth Ann Bovino, senior economist at Standard & Poor’s. “We’re seeing things turn around. And that’s where the optimism comes in among households.”
But research by noted economists Karl Case, John Quigley and Robert Shiller found the households were more powerful affected by declines in wealth than increases. An unexpected 1 percent drop in housing prices caused a permanent 0.1 percent decrease in spending, that study found. But a similar 1 percent rise in housing prices boosted consumer spending by only 0.03 percent.
“Rising wealth is gratifying, but the loss of wealth is terrifying,” said Mark Zandi, chief economist at Moodys.com. “Households spend somewhat more freely as their nest eggs grow, but they slash their spending when their nest eggs shrink.”
William Emmons, chief economist for at the St. Louis Fed’s new Center for Household Financial Stability, said that many of the most vulnerable households began to treat credit as another form of income during the boom. After the bust, they were forced to dramatically rethink their finances, resulting in more cautious spending.
Emmons said many families have not experienced any recovery — or are even still losing wealth. Young Americans, those with few skills or are unemployed may not have been able to rebuild any wealth. He noted that though the number of foreclosures has dropped significantly, it is still more than double the pre-crisis amount.
Meanwhile, he estimated that recent gains in the stock market mean that the recovery of wealth is nearly complete for white and Asian households and older Americans.
Wealth accumulation not only impacts families’ current financial status but also their prospects for future economic success. The St. Louis Fed report points to studies that connect savings to the likelihood of attending and completing college and economic mobility.
“Balance sheets matter in ways that income alone does not,” said Ray Boshara, head of the center.
http://www.washingtonpost.com/busin...29a878-c930-11e2-8da7-d274bc611a47_story.html
Americans have rebuilt less than half of wealth lost to the recession, study says
By Ylan Q. Mui,
Published: May 30
American households have rebuilt less than half of the wealth lost during the recession, leaving them without the spending power to fuel a robust economic recovery, according to a new analysis from the Federal Reserve.
From the peak of the boom to the bottom of the bust, households watched a total of $16 trillion in wealth disappear amid sinking stock prices and the rubble of the real estate market. Since then, Americans have only been able to recapture 45 percent of that amount on average, after adjusting for inflation and population growth, according to the report from the St. Louis Fed released Thursday.
In addition, the report showed most of the improvement was due to gains in the stock market, which primarily benefit wealthy families. That means the recovery for other households has been even weaker.
“A conclusion that the financial damage of the crisis and recession largely has been repaired is not justified,” the report stated.
The study is part of a growing body of research on the role of household wealth — or lack thereof — in amplifying the impact of the recession and slowing the rate of recovery. Traditionally, economists and policymakers have focused on the effects of employment and income. But the report from the St. Louis Fed argued that swings in household balance sheets — which include home values, stock prices, savings and debt — were critical in determining which families weathered the financial storm and which got swept away.
The report found that the most fragile households were not well educated, relatively young or black or Hispanic, or some combination of those characteristics. Those families tended to have low savings combined with high debt and accrued much of their wealth through housing.
How those households respond to the changes in wealth is a critical component of the recovery. Top officials, including Chairman Ben S. Bernanke, have pointed to the rebound in real estate and the soaring stock market as evidence of the success of the central bank’s policies.
The Fed is spending $85 billion a month to lower long-term interest rates and stimulate the economy. It has also kept short-term interest rates to near zero. That has helped push stock markets to record highs, while home prices have jumped by the most in seven years. Consumer confidence is at its highest point since February 2008. Officials hope those factors will eventually result in more consumer spending power.
“I think we’re at an inflection point,” said Beth Ann Bovino, senior economist at Standard & Poor’s. “We’re seeing things turn around. And that’s where the optimism comes in among households.”
But research by noted economists Karl Case, John Quigley and Robert Shiller found the households were more powerful affected by declines in wealth than increases. An unexpected 1 percent drop in housing prices caused a permanent 0.1 percent decrease in spending, that study found. But a similar 1 percent rise in housing prices boosted consumer spending by only 0.03 percent.
“Rising wealth is gratifying, but the loss of wealth is terrifying,” said Mark Zandi, chief economist at Moodys.com. “Households spend somewhat more freely as their nest eggs grow, but they slash their spending when their nest eggs shrink.”
William Emmons, chief economist for at the St. Louis Fed’s new Center for Household Financial Stability, said that many of the most vulnerable households began to treat credit as another form of income during the boom. After the bust, they were forced to dramatically rethink their finances, resulting in more cautious spending.
Emmons said many families have not experienced any recovery — or are even still losing wealth. Young Americans, those with few skills or are unemployed may not have been able to rebuild any wealth. He noted that though the number of foreclosures has dropped significantly, it is still more than double the pre-crisis amount.
Meanwhile, he estimated that recent gains in the stock market mean that the recovery of wealth is nearly complete for white and Asian households and older Americans.
Wealth accumulation not only impacts families’ current financial status but also their prospects for future economic success. The St. Louis Fed report points to studies that connect savings to the likelihood of attending and completing college and economic mobility.
“Balance sheets matter in ways that income alone does not,” said Ray Boshara, head of the center.
http://www.washingtonpost.com/busin...29a878-c930-11e2-8da7-d274bc611a47_story.html
U.S. Household Worth Tops Pre-Recession Peak for First Time
U.S. Household Worth Tops Pre-Recession Peak for First Time
By Michelle Jamrisko -
Jun 6, 2013 1:32 PM CT
Household wealth in the U.S. jumped to a record in the first quarter, exceeding its pre-recession peak for the first time, bolstered by gains in the stock and housing markets that are helping Americans mend finances.
Net worth for households and non-profit groups increased by $3 trillion from January through March, or 4.5 percent from the previous three months, to $70.3 trillion, the Federal Reserve said today from Washington in its financial accounts report, previously known as the flow of funds survey.
Household wealth eclipsed its pre-recession level as gains in the stock and housing markets help Americans withstand an increase in the payroll tax this year. Lending rates kept low by the Federal Reserve, coupled with further gains in employment, may continue to repair balance sheets and support consumer spending that makes up about 70 percent of the economy.
“We’re still on track for another improvement in net worth in the second quarter,” said Guy Berger, an economist at RBS Securities Inc. in Stamford, Connecticut. “It is having a positive effect.”
Household net worth is $2.29 trillion above its pre-recession peak of $68.1 trillion reached in the third quarter of 2007. It was at $67.3 trillion in the last three months of 2012.
The value of financial assets owned by American households, including stocks and pension-fund holdings, increased by $2.1 trillion in the first quarter to $57.7 trillion, today’s Fed report showed.
Stock Prices
Equity prices have built on those gains so far this quarter even as federal budget cuts weigh on economic growth and concern that Fed policy makers will scale back bond purchases have hurt the market in the last three weeks. The Standard & Poor’s 500 Index advanced 3 percent through June 5 since March 29, while the first quarter saw a 10 percent increase.
Stocks rose today, after the S&P 500 Index dropped to a one-month low yesterday. The gauge climbed 0.3 percent to 1,614.41 at 2:30 p.m. in New York.
Household real-estate assets climbed by $836.8 billion, according to today’s flow of funds data. Owners’ equity as a share of total household real-estate holdings increased to 49.2 percent last quarter from 46.7 percent in the previous three months.
A recovering housing market is helping to support those gains. Property values rose 10.5 percent in the 12 months through March, the biggest gain in seven years and the 13th consecutive advance in national home prices, according to Irvine, California-based CoreLogic Inc.
Auto Sales
Automakers are seeing a boost in orders as consumers find the wherewithal to spend. Cars and light trucks sold at a 15.2 million annualized rate in May, making it the sixth month out of the last seven to exceed the 15-million mark -- a level that previously hadn’t been reached since February 2008. Stocks of General Motors Co. (GM), Ford Motor Co. (F) and Fiat SpA, the majority owner of Chrysler Group LLC, are all up more than 20 percent since March.
“Housing has kind of led the way with truck sales,” Kurt McNeil, GM’s vice president of U.S. sales operations, said on a June 3 conference call. “You’re starting to see some positive data from consumer sentiment and consumer confidence. The stock market continues to do well.”
Less Borrowing
Americans reduced debt last quarter even as the residential real-estate market improved. Today’s report showed household borrowing decreased at a 0.6 percent annual rate from January to March. Mortgage borrowing dropped at a 2.3 percent pace, the 16th consecutive decrease. Other forms of consumer credit, including auto and student loans, climbed at a 5.7 percent pace.
Total non-financial debt increased at a 4.6 percent annual pace last quarter, led by a 10.3 percent advance by the federal government and a 5.3 percent gain among companies. State and local government borrowing rose at a 1.9 percent pace.
Household finances on the mend are helping consumers meet their loan payments. Mortgage and consumer-loan payments in the fourth quarter accounted for 10.4 percent of after-tax income, the smallest share in records dating to 1980, according to Fed figures issued in March. The figure peaked at 14.1 percent in September 2007.
Still, when adjusted for inflation and population growth, household net worth had recovered less than two-thirds of the losses from the recession ended June 2009, according to research from the Federal Reserve Bank of St. Louis. The gauge of inflation-adjusted net worth per household shows 62.8 percent of the losses had been regained through the first quarter, according to figures issued today.
http://www.bloomberg.com/news/2013-...ops-pre-recession-peak-for-first-time-1-.html
U.S. Household Worth Tops Pre-Recession Peak for First Time
By Michelle Jamrisko -
Jun 6, 2013 1:32 PM CT
Household wealth in the U.S. jumped to a record in the first quarter, exceeding its pre-recession peak for the first time, bolstered by gains in the stock and housing markets that are helping Americans mend finances.
Net worth for households and non-profit groups increased by $3 trillion from January through March, or 4.5 percent from the previous three months, to $70.3 trillion, the Federal Reserve said today from Washington in its financial accounts report, previously known as the flow of funds survey.
Household wealth eclipsed its pre-recession level as gains in the stock and housing markets help Americans withstand an increase in the payroll tax this year. Lending rates kept low by the Federal Reserve, coupled with further gains in employment, may continue to repair balance sheets and support consumer spending that makes up about 70 percent of the economy.
“We’re still on track for another improvement in net worth in the second quarter,” said Guy Berger, an economist at RBS Securities Inc. in Stamford, Connecticut. “It is having a positive effect.”
Household net worth is $2.29 trillion above its pre-recession peak of $68.1 trillion reached in the third quarter of 2007. It was at $67.3 trillion in the last three months of 2012.
The value of financial assets owned by American households, including stocks and pension-fund holdings, increased by $2.1 trillion in the first quarter to $57.7 trillion, today’s Fed report showed.
Stock Prices
Equity prices have built on those gains so far this quarter even as federal budget cuts weigh on economic growth and concern that Fed policy makers will scale back bond purchases have hurt the market in the last three weeks. The Standard & Poor’s 500 Index advanced 3 percent through June 5 since March 29, while the first quarter saw a 10 percent increase.
Stocks rose today, after the S&P 500 Index dropped to a one-month low yesterday. The gauge climbed 0.3 percent to 1,614.41 at 2:30 p.m. in New York.
Household real-estate assets climbed by $836.8 billion, according to today’s flow of funds data. Owners’ equity as a share of total household real-estate holdings increased to 49.2 percent last quarter from 46.7 percent in the previous three months.
A recovering housing market is helping to support those gains. Property values rose 10.5 percent in the 12 months through March, the biggest gain in seven years and the 13th consecutive advance in national home prices, according to Irvine, California-based CoreLogic Inc.
Auto Sales
Automakers are seeing a boost in orders as consumers find the wherewithal to spend. Cars and light trucks sold at a 15.2 million annualized rate in May, making it the sixth month out of the last seven to exceed the 15-million mark -- a level that previously hadn’t been reached since February 2008. Stocks of General Motors Co. (GM), Ford Motor Co. (F) and Fiat SpA, the majority owner of Chrysler Group LLC, are all up more than 20 percent since March.
“Housing has kind of led the way with truck sales,” Kurt McNeil, GM’s vice president of U.S. sales operations, said on a June 3 conference call. “You’re starting to see some positive data from consumer sentiment and consumer confidence. The stock market continues to do well.”
Less Borrowing
Americans reduced debt last quarter even as the residential real-estate market improved. Today’s report showed household borrowing decreased at a 0.6 percent annual rate from January to March. Mortgage borrowing dropped at a 2.3 percent pace, the 16th consecutive decrease. Other forms of consumer credit, including auto and student loans, climbed at a 5.7 percent pace.
Total non-financial debt increased at a 4.6 percent annual pace last quarter, led by a 10.3 percent advance by the federal government and a 5.3 percent gain among companies. State and local government borrowing rose at a 1.9 percent pace.
Household finances on the mend are helping consumers meet their loan payments. Mortgage and consumer-loan payments in the fourth quarter accounted for 10.4 percent of after-tax income, the smallest share in records dating to 1980, according to Fed figures issued in March. The figure peaked at 14.1 percent in September 2007.
Still, when adjusted for inflation and population growth, household net worth had recovered less than two-thirds of the losses from the recession ended June 2009, according to research from the Federal Reserve Bank of St. Louis. The gauge of inflation-adjusted net worth per household shows 62.8 percent of the losses had been regained through the first quarter, according to figures issued today.
http://www.bloomberg.com/news/2013-...ops-pre-recession-peak-for-first-time-1-.html
Wages Fail to Keep Pace With Productivity
Increases, Aggravating Income Inequality
[FONT=trebuchet ms, arial unicode ms, microsoft sans serif, verdana]
<B? p <>by Greg Ip
Wall Street Journal.
Mar 27, 2006.
pg. A.2</B>
The Bush administration's defenders, and many private economists, say wages are bound to catch up. "Everything we know about economics and historical experience is that when productivity goes up, real wages go up, too," says Phillip Swagel, a scholar at the conservative American Enterprise Institute who worked in the Bush White House. It took a couple of years for wages to catch up with accelerating productivity in the late 1990s, he says. "This time, it's taking three, maybe four or five."
[/FONT]</HR>
Heard this before.
Muckraker is ok. Consistent over the years. Are you ok?
I'm ok, are you ok?
Are you? At the beginning of this thread (2004) you felt everything was honky dory with GW's economy. GW and Greenspan made all the right moves and you, like all conservatives, libertarians, capitalists or whatever you will admit to being blamed everyone except the speculators and led to the crash.
Whereas, according to your posts, nothing President Obama has done is good. Even though we have dug out somewhat of the morass your conservative/libertarians created.
Your ok alright!
You're free to post an article stating the things you want to hear about Obama.
Is anyone writing articles about how good the economy is? Or do you just think I'm purposely avoiding them?
It's also nice to see you respond most passionately about Obama being the victim considering all his activities that have been exposed in the last three weeks.
Nothing like the priorities of a hypocrite.
Stay classy thoughtone.
Re: Bailout of Long-Term Capital: A Bad Precedent?
Post #201-289 in this thread goes from Feb 2009 to present.
I brought up Obama once indirectly with a Death Spiral reference and I posted two articles over that timeframe that mentioned him by name once each. Both positively.
The vast majority of the time, thoughtone, you are the one that brings Obama up, usually while going back and forth with Lamarr and Cruise.
This is what I mean when I say you think like a politician and it's a bad thing.
I post an article with no personal commentary and the article itself makes no mention of the President, but your onethought is what does this say about Obama.
You should get rid of your cable and take up knitting or something.
Post #201-289 in this thread goes from Feb 2009 to present.
I brought up Obama once indirectly with a Death Spiral reference and I posted two articles over that timeframe that mentioned him by name once each. Both positively.
The vast majority of the time, thoughtone, you are the one that brings Obama up, usually while going back and forth with Lamarr and Cruise.
This is what I mean when I say you think like a politician and it's a bad thing.
I post an article with no personal commentary and the article itself makes no mention of the President, but your onethought is what does this say about Obama.
You should get rid of your cable and take up knitting or something.
The Eddie Murphy Rule
The Eddie Murphy Rule (26:05)
July 09, 2013 9:24 PM
On today's show, we talk to commodities traders to answer one of the most important questions in finance: What actually happens at the end of Trading Places?
We know something crazy happens on the trading floor. We know that Eddie Murphy and Dan Aykroyd get rich and the Duke brothers lose everything. But how does it all happen? And could it happen in the real world?
Also on the show: The "Eddie Murphy Rule" that wound up in the the big financial overhaul law Congress passed in 2010.
http://www.npr.org/blogs/money/2013/07/09/200401407/episode-471-the-eddie-murphy-rule
The Eddie Murphy Rule (26:05)
July 09, 2013 9:24 PM
On today's show, we talk to commodities traders to answer one of the most important questions in finance: What actually happens at the end of Trading Places?
We know something crazy happens on the trading floor. We know that Eddie Murphy and Dan Aykroyd get rich and the Duke brothers lose everything. But how does it all happen? And could it happen in the real world?
Also on the show: The "Eddie Murphy Rule" that wound up in the the big financial overhaul law Congress passed in 2010.
http://www.npr.org/blogs/money/2013/07/09/200401407/episode-471-the-eddie-murphy-rule
Re: The Eddie Murphy Rule
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<A HREF="http://www.politifact.com/truth-o-meter/statements/2013/aug/20/barack-obama/obama-says-exports-us-goods-all-time-high/">link</A>
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<A HREF="http://www.politifact.com/truth-o-meter/statements/2013/aug/20/barack-obama/obama-says-exports-us-goods-all-time-high/">link</A>
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Tires, Taxes And The Grizz
Tires, Taxes And The Grizz (14:01)
June 21, 2013 9:07 PM
The price of tires has risen by about 40 percent in the past five years. That's partly because rubber prices have gone up. But it's also due to a tariff the U.S. imposed on Chinese tire imports.
As tire prices have risen, more people have been renting tires rather than buying them outright. And renting tires, it turns out, is often a bad deal in the long run.
On today's show: How a celebrated attempt to help one group of people ended quietly hurting a much larger group.
http://www.npr.org/blogs/money/2013/06/21/194326482/episode-467-tires-taxes-and-the-grizz
Tires, Taxes And The Grizz (14:01)
June 21, 2013 9:07 PM
The price of tires has risen by about 40 percent in the past five years. That's partly because rubber prices have gone up. But it's also due to a tariff the U.S. imposed on Chinese tire imports.
As tire prices have risen, more people have been renting tires rather than buying them outright. And renting tires, it turns out, is often a bad deal in the long run.
On today's show: How a celebrated attempt to help one group of people ended quietly hurting a much larger group.
http://www.npr.org/blogs/money/2013/06/21/194326482/episode-467-tires-taxes-and-the-grizz
Factory Rebirth Fizzles in U.S. as Work Shipped Overseas
Factory Rebirth Fizzles in U.S. as Work Shipped Overseas
By Thomas Black
Sep 12, 2013 11:01 PM CT
Randy Webb sees scant evidence of a U.S. manufacturing rebound in the Ohio plant where he’s fixed aircraft electronics for 25 years. Honeywell International Inc. (HON) is closing the shop in 2014 as it expands such work overseas.
Webb is among 80 employees poised to lose their jobs in Strongsville, Ohio, outside Cleveland, near where General Electric Co. (GE) will shut a lighting factory in favor of production in Hungary. Delphi Automotive Plc (DLPH) is sending parts assembly to Mexico from Flint, Michigan, and Eaton Corp. (ETN) will make extra-large hydraulic cylinders in the Netherlands, not Alabama.
“Manufacturing is clearly on the downswing,” said Webb, 49, who was told in April that the Strongsville Service Center would close. “Everybody I know is jumping to the service industry or taking some other kind of job.”
The U.S. industrial comeback, an idea embraced by President Barack Obama and some economists as 12 years of factory-job losses gave way to three annual gains, is now sputtering. Even with nonfarm payrolls up 1.1 percent in 2013 to 136.1 million, manufacturing has stagnated at less than 12 million. Factories added more than 500,000 positions after falling in February 2010 to the lowest since 1941.
That left the factory workforce through August about 13 percent smaller than the 13.7 million when the U.S. fell into recession in December 2007. In 2000, the tally was 17 million.
“I know all of us are concerned about manufacturing, but it’s not going to come home to the degree that it used to be,” Federal Reserve Bank of Dallas President Richard Fisher said at a Sept. 5 event in Dallas.
Cost Disadvantage
Higher taxes and employee benefits boost U.S. manufacturing costs to 9 percent more than the average of the country’s nine-largest trading partners, according to a Sept. 3 report by a team of JPMorgan Chase & Co. analysts.
For GE, higher U.S. expenses mean sending assembly of high-intensity discharge lamps to Budapest from a factory with 160 workers in Ravenna, Ohio.
“This particular product that was at Ravenna was made more cost competitively in Hungary,” said Christopher Augustine, a spokesman for Fairfield, Connecticut-based GE.
Hungary is GE’s global production center for that product line, just as fluorescent-lamp output is centered elsewhere in Ohio, in Bucyrus, Augustine said. Many of those lights go to U.S. customers, he said.
Expanding Abroad
Honeywell has cut its U.S. workforce by 5,000 positions to 52,000 since 2007 while adding 15,000 employees abroad, for a total of 80,000 outside the country.
Strongsville is one of two avionics repair shops closing in the U.S., along with one in Irving, Texas, said Steve Brecken, a Honeywell spokesman. U.S. operations are being consolidated in Renton, Washington, and Wichita, Kansas, and part of the work is being transferred to a U.S.-based contractor, he said. Morris Township, New Jersey-based Honeywell is expanding outside the U.S. at shops in Singapore and Shanghai to meet rising demand there, Brecken said.
“The world has opened up and it’s providing more choices for manufacturers that are global companies and supply a global customer base,” said Stephen Stanley, chief economist for Pierpont Securities LLC in Stamford, Connecticut. “We’re going to continue to see a globalization of manufacturing.”
Obama’s efforts to nurture a manufacturing comeback include the National Export Initiative he announced in March 2010, a month after factory payrolls slid to 11.5 million. The goal was to double U.S. exports and create 2 million jobs, with programs such as financing for small- and medium-sized businesses to boost sales overseas.
No Easing
In February, he laid out a four-point plan to revitalize manufacturing in his State of the Union address, including cutting the tax rate on manufacturers to 25 percent from a top federal corporate rate of 35 percent. Seven months later, tax changes remain stalled in a gridlocked Congress.
The National Association of Manufacturers, often at odds with Obama over policy issues, agrees with him on the prospect of a factory rebirth.
With cheap natural gas from U.S. shale deposits and increased automation reducing labor’s share of manufacturing costs, U.S. factories can compete with those in low-wage countries, said Chad Moutray, the Washington-based group’s chief economist.
“People want to locate and invest here because they want to sell to us,” Moutray said. “Multinationals may be investing overseas, but they’re also investing here.”
Payrolls, Productivity
One discouraging sign that manufacturing employment is recovering: the 13 percent gap between factory payrolls now and before the recession occurred amid a rebound in output, said Tim Quinlan, a Wells Fargo & Co. economist in Charlotte, North Carolina. Industrial production trails a 2007 pre-recession high by only 1.9 percentage points.
“Whereas I do see manufacturing underpinning overall U.S. economic growth, I don’t see hiring in the factory sector underpinning growth in jobs,” Quinlan said. “It will be a long, long time before we get back to pre-recession highs for employment in the factory sector.”
With manufacturing employment up only 0.1 percent through August, job growth is just about keeping pace with losses such as the pending shutdown in November of Delphi’s Flint factory, with 300 employees.
The work is being moved to Mexico, according to a Trade Adjustment Assistance petition filed with the U.S. Labor Department. Tom Wickham, a spokesman for General Motors Co. (GM), which supplied unionized hourly workers for the plant supervised by Troy, Michigan-based Delphi, confirmed the closing.
Eaton, Jabil
Eaton said in a petition that it shuttered its hydraulic-cylinder plant in Decatur, Alabama, in July. Scott Schroeder, a spokesman for Dublin, Ireland-based Eaton, said consolidating production boosts efficiency. In Tempe, Arizona, contract electronics manufacturer Jabil Circuit Inc. (JBL) will eliminate about 500 positions with a factory closing.
“We are in the process of moving several assemblies to other Jabil facilities in Mexico and Asia in order to reduce labor costs and meet our customers’ pricing expectations,” the St. Petersburg, Florida-based company said in a Trade Adjustment Assistance petition. Beth Walters, a Jabil spokeswoman, said by e-mail that the plant will close within a year.
Webb, who said he helped train Honeywell employees from abroad who now perform work once done in the U.S., can relate to displaced workers at other U.S. manufacturers. If he can’t find a job near Strongsville with equal pay, he may pursue a long-held desire to become a high school teacher.
In the meantime, he goes to work each day amid the strain of a months-long wind-down before what may be the end of his career in avionics repair.
“It’s like dying a death of a thousand cuts here,” Webb said, “because it’s going so slowly.”
http://www.bloomberg.com/news/2013-...-fizzles-in-u-s-as-work-shipped-overseas.html
Factory Rebirth Fizzles in U.S. as Work Shipped Overseas
By Thomas Black
Sep 12, 2013 11:01 PM CT
Randy Webb sees scant evidence of a U.S. manufacturing rebound in the Ohio plant where he’s fixed aircraft electronics for 25 years. Honeywell International Inc. (HON) is closing the shop in 2014 as it expands such work overseas.
Webb is among 80 employees poised to lose their jobs in Strongsville, Ohio, outside Cleveland, near where General Electric Co. (GE) will shut a lighting factory in favor of production in Hungary. Delphi Automotive Plc (DLPH) is sending parts assembly to Mexico from Flint, Michigan, and Eaton Corp. (ETN) will make extra-large hydraulic cylinders in the Netherlands, not Alabama.
“Manufacturing is clearly on the downswing,” said Webb, 49, who was told in April that the Strongsville Service Center would close. “Everybody I know is jumping to the service industry or taking some other kind of job.”
The U.S. industrial comeback, an idea embraced by President Barack Obama and some economists as 12 years of factory-job losses gave way to three annual gains, is now sputtering. Even with nonfarm payrolls up 1.1 percent in 2013 to 136.1 million, manufacturing has stagnated at less than 12 million. Factories added more than 500,000 positions after falling in February 2010 to the lowest since 1941.
That left the factory workforce through August about 13 percent smaller than the 13.7 million when the U.S. fell into recession in December 2007. In 2000, the tally was 17 million.
“I know all of us are concerned about manufacturing, but it’s not going to come home to the degree that it used to be,” Federal Reserve Bank of Dallas President Richard Fisher said at a Sept. 5 event in Dallas.
Cost Disadvantage
Higher taxes and employee benefits boost U.S. manufacturing costs to 9 percent more than the average of the country’s nine-largest trading partners, according to a Sept. 3 report by a team of JPMorgan Chase & Co. analysts.
For GE, higher U.S. expenses mean sending assembly of high-intensity discharge lamps to Budapest from a factory with 160 workers in Ravenna, Ohio.
“This particular product that was at Ravenna was made more cost competitively in Hungary,” said Christopher Augustine, a spokesman for Fairfield, Connecticut-based GE.
Hungary is GE’s global production center for that product line, just as fluorescent-lamp output is centered elsewhere in Ohio, in Bucyrus, Augustine said. Many of those lights go to U.S. customers, he said.
Expanding Abroad
Honeywell has cut its U.S. workforce by 5,000 positions to 52,000 since 2007 while adding 15,000 employees abroad, for a total of 80,000 outside the country.
Strongsville is one of two avionics repair shops closing in the U.S., along with one in Irving, Texas, said Steve Brecken, a Honeywell spokesman. U.S. operations are being consolidated in Renton, Washington, and Wichita, Kansas, and part of the work is being transferred to a U.S.-based contractor, he said. Morris Township, New Jersey-based Honeywell is expanding outside the U.S. at shops in Singapore and Shanghai to meet rising demand there, Brecken said.
“The world has opened up and it’s providing more choices for manufacturers that are global companies and supply a global customer base,” said Stephen Stanley, chief economist for Pierpont Securities LLC in Stamford, Connecticut. “We’re going to continue to see a globalization of manufacturing.”
Obama’s efforts to nurture a manufacturing comeback include the National Export Initiative he announced in March 2010, a month after factory payrolls slid to 11.5 million. The goal was to double U.S. exports and create 2 million jobs, with programs such as financing for small- and medium-sized businesses to boost sales overseas.
No Easing
In February, he laid out a four-point plan to revitalize manufacturing in his State of the Union address, including cutting the tax rate on manufacturers to 25 percent from a top federal corporate rate of 35 percent. Seven months later, tax changes remain stalled in a gridlocked Congress.
The National Association of Manufacturers, often at odds with Obama over policy issues, agrees with him on the prospect of a factory rebirth.
With cheap natural gas from U.S. shale deposits and increased automation reducing labor’s share of manufacturing costs, U.S. factories can compete with those in low-wage countries, said Chad Moutray, the Washington-based group’s chief economist.
“People want to locate and invest here because they want to sell to us,” Moutray said. “Multinationals may be investing overseas, but they’re also investing here.”
Payrolls, Productivity
One discouraging sign that manufacturing employment is recovering: the 13 percent gap between factory payrolls now and before the recession occurred amid a rebound in output, said Tim Quinlan, a Wells Fargo & Co. economist in Charlotte, North Carolina. Industrial production trails a 2007 pre-recession high by only 1.9 percentage points.
“Whereas I do see manufacturing underpinning overall U.S. economic growth, I don’t see hiring in the factory sector underpinning growth in jobs,” Quinlan said. “It will be a long, long time before we get back to pre-recession highs for employment in the factory sector.”
With manufacturing employment up only 0.1 percent through August, job growth is just about keeping pace with losses such as the pending shutdown in November of Delphi’s Flint factory, with 300 employees.
The work is being moved to Mexico, according to a Trade Adjustment Assistance petition filed with the U.S. Labor Department. Tom Wickham, a spokesman for General Motors Co. (GM), which supplied unionized hourly workers for the plant supervised by Troy, Michigan-based Delphi, confirmed the closing.
Eaton, Jabil
Eaton said in a petition that it shuttered its hydraulic-cylinder plant in Decatur, Alabama, in July. Scott Schroeder, a spokesman for Dublin, Ireland-based Eaton, said consolidating production boosts efficiency. In Tempe, Arizona, contract electronics manufacturer Jabil Circuit Inc. (JBL) will eliminate about 500 positions with a factory closing.
“We are in the process of moving several assemblies to other Jabil facilities in Mexico and Asia in order to reduce labor costs and meet our customers’ pricing expectations,” the St. Petersburg, Florida-based company said in a Trade Adjustment Assistance petition. Beth Walters, a Jabil spokeswoman, said by e-mail that the plant will close within a year.
Webb, who said he helped train Honeywell employees from abroad who now perform work once done in the U.S., can relate to displaced workers at other U.S. manufacturers. If he can’t find a job near Strongsville with equal pay, he may pursue a long-held desire to become a high school teacher.
In the meantime, he goes to work each day amid the strain of a months-long wind-down before what may be the end of his career in avionics repair.
“It’s like dying a death of a thousand cuts here,” Webb said, “because it’s going so slowly.”
http://www.bloomberg.com/news/2013-...-fizzles-in-u-s-as-work-shipped-overseas.html
Is business investment gap stalling recovery?
Is business investment gap stalling recovery?
Weak levels of business investment are holding down wages and job gains.
Tim Mullaney, USA TODAY
8:02 p.m. EDT September 22, 2013
When the financial crisis hit in 2008, aluminum prices crashed nearly as fast as stocks.
So aluminum giant Alcoa did what it had to: It slashed capital investment, to $1.6 billion in 2009 from $3.4 billion a year earlier. It never came back. With prices still low, Alcoa's yearly investment is now $1.3 billion and falling, concentrated in a handful of specialty businesses that are still growing. Its stock has lost three-fourths of its value. And effective Monday, Alcoa is out of the Dow Jones Industrial Average.
"They're not generating as much profit, so they can't invest,'' Citigroup analyst Brian Yu says. "They're putting their capital where it makes the most sense.''
Five years after the crisis, the "investment gap'' that Alcoa exemplifies stands as one of the most enduring and disabling legacies of the Great Recession. Companies have held off on spending as much as $2.2 trillion since 2008, estimates the Progressive Policy Institute in a new report — more than $500 billion just last year. That's translating into lower productivity growth, slower economic growth — and fewer new jobs.
"When workers have older and less equipment, they produce less,'' PPI Chief Economic Strategist Michael Mandel said. "It's a very simple connection.''
It means lower wages, too. Median household incomes are still about $4,500 below 2007 levels, adjusted for inflation. One major reason is that low productivity growth means profit margins are narrower — and that shrinks the pot of money that raises are drawn from, even with corporate profits still near all-time highs, says Carl Tannenbaum, chief economist at Chicago-based Northern Trust.
Excluding the energy industry's shale oil boom, investment economy-wide is lower than in 2007, Moody's Analytics says
The problem is widespread, at even the zenith of American business.
Among the Dow industrials, companies such as Home Depot, General Electric, Cisco Systems, IBM, Visa and Johnson & Johnson are all still below 2008's capital spending. Dow component 3M's capital spending hasn't kept up with inflation, according to regulatory filings.
The biggest factor holding up investment is executives' still-shaky confidence, said Frank Friedman, chief financial officer of accounting firm Deloitte, which does regular surveys of CFOs. That will only ease when the economy posts stronger monthly job gains than it has recently, he said. Since April's gain of 199,000, the economy has averaged only 155,000 in the following four months.
"What drives confidence is seeing people get hired in the private sector,'' he said. "CEOs need confidence to make investment."
Corporate reticence, at a time of outsize profits, puzzles economists and policymakers. In a sign of the gap's persistence, PPI estimates that businesses invested $508 billion less in 2012 alone than they would have if spending had kept growing at its 1997-2007 pace. Investment saw little growth in the first half of this year, according to the Commerce Department, even after Congress and President Obama avoided the fiscal cliff.
By one arcane measure that the Federal Reserve tracks, U.S businesses are investing less than during any recovery since at least 1952 — even though they're so awash in cash, they needn't borrow to invest at a more normal clip, Barclays economist Dean Maki said.
The problem is still getting worse, according to some studies. Global corporate investment is likely to drop 1.5% this year and is set to fall as much as 5% next, Standard & Poor's economist Garth Williams said. In the U.S., investment will drop 1% this year and 3% next, he added.
"The global recovery will be slower and weaker than people might hope for,'' Williams said. "Investment adds to a recovery once it's underway, and that's at risk.''
No investment = no raise
Why is this a big deal?
Because investment drives productivity growth, and productivity ultimately makes rising wages possible, Tannenbaum said. If the cost of making a $100 item goes to $70 from $80, the $10 saved can be split between wages, profits, and more investment, he said. Substantially all wage growth in the history of capitalism traces back to higher productivity, he says.
Yet, the last two years were the weakest stretch for productivity growth since 1983-84, the Labor Department says. The Labor Department's report on second-quarter productivity showed a 2.3% annualized gain, but it followed such weak performance in late 2012 and early this year that the last 12 months show only a 0.3% gain. Productivity rose five times faster during the Internet boom in the late 1990s and its aftermath, as the productivity pop from investments made by 2000 persisted for years afterwards.
That investment helped drive wage growth in the late 1990s — and the lack of it is holding wages back now, economists say.
"Investment is the foundation of growth," said PPI economist Diana Carew. "With more investment, everything we think is lackluster now would see bigger gains.''
Policymakers agree. The minutes of the Federal Reserve's July meeting show members of the Open Markets Committee saying more investment is ''likely to be a necessary element of the projected pickup in economic growth.'' But the minutes add that "reports from businesses range from contacts who expressed heightened optimism to those who suggested that little acceleration was likely in the second half of the year.''
The most recent data complete the picture that opinion leaders paint.
July's orders for core capital goods — which excludes the volatile aerospace sector — showed a drop of 1.5%. "Quite ugly," economist Joel Naroff called the report. That impression was only partly leavened by bullish signals from an Institute of Supply Management survey on manufacturers' confidence, and another from the Philadelphia Federal Reserve on Sept. 19.
"The U.S. equipment sector has stalled in the past year — through both the start of the Fed's (third stimulus) program and talk of tapering now,'' Action Economics Chief Economist Mike Englund said. "Growth has been hit by a diminishing cyclical rebound in the auto sector, defense cuts ... and a disappointing 2013 pace for non-residential construction.''
The good news is that capital spending usually grows faster than the economy as a whole during the second half of an economic cycle, which would imply some acceleration next year, probably after a weak third quarter, said John Canally, chief economic strategist at LPL Financial.
"I wouldn't say it will be a robust, '90s-syle spending binge,'' Canally said. "But at the margin, it should be OK.''
Big risk, big rewards
The payoffs from investing enough can be large — though, like any investment, capital spending isn't a sure thing.
At Ciena, a Maryland telecom-gear company, CEO Gary Smith doubled investment beginning in 2009. Ciena needed to innovate before rivals devised products for the surge toward cloud computing, Smith said. That meant adding proprietary software and other features to Ciena gear, he said.
"The culture of our company is to play for the long term," said Smith.
Adjusted operating-profit margins that dipped into the red during the recession are back to 8% again with help from new products, he said. Third-quarter product sales climbed 17%, driven by the new machines developed with that money.
Corporate giants such as Verizon Communications and Intel show how investing through the downturn paid off. Alcoa is one example of what can happen when executives try to hold the line.
Intel has doubled capital spending since 2008 and will add another $1 billion this year, reaching $13 billion, spokesman Chuck Mulloy said. New U.S.-based factories have let Intel widen profit margins and add 25,000 jobs since 2008, he said.
Verizon poured $23 billion into its FiOS broadband network since 2004, and has spent billions more to upgrade its Verizon Wireless network to 4G technology, Chief Technology Officer Anthony Melone said.
The results: Verizon's margins in its wireless business have reached an industry-best 50%, up from 46% in 2008, enough to boost profit on the $80 billion business by as much as $3 billion. Verizon's 6% subscriber growth in the last year is nearly twice the industry's pace. All that drove Verizon's Labor Day weekend deal to buy the 45% of Verizon Wireless it doesn't already own from UK-based Vodafone for $130 billion.
Meanwhile, FiOS — a triple-play bundle of TV, broadband Internet and phone service — is generating nearly $11 billion in yearly sales, growing 15% in the second quarter. It has also let Verizon hang on to millions of wired-telephone customers, Melone added.
"You have to have the stomach to do it,'' he said.
Companies that have cut investment are often in the midst of transitions to new ways of doing business, including Alcoa. With basic-aluminum prices depressed, it has preserved investment in new, higher-value products while cutting older businesses.
"Some (of our) businesses are under enormous stress," CEO Klaus Kleinfeld said in an earnings conference call July 9. "Two big areas are aerospace and automotive, and we are putting capital in there. We are growing in this."
One industry hit especially hard by the investment drought is retailing.
Retailing was one of the spectacular successes of the 1990s productivity boom, as rivals spent heavily to keep up with Wal-Mart's cost-cutting innovations. But spending has slowed. In 2012, with consumer spending rising modestly, productivity growth picked up from post-recession lows but remained half of what it was a decade earlier and below its long-run average, government data show.
Home-improvement chain Lowe's has cut capital spending to $1.2 billion from $1.8 billion, a plunge that spokeswoman Chris Ahearn attributed to shifting from opening 150 stores a year to expanding Lowes.com. Similarly, Macy's cut investment after renovating newly acquired stores in the mid-2000s, spokesman Jim Sluzewski said. Macy's spending has nearly recovered to pre-recession levels, after inflation.
Most retailers say they'll boost investment 5% or less this year, according to a survey by KPMG. Many will lose more market share to Amazon.com, which has boosted capital spending 11-fold since 2008 and seen its stock quintuple, said Mark Larson, head of KPMG's retailing practice.
"When the downturn hit, retailers really retrenched,'' said Larson. "Now they'll invest, but it's modest.''
http://www.usatoday.com/story/money/business/2013/09/22/business-investment-productivity/2455427/
Is business investment gap stalling recovery?
Weak levels of business investment are holding down wages and job gains.
Tim Mullaney, USA TODAY
8:02 p.m. EDT September 22, 2013
When the financial crisis hit in 2008, aluminum prices crashed nearly as fast as stocks.
So aluminum giant Alcoa did what it had to: It slashed capital investment, to $1.6 billion in 2009 from $3.4 billion a year earlier. It never came back. With prices still low, Alcoa's yearly investment is now $1.3 billion and falling, concentrated in a handful of specialty businesses that are still growing. Its stock has lost three-fourths of its value. And effective Monday, Alcoa is out of the Dow Jones Industrial Average.
"They're not generating as much profit, so they can't invest,'' Citigroup analyst Brian Yu says. "They're putting their capital where it makes the most sense.''
Five years after the crisis, the "investment gap'' that Alcoa exemplifies stands as one of the most enduring and disabling legacies of the Great Recession. Companies have held off on spending as much as $2.2 trillion since 2008, estimates the Progressive Policy Institute in a new report — more than $500 billion just last year. That's translating into lower productivity growth, slower economic growth — and fewer new jobs.
"When workers have older and less equipment, they produce less,'' PPI Chief Economic Strategist Michael Mandel said. "It's a very simple connection.''
It means lower wages, too. Median household incomes are still about $4,500 below 2007 levels, adjusted for inflation. One major reason is that low productivity growth means profit margins are narrower — and that shrinks the pot of money that raises are drawn from, even with corporate profits still near all-time highs, says Carl Tannenbaum, chief economist at Chicago-based Northern Trust.
Excluding the energy industry's shale oil boom, investment economy-wide is lower than in 2007, Moody's Analytics says
The problem is widespread, at even the zenith of American business.
Among the Dow industrials, companies such as Home Depot, General Electric, Cisco Systems, IBM, Visa and Johnson & Johnson are all still below 2008's capital spending. Dow component 3M's capital spending hasn't kept up with inflation, according to regulatory filings.
The biggest factor holding up investment is executives' still-shaky confidence, said Frank Friedman, chief financial officer of accounting firm Deloitte, which does regular surveys of CFOs. That will only ease when the economy posts stronger monthly job gains than it has recently, he said. Since April's gain of 199,000, the economy has averaged only 155,000 in the following four months.
"What drives confidence is seeing people get hired in the private sector,'' he said. "CEOs need confidence to make investment."
Corporate reticence, at a time of outsize profits, puzzles economists and policymakers. In a sign of the gap's persistence, PPI estimates that businesses invested $508 billion less in 2012 alone than they would have if spending had kept growing at its 1997-2007 pace. Investment saw little growth in the first half of this year, according to the Commerce Department, even after Congress and President Obama avoided the fiscal cliff.
By one arcane measure that the Federal Reserve tracks, U.S businesses are investing less than during any recovery since at least 1952 — even though they're so awash in cash, they needn't borrow to invest at a more normal clip, Barclays economist Dean Maki said.
The problem is still getting worse, according to some studies. Global corporate investment is likely to drop 1.5% this year and is set to fall as much as 5% next, Standard & Poor's economist Garth Williams said. In the U.S., investment will drop 1% this year and 3% next, he added.
"The global recovery will be slower and weaker than people might hope for,'' Williams said. "Investment adds to a recovery once it's underway, and that's at risk.''
No investment = no raise
Why is this a big deal?
Because investment drives productivity growth, and productivity ultimately makes rising wages possible, Tannenbaum said. If the cost of making a $100 item goes to $70 from $80, the $10 saved can be split between wages, profits, and more investment, he said. Substantially all wage growth in the history of capitalism traces back to higher productivity, he says.
Yet, the last two years were the weakest stretch for productivity growth since 1983-84, the Labor Department says. The Labor Department's report on second-quarter productivity showed a 2.3% annualized gain, but it followed such weak performance in late 2012 and early this year that the last 12 months show only a 0.3% gain. Productivity rose five times faster during the Internet boom in the late 1990s and its aftermath, as the productivity pop from investments made by 2000 persisted for years afterwards.
That investment helped drive wage growth in the late 1990s — and the lack of it is holding wages back now, economists say.
"Investment is the foundation of growth," said PPI economist Diana Carew. "With more investment, everything we think is lackluster now would see bigger gains.''
Policymakers agree. The minutes of the Federal Reserve's July meeting show members of the Open Markets Committee saying more investment is ''likely to be a necessary element of the projected pickup in economic growth.'' But the minutes add that "reports from businesses range from contacts who expressed heightened optimism to those who suggested that little acceleration was likely in the second half of the year.''
The most recent data complete the picture that opinion leaders paint.
July's orders for core capital goods — which excludes the volatile aerospace sector — showed a drop of 1.5%. "Quite ugly," economist Joel Naroff called the report. That impression was only partly leavened by bullish signals from an Institute of Supply Management survey on manufacturers' confidence, and another from the Philadelphia Federal Reserve on Sept. 19.
"The U.S. equipment sector has stalled in the past year — through both the start of the Fed's (third stimulus) program and talk of tapering now,'' Action Economics Chief Economist Mike Englund said. "Growth has been hit by a diminishing cyclical rebound in the auto sector, defense cuts ... and a disappointing 2013 pace for non-residential construction.''
The good news is that capital spending usually grows faster than the economy as a whole during the second half of an economic cycle, which would imply some acceleration next year, probably after a weak third quarter, said John Canally, chief economic strategist at LPL Financial.
"I wouldn't say it will be a robust, '90s-syle spending binge,'' Canally said. "But at the margin, it should be OK.''
Big risk, big rewards
The payoffs from investing enough can be large — though, like any investment, capital spending isn't a sure thing.
At Ciena, a Maryland telecom-gear company, CEO Gary Smith doubled investment beginning in 2009. Ciena needed to innovate before rivals devised products for the surge toward cloud computing, Smith said. That meant adding proprietary software and other features to Ciena gear, he said.
"The culture of our company is to play for the long term," said Smith.
Adjusted operating-profit margins that dipped into the red during the recession are back to 8% again with help from new products, he said. Third-quarter product sales climbed 17%, driven by the new machines developed with that money.
Corporate giants such as Verizon Communications and Intel show how investing through the downturn paid off. Alcoa is one example of what can happen when executives try to hold the line.
Intel has doubled capital spending since 2008 and will add another $1 billion this year, reaching $13 billion, spokesman Chuck Mulloy said. New U.S.-based factories have let Intel widen profit margins and add 25,000 jobs since 2008, he said.
Verizon poured $23 billion into its FiOS broadband network since 2004, and has spent billions more to upgrade its Verizon Wireless network to 4G technology, Chief Technology Officer Anthony Melone said.
The results: Verizon's margins in its wireless business have reached an industry-best 50%, up from 46% in 2008, enough to boost profit on the $80 billion business by as much as $3 billion. Verizon's 6% subscriber growth in the last year is nearly twice the industry's pace. All that drove Verizon's Labor Day weekend deal to buy the 45% of Verizon Wireless it doesn't already own from UK-based Vodafone for $130 billion.
Meanwhile, FiOS — a triple-play bundle of TV, broadband Internet and phone service — is generating nearly $11 billion in yearly sales, growing 15% in the second quarter. It has also let Verizon hang on to millions of wired-telephone customers, Melone added.
"You have to have the stomach to do it,'' he said.
Companies that have cut investment are often in the midst of transitions to new ways of doing business, including Alcoa. With basic-aluminum prices depressed, it has preserved investment in new, higher-value products while cutting older businesses.
"Some (of our) businesses are under enormous stress," CEO Klaus Kleinfeld said in an earnings conference call July 9. "Two big areas are aerospace and automotive, and we are putting capital in there. We are growing in this."
One industry hit especially hard by the investment drought is retailing.
Retailing was one of the spectacular successes of the 1990s productivity boom, as rivals spent heavily to keep up with Wal-Mart's cost-cutting innovations. But spending has slowed. In 2012, with consumer spending rising modestly, productivity growth picked up from post-recession lows but remained half of what it was a decade earlier and below its long-run average, government data show.
Home-improvement chain Lowe's has cut capital spending to $1.2 billion from $1.8 billion, a plunge that spokeswoman Chris Ahearn attributed to shifting from opening 150 stores a year to expanding Lowes.com. Similarly, Macy's cut investment after renovating newly acquired stores in the mid-2000s, spokesman Jim Sluzewski said. Macy's spending has nearly recovered to pre-recession levels, after inflation.
Most retailers say they'll boost investment 5% or less this year, according to a survey by KPMG. Many will lose more market share to Amazon.com, which has boosted capital spending 11-fold since 2008 and seen its stock quintuple, said Mark Larson, head of KPMG's retailing practice.
"When the downturn hit, retailers really retrenched,'' said Larson. "Now they'll invest, but it's modest.''
http://www.usatoday.com/story/money/business/2013/09/22/business-investment-productivity/2455427/
Americans Are Rich but Not Very Competent
Americans Are Rich but Not Very Competent
By Peter Coy
October 09, 2013
The good news for Americans in a new international study of adult skills is that the U.S. ranks near the top in gross domestic product per capita, behind only Norway.
The bad news is that Americans are so far behind in their skills that it’s hard to see how they can stay at the top for long.
The figures are contained in a report by the Organization for Economic Cooperation & Development called OECD Skills Outlook 2013 (pdf). It was released on Oct. 8. The OECD is an organization of relatively wealthy, industrialized nations.
Here are the OECD countries in the study with a bigger share of adults aged 16 to 64 in the top two levels of literacy, listed from the top down:
Japan, Finland, Netherlands, Sweden, Australia, Norway, Estonia, Slovenia, Flanders (part of Belgium), Canada, Czech Republic, Denmark, South Korea, England and Northern Ireland, and Germany.
Then comes the U.S.
After that are Austria, Poland, Ireland, France, Cyprus, Spain, and, in last place, Italy.
In numeracy the U.S. comes out even worse, ahead of only Italy and Spain. And when the OECD breaks down the numeracy of just 16- to 24-year-olds, the U.S. is in last place.
Remarkably for the nation that’s home to Silicon Valley, the U.S. was also last (among countries for which there were complete data) in “proficiency in problem-solving in technology-rich environments among young adults.” South Korea and Finland were Nos. 1 and 2.
This is a problem. As the OECD puts it: “Being able to read, understand and respond appropriately to numerical and mathematical information are skills that are essential for full social and economic participation.”
New York Times business columnist Eduardo Porter wrote about the OECD study in today’s New York Times and tried to puzzle out how the U.S. has managed to stay so rich with a relatively unimpressive workforce. “Japan has fantastic human capital but uses it quite poorly,” Andreas Schleicher, the OECD deputy director for education and skills, told Porter. “The United States is the opposite. It has mediocre assets but is good at extracting value from them.”
The U.S. makes the most of its workforce by rewarding the best and firing the worst. Women are given opportunities for advancement. Japan, which doesn’t do any of those things, could make huge strides simply by reorganizing work. In the U.S., Porter writes, “human capital has to be painstakingly built, one cohort at a time.”
http://www.businessweek.com/articles/2013-10-09/americans-are-rich-but-not-very-competent#r=rss
Americans Are Rich but Not Very Competent
By Peter Coy
October 09, 2013
The good news for Americans in a new international study of adult skills is that the U.S. ranks near the top in gross domestic product per capita, behind only Norway.
The bad news is that Americans are so far behind in their skills that it’s hard to see how they can stay at the top for long.
The figures are contained in a report by the Organization for Economic Cooperation & Development called OECD Skills Outlook 2013 (pdf). It was released on Oct. 8. The OECD is an organization of relatively wealthy, industrialized nations.
Here are the OECD countries in the study with a bigger share of adults aged 16 to 64 in the top two levels of literacy, listed from the top down:
Japan, Finland, Netherlands, Sweden, Australia, Norway, Estonia, Slovenia, Flanders (part of Belgium), Canada, Czech Republic, Denmark, South Korea, England and Northern Ireland, and Germany.
Then comes the U.S.
After that are Austria, Poland, Ireland, France, Cyprus, Spain, and, in last place, Italy.
In numeracy the U.S. comes out even worse, ahead of only Italy and Spain. And when the OECD breaks down the numeracy of just 16- to 24-year-olds, the U.S. is in last place.
Remarkably for the nation that’s home to Silicon Valley, the U.S. was also last (among countries for which there were complete data) in “proficiency in problem-solving in technology-rich environments among young adults.” South Korea and Finland were Nos. 1 and 2.
This is a problem. As the OECD puts it: “Being able to read, understand and respond appropriately to numerical and mathematical information are skills that are essential for full social and economic participation.”
New York Times business columnist Eduardo Porter wrote about the OECD study in today’s New York Times and tried to puzzle out how the U.S. has managed to stay so rich with a relatively unimpressive workforce. “Japan has fantastic human capital but uses it quite poorly,” Andreas Schleicher, the OECD deputy director for education and skills, told Porter. “The United States is the opposite. It has mediocre assets but is good at extracting value from them.”
The U.S. makes the most of its workforce by rewarding the best and firing the worst. Women are given opportunities for advancement. Japan, which doesn’t do any of those things, could make huge strides simply by reorganizing work. In the U.S., Porter writes, “human capital has to be painstakingly built, one cohort at a time.”
http://www.businessweek.com/articles/2013-10-09/americans-are-rich-but-not-very-competent#r=rss
source: Business Insider
S&P: The Shutdown Took $24 Billion Out Of The US Economy
The S&P has cut the annualized U.S. growth view closer to 2% from 3%, Bloomberg is reporting.
]The ratings agency — which recognizes the Senate deal will be approved — says that the shutdown has taken $24 billion out of the economy and cut 0.6% off of yearly fourth quarter GDP growth.
"If people are afraid that the government policy brinkmanship will resurface again, and with it the risk of another shutdown or worse, they'll remain afraid to open up their checkbooks. That points to another Humbug holiday season," S&P wrote in a release.
They also said the impact of the debt ceiling is getting worse by the day for the U.S. economy.
Here's the full release:
S&P: The Shutdown Took $24 Billion Out Of The US Economy
The S&P has cut the annualized U.S. growth view closer to 2% from 3%, Bloomberg is reporting.
]The ratings agency — which recognizes the Senate deal will be approved — says that the shutdown has taken $24 billion out of the economy and cut 0.6% off of yearly fourth quarter GDP growth.
"If people are afraid that the government policy brinkmanship will resurface again, and with it the risk of another shutdown or worse, they'll remain afraid to open up their checkbooks. That points to another Humbug holiday season," S&P wrote in a release.
They also said the impact of the debt ceiling is getting worse by the day for the U.S. economy.
Here's the full release:
NEW YORK (Standard & Poor's) Oct. 16, 2013--The U.S. government has been shut down for more than two weeks. Earlier today, Senate leadership crafted an agreement to end the shutdown and avert a debt default. However, the deal needs to be voted on by both chambers of Congress.
We believe that to date, the shutdown has shaved at least 0.6% off of annualized fourth-quarter 2013 GDP growth, or taken $24 billion out of the economy. However, the closer we get to breaching the debt ceiling, the higher we expect the economic impact to be.
In the summer of 2011, as we approached the last debt ceiling standoff, consumer confidence plummeted and hit a 31-year low in August when the debt ceiling issue came to a head. Given that this round of debt-ceiling negotiations is occurring after two-plus weeks of a government shutdown, the total impact on the economy will likely be even more severe.
While we believe the Senate deal will be passed and the debt ceiling will be raised, the impact of a default by the U.S. government on its debts would be devastating for markets and the economy and worse than the collapse of Lehman Brothers in 2008.
Should a default occur, the resulting sudden, unplanned contraction of current spending could see government spending cut by about 4% of annualized GDP. That would put the economy in a recession and wipeout much of the economic progress made by the recovery from the Great Recession.
As we've said, we expect the Senate deal to be approved. However, the current chatter coming out of Washington suggests that any continuing resolution will be a temporary one, with an early 2014 timeframe for the next set of Washington deadlines. The short turnaround for politicians to negotiate some sort of lasting deal will likely weigh on consumer confidence, especially among government workers that were furloughed. If people are afraid that the government policy brinkmanship will resurface again, and with it the risk of another shutdown or worse, they'll remain afraid to open up their checkbooks. That points to another Humbug holiday season.
The bottom line is the government shutdown has hurt the U.S. economy. In September, we expected 3% annualized growth in the fourth quarter because we thought politicians would have learned from 2011 and taken steps to avoid things like a government shutdown and the possibility of a sovereign default. Since our forecast didn't hold, we now have to lower our fourth-quarter growth estimate to closer to 2%
Standard & Poor's Ratings Services, part of McGraw Hill Financial (NYSE: MHFI), is the world's leading provider of independent credit risk research and benchmarks. We publish more than a million credit ratings on debt issued by sovereign, municipal, corporate and financial sector entities. With over 1,400 credit analysts in 23 countries, and more than 150 years' experience of assessing credit risk, we offer a unique combination of global coverage and local insight. Our research and opinions about relative credit risk provide market participants with information and independent benchmarks that help to support the growth of transparent, liquid debt markets worldwide.
We believe that to date, the shutdown has shaved at least 0.6% off of annualized fourth-quarter 2013 GDP growth, or taken $24 billion out of the economy. However, the closer we get to breaching the debt ceiling, the higher we expect the economic impact to be.
In the summer of 2011, as we approached the last debt ceiling standoff, consumer confidence plummeted and hit a 31-year low in August when the debt ceiling issue came to a head. Given that this round of debt-ceiling negotiations is occurring after two-plus weeks of a government shutdown, the total impact on the economy will likely be even more severe.
While we believe the Senate deal will be passed and the debt ceiling will be raised, the impact of a default by the U.S. government on its debts would be devastating for markets and the economy and worse than the collapse of Lehman Brothers in 2008.
Should a default occur, the resulting sudden, unplanned contraction of current spending could see government spending cut by about 4% of annualized GDP. That would put the economy in a recession and wipeout much of the economic progress made by the recovery from the Great Recession.
As we've said, we expect the Senate deal to be approved. However, the current chatter coming out of Washington suggests that any continuing resolution will be a temporary one, with an early 2014 timeframe for the next set of Washington deadlines. The short turnaround for politicians to negotiate some sort of lasting deal will likely weigh on consumer confidence, especially among government workers that were furloughed. If people are afraid that the government policy brinkmanship will resurface again, and with it the risk of another shutdown or worse, they'll remain afraid to open up their checkbooks. That points to another Humbug holiday season.
The bottom line is the government shutdown has hurt the U.S. economy. In September, we expected 3% annualized growth in the fourth quarter because we thought politicians would have learned from 2011 and taken steps to avoid things like a government shutdown and the possibility of a sovereign default. Since our forecast didn't hold, we now have to lower our fourth-quarter growth estimate to closer to 2%
Standard & Poor's Ratings Services, part of McGraw Hill Financial (NYSE: MHFI), is the world's leading provider of independent credit risk research and benchmarks. We publish more than a million credit ratings on debt issued by sovereign, municipal, corporate and financial sector entities. With over 1,400 credit analysts in 23 countries, and more than 150 years' experience of assessing credit risk, we offer a unique combination of global coverage and local insight. Our research and opinions about relative credit risk provide market participants with information and independent benchmarks that help to support the growth of transparent, liquid debt markets worldwide.
How to Find a Job in the North Dakota Oil Boom
How to Find a Job in the North Dakota Oil Boom
By Blaire Briody | The Fiscal Times
Tue, Nov 5, 2013
In early 2013, Derek MacDonald, a skinny 28-year-old with glasses, was living in the small town of Smith Center, Kansas, and taking care of his sick grandfather. He looked for steady work for over a year, but found nothing more than odd construction jobs. He also has a DUI on his record, which he believes dissuaded employers from hiring him. “I only had a couple jobs the whole year,” he says.
Broke and unsure of what to do next, he packed up two duffle bags, a sleeping bag and a tarp, and bought a one-way bus ticket to Williston, North Dakota – a place with one of the lowest unemployment rates in the country, at 0.9 percent. The media has dubbed it “the town the recession forgot.” “I found a job within the first hour of being here,” says MacDonald.
Located just south of the Canadian border, it’s almost hard not to find a job in Williston. Advancements in hydraulic fracturing have helped the region experience one of the largest oil booms the U.S. has ever seen. North Dakota has seen a 600 percent increase in production in recent years. The state currently produces around 27 million barrels of oil every month, and has risen from the ninth-highest oil producing state, to the second, trailing only Texas.
With oil come jobs. Williston and its surrounding areas have generated over 75,000 new jobs, and average annual wages have more than tripled in the past decade, going from $24,841 in 2002 to $78,364 today. For those in the oil field, who typically work long overtime hours, the average wage in the state is $112,462. The state now has 22,000 more jobs than people looking for work.
Nearly every business in town has “Help Wanted” signs and has raised wages to attract employees. McDonald’s started offering $300 signing bonuses, and the hourly pay for a cashier position at Walmart starts at $17.50, twice as much as the same position in other locations. And if a jobseeker can snag a job in the oil industry, they can make over $100,000 with no college degree.
The problem is, as thousands of workers from all over the country have showed up, housing construction has not kept pace. The lack of supply has caused landlords to inflate rents, and a modest two-bedroom that used to go for $500 a month before the boom shot up to $2,500 a month. Those who can afford the rent usually have to add their name to a waiting list, and newcomers often have to live in campers, cars or tents while they search for work. Some jobs offer housing in “man camps,” but not all.
“Do your research and know what you’re going to do for housing before you come out here,” says Cindy Sanford, the manager of Job Service North Dakota, an employment agency in Williston. “Sleeping in your car during the winter doesn’t work. It gets cold here.” In addition, it can take two to three weeks for companies to process an application, Sanford notes.
MacDonald found a construction job for $18 an hour his first day in town, housing has been much more difficult. He slept on the floor of a local church when he first arrived, searching for housing in the local newspaper when he had time. After two weeks, he found a place, but it was $600 a month to share a room in an old plantation house with 25 other men.
Sanford suggests jobseekers register at the Job Service North Dakota site, which currently lists 23,000 open positions. Jobseekers can upload up to seven different resumes. There are currently 2,605 job openings in the region, and not a lot of competition – Job Service North Dakota receives only 0.4 resumes per job opening. The jobs that are most in demand, according to Sanford, are truck drivers, electricians, heavy equipment operators and diesel mechanics. In addition, “we’re in dire need of chefs and cooks,” she says. Chefs can make between $40,000 to $85,000 a year, depending on their skill level, Sanford says.
For most private sector jobs, expect to see larger paychecks. The average weekly wage (not including overtime pay) for an oil and gas extraction job in the area is $1,858 (or $96,616 year); $1,684 for real estate jobs ($87,568 a year); $1,458 ($75,816 a year) for transportation and warehousing, and $1,341 for construction ($69,732 a year), according to Job Service North Dakota.
If an oil rig job is what you want, competition has intensified. While five years ago companies often hired workers for their entry-level positions (typically called a rig hand or roustabout) with little to no experience, today, it takes at least six months of experience and a connection to break in, according to Sanford. “An entry-level roustabout job is not as easy to get,” she says. “Legally, [rigs] are only allowed to have one new person per team.”
Instead of searching for that elusive drilling job, Sanford suggests aiming for production industry positions, including maintenance, driving and waste disposal, which are expected to be more stable than drilling. According to the North Dakota Department of Minerals, each drilling rig creates 120 jobs, and of those jobs, 36.5 percent of those jobs are trucking related. In addition to hauling oil, a fracking operation requires 2,000 truck trips of water in its first year of operation. “Driving is huge,” says Sanford, but jobseekers must have a clean driving record, and she recommends obtaining a motor vehicle report from your state before applying.
MacDonald believes his efforts have paid off. He recently found a new construction job that pays for his housing and travel costs. He works about 40 hours a week building homes, and brings in $100 to $200 a day. “You have to be on your game, and you have to be smart about it. It’s too damn cold to live on the streets right now,” he says.
Sanford says those who will be most successful in oil country come for the long-term. “Companies are looking for people who want to make a career change and are here to stay,” she says. “That person is going to go to the top of the list. If you want to make a huge change, there’s tons of opportunity.”
http://news.yahoo.com/job-north-dakota-oil-boom-200000024.html
How to Find a Job in the North Dakota Oil Boom
By Blaire Briody | The Fiscal Times
Tue, Nov 5, 2013
In early 2013, Derek MacDonald, a skinny 28-year-old with glasses, was living in the small town of Smith Center, Kansas, and taking care of his sick grandfather. He looked for steady work for over a year, but found nothing more than odd construction jobs. He also has a DUI on his record, which he believes dissuaded employers from hiring him. “I only had a couple jobs the whole year,” he says.
Broke and unsure of what to do next, he packed up two duffle bags, a sleeping bag and a tarp, and bought a one-way bus ticket to Williston, North Dakota – a place with one of the lowest unemployment rates in the country, at 0.9 percent. The media has dubbed it “the town the recession forgot.” “I found a job within the first hour of being here,” says MacDonald.
Located just south of the Canadian border, it’s almost hard not to find a job in Williston. Advancements in hydraulic fracturing have helped the region experience one of the largest oil booms the U.S. has ever seen. North Dakota has seen a 600 percent increase in production in recent years. The state currently produces around 27 million barrels of oil every month, and has risen from the ninth-highest oil producing state, to the second, trailing only Texas.
With oil come jobs. Williston and its surrounding areas have generated over 75,000 new jobs, and average annual wages have more than tripled in the past decade, going from $24,841 in 2002 to $78,364 today. For those in the oil field, who typically work long overtime hours, the average wage in the state is $112,462. The state now has 22,000 more jobs than people looking for work.
Nearly every business in town has “Help Wanted” signs and has raised wages to attract employees. McDonald’s started offering $300 signing bonuses, and the hourly pay for a cashier position at Walmart starts at $17.50, twice as much as the same position in other locations. And if a jobseeker can snag a job in the oil industry, they can make over $100,000 with no college degree.
The problem is, as thousands of workers from all over the country have showed up, housing construction has not kept pace. The lack of supply has caused landlords to inflate rents, and a modest two-bedroom that used to go for $500 a month before the boom shot up to $2,500 a month. Those who can afford the rent usually have to add their name to a waiting list, and newcomers often have to live in campers, cars or tents while they search for work. Some jobs offer housing in “man camps,” but not all.
“Do your research and know what you’re going to do for housing before you come out here,” says Cindy Sanford, the manager of Job Service North Dakota, an employment agency in Williston. “Sleeping in your car during the winter doesn’t work. It gets cold here.” In addition, it can take two to three weeks for companies to process an application, Sanford notes.
MacDonald found a construction job for $18 an hour his first day in town, housing has been much more difficult. He slept on the floor of a local church when he first arrived, searching for housing in the local newspaper when he had time. After two weeks, he found a place, but it was $600 a month to share a room in an old plantation house with 25 other men.
Sanford suggests jobseekers register at the Job Service North Dakota site, which currently lists 23,000 open positions. Jobseekers can upload up to seven different resumes. There are currently 2,605 job openings in the region, and not a lot of competition – Job Service North Dakota receives only 0.4 resumes per job opening. The jobs that are most in demand, according to Sanford, are truck drivers, electricians, heavy equipment operators and diesel mechanics. In addition, “we’re in dire need of chefs and cooks,” she says. Chefs can make between $40,000 to $85,000 a year, depending on their skill level, Sanford says.
For most private sector jobs, expect to see larger paychecks. The average weekly wage (not including overtime pay) for an oil and gas extraction job in the area is $1,858 (or $96,616 year); $1,684 for real estate jobs ($87,568 a year); $1,458 ($75,816 a year) for transportation and warehousing, and $1,341 for construction ($69,732 a year), according to Job Service North Dakota.
If an oil rig job is what you want, competition has intensified. While five years ago companies often hired workers for their entry-level positions (typically called a rig hand or roustabout) with little to no experience, today, it takes at least six months of experience and a connection to break in, according to Sanford. “An entry-level roustabout job is not as easy to get,” she says. “Legally, [rigs] are only allowed to have one new person per team.”
Instead of searching for that elusive drilling job, Sanford suggests aiming for production industry positions, including maintenance, driving and waste disposal, which are expected to be more stable than drilling. According to the North Dakota Department of Minerals, each drilling rig creates 120 jobs, and of those jobs, 36.5 percent of those jobs are trucking related. In addition to hauling oil, a fracking operation requires 2,000 truck trips of water in its first year of operation. “Driving is huge,” says Sanford, but jobseekers must have a clean driving record, and she recommends obtaining a motor vehicle report from your state before applying.
MacDonald believes his efforts have paid off. He recently found a new construction job that pays for his housing and travel costs. He works about 40 hours a week building homes, and brings in $100 to $200 a day. “You have to be on your game, and you have to be smart about it. It’s too damn cold to live on the streets right now,” he says.
Sanford says those who will be most successful in oil country come for the long-term. “Companies are looking for people who want to make a career change and are here to stay,” she says. “That person is going to go to the top of the list. If you want to make a huge change, there’s tons of opportunity.”
http://news.yahoo.com/job-north-dakota-oil-boom-200000024.html
Re: How to Find a Job in the North Dakota Oil Boom
Jobs report, other economic measures
stronger than expected
Email: khall@mcclatchydc.com; Twitter: @KevinGHall
Read more here: http://www.mcclatchydc.com/2013/11/...wn-october-hiring-eclipses.html#storylink=cpy
Jobs report, other economic measures
stronger than expected
By Kevin G. Hall
McClatchy Washington Bureau
November 8, 2013
WASHINGTON — A much-better-than-expected jobs report Friday, combined with other strong economic indicators, raises the chances that the Federal Reserve may pull back on its stimulus for the economy sooner rather than later.
Mainstream economists had expected job growth in the range of 120,000 in October because of last month’s 16-day partial federal government shutdown, so the rise in non-farm payrolls by 204,000 was a bit of a shock. And it came a day after the Commerce Department had reported that the economy grew at a faster-than-expected annual rate of 2.8 percent from July to September.
“These job gains were certainly beyond my wildest expectations,” said Scott Anderson, the chief economist for San Francisco-based Bank of the West and an analyst who’s been less optimistic than most. “It looks like the economy gained some momentum, despite the government shutdown.”
The report came as the latest measures of manufacturing, international trade and services have come in strong too, and show the economy to be more resilient than thought. The Federal Reserve had cited uncertainty over the shutdown as one reason it was continuing its stimulus efforts to bolster the economy, and the recent data are calling that into question.
Conventional wisdom was that the Fed would begin pulling back support in March, but now many analysts think it might begin in December.
“This argues for a more aggressive Fed,” Anderson said.
Some economists cautioned, however, that the Fed might focus more on the slight uptick of the unemployment rate to 7.3 percent and wait to see more improvement there.
“We still think that March is going to be the earliest when we hear anything from the Fed on tapering,” said Anika Khan, a senior economist at Wells Fargo Securities in Charlotte, N.C.
Within the Labor Department’s jobs report Friday were signs that hiring was broadly spread across sectors.
In fact, the only broad sector to post declines in October was government, which shed 8,000 jobs. Absent government, private-sector payrolls grew by 212,000. And statisticians revised the August and September jobs reports upward by a combined 60,000 jobs.
Because government workers received back pay after the shutdown, they were counted as employed during the month.
Where it got more complicated, however, was in determining the unemployment rate. That’s done through a survey of households. and while the unemployment rate reportedly rose a tenth of a percentage point, there’s reason to think it might have gone down instead.
That’s because a large number of respondents to the household survey, 448,000 of them, reported that they were “unemployed, on temporary layoff.” These were government workers or people who did contract work with the federal government.
“We estimate the unemployment rate was 7.0 percent excluding the impact of the shutdown,” economists for forecaster RDQ Economics said in an investment note.
One of the mysteries in Friday’s report, however, was the sharp drop in the labor force participation rate. Already at a 35-year low, the rate fell by an unusually large four-tenths of a percentage point in just one month, to 62.8 percent. That’s more than 700,000 people exiting the labor force.
“Labor force participation should not have been affected by the government shutdown,” Keith Hall, a George Mason University researcher who’s a former head of the Bureau of Labor Statistics, said in an analysis. “It is unclear what caused the sudden change.”
The leisure and hospitality sector led hiring in October, adding 53,000 jobs. Business and pleasure travel affects this section, which suggests that companies and ordinary folks were inclined to travel and spend money last month.
The professional and business services sector, generally better-paying white-collar jobs, added 44,000 positions.
Retailers also posted a strong 44,400 new payroll jobs in October, a good sign going into the holiday season.
“Today’s report puts the U.S. economy in a very positive light heading into the fall and winter seasons,” Jack Kleinhenz, the chief economist for the National Retail Federation, said in a statement. “While retailers and businesses are hiring, consumers remain cautious, but we remain steadfast in our belief that consumer confidence and spending will improve.”
The latest reading of consumer confidence, however, came in subdued on Friday. The Thomson Reuters/University of Michigan index of consumer sentiment fell to its lowest level in more than two years. It suggests that while the shutdown didn’t hurt hiring, it did weigh on consumers who feared losing their jobs and likely dialed back their spending.
And for the second straight month, manufacturers expressed disappointment in relatively slow growth. The construction and manufacturing sectors continued to add jobs, 11,000 and 19,000, respectively, last month. On a year-over-year basis, manufacturers have added 55,000 workers.
“Hiring growth for the sector has been disappointingly slow,” Chad Moutray, the chief economist for the National Association of Manufacturers, said in his blog Shopfloor.org.
McClatchy Washington Bureau
November 8, 2013
WASHINGTON — A much-better-than-expected jobs report Friday, combined with other strong economic indicators, raises the chances that the Federal Reserve may pull back on its stimulus for the economy sooner rather than later.
Mainstream economists had expected job growth in the range of 120,000 in October because of last month’s 16-day partial federal government shutdown, so the rise in non-farm payrolls by 204,000 was a bit of a shock. And it came a day after the Commerce Department had reported that the economy grew at a faster-than-expected annual rate of 2.8 percent from July to September.
“These job gains were certainly beyond my wildest expectations,” said Scott Anderson, the chief economist for San Francisco-based Bank of the West and an analyst who’s been less optimistic than most. “It looks like the economy gained some momentum, despite the government shutdown.”
The report came as the latest measures of manufacturing, international trade and services have come in strong too, and show the economy to be more resilient than thought. The Federal Reserve had cited uncertainty over the shutdown as one reason it was continuing its stimulus efforts to bolster the economy, and the recent data are calling that into question.
Conventional wisdom was that the Fed would begin pulling back support in March, but now many analysts think it might begin in December.
“This argues for a more aggressive Fed,” Anderson said.
Some economists cautioned, however, that the Fed might focus more on the slight uptick of the unemployment rate to 7.3 percent and wait to see more improvement there.
“We still think that March is going to be the earliest when we hear anything from the Fed on tapering,” said Anika Khan, a senior economist at Wells Fargo Securities in Charlotte, N.C.
Within the Labor Department’s jobs report Friday were signs that hiring was broadly spread across sectors.
In fact, the only broad sector to post declines in October was government, which shed 8,000 jobs. Absent government, private-sector payrolls grew by 212,000. And statisticians revised the August and September jobs reports upward by a combined 60,000 jobs.
Because government workers received back pay after the shutdown, they were counted as employed during the month.
Where it got more complicated, however, was in determining the unemployment rate. That’s done through a survey of households. and while the unemployment rate reportedly rose a tenth of a percentage point, there’s reason to think it might have gone down instead.
That’s because a large number of respondents to the household survey, 448,000 of them, reported that they were “unemployed, on temporary layoff.” These were government workers or people who did contract work with the federal government.
“We estimate the unemployment rate was 7.0 percent excluding the impact of the shutdown,” economists for forecaster RDQ Economics said in an investment note.
One of the mysteries in Friday’s report, however, was the sharp drop in the labor force participation rate. Already at a 35-year low, the rate fell by an unusually large four-tenths of a percentage point in just one month, to 62.8 percent. That’s more than 700,000 people exiting the labor force.
“Labor force participation should not have been affected by the government shutdown,” Keith Hall, a George Mason University researcher who’s a former head of the Bureau of Labor Statistics, said in an analysis. “It is unclear what caused the sudden change.”
The leisure and hospitality sector led hiring in October, adding 53,000 jobs. Business and pleasure travel affects this section, which suggests that companies and ordinary folks were inclined to travel and spend money last month.
The professional and business services sector, generally better-paying white-collar jobs, added 44,000 positions.
Retailers also posted a strong 44,400 new payroll jobs in October, a good sign going into the holiday season.
“Today’s report puts the U.S. economy in a very positive light heading into the fall and winter seasons,” Jack Kleinhenz, the chief economist for the National Retail Federation, said in a statement. “While retailers and businesses are hiring, consumers remain cautious, but we remain steadfast in our belief that consumer confidence and spending will improve.”
The latest reading of consumer confidence, however, came in subdued on Friday. The Thomson Reuters/University of Michigan index of consumer sentiment fell to its lowest level in more than two years. It suggests that while the shutdown didn’t hurt hiring, it did weigh on consumers who feared losing their jobs and likely dialed back their spending.
And for the second straight month, manufacturers expressed disappointment in relatively slow growth. The construction and manufacturing sectors continued to add jobs, 11,000 and 19,000, respectively, last month. On a year-over-year basis, manufacturers have added 55,000 workers.
“Hiring growth for the sector has been disappointingly slow,” Chad Moutray, the chief economist for the National Association of Manufacturers, said in his blog Shopfloor.org.
Email: khall@mcclatchydc.com; Twitter: @KevinGHall
Read more here: http://www.mcclatchydc.com/2013/11/...wn-october-hiring-eclipses.html#storylink=cpy
The coming brain drain in U.S. manufacturing
The coming brain drain in U.S. manufacturing
More than 200,000 skilled factory jobs are going begging. A wave of Boomer retirements could make the labor shortage even worse.
By Anne Fisher, contributor
November 5, 2013: 5:00 AM ET
FORTUNE -- "Manufacturing has an image problem," says Paul Gerbino, head of industrial-supply trade publishers ThomasNet News. "People think of it as dirty, dark, and low-paying." That stereotype is one reason why companies that make tangible products are struggling to find candidates for about 237,000 job openings. To put that figure in perspective, it's 89,000 more than the entire U.S. economy created in September.
The shortage isn't new -- demand for factory workers has been rising sharply every year since 2005 -- but it's poised to get a whole lot worse.
It all comes down to demographics. Consider: Almost 80% of the current manufacturing workforce is between the ages of 45 and 65, says a new report from ThomasNet.com. One-third are between 55 and 64 years old and starting to look toward retirement. Yet more than three-quarters of the manufacturers in the study said that fewer than 25% of their employees are under age 30, and most don't see that changing anytime soon.
As a result, the study notes, manufacturing faces a "ticking biological clock" that could derail future growth. It's more than a little surprising, at a time when unemployment among Americans aged 18 to 29 stands at a whopping 16%.
Why the disconnect? For one thing, people in that age group are increasingly dropping out of the workforce altogether, at least for now. But even those who are looking for work "often don't even think about manufacturing as a career, because they don't realize that factory jobs are not what they were in the old days," says Gerbino. "Many of these jobs involve sophisticated technology" -- and they pay accordingly: Salaries can start at $50,000 or more, and climb to well over $100,00 a year for skilled, experienced engineers and technicians.
Moreover, manufacturing companies have job openings beyond the factory floor: Of the 42% in ThomasNet's poll with plans to increase headcount in 2013 if they can find enough people, 55% are looking for sales and marketing pros, and 53% need more production managers.
Replacing the Boomers who'll be stepping aside in the next few years will take "an image makeover," says Gerbino. "Manufacturers have to get the word out to high school and college students that this can be a great career. As one of our survey respondents put it, 'We need to create excitement about building something tangible.'"
Some companies are already trying. About half of those in the ThomasNet study say they're beginning to step up their recruiting efforts through apprenticeship and internship programs, as well as from technical schools and community colleges.
ThomasNet, meanwhile, has been spurred to action by its own research. The publisher recently launched an online magazine called IMT Career Journal, which covers topics like how employers can work with local school districts to promote technical training in public high schools, and it started a manufacturing-only job board.
http://management.fortune.cnn.com/2013/11/05/brain-drain-us-manufacturing/
The coming brain drain in U.S. manufacturing
More than 200,000 skilled factory jobs are going begging. A wave of Boomer retirements could make the labor shortage even worse.
By Anne Fisher, contributor
November 5, 2013: 5:00 AM ET
FORTUNE -- "Manufacturing has an image problem," says Paul Gerbino, head of industrial-supply trade publishers ThomasNet News. "People think of it as dirty, dark, and low-paying." That stereotype is one reason why companies that make tangible products are struggling to find candidates for about 237,000 job openings. To put that figure in perspective, it's 89,000 more than the entire U.S. economy created in September.
The shortage isn't new -- demand for factory workers has been rising sharply every year since 2005 -- but it's poised to get a whole lot worse.
It all comes down to demographics. Consider: Almost 80% of the current manufacturing workforce is between the ages of 45 and 65, says a new report from ThomasNet.com. One-third are between 55 and 64 years old and starting to look toward retirement. Yet more than three-quarters of the manufacturers in the study said that fewer than 25% of their employees are under age 30, and most don't see that changing anytime soon.
As a result, the study notes, manufacturing faces a "ticking biological clock" that could derail future growth. It's more than a little surprising, at a time when unemployment among Americans aged 18 to 29 stands at a whopping 16%.
Why the disconnect? For one thing, people in that age group are increasingly dropping out of the workforce altogether, at least for now. But even those who are looking for work "often don't even think about manufacturing as a career, because they don't realize that factory jobs are not what they were in the old days," says Gerbino. "Many of these jobs involve sophisticated technology" -- and they pay accordingly: Salaries can start at $50,000 or more, and climb to well over $100,00 a year for skilled, experienced engineers and technicians.
Moreover, manufacturing companies have job openings beyond the factory floor: Of the 42% in ThomasNet's poll with plans to increase headcount in 2013 if they can find enough people, 55% are looking for sales and marketing pros, and 53% need more production managers.
Replacing the Boomers who'll be stepping aside in the next few years will take "an image makeover," says Gerbino. "Manufacturers have to get the word out to high school and college students that this can be a great career. As one of our survey respondents put it, 'We need to create excitement about building something tangible.'"
Some companies are already trying. About half of those in the ThomasNet study say they're beginning to step up their recruiting efforts through apprenticeship and internship programs, as well as from technical schools and community colleges.
ThomasNet, meanwhile, has been spurred to action by its own research. The publisher recently launched an online magazine called IMT Career Journal, which covers topics like how employers can work with local school districts to promote technical training in public high schools, and it started a manufacturing-only job board.
http://management.fortune.cnn.com/2013/11/05/brain-drain-us-manufacturing/
Re: The coming brain drain in U.S. manufacturing
Jobless rates drops to lowest level in five years
Read more here: http://www.mcclatchydc.com/2013/12/06/210875/jobless-rates-drops-to-lowest.html#storylink=cpy
Jobless rates drops to lowest level in five years
McClatchy Washington Bureau
By Kevin G. Hall
December 6, 2013
WASHINGTON — Employers added a solid 203,000 jobs in November, driving down the unemployment rate three-tenths of a percentage point to 7 percent, the lowest it’s been since November 2008, the Labor Department said Friday.
The healthy jobs report came a day after the Commerce Department revised upward the growth estimates for July through September, determining the economy grew at a surprisingly strong annual pace of 3.6 percent. Also Friday, the University of Michigan’s consumer sentiment index rose sharply, suggesting shoppers may be ready to loosen holiday purse strings.
“This is an unambiguously strong jobs report. Businesses are getting their groove back and stepping up their hiring. Most encouraging is that the job gains are across most industries,” said Mark Zandi, chief economist for forecaster Moody’s Analytics. “It is still premature to conclude the job market is off and running.”
November job gains were broad, across most sectors of the economy and included a slight upward revision to prior months’ jobs numbers than put October hiring at 200,000. Professional and business services grew by 35,000 jobs in November. Manufacturing, which had seen sluggish hiring over much of the year, saw 27,000 new jobs last month.
Mainstream economists had expected about 185,000 new hires and only a slight dip in the jobless rate. The strong numbers and other data could cause the Federal Reserve to take its foot off of the accelerator when it meets on Dec. 17-18 to consider tapering off on its $85 billion a month in bond purchases to stimulate the economy.
The spate of recent positive data suggests the economic recovery is still gathering steam and could return to greater normalcy _ if Washington stays out of the way.
“The budget battles in Washington could still derail confidence and the job market early next year. But if lawmakers can simply do no damage, everything is coming together for a much better job market and economy next year,” said Zandi.
Senate and House of Representatives budget negotiations have sparked cautious optimism of a small deal next week that could remove the threat of another government shutdown and potential debt default.
The White House praised the Friday report.
“With solid job growth in November – in addition to strong data on manufacturing activity and auto sales – it is clear that the recovery continues to gain traction,” Jason Furman, head of the Council of Economic Advisers, said a statement.
Republicans, who are resisting the administration’s efforts to extend unemployment benefits for the long-term unemployed, used the report to argue the strengthening economy does not need further government support.
“Today’s report includes positive signs that should discourage calls for more emergency government ‘stimulus,’” House Speaker John Boehner, R-Ohio, said in a statement. “Instead, what our economy needs is more pro-growth solutions that get government out of the way.”
Deeper in the report, however, there was ammunition for supporters of another extension of jobless benefits for the long-term unemployed.
“The share of unemployed workers who have been out of work for more than six months increased in November from 36.1 percent to 37.3 percent. Today, the long-term unemployment rate is more than double the average rate in 2007,” Elise Gould, an economist with the center-left Economic Policy Institute, wrote in an analysis of the jobs report.
Arguably the most unexpected part of Friday’s report was the sharp drop in the unemployment rate.
“Biggest surprise in my view: Big drop in the U.S. unemployment rate to 7.0 percent was far larger than expected,” said Scott Anderson, chief economist for San Francisco-based Bank of the West, adding, “This is a solid payroll report any way you slice and dice it. Job creation is accelerating into the New Year.”
The labor force participation rate held steady, albeit at a depressed rate, suggesting that the drop in the jobless rate was not because of people exiting the workforce. The jobless rate is derived from a survey of households, and while the results are volatile from month to month, more people reported in November that they were employed and far fewer reported they were unemployed.
Equally heartening in Friday’s report was the strong manufacturing numbers. The sector had powered recovery in late 2011 and early 2012 but then went slack.
“The strong manufacturing jobs numbers for November – which were the strongest since March 2012 – were consistent with the recent pickup in new orders and production for the sector,” Chad Moutray, chief economist for the National Association of Manufacturers. “This is definitely an encouraging sign, particularly given the hesitance of many business leaders of late to add new workers given uncertainties in the market. In fact, with these job gains, manufacturing employment has pierced the 12 million mark since April 2009.”
The construction sector also posted surprisingly robust numbers for November, adding 17,000 jobs as cold winter months approached. The sector has struggled to recover as housing has bumped along and lagged the broader recovery.
Friday’s jobs numbers are also consistent with the improvements in the first-time claims filed for unemployment benefits. The government reported Thursday that this number fell below a key threshold to 298,000. The four-week average of first-time claims, the preferred way economists look at this numbers, is about 322,000 and represents a level that points to an economy gaining steam.
Even the signs of underemployment and stress in the labor market improved a bit last month. Across the board, the Labor Department’s alternative measures of employment got better and are substantially better than a year ago _ albeit still showing signs of stress compared to historical levels.
By Kevin G. Hall
December 6, 2013
WASHINGTON — Employers added a solid 203,000 jobs in November, driving down the unemployment rate three-tenths of a percentage point to 7 percent, the lowest it’s been since November 2008, the Labor Department said Friday.
The healthy jobs report came a day after the Commerce Department revised upward the growth estimates for July through September, determining the economy grew at a surprisingly strong annual pace of 3.6 percent. Also Friday, the University of Michigan’s consumer sentiment index rose sharply, suggesting shoppers may be ready to loosen holiday purse strings.
“This is an unambiguously strong jobs report. Businesses are getting their groove back and stepping up their hiring. Most encouraging is that the job gains are across most industries,” said Mark Zandi, chief economist for forecaster Moody’s Analytics. “It is still premature to conclude the job market is off and running.”
November job gains were broad, across most sectors of the economy and included a slight upward revision to prior months’ jobs numbers than put October hiring at 200,000. Professional and business services grew by 35,000 jobs in November. Manufacturing, which had seen sluggish hiring over much of the year, saw 27,000 new jobs last month.
Mainstream economists had expected about 185,000 new hires and only a slight dip in the jobless rate. The strong numbers and other data could cause the Federal Reserve to take its foot off of the accelerator when it meets on Dec. 17-18 to consider tapering off on its $85 billion a month in bond purchases to stimulate the economy.
The spate of recent positive data suggests the economic recovery is still gathering steam and could return to greater normalcy _ if Washington stays out of the way.
“The budget battles in Washington could still derail confidence and the job market early next year. But if lawmakers can simply do no damage, everything is coming together for a much better job market and economy next year,” said Zandi.
Senate and House of Representatives budget negotiations have sparked cautious optimism of a small deal next week that could remove the threat of another government shutdown and potential debt default.
The White House praised the Friday report.
“With solid job growth in November – in addition to strong data on manufacturing activity and auto sales – it is clear that the recovery continues to gain traction,” Jason Furman, head of the Council of Economic Advisers, said a statement.
Republicans, who are resisting the administration’s efforts to extend unemployment benefits for the long-term unemployed, used the report to argue the strengthening economy does not need further government support.
“Today’s report includes positive signs that should discourage calls for more emergency government ‘stimulus,’” House Speaker John Boehner, R-Ohio, said in a statement. “Instead, what our economy needs is more pro-growth solutions that get government out of the way.”
Deeper in the report, however, there was ammunition for supporters of another extension of jobless benefits for the long-term unemployed.
“The share of unemployed workers who have been out of work for more than six months increased in November from 36.1 percent to 37.3 percent. Today, the long-term unemployment rate is more than double the average rate in 2007,” Elise Gould, an economist with the center-left Economic Policy Institute, wrote in an analysis of the jobs report.
Arguably the most unexpected part of Friday’s report was the sharp drop in the unemployment rate.
“Biggest surprise in my view: Big drop in the U.S. unemployment rate to 7.0 percent was far larger than expected,” said Scott Anderson, chief economist for San Francisco-based Bank of the West, adding, “This is a solid payroll report any way you slice and dice it. Job creation is accelerating into the New Year.”
The labor force participation rate held steady, albeit at a depressed rate, suggesting that the drop in the jobless rate was not because of people exiting the workforce. The jobless rate is derived from a survey of households, and while the results are volatile from month to month, more people reported in November that they were employed and far fewer reported they were unemployed.
Equally heartening in Friday’s report was the strong manufacturing numbers. The sector had powered recovery in late 2011 and early 2012 but then went slack.
“The strong manufacturing jobs numbers for November – which were the strongest since March 2012 – were consistent with the recent pickup in new orders and production for the sector,” Chad Moutray, chief economist for the National Association of Manufacturers. “This is definitely an encouraging sign, particularly given the hesitance of many business leaders of late to add new workers given uncertainties in the market. In fact, with these job gains, manufacturing employment has pierced the 12 million mark since April 2009.”
The construction sector also posted surprisingly robust numbers for November, adding 17,000 jobs as cold winter months approached. The sector has struggled to recover as housing has bumped along and lagged the broader recovery.
Friday’s jobs numbers are also consistent with the improvements in the first-time claims filed for unemployment benefits. The government reported Thursday that this number fell below a key threshold to 298,000. The four-week average of first-time claims, the preferred way economists look at this numbers, is about 322,000 and represents a level that points to an economy gaining steam.
Even the signs of underemployment and stress in the labor market improved a bit last month. Across the board, the Labor Department’s alternative measures of employment got better and are substantially better than a year ago _ albeit still showing signs of stress compared to historical levels.
Read more here: http://www.mcclatchydc.com/2013/12/06/210875/jobless-rates-drops-to-lowest.html#storylink=cpy
The U.S. economy does better under Democratic presidents — is it just luck?
The U.S. economy does better under Democratic presidents — is it just luck?
Posted by Brad Plumer
on December 2, 2013 at 9:45 am
Since World War II, there's been a strikingly consistent pattern in American politics: The economy does much better when a Democrat is in the White House.
More specifically, since 1947, the U.S. economy has grown at an average real rate of 4.35 percent under Democratic presidents and just 2.54 percent under Republicans:
Why the big gap? One possible explanation is that Democratic policies are better for economic growth. Another is that Republican policies are better for growth — but there's a time lag, so Democrats tend to benefit.
Alternatively, perhaps Democrats simply have better economic luck. That third theory is one favored by economists Alan Blinder and Mark Watson in their new working paper, “Presidents and the Economy: A Forensic Investigation”. They argue that random economic fluctuations best explain the differences in growth between 1947 and 2013, and not which party happens to hold the White House.
"Democrats would no doubt like to attribute the large D-R growth gap to better macroeconomic policies, but the data do not support such a claim,” the authors write. (Blinder worked as an adviser in the Clinton White House, Watson is an econometrician not affiliated with either party.)
Instead, the two economists offer three big reasons for the partisan gap in growth rates: oil shocks, productivity growth and consumer confidence. These factors, they say, can explain at least half of the gap. Here's a breakdown:
1) Oil shocks: Republicans have had worse luck with oil shocks, or spikes in the price of crude oil that tend to cramp consumer spending and limit growth. Blinder and Watson draw on University of California, San Diego economist James Hamilton's work on how oil spikes hurt the economy and suggest that these shocks explain between one-eighth and one-fourth of the difference in partisan growth rates.
They do note, however, that this isn't entirely independent of policy, as the invasions of Iraq under Presidents George H.W. Bush and George W. Bush appeared to have driven up the worldwide price of oil. (The latter, the authors say, was "the biggest oil shock in the sample," with a bigger economic impact than either of the OPEC-driven shocks under Presidents Richard Nixon and Jimmy Carter.)
2) Productivity shocks: Total factor productivity has tended to grow faster under Democratic presidents than Republican ones. The big story here was a surge in productivity during the John F. Kennedy and Lyndon Johnson administrations, combined with a sharp slowdown during President Ronald Reagan's first term.
"As with oil shocks, we consider [productivity shocks] as mainly reflecting luck," the authors write. "But, of course, we cannot rule out that they have a policy component as well."
3) Consumer confidence: Consumer confidence tends to leap during the first year of Democratic presidencies. Is this a coincidence? The authors say it's possible that the election of a Democratic president somehow boosts confidence, which in turn boosts spending. But it's surprisingly difficult to tease out why this might be.
"Much of the D-R growth gap in the United States comes from business fixed investment and spending on consumer durables," the economists write. "And it comes mostly in the first year of a presidential term. Yet the superior growth record under Democrats is not forecastable by standard techniques, which means it cannot be attributed to superior initial conditions."
All told, the economists suggest that the three factors above account for 46 percent to 62 percent of the gap. That means we still don't have a full answer.
Other (rejected) theories: The authors also consider — and rule out — a number of other possible explanations:
-- Deficits. There doesn't seem to be a huge difference in fiscal policies between the two parties since 1947. The structural federal budget deficit has been 1.5 percent under Democratic presidents and 2.2 percent under Republicans — "far from statistically significant," the economists write.
-- Military spending. The authors do find a big difference in military spending — real defense spending grew 5.9 percent under Democrats and just 0.8 percent under Republicans. But they don't think this is enough to drive the difference in growth rates: "On average, federal defense spending accounts for just 8% of GDP over the postwar period. It would be hard for a tail that small to wag such a big dog."
-- Congress. Party control of Congress doesn't seem to have much impact on the economy one way or the other.
-- Federal Reserve. Fed chairmen appointed by Democrats tend to outperform Fed chiefs appointed by Republicans. But this doesn't necessarily benefit Democratic presidents. Indeed, the Federal Reserve, on average, tends to lower interest rates during Republican administrations and hike them during Democratic administrations. (This might simply be a response to the fact that the economy does better under Democrats, however.)
-- Inherited economies. The authors don't give much credence to the idea that Democratic presidents inherit stronger economies. In fact, the opposite may be true: "Democrats inherit growth rates of 1.8% from the final year of the previous term, while Republicans inherit a growth rate of 4.1%." Yet Democratic presidents have still done better, on average, in their first terms since 1947.
-- Global patterns. There doesn't seem to be any worldwide pattern here. Canada shows the same partisan gap in growth rates as the United States, with the economy growing faster under Liberal governments than during Conservative governments. But there's no such pattern found in France or Germany.
Now, this paper is hardly the last word on the subject. As Blinder and Watson note, they can only explain from 46 percent to 62 percent of the difference in growth rates — there's a lot more work to be done in figuring out the rest of the answer. "The rest remains, for now, a mystery."
Further reading: Princeton political scientist Larry Bartels has also shown that income inequality tends to rise under Republican presidents and fall under Democratic presidents. Blinder and Watson mention this fact in their paper, but they don't examine whether this might relate at all to the partisan gap in growth rates.
http://www.washingtonpost.com/blogs...-under-democratic-presidents-is-it-just-luck/
The U.S. economy does better under Democratic presidents — is it just luck?
Posted by Brad Plumer
on December 2, 2013 at 9:45 am
Since World War II, there's been a strikingly consistent pattern in American politics: The economy does much better when a Democrat is in the White House.
More specifically, since 1947, the U.S. economy has grown at an average real rate of 4.35 percent under Democratic presidents and just 2.54 percent under Republicans:
Why the big gap? One possible explanation is that Democratic policies are better for economic growth. Another is that Republican policies are better for growth — but there's a time lag, so Democrats tend to benefit.
Alternatively, perhaps Democrats simply have better economic luck. That third theory is one favored by economists Alan Blinder and Mark Watson in their new working paper, “Presidents and the Economy: A Forensic Investigation”. They argue that random economic fluctuations best explain the differences in growth between 1947 and 2013, and not which party happens to hold the White House.
"Democrats would no doubt like to attribute the large D-R growth gap to better macroeconomic policies, but the data do not support such a claim,” the authors write. (Blinder worked as an adviser in the Clinton White House, Watson is an econometrician not affiliated with either party.)
Instead, the two economists offer three big reasons for the partisan gap in growth rates: oil shocks, productivity growth and consumer confidence. These factors, they say, can explain at least half of the gap. Here's a breakdown:
1) Oil shocks: Republicans have had worse luck with oil shocks, or spikes in the price of crude oil that tend to cramp consumer spending and limit growth. Blinder and Watson draw on University of California, San Diego economist James Hamilton's work on how oil spikes hurt the economy and suggest that these shocks explain between one-eighth and one-fourth of the difference in partisan growth rates.
They do note, however, that this isn't entirely independent of policy, as the invasions of Iraq under Presidents George H.W. Bush and George W. Bush appeared to have driven up the worldwide price of oil. (The latter, the authors say, was "the biggest oil shock in the sample," with a bigger economic impact than either of the OPEC-driven shocks under Presidents Richard Nixon and Jimmy Carter.)
2) Productivity shocks: Total factor productivity has tended to grow faster under Democratic presidents than Republican ones. The big story here was a surge in productivity during the John F. Kennedy and Lyndon Johnson administrations, combined with a sharp slowdown during President Ronald Reagan's first term.
"As with oil shocks, we consider [productivity shocks] as mainly reflecting luck," the authors write. "But, of course, we cannot rule out that they have a policy component as well."
3) Consumer confidence: Consumer confidence tends to leap during the first year of Democratic presidencies. Is this a coincidence? The authors say it's possible that the election of a Democratic president somehow boosts confidence, which in turn boosts spending. But it's surprisingly difficult to tease out why this might be.
"Much of the D-R growth gap in the United States comes from business fixed investment and spending on consumer durables," the economists write. "And it comes mostly in the first year of a presidential term. Yet the superior growth record under Democrats is not forecastable by standard techniques, which means it cannot be attributed to superior initial conditions."
All told, the economists suggest that the three factors above account for 46 percent to 62 percent of the gap. That means we still don't have a full answer.
Other (rejected) theories: The authors also consider — and rule out — a number of other possible explanations:
-- Deficits. There doesn't seem to be a huge difference in fiscal policies between the two parties since 1947. The structural federal budget deficit has been 1.5 percent under Democratic presidents and 2.2 percent under Republicans — "far from statistically significant," the economists write.
-- Military spending. The authors do find a big difference in military spending — real defense spending grew 5.9 percent under Democrats and just 0.8 percent under Republicans. But they don't think this is enough to drive the difference in growth rates: "On average, federal defense spending accounts for just 8% of GDP over the postwar period. It would be hard for a tail that small to wag such a big dog."
-- Congress. Party control of Congress doesn't seem to have much impact on the economy one way or the other.
-- Federal Reserve. Fed chairmen appointed by Democrats tend to outperform Fed chiefs appointed by Republicans. But this doesn't necessarily benefit Democratic presidents. Indeed, the Federal Reserve, on average, tends to lower interest rates during Republican administrations and hike them during Democratic administrations. (This might simply be a response to the fact that the economy does better under Democrats, however.)
-- Inherited economies. The authors don't give much credence to the idea that Democratic presidents inherit stronger economies. In fact, the opposite may be true: "Democrats inherit growth rates of 1.8% from the final year of the previous term, while Republicans inherit a growth rate of 4.1%." Yet Democratic presidents have still done better, on average, in their first terms since 1947.
-- Global patterns. There doesn't seem to be any worldwide pattern here. Canada shows the same partisan gap in growth rates as the United States, with the economy growing faster under Liberal governments than during Conservative governments. But there's no such pattern found in France or Germany.
Now, this paper is hardly the last word on the subject. As Blinder and Watson note, they can only explain from 46 percent to 62 percent of the difference in growth rates — there's a lot more work to be done in figuring out the rest of the answer. "The rest remains, for now, a mystery."
Further reading: Princeton political scientist Larry Bartels has also shown that income inequality tends to rise under Republican presidents and fall under Democratic presidents. Blinder and Watson mention this fact in their paper, but they don't examine whether this might relate at all to the partisan gap in growth rates.
http://www.washingtonpost.com/blogs...-under-democratic-presidents-is-it-just-luck/
A familiar economic trend in America: Spending up, saving down
A familiar economic trend in America: Spending up, saving down
By Jim Tankersley,
Published: December 27
The U.S. economy has grown faster than expected in recent months, and energized American shoppers are the reason why. In September, October and November, consumer spending increased faster than it has in any three-month period since the Great Recession ended.
That surge comes with an all-too-familiar side note: In order to spend more, Americans are saving less.
Workers’ incomes still aren’t rising very fast — and they’re not rising enough to keep up with the increase in spending. Consumers suddenly don’t seem to care very much about that, perhaps because they feel buoyed by a finally healing housing market, a falling unemployment rate and new optimism that the economy is shaking off its slow-growth shackles.
The nation’s savings rate fell to just above 4 percent in November, the Commerce Department reported this week. That’s closer to the low savings rates the country experienced in the mid-2000s, in the run-up to the financial crisis, than it is to the savings rates for the first few years after the recession ended.
There are reasons to worry about that trend, and there are reasons to think it’s good for the economy — or not a concern, at least.
There’s also reason to think the trend tells us something about how much of a mark the recession left on Americans’ savings habits.
“People who went through the Great Depression saved a lot,” said Daniel Altman, who teaches economics at New York University’s Stern School of Business. Maybe, he said, the dip in the savings rate shows that “people who went through the Great Recession, it won’t stay with them, and they’ll go back to where they were six or seven years ago.”
America’s savings rate fell steadily from the early 1980s through the mid-2000s, ticking up only during or after recessions. It topped 11 percent during President Reagan's first term. From 2005-07, the annual rate averaged 3 percent (a number that may appear higher than you recall because of a recent change in how the government calculates the rate). In retrospect, that rate was a sign that consumers were borrowing and spending too much, in part because the housing bubble gave many people an inflated sense of their personal wealth.
The savings rate essentially doubled during the recession, and it stayed there, averaging nearly 6 percent from 2009-12. The initial increase wasn’t due to Americans plugging more money into retirement or savings accounts, economists at the Federal Reserve Bank of New York found in a 2011 study. It was due to people paying down debt, especially mortgages.
That process, known as deleveraging, was widely blamed by economists for dampening economic growth after the recession.
An optimistic way to view the recent decline in savings, then, is as a sign that the dampening is over. Home values are rising again, and quite rapidly in many areas. So are stock prices. Consumers appear to be feeling again what economists call a “wealth effect” — as they perceive their homes or portfolios are worth more, they’re more likely to spend more at present. That spending could spur more economic growth, more job creation and faster income growth — a virtuous cycle.
A more pessimistic view would be: “Here we go again.” The plummeting savings of the 2000s did not lead to durable income gains for a broad swath of American workers. There’s no guarantee big income gains are around the corner now, either, and no guarantee that consumers are spending because they see raises in their future.
(They could also just be burning off pent-up demand. For example, automobile purchases are a big chunk of the recent spending increases, at a time when Americans are driving older cars than ever before.)
If you’re concerned about consumers getting in over their heads again, there are better ways of measuring that than the savings rate — and so far, they’re encouraging. One of those measures is to compare household debt payments to disposable income. That ratio has fallen from 13 percent pre-recession to about 10 percent now, notes Louis D. Johnston, an associate economics professor at the College of St. Benedict in Minnesota.
Johnston said he won’t start to worry unless it climbs back into the 11.5-12 percent range.
http://www.washingtonpost.com/busin...16c814-6e72-11e3-a523-fe73f0ff6b8d_story.html
A familiar economic trend in America: Spending up, saving down
By Jim Tankersley,
Published: December 27
The U.S. economy has grown faster than expected in recent months, and energized American shoppers are the reason why. In September, October and November, consumer spending increased faster than it has in any three-month period since the Great Recession ended.
That surge comes with an all-too-familiar side note: In order to spend more, Americans are saving less.
Workers’ incomes still aren’t rising very fast — and they’re not rising enough to keep up with the increase in spending. Consumers suddenly don’t seem to care very much about that, perhaps because they feel buoyed by a finally healing housing market, a falling unemployment rate and new optimism that the economy is shaking off its slow-growth shackles.
The nation’s savings rate fell to just above 4 percent in November, the Commerce Department reported this week. That’s closer to the low savings rates the country experienced in the mid-2000s, in the run-up to the financial crisis, than it is to the savings rates for the first few years after the recession ended.
There are reasons to worry about that trend, and there are reasons to think it’s good for the economy — or not a concern, at least.
There’s also reason to think the trend tells us something about how much of a mark the recession left on Americans’ savings habits.
“People who went through the Great Depression saved a lot,” said Daniel Altman, who teaches economics at New York University’s Stern School of Business. Maybe, he said, the dip in the savings rate shows that “people who went through the Great Recession, it won’t stay with them, and they’ll go back to where they were six or seven years ago.”
America’s savings rate fell steadily from the early 1980s through the mid-2000s, ticking up only during or after recessions. It topped 11 percent during President Reagan's first term. From 2005-07, the annual rate averaged 3 percent (a number that may appear higher than you recall because of a recent change in how the government calculates the rate). In retrospect, that rate was a sign that consumers were borrowing and spending too much, in part because the housing bubble gave many people an inflated sense of their personal wealth.
The savings rate essentially doubled during the recession, and it stayed there, averaging nearly 6 percent from 2009-12. The initial increase wasn’t due to Americans plugging more money into retirement or savings accounts, economists at the Federal Reserve Bank of New York found in a 2011 study. It was due to people paying down debt, especially mortgages.
That process, known as deleveraging, was widely blamed by economists for dampening economic growth after the recession.
An optimistic way to view the recent decline in savings, then, is as a sign that the dampening is over. Home values are rising again, and quite rapidly in many areas. So are stock prices. Consumers appear to be feeling again what economists call a “wealth effect” — as they perceive their homes or portfolios are worth more, they’re more likely to spend more at present. That spending could spur more economic growth, more job creation and faster income growth — a virtuous cycle.
A more pessimistic view would be: “Here we go again.” The plummeting savings of the 2000s did not lead to durable income gains for a broad swath of American workers. There’s no guarantee big income gains are around the corner now, either, and no guarantee that consumers are spending because they see raises in their future.
(They could also just be burning off pent-up demand. For example, automobile purchases are a big chunk of the recent spending increases, at a time when Americans are driving older cars than ever before.)
If you’re concerned about consumers getting in over their heads again, there are better ways of measuring that than the savings rate — and so far, they’re encouraging. One of those measures is to compare household debt payments to disposable income. That ratio has fallen from 13 percent pre-recession to about 10 percent now, notes Louis D. Johnston, an associate economics professor at the College of St. Benedict in Minnesota.
Johnston said he won’t start to worry unless it climbs back into the 11.5-12 percent range.
http://www.washingtonpost.com/busin...16c814-6e72-11e3-a523-fe73f0ff6b8d_story.html
Re: A familiar economic trend in America: Spending up, saving down
First Batch of December Economic Data Strong
McClatchy Washington Bureau
By Kevin G. Hall
January 2, 2014
WASHINGTON — A batch of economic data released Thursday on the first working day of the New Year point to a solid close to 2013.
The closely watched ISM Manufacturing Index, a survey of purchasing managers, came in with a reading of 57 for December, another month in which it is above the threshold of 55, a sign of solid gains in manufacturing.
'Industrial activity is being driven by the ramping up of the housing supply chain and strong motor vehicle production as consumers meet pent-up demand for shelter and transportation,' said Daniel Meckstroth, chief economist for the Manufacturers Alliance for Productivity and Innovation, which publishes the ISM index.
Also Thursday, the Labor Department reported that first-time claims for unemployment benefits dropped a tad to 339,000 for the week ending Dec. 28, 2013. The four-week average for claims, however, nudged up to 357,250 on upward revisions to prior data.
Read more here: http://www.mcclatchydc.com/2014/01/02/213345/first-batch-of-december-economic.html#storylink=cpy
First Batch of December Economic Data Strong
McClatchy Washington Bureau
By Kevin G. Hall
January 2, 2014
WASHINGTON — A batch of economic data released Thursday on the first working day of the New Year point to a solid close to 2013.
The closely watched ISM Manufacturing Index, a survey of purchasing managers, came in with a reading of 57 for December, another month in which it is above the threshold of 55, a sign of solid gains in manufacturing.
'Industrial activity is being driven by the ramping up of the housing supply chain and strong motor vehicle production as consumers meet pent-up demand for shelter and transportation,' said Daniel Meckstroth, chief economist for the Manufacturers Alliance for Productivity and Innovation, which publishes the ISM index.
Also Thursday, the Labor Department reported that first-time claims for unemployment benefits dropped a tad to 339,000 for the week ending Dec. 28, 2013. The four-week average for claims, however, nudged up to 357,250 on upward revisions to prior data.
Read more here: http://www.mcclatchydc.com/2014/01/02/213345/first-batch-of-december-economic.html#storylink=cpy
Unemployment Insurance And Minimum Wage For Capital Gains And The Corporate Tax
Let's Make A Deal: Unemployment Insurance And Minimum Wage For Capital Gains And The Corporate Tax
Cedric Muhammad, Contributor
OP/ED | 1/05/2014 @ 9:57AM
There’s a very simple short-term solution to the problem of addressing income inequality and the need for economic growth. It is improving the country’s capital-to labor-ratio – increasing the stock of wealth available to produce goods and services while reducing unemployment. This is fundamentally an economic problem but one which Jude Wanniski noted always requires a political solution, and therefore compromise to address.
The blueprint for such an agreement was laid down in December of 2010 when President Obama and Congressional Democrats traded a two-year extension of the Bush-era tax cuts for a one-year extension of unemployment benefits.
With that prism, and with an eye on acknowledging that in response to an economic contraction like that just experienced, both the redistribution and growth impulses are legitimate – the elements of an appropriate compromise are apparent.
A deal must include something which bolsters entrepreneurship and investment while patching up the safety net for the 2 to 3 remaining years before we return to full employment. The agreement would carry us through both Congressional elections and the end of the Obama second-term, allowing a new President and Congress to complete the pivot away from distribution and toward economic growth.
Democrats should be willing – for two years – to 1) lower the top capital gains tax rate from 20% to 15% (the Bush era level) 2) eliminate all taxation on capital gains, dividend and interest income on those earning less than $250,000 (a proposal of Mitt Romney’s) and 3) lower the corporate tax rate from 35% to 28% (as part of a corporate tax reform sought by Senator Max Baucus).
In return, Republicans should be willing to 1) extend unemployment insurance benefits for one year and 2) raise the federal minimum wage to $10.10 per hour.
Both sides would be obtaining long-sought objectives while giving the nation a show of bipartisanship building on the humble display of Rep. Paul Ryan and Senator Patty Murray in recent budget negotiations. It also would allow each side to claim credit for an improved economy without compromising principled arguments.
The leading rhetorical obstacle – that such an effort wouldn’t pay for itself is easily overcome.
First, the Baucus corporate tax reform immediately taxes profits from the goods and services sold by American corporations into the country from foreign subsidiaries. The Democratic-leaning New York Times acknowledges, “It would establish a temporary 20 percent tax rate on billions of dollars in corporate earnings that have been parked abroad and would order all such earnings to be taxed, payable over eight years, creating a one-time windfall of more than $200 billion for the Treasury.”
Secondly, if an arbiter need be appointed to identify cost offsets, both sides could turn to Senator Tom Coburn’s “Wastebook 2013” which highlights examples of ‘wasteful and low-priority’ spending to the tune of $30 billion, an amount more than equal to the estimated $26 billion that a one-year extension of unemployment benefits would cost. Here, Members of Congress on both sides, facing election battles, would have to take courage, but certainly political cover could be provided to them by their colleagues in safe seats in a better position to echo Sen. Coburn’s articulation of the electorate’s sentiment, “The nearly $30 billion in questionable and lower-priority spending in Wastebook 2013 is a small fraction of the more than $200 billion we throw away every year through fraud, waste, duplication and mismanagement. There is more than enough stupidity and incompetence in government to allow us to live well below the budget caps.”
More political cover from the Right can come from the influential Club For Growth who in concept support a minimum wage for corporate tax cut trade. On the Sunday January 5, 2014 ‘Washington Journal’ program on C-SPAN, The Club For Growth’s Vice-President For Government Affairs, Andrew Roth showed how to make principled arguments for what you believe while opening the door for a negotiation, “On minimum wage I think that everybody firmly believes that price controls don’t work. Nixon tried them in the 1970s with disastrous results and it’s just unfortunate people don’t recognize that the minimum wage is a price control; it’s a price control on labor, so it doesn’t work. Now as a political tool, if you wanted to pair it with corporate tax reform, you’d have to see what it’d look like. If it as a massive drop in the corporate tax rate and it was extremely pro-growth, then maybe something could be done.”
For Democrats who argue for demand-side economics and who rest their hat on the economy’s two-thirds dependence on consumption, capital gains tax reduction (especially when totally eliminated for those under $250,000) and corporate tax reduction (especially when coupled with loophole reform) is a small pill to swallow for 1.3 million Americans to continue receiving benefits and an estimated 5 million Americans being lifted above the poverty line.
Jude Wanniski didn’t have a problem with a minimum wage increase under two circumstances: 1) during a time of robust economic growth and 2) when paired with tax policies which would create a surplus of capital.
The second scenario does not exist but the latter condition is possible as part of a grand bargain.
So, Congress, let’s make a deal.
http://www.forbes.com/sites/cedricm...or-capital-gains-and-corporate-tax-reduction/
Let's Make A Deal: Unemployment Insurance And Minimum Wage For Capital Gains And The Corporate Tax
Cedric Muhammad, Contributor
OP/ED | 1/05/2014 @ 9:57AM
“The political process has as its ultimate aim a solution to the basic economic problem that for all time has confronted the global electorate, which is the tension between income growth and income distribution.”
- Jude Wanniski
- Jude Wanniski
There’s a very simple short-term solution to the problem of addressing income inequality and the need for economic growth. It is improving the country’s capital-to labor-ratio – increasing the stock of wealth available to produce goods and services while reducing unemployment. This is fundamentally an economic problem but one which Jude Wanniski noted always requires a political solution, and therefore compromise to address.
The blueprint for such an agreement was laid down in December of 2010 when President Obama and Congressional Democrats traded a two-year extension of the Bush-era tax cuts for a one-year extension of unemployment benefits.
With that prism, and with an eye on acknowledging that in response to an economic contraction like that just experienced, both the redistribution and growth impulses are legitimate – the elements of an appropriate compromise are apparent.
A deal must include something which bolsters entrepreneurship and investment while patching up the safety net for the 2 to 3 remaining years before we return to full employment. The agreement would carry us through both Congressional elections and the end of the Obama second-term, allowing a new President and Congress to complete the pivot away from distribution and toward economic growth.
Democrats should be willing – for two years – to 1) lower the top capital gains tax rate from 20% to 15% (the Bush era level) 2) eliminate all taxation on capital gains, dividend and interest income on those earning less than $250,000 (a proposal of Mitt Romney’s) and 3) lower the corporate tax rate from 35% to 28% (as part of a corporate tax reform sought by Senator Max Baucus).
In return, Republicans should be willing to 1) extend unemployment insurance benefits for one year and 2) raise the federal minimum wage to $10.10 per hour.
Both sides would be obtaining long-sought objectives while giving the nation a show of bipartisanship building on the humble display of Rep. Paul Ryan and Senator Patty Murray in recent budget negotiations. It also would allow each side to claim credit for an improved economy without compromising principled arguments.
The leading rhetorical obstacle – that such an effort wouldn’t pay for itself is easily overcome.
First, the Baucus corporate tax reform immediately taxes profits from the goods and services sold by American corporations into the country from foreign subsidiaries. The Democratic-leaning New York Times acknowledges, “It would establish a temporary 20 percent tax rate on billions of dollars in corporate earnings that have been parked abroad and would order all such earnings to be taxed, payable over eight years, creating a one-time windfall of more than $200 billion for the Treasury.”
Secondly, if an arbiter need be appointed to identify cost offsets, both sides could turn to Senator Tom Coburn’s “Wastebook 2013” which highlights examples of ‘wasteful and low-priority’ spending to the tune of $30 billion, an amount more than equal to the estimated $26 billion that a one-year extension of unemployment benefits would cost. Here, Members of Congress on both sides, facing election battles, would have to take courage, but certainly political cover could be provided to them by their colleagues in safe seats in a better position to echo Sen. Coburn’s articulation of the electorate’s sentiment, “The nearly $30 billion in questionable and lower-priority spending in Wastebook 2013 is a small fraction of the more than $200 billion we throw away every year through fraud, waste, duplication and mismanagement. There is more than enough stupidity and incompetence in government to allow us to live well below the budget caps.”
More political cover from the Right can come from the influential Club For Growth who in concept support a minimum wage for corporate tax cut trade. On the Sunday January 5, 2014 ‘Washington Journal’ program on C-SPAN, The Club For Growth’s Vice-President For Government Affairs, Andrew Roth showed how to make principled arguments for what you believe while opening the door for a negotiation, “On minimum wage I think that everybody firmly believes that price controls don’t work. Nixon tried them in the 1970s with disastrous results and it’s just unfortunate people don’t recognize that the minimum wage is a price control; it’s a price control on labor, so it doesn’t work. Now as a political tool, if you wanted to pair it with corporate tax reform, you’d have to see what it’d look like. If it as a massive drop in the corporate tax rate and it was extremely pro-growth, then maybe something could be done.”
For Democrats who argue for demand-side economics and who rest their hat on the economy’s two-thirds dependence on consumption, capital gains tax reduction (especially when totally eliminated for those under $250,000) and corporate tax reduction (especially when coupled with loophole reform) is a small pill to swallow for 1.3 million Americans to continue receiving benefits and an estimated 5 million Americans being lifted above the poverty line.
Jude Wanniski didn’t have a problem with a minimum wage increase under two circumstances: 1) during a time of robust economic growth and 2) when paired with tax policies which would create a surplus of capital.
The second scenario does not exist but the latter condition is possible as part of a grand bargain.
So, Congress, let’s make a deal.
http://www.forbes.com/sites/cedricm...or-capital-gains-and-corporate-tax-reduction/
Great info in here, this should be a sticky....
Forgot we will sticky white bitches instead of better ourselves...
Forgot we will sticky white bitches instead of better ourselves...
Ahem. Wrong board.Great info in here, this should be a sticky....
Forgot we will sticky white bitches instead of better ourselves...
You'd be hard pressed to find a white woman posted on THIS board; surely not one stickied.
Speaking of which, I like sweet sticky things . . .
`
The Invention Of 'The Economy'
The Invention Of 'The Economy' (14:49)
March 05, 2014 5:23 PM ET
On today's show: How we started boiling down entire nations into a single number. And how that number made people think they could control everything.
http://www.npr.org/blogs/money/2014/03/05/286366404/episode-521-the-invention-of-the-economy
The Invention Of 'The Economy' (14:49)
March 05, 2014 5:23 PM ET
On today's show: How we started boiling down entire nations into a single number. And how that number made people think they could control everything.
http://www.npr.org/blogs/money/2014/03/05/286366404/episode-521-the-invention-of-the-economy
Re: The Invention Of 'The Economy'
Fed's Beige Book points to pick-up in U.S. growth
http://www.reuters.com/article/2014/06/04/us-usa-economy-fed-idUSKBN0EF20620140604
Fed's Beige Book points to pick-up in U.S. growth
(Reuters) - Economic growth strengthened throughout the country with a broad pick-up in manufacturing, "brisk growth" at some shipping ports and steady consumer spending, the Federal Reserve said on Wednesday.
The central bank's Beige Book of anecdotal economic reports from around the country noted modest to moderate growth in all 12 Fed regions - a positive change from the April document when some parts of the country were still struggling through severe winter weather.
The report, prepared by the New York Federal Reserve Bank with information collected on or before May 23, adds more evidence to what Fed officials have generally said they believe is a strengthening U.S. economy.
"Overall, this was a fairly upbeat assessment on the U.S. economic performance and it provides further confirmation of a sustained uptick in economic growth," Millan Mulraine,deputy head of U.S. Research & Strategy for TD Securities, wrote in an analysis of the report.
With only a few notable exceptions, including mixed reports on the strength of the housing industry, the document pointed to broad gains in the economy.
"Consumer spending expanded across all Districts, to varying degrees," the report said. "Manufacturing activity expanded throughout the nation... Activity expanded robustly in the Boston, New York, Atlanta and Kansas Districts."
Banks boosted lending activity; shippers said cargo volumes were increasing while business at ports in the Richmond and Atlanta districts "grew briskly."
The labor market also "generally improved," with the Kansas City district reporting that businesses were now having to compete for workers, the Cleveland and Chicago districts noting an upturn in demand for temporary employees, and Atlanta pointing to a jump in the number of workers moving from temporary to permanent jobs.
Wage pressures remained "subdued," potential evidence that, as many Fed officials have argued, the labor force has room to grow before wage pressures take hold.
Inflation was "said to be contained, as most Districts reported that both input and finished goods prices were little changed," the Fed reported.
The observations in the Beige Book will be part of the context Fed officials consider at their upcoming policy meeting on June 17-18.
After a dismal first quarter in which the economy contracted, growth is expected to rebound over the rest of the year. Fed members have attributed the poor first-quarter result to the bad winter in many parts of the country, and the Beige Book added credence to that view.
As the snow and ice melted, consumers started shopping for cars, and construction crews set to work on new office buildings as businesses in many districts snapped up empty space.
"The commercial real estate market was mostly stronger since the last report," with 11 districts reporting steady or improving vacancy rates and the Dallas district saying that its office market was "robust."
The sense of steady growth has been broadly acknowledged by individual Fed officials, but it has yet to translate into the sort of job gains or steady rise in prices they hope will occur.
The central bank's Beige Book of anecdotal economic reports from around the country noted modest to moderate growth in all 12 Fed regions - a positive change from the April document when some parts of the country were still struggling through severe winter weather.
The report, prepared by the New York Federal Reserve Bank with information collected on or before May 23, adds more evidence to what Fed officials have generally said they believe is a strengthening U.S. economy.
"Overall, this was a fairly upbeat assessment on the U.S. economic performance and it provides further confirmation of a sustained uptick in economic growth," Millan Mulraine,deputy head of U.S. Research & Strategy for TD Securities, wrote in an analysis of the report.
With only a few notable exceptions, including mixed reports on the strength of the housing industry, the document pointed to broad gains in the economy.
"Consumer spending expanded across all Districts, to varying degrees," the report said. "Manufacturing activity expanded throughout the nation... Activity expanded robustly in the Boston, New York, Atlanta and Kansas Districts."
Banks boosted lending activity; shippers said cargo volumes were increasing while business at ports in the Richmond and Atlanta districts "grew briskly."
The labor market also "generally improved," with the Kansas City district reporting that businesses were now having to compete for workers, the Cleveland and Chicago districts noting an upturn in demand for temporary employees, and Atlanta pointing to a jump in the number of workers moving from temporary to permanent jobs.
Wage pressures remained "subdued," potential evidence that, as many Fed officials have argued, the labor force has room to grow before wage pressures take hold.
Inflation was "said to be contained, as most Districts reported that both input and finished goods prices were little changed," the Fed reported.
The observations in the Beige Book will be part of the context Fed officials consider at their upcoming policy meeting on June 17-18.
After a dismal first quarter in which the economy contracted, growth is expected to rebound over the rest of the year. Fed members have attributed the poor first-quarter result to the bad winter in many parts of the country, and the Beige Book added credence to that view.
As the snow and ice melted, consumers started shopping for cars, and construction crews set to work on new office buildings as businesses in many districts snapped up empty space.
"The commercial real estate market was mostly stronger since the last report," with 11 districts reporting steady or improving vacancy rates and the Dallas district saying that its office market was "robust."
The sense of steady growth has been broadly acknowledged by individual Fed officials, but it has yet to translate into the sort of job gains or steady rise in prices they hope will occur.
http://www.reuters.com/article/2014/06/04/us-usa-economy-fed-idUSKBN0EF20620140604