published Friday, July 2nd, 2010

Concerns rising that economic recovery is slowing

CHRISTOPHER S. RUGABER

AP Economics Writer

WASHINGTON — Concerns are rising that the economic rebound is stalling, but a strong jobs report on Friday would go a long way toward assuaging those fears.

Conversely, a report showing private employers failed to create many jobs in June will amplify worries that the recovery is weakening and won't be strong enough to put many of the 15 million unemployed back to work anytime soon.

"The economy is losing some momentum," said Ryan Sweet, senior economist at Moody's Economy.com. "We need to see private hiring really accelerate."

Analysts forecast that employers cut a net total of 110,000 jobs in June, which would be the nation's first loss of jobs in six months. But that figure includes the expected end of about 240,000 temporary census jobs.

Economists will focus more on private employers, who are forecast to have added 112,000 positions. That would be the sixth-straight month of gains and an improvement from a weak showing of 41,000 in May.

But the unemployment rate is forecast to tick up to 9.8 percent from 9.7 percent. The report will be released Friday at 8:30 a.m.

A gain of 112,000 in private payrolls would signal the recovery is on track, economists said. With added jobs boosting incomes and giving consumers more money to spend, the economy would be able to keep growing even as the impact of government stimulus programs wanes.

Still, a gain of about 100,000 jobs is barely enough to keep up with population growth. The economy needs to create jobs at least at twice that pace to quickly bring down the jobless rate.

The jobs figures will come after a raft of weak reports Thursday provided the strongest evidence yet that the recovery is slowing. The negative news added to concerns that the nation could be on its way back into recession.

Most notable was a rise in the number of people filing for unemployment benefits for the first time. The four-week average for jobless claims now stands at its highest point since March.

The bleak indicators come just after Congress adjourned for the holiday weekend without extending jobless benefits.

On top of that, the housing market appears to be slumping again, and the Dow Jones industrials closed down for the sixth trading day in a row. Add in slower growth in China and the European debt crisis, and economists are scaling back their forecasts for the U.S.

"When you add it all up, it doesn't imply a double-dip, but it does suggest that growth will be slower than we'd like to see," said Scott Brown, chief economist at Raymond James.

A double-dip recession happens when an economy shrinks, then begins to expand again before going back into reverse. Economists don't agree on a more precise definition.

Senate Republicans, expressing concerns about the ballooning federal deficit, this week blocked a bill that would have kept unemployment checks going to people who have been laid off for long stretches.

More than 1.3 million people have been left without federal jobless benefits after Congress adjourned without an extension. That number could grow to 3.3 million by the end of the month if lawmakers can't resolve the impasse when they return.

Among those waiting for a resolution is Nan Esparza, 59, a single mother of three in Smithfield, N.C., who lost her job as a legal secretary early last year. Her unemployment benefits expired last month. She plans to live off savings.

"After that, I'm in a world of trouble," she said.

States typically provide six months of unemployment help. During the recession, Congress added nearly a year and a half of extra benefits. Democrats want those terms extended through November, at a cost of $34 billion.

Less money in people's pockets could hamper economic growth. JPMorgan Chase economist Michael Feroli lowered his growth forecast for the third quarter to an annual rate of 3 percent from 4 percent, citing tighter government spending.

Other economists expect growth to slow to an anemic 2 percent in the second half of this year. That probably wouldn't reduce the unemployment rate, currently at 9.7 percent.

In a new sign of job-market weakness, initial claims for unemployment jumped by 13,000 last week to a seasonally adjusted 472,000. The four-week average, which smooths fluctuations, rose to its highest level in more than three months. Claims generally need to drop below 400,000 to signal that hiring is ramping up.

The rebound so far has been fueled mostly by government stimulus spending, manufacturing activity and business spending on new equipment and inventories, and those factors are fading.

It's happening as new threats emerge: Stock markets are falling and home prices could drop again, lowering household wealth. Americans could respond by cutting back on spending and weakening the recovery.

Manufacturers reported Thursday that export orders grew at a slower pace in June than the previous month. New surveys suggested growth in China is slowing, which could lead it to import fewer American products.

Meanwhile, governments in the United States and overseas are cutting spending and reining in stimulus measures. Some economists worry those steps are premature as long as the economy remains weak.

There was also another fresh sign of trouble in the housing market. The number of buyers who signed contracts to purchase homes tumbled 30 percent in May, the National Association of Realtors said. Construction spending also declined for the month. Both were affected by the expiration of government incentives to buy homes.

___

Associated Press Writers Stephen Ohlemacher and Tom Raum in Washington; Mike Baker in Raleigh, N.C.; Rachel La Corte in Olympia, Wash.; and Kathy Barks Hoffman in Lansing, Mich., contributed to this story.

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carlB said...

Home » News » Latest News » Concerns rising that ... Friday, July 2, 2010 - 9:48 a.m. Concerns rising that economic recovery is slowing


Reply: Thank you for making people aware of the real conditions.

Do you think it is possible for the US to get some of these private companies to start reinvesting back into the US to help create jobs and if they do not help, then what will happen to our employment rate when the unsustainable government stimulus money is not available? Without the help needed from the private sectors, will this deep recession turn into "double dip" or a deep depression?

We continue to hear from the anti Obama and the anti Democrat people about how the President is running up our Nation's debt with his, Healthcare plan, bailouts and the Stimulus recovery plan.
It doesn't take a genius to understand why our total budget deficit has been going up since the year of 2001 and in 2007 the Nation went into a deep recession. I wonder why it is that the anti Obama people want us to forget and not even mention what happened during the Bush/Cheney 8 years, when what happened then is now dictating the corrective policies and actions of President Obama? Yet the "losers" are doing everything to get back in control of our Government so they can continue with the same policies which got the country into the crisis conditions that they passed onto this administration to deal with. The trouble is, where is the patience of the people who keep trying to convince us and complain about why the crisis issues are not solved in a year and a half. There are not any quick quick fixes to this complicated mess the Nation was allowed to get in without the needed corrections needed, long before it reached the critical point of a possible deep depression.

Where are the Private Sector jobs?

THEREFORE, getting our private sector jobs back and getting our trade deficit back in balance will be necessary before we can expect to have a long-term recovery plan, since the taxpayer money is not sustainable.

The private global corporations still want the American consumers' money and just as long as the consumers have any money to spent under the global monopolies, that money is spent on imported goods. Yet there is not any rush by these companies to create jobs back here in the USA without getting some of our tax money to help them in reestablishing their factories back here in the US.

July 2, 2010 at 10:21 a.m.
redbearded said...

Carl, you're all wet and all you've done is repeat the dim/lib cant of the last 2 years, trying to explain away why you're screw-up, do nothing prez has made things even worse. What you try to forget is that for the last 4 or 5 years congress and senate have had a majority of dims/morons that don't know what to do either but throw money at a problem. It has to stop and you people need to get out!!! The other lie the Great Deceiver has told you is that there was an economic recovery happening at all. There was never any such thing. Now he wants to reform banking legislation so that people won't be able to buy a home unless the gov't decides they can afford it. Construction market is down, unemployment is still high (oh, yeah, where's that jobs bill H promised you?), but his banker buddies and his union cohorts are doing just fine. Don't forget the health care pig and that your taxes will double in about 2 years to pay for the deadbeats he wants to have insurance. By the way, he'll never give one red cent to help the people in the gulf. Why do you think he continues to point the finger at BP. Better get what you can from them, he doesn't care, not his problem.

July 2, 2010 at 1:46 p.m.
cbc123 said...

Intermediate Macroeconomics: The Cyclically Balanced Budget

When the economy is bad, cut taxes and spend more to stimulate it. This will raise the deficit and debt. BUT When the economy picks back up again, raise taxes and spend less to reign in inflation. This will create a surplus and lower the debt. HOWEVER The Pigouvian problem exists when the people don't understand economics, media amplifies their confusion, and for politicians to win votes they must use bad economic policy. SO Everyone is at fault: both parties, you, and me. Our education system doesn't stress economics or politics. [insert conspiracy theory here]

July 2, 2010 at 11:25 p.m.
cbc123 said...

Oh, and can we legalize marijuana?

Introducing a new market would be a HUGE stimulus package in itself. We could spend less money on fighting a harmless plant (over $1 trillion to date) and criminals would stop profiting from prohibition (who remembers where Al Capone got his money?). Also, we could tax and regulate the plant, which we can't do when it's illegal.

If you're thinking about just recreational pot, think again. I am pretty sure that the United States is the only industrialized country that legally cannot grow its own hemp. Anyone know why?

July 2, 2010 at 11:34 p.m.
FM_33 said...

Yep !

July 3, 2010 at 4:07 p.m.
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