June 24, 2024

Off the Charts: Recovery in Germany Is Faster Than Elsewhere

But not in Germany.

In Germany, alone among the 27 members of the European Union, unemployment rates for both older and younger workers are now lower than they were when the United States slipped into a recession at the end of 2007.

In the rest of the euro zone, the unemployment rate for workers ages 25 to 74 has more than doubled over that period, to 12.8 percent. The rate for younger workers is more than 30 percent, on average — and above 50 percent in Spain and Greece. In Germany, it is less than 8 percent.

The accompanying charts show how unemployment rates for both groups of workers have changed in each of the 17 countries in the euro zone, as well as for Britain and the United States.

In terms of adult unemployment rates, the most recent figures for the United States (6.1 percent) and Britain (5.7 percent) are not that far from Germany’s figure of 5.1 percent. The major difference is in youth unemployment, which is above 16 percent in the United States and above 20 percent in Britain.

What accounts for that difference? Some of the credit goes to Germany’s education and employment system for young workers, and to German policies that encourage employers facing downturns to reduce working hours rather than fire workers. In Germany, students are separated into different career tracks, with many put into a system that leads to apprenticeships rather than to college degrees.

But that is not the entire story. The euro zone’s troubles have helped Germany’s export-oriented economy. The weak euro has made Germany’s exports more competitive against those of countries with which it competes, most notably the United States and Japan. Since the end of 2007, the euro is down about 10 percent against the dollar and about 20 percent against the yen.

Were the euro zone to break up, there is little question that the value of a new German mark would rise sharply, while the currencies of many other members of the zone would fall relative both to the mark and other international currencies. That would depress German exports.

The charts reflecting Germany’s unemployment rates, if they were the only evidence available on world economic trends, would seem to indicate there was a mild downturn in 2009 that soon ended, with the economy recovering the next year. The United States charts would indicate a more severe downturn, followed by a recovery that began in 2010 and may now be gathering strength. In Britain, there has been much less progress since unemployment peaked in 2011.

In the 16 other euro zone countries as a group, the chart indicates a deep recession that leveled off in 2010 and 2011 but has since gotten much worse — particularly for young workers. “We will have to speed up in fighting youth unemployment,” the German finance minister, Wolfgang Schäuble, said at a conference this week, “because otherwise we will lose the support, in a democratic way, in some populations of the European Union.”

If that is to happen, it may require a change of course for Europe, where it appears the rich will continue to get richer. The European Commission’s latest economic forecast, released last week, predicted declining unemployment in Germany this year and next, but said joblessness was likely to continue to climb in France, Italy and Spain.

Floyd Norris comments on finance and the economy at nytimes.com/economix.

Article source: http://www.nytimes.com/2013/05/11/business/economy/a-faster-recovery-in-germany-than-elsewhere.html?partner=rss&emc=rss

Economix Blog: Where the Raises Are: Trucking and Academia



Dollars to doughnuts.

I spoke today with Diane Swonk, chief economist at Mesirow Financial, who mentioned that she has been keeping an eye on which industries and occupations are giving raises. Unfortunately, not many fall under that category.

As of March, the Labor Department’s index for the cost of total compensation for all civilian workers was just 0.3 percent higher than a year earlier, after adjusting for inflation. To give some context, the year-over-year change in this index — which includes wages and salaries as well as benefits — has averaged 0.7 percent since 1982, the first year these data became available.

Source: Bureau of Labor Statistics, via Haver Analytics. Numbers are adjusted for inflation by Haver. Source: Bureau of Labor Statistics, via Haver Analytics. Numbers are adjusted for inflation by Haver.

Inflation has been very low in recent years, but it has still been substantial enough to mostly wipe out the meager raises that American workers have been receiving in nominal terms. (Before adjusting for inflation, compensation rose 1.8 percent year-over-year in March, compared with a long-term average of 3.7 percent.) Workers’ raises are also slightly lower if you strip out the cost of benefits, particularly since the rise in health care costs has generally outpaced the rise in wages. That’s probably not a coincidence; growing health care costs are eating up other forms of compensation that employers might otherwise provide.

Source: Bureau of Labor Statistics, via Haver Analytics. Numbers are adjusted for inflation by Haver. Source: Bureau of Labor Statistics, via Haver Analytics. Numbers are adjusted for inflation by Haver.

The lack of major wage gains across the board seems to contradict the idea that the economy is suffering from a major bout of skills mismatch. I have no doubt that employers in some industries are having trouble finding workers with relevant skills, but if skills mismatch were the primary driver of the country’s lackluster hiring in recent years, then we would expect to see many more businesses bidding up wages in pursuit of those rare skilled workers who are available.

The two categories that have shown the biggest year-over-year increases in total compensation are (1) occupations in transportation and material moving and (2) employees at junior colleges, colleges, universities and professional schools.

So what do truckers and professors have in common? Ms. Swonk observes that their jobs are both hard to either outsource or automate, unlike a lot of other occupations.

That is becoming less true for professors, though, in the age of massive open online courses, or MOOCs. MOOCs help schools cut down on labor costs by scaling up the number of students who can be taught by a single professor — in some cases, a professor they don’t even directly employ. And professors are worrying about being displaced. As The Chronicle of Higher Education reported Thursday, faculty members in the philosophy department at San Jose State University released an open letter saying they refuse to adopt a MOOC with lectures from a Harvard professor because they don’t want to enable efforts to “replace professors, dismantle departments, and provide a diminished education for students in public universities.”

On the other hand, MOOCs could still push up the overall level of wages for people employed at colleges by changing the composition of workers on those payrolls; the superstar professors whose lectures are featured in large-scale online courses will continue to be paid a lot, while the lower-wage professor jobs at community colleges and other strapped schools could be eliminated altogether, stripping out the bottom part of the pay distribution in higher education.

Article source: http://economix.blogs.nytimes.com/2013/05/02/where-the-raises-are-trucking-and-academia/?partner=rss&emc=rss

Starbucks Earnings Increased 13% in Latest Quarter

The company’s results were helped by a 6 percent increase in global sales at cafes open at least a year.

The performance reflects the turnaround Starbucks has made since its struggles during the recession. After bringing back its founder, Howard Schultz, as chief executive in 2008, the company embarked on a reorganization that included closing underperforming stores in the United States.

Mr. Schultz has said that the company has the ability to keep growing even through a turbulent economy because most people see Starbucks as an “affordable luxury.”

Starbucks said it earned $432.2 million, or 57 cents a share, in the quarter, up from $382.1 million, or 50 cents a share, a year earlier. Revenue in the period ending Dec. 30, the first quarter of Starbucks’s fiscal year, rose 11 percent, to $3.8 billion. Analysts had expected a profit of 57 cents a share and revenue of $3.85 billion, according to FactSet.

Shares rose 11 cents on Thursday, to $54.57 a share.

Article source: http://www.nytimes.com/2013/01/25/business/starbucks-earnings-increased-13-in-latest-quarter.html?partner=rss&emc=rss

Economix Blog: Live Blog: Inside the Fed’s 2007 Deliberations

Ben S. Bernanke, chairman of the Federal Reserve.Karen Bleier/Agence France-Presse — Getty Images Ben S. Bernanke, chairman of the Federal Reserve.

On Friday the Federal Reserve released the transcripts of its discussions in 2007, the year the housing market, the financial markets, and the broader economy began to unravel. Reporters from The Times are sharing their findings on what the transcripts reveal in the blog entries and tweets below.

Refresh nowUpdating…Feed

Article source: http://economix.blogs.nytimes.com/2013/01/18/inside-the-feds-2007-deliberations/?partner=rss&emc=rss

Bucks Blog: Seeking College Application Essays About Money

This weekend’s Your Money column includes a call for submissions from current high school seniors who have written their college application essays about money. We’ll read them all and publish the best here on Bucks. You can send us yours at moneyessays@nytimes.com.

Anything about affluence or lack thereof, social class, the economy, your family’s financial situation or paid work you’ve done is fair game here. If you’re in doubt, send it in anyway, as we intend to cast a wide net and define money pretty broadly.

This is open only to people who are applying to college this year. But if you took on similar issues in your application essay in the past, please post a comment about what you wrote (and whether you got in). And if you’re a high school guidance counselor or college admissions officer, please share memories of particularly good essays on money.

Article source: http://bucks.blogs.nytimes.com/2013/01/04/seeking-college-application-essays-about-money/?partner=rss&emc=rss

Job Market Strengthened as the Year Wound Down

One survey showed that private hiring increased last month, while another said that layoffs declined and a third showed that applications for unemployment benefits stayed near a four-year low.

The data led some economists to raise their forecasts for December job growth one day before the Labor Department releases its closely watched employment report.

“The job market held firm in December despite the intensifying fiscal cliff negotiations,” said Mark Zandi, chief economist at Moody’s Analytics. “Businesses even became somewhat more aggressive in their hiring at year end.”

The most positive sign came from ADP. Its monthly employment survey showed businesses added 215,000 jobs last month, the most in 10 months and much higher than November’s total of 148,000.

Economists tend to approach the ADP survey with some skepticism because it has diverged sharply at times from the government’s job figures.

But some economists were also hopeful after noting that businesses were less inclined to cut jobs last month.

The consulting firm Challenger, Gray Christmas said that the number of announced job cuts fell 43 percent in December from November, and that overall planned layoffs in 2012 fell to the lowest level since 1997.

The weekly number of people who applied for unemployment figures rose by 10,000, but the four-week average was little changed at 360,000 last week. That’s only slightly above the previous week’s 359,750, which was the lowest since March 2008.

Most economists expect the Labor Department report will show that employers added about 150,000 jobs last month and that the unemployment rate stayed at 7.7 percent. The economy has added about 150,000 jobs a month, on average, over the last two years. That’s too few to rapidly lower the unemployment rate.

Even with modest gains in hiring, the unemployment rate remains high. It fell to 7.7 percent in November from 7.9 percent in October. The number of people receiving jobless benefits fell to 5.4 million in the week ended Dec. 15, the latest data available. That’s down about 70,000 from the previous week.

Some economists saw potential for stronger gains after seeing Thursday’s data. Joseph LaVorgna, chief United States economist at Deutsche Bank, raised his forecast for job growth in December to 190,000 jobs, from 150,000.

Credit Suisse also raised its forecast to 185,000, from 165,000. Still, economists remained cautious about where the job market is headed.

While Congress and the White House reached a deal this week that removed a threat of tax increases for many Americans, they postponed the more difficult decisions on spending cuts and on raising the nation’s $16.4 trillion borrowing limit by late February.

Article source: http://www.nytimes.com/2013/01/04/business/economy/more-americans-seek-jobless-benefits.html?partner=rss&emc=rss

Consumer Spending Reported Down 0.2% in October

The Commerce Department said Friday that consumer spending dropped 0.2 percent in October. It was the weakest figure since May, and it compared with a 0.8 percent spending increase in September. Income had risen 0.4 percent in September.

Work interruptions caused by the storm reduced wages and salaries in October by about $18 billion at an annual rate, the government said. The storm affected 24 states, with the most severe damage in New York and New Jersey.

Consumers may also be scaling back on spending because of fears about the automatic tax increases and spending cuts that will take effect in January if Congress and the Obama administration fail to strike a budget deal by then.

“The upshot is that although both incomes and spending will probably bounce back in November, the underlying trend is weak,” said Paul Dales, senior United States economist at Capital Economics.

The spending figures suggested that the economy was growing more slowly in the October-December quarter than it did in the July-September quarter. Consumer spending drives nearly 70 percent of economic activity.

Mr. Dales predicted that domestic economic growth would slip from the 2.7 percent annual rate in the July-September quarter to 1 percent in the October-December period. That is too low to cut the unemployment rate, now at 7.9 percent.

Income and spending gains would have been meager even after discounting the effects of the storm. Income would have risen 0.1 percent. Spending would have been essentially flat, Mr. Dales said.

After-tax income adjusted for inflation fell 0.1 percent in October. And spending, when adjusted for inflation, dropped 0.3 percent — the biggest such decline in three years. The saving rate edged up slightly to 3.4 percent of after-tax income in October, compared with 3.3 percent in September.

Many economists say growth will rebound once rebuilding begins in the Northeast. And if President Obama and Congress can reach a budget deal, some economists, including the Federal Reserve chairman, Ben S. Bernanke, are predicting a strong year for the economy.

Article source: http://www.nytimes.com/2012/12/01/business/economy/consumers-cut-spending-in-october.html?partner=rss&emc=rss

Consumers Cut Spending in October

Consumer spending dropped 0.2 percent in October, the government said. That was down from an increase of 0.8 percent in September and was the weakest showing since May.

Income was flat in the month, following a 0.4 percent rise in September.

The government said work interruptions caused by the late October storm reduced wages and salaries by about $18 billion at an annual rate. Hurricane Sandy affected 24 states, with the most severe damage in New York and New Jersey.

Consumers may also be worried about automatic tax increases and spending cuts that will take effect in January if lawmakers and the Obama administration fail to strike a deal before then.

The depressed spending figures suggest economic growth are likely to be weak in the October-December quarter. Consumer spending drives nearly 70 percent of economic activity in the United States.

Discounting the effects of the storm, income growth would have risen a still-weak 0.1 percent. After-tax income adjusted for inflation fell 0.1 percent, while spending adjusted for inflation dropped 0.3 percent.

The saving rate edged up slightly, to 3.4 percent of after-tax income in October, compared with 3.3 percent in September.

The government reported Thursday that the overall economy grew at an annual rate of 2.7 percent in the July-September quarter, an improvement from the 2 percent rate of growth initially estimated. However, economists believe the acceleration in activity will be short-lived.

Many of them predict growth is slowing in the current October-December quarter to less than 2 percent, a rate that is too weak to make a significant dent in unemployment. But they expect growth to rebound in the New Year when the rebuilding phase begins in the Northeast.

In October, spending at retail businesses fell 0.3 percent, the first drop after three months of gains. Auto sales dropped 1.5 percent, the biggest decline in a year.

Article source: http://www.nytimes.com/2012/12/01/business/economy/consumers-cut-spending-in-october.html?partner=rss&emc=rss

The iEconomy

Motion Graphic: The iPhone Economy

Apple’s iPhone is a model of American ingenuity, but most of its components are manufactured somewhere else. The decline of manufacturing can lead to the loss of other kinds of jobs.

Article source: http://www.nytimes.com/interactive/business/ieconomy.html?partner=rss&emc=rss

BUSINESS: Stimulating Job Growth

Stephen Case, the co-founder of AOL, speaks with Catherine Rampell on job creation and entrepreneurship. Mr. Case serves on the President’s Council on Jobs and Competitiveness.

Article source: http://feeds.nytimes.com/click.phdo?i=2f32b6f993c8c8e301ae8787ee1d53ea