November 18, 2017

World Economy Growing Unevenly, O.E.C.D. Says

PARIS — The world economy will continue slowly expanding for the rest of the year, despite signs of relative weakness in China and other emerging markets, and an uneven recovery in Europe, the Organization for Economic Cooperation and Development said Tuesday.

The United States, Britain and Japan are growing “at encouraging rates,” while the euro zone emerged from six straight quarters of contraction in the April-June period, the organization said in a new forecast. Recent indicators from the major advanced economies, including increased business confidence and stronger industrial production, suggest the trend will “continue at the improved rate seen in the second quarter.”

The United States economy will probably grow at a 2.5 percent annualized rate in the third quarter and 2.7 percent in the fourth, the report said. The country’s economy grew at a 2.5 percent rate in the second quarter.

Japan will grow by 2.6 percent in the third quarter and 2.4 percent in the fourth quarter, in line with the 2.6 percent second quarter figure, according to the organization, a Paris-based research and policy consortium representing the world’s most advanced economies. Its outlook contained no major surprises and appeared to be consistent with mainstream private and official forecasts.

Jorgen Elmeskov, the O.E.C.D.’s deputy chief economist, said the latest indicators point to “essentially the same” picture as in May, the time of the organization’s last assessment, although “the numbers are a tad higher.”

But the assessment of the jobs market was notably somber. Unemployment, currently at high levels across the developed world, could become entrenched, the O.E.C.D. said, as long-term joblessness becomes structural unemployment, with the potential to “remain even as the recovery takes hold.”

Germany, France and Italy, the three largest euro zone economies, are likely to expand by a combined 1.3 percent in the third quarter and 1.4 percent in the fourth quarter, the organization said. That would be a little slower than the second quarter, when growth in those economies was 1.6 percent. Germany’s economy will continue to be the main driver of European growth, the report suggests, even as France grows slowly and Italy continues to contract slightly.

The picture in emerging economies is less promising, the organization noted. China, it said, “appears to have passed the trough” — the nadir of its economic cycle — but it and other emerging economies face significant uncertainty, including possible financial market disruptions. That would be partly in reaction to the United States Federal Reserve’s plans to begin scaling back its economic stimulus program, a process being called “tapering” by the financial world.

The Chinese economy is likely to grow at a 7.2 percent annualized rate in the third quarter and 8.1 percent in the fourth, the report said, accelerating from the 7.0 percent growth recorded in the second quarter.

While China’s overall growth rate is faster than that of developed countries, and the recent cooling partly reflects the government’s desire to rein in credit market excesses, many economists say that high growth is necessary to hold social tensions in check.

In some emerging economies, slowing growth, together with the prospect of tighter Federal Reserve monetary policy and the increase in global bond yields that have accompanied it, have brought “market instability, rising financing costs, capital outflows and currency depreciations,” the report said. The problem is most pronounced where governments have depended on inflows of foreign investment to finance current-account deficits, it noted.

One country facing such a predicament is India, where the currency has been falling sharply. In such a situation, the report said, emerging market central banks might face “difficult policy dilemmas,” with capital flight and downward pressure on currencies arguing for higher interest rates that could in turn weigh on growth.

The renewed momentum of some of the more advanced economies marks a turnabout from recent years, when moribund growth in Japan and Europe was more than balanced by strong growth in emerging markets, the report said. Now, the weaker showing by emerging markets “makes for a continuation of sluggish global growth, notwithstanding the pickup in advanced economies.”

Mr. Elmeskov pointed to “a loss of momentum in structural reform” among emerging market countries as a contributor to the slowing growth,

Under the circumstances, the report cautioned, “a sustainable recovery is not yet firmly established and important risks remain,” among them the possibility of “deadlock and brinkmanship over fiscal policy in the United States,” and the 17-nation euro zone’s continuing vulnerability to “renewed financial, banking and sovereign debt tensions.”

“The risks still call for a determined policy approach,” Mr. Elmeskov said.

Unemployment, currently at high levels across the developed world, could become entrenched, it said, as long-term joblessness becomes structural unemployment, with the potential to “remain even as the recovery takes hold.”

The problem of long-term joblessness is best addressed by better training policies, as well as stronger demand, as well as tax reforms to increase work incentives, the organization said.

Both the developed economies and the emerging countries face the prospect that growth will remain slow over the longer term, it said, so “reforms to boost growth, rebalance the global economy and reduce structural impediments to job creation remain vital.”

Article source: http://www.nytimes.com/2013/09/04/business/global/world-economy-growing-unevenly-oecd-says.html?partner=rss&emc=rss

The Education Revolution: Faltering Economy in China Dims Job Prospects for Graduates

Businesses say they are swamped with job applications but have few positions to offer as economic growth has begun to falter. Twitter-like microblogging sites in China are full of laments from graduates with dim prospects.

The Chinese government is worried, saying that the problem could affect social stability, and it has ordered schools, government agencies and state-owned enterprises to hire more graduates at least temporarily to help relieve joblessness. “The only thing that worries them more than an unemployed low-skilled person is an unemployed educated person,” said Shang-Jin Wei, a Columbia Business School economist.

Lu Mai, the secretary general of the elite, government-backed China Development Research Foundation, acknowledged in a speech this month that less than half of this year’s graduates had found jobs so far.

Graduating seniors at all but a few of China’s top universities say that very few people they know are finding jobs — and that those who did receive offers over the winter were seeing them rescinded as the economy has weakened in recent weeks.

“Many companies are not expanding at all, while some of my classmates have been hired and fired in the same month when the companies realized that they could not afford the salaries after all,” said Yan Shuang, a graduating senior in labor and human resources at the Beijing Institute of Technology.

Ms. Yan said she had been promised a job at a sports clothing company over the winter. But the company canceled all hiring plans in March as the economy weakened.

China quadrupled the number of students enrolled in universities and colleges over the last decade. But its economy is still driven by manufacturing, with a preponderance of blue-collar jobs. Prime Minister Li Keqiang personally led the cabinet meeting, on May 16, that produced the directive for schools, government agencies and state-owned enterprises to hire more graduates, a strategy that has been used with increasing frequency in recent years to absorb jobless but educated youths.

“Any country with an expanding middle class and a rising number of unemployed graduates is in for trouble,” said Gerard A. Postiglione, the director of the Wah Ching Center of Research on Education in China at Hong Kong University.

A national survey released last winter found that in the age bracket of 21- to 25-year-olds, 16 percent of the men and women with college degrees were unemployed.

But only 4 percent of those with an elementary school education were unemployed, a sign of voracious corporate demand persisting for blue-collar workers. Wages for workers who have come in from rural areas to urban factories have surged 70 percent in the last four years; wages for young people in white-collar sectors have barely stayed steady or have even declined.

Economists have long estimated that the Chinese economy needs to grow 7 or 8 percent annually to avoid large-scale unemployment. But that rule of thumb has become less reliable in recent years as the labor market has split.

Relatively slow growth is still creating enough jobs to provide full employment for the country’s blue-collar workers. But much faster growth may be needed to create white-collar jobs for the graduates pouring out of universities.

The International Monetary Fund predicts the Chinese economy will grow 7.75 percent this year — slower than the growth of 10 to 14 percent before 2008, but still a much faster pace than in the West. The main problem for China lies in the sheer growth in graduates; the United States produces three million graduates a year, while China has increased its annual number of graduates by more than five million in a single decade.

Keith Bradsher reported from Hong Kong and Sue-Lin Wong from Beijing. Chris Buckley contributed reporting from Hong Kong, and Mia Li contributed research from Beijing.

Article source: http://www.nytimes.com/2013/06/17/business/global/faltering-economy-in-china-dims-job-prospects-for-graduates.html?partner=rss&emc=rss

European Unemployment Sets Another Record

PARIS — The euro zone jobless rate rose to a record 12.1 percent in March, a sharp reminder that unemployment remains among the region’s biggest problems.

The unemployment rate in the 17-nation currency union ticked up by one-tenth of a percentage point from February, when the previous record was set, Eurostat, the statistical agency of the European Union, reported from Luxembourg. A year earlier, euro zone joblessness stood at 11 percent.

A separate report Tuesday from Eurostat showed inflation dropping sharply in the euro zone, well below the European Central Bank’s target of 2 percent a year. The annualized rate of inflation for consumer prices was just 1.2 percent in April 2013, down from March, when inflation stood at 1.7 percent.

The reports, along with other recent data suggesting that the economy is healing more slowly than many had hoped, could prompt the European Central Bank to take action at its policy meeting on Thursday. The central bank could cut its key interest-rate target, already at a record low of 0.75 percent, by a quarter point, economists say, though the impact of such a move would probably be slight, because banks remain less than eager to lend.

“Stabilizing the peripheral euro zone countries will take at least until the end of 2013,” Ralph Solveen, an economist with Commerzbank in Frankfurt, said. As a result, he said, unemployment would probably keep rising “until next spring.”

For the 27-nation European Union, the March jobless rate was unchanged, at 10.9 percent. Eurostat estimated that 26.5 million men and women were now unemployed in Europe, including 5.7 million young people.

Both the euro zone and European Union jobless figures are the highest Eurostat has reported since it began keeping the data in 1995 in the days before the euro. In comparison, the unemployment rate in the United States was 7.6 percent in March.

Six years after Wall Street’s bad bets on the United States housing market began to sink the global financial system, the European economy remains trapped in torpor with little relief in sight. Governments have tightened the screws on public finances to meet deficit targets, and companies remain extremely reticent about hiring. The euro zone’s gross domestic product is widely expected to decline for a second consecutive year in 2013.

Manufacturers are largely dependent on demand from outside Europe for growth. Carmakers, which employ about two million people in Europe, anticipate sales in the European Union this year to fall back to levels last seen in the early 1990s. In that dismal landscape, PSA Peugeot Citroën, the French automaker that ranks No. 2 in Europe behind Volkswagen, said Monday that its unions had agreed to a plan to close a plant near Paris and to reduce its French work force by more than 11,000.

While a decline in energy prices helped to push the inflation rate lower, Jennifer McKeown, an economist in London with Capital Economics, argued that the jobless problem was probably itself part of the reason for the downward pressure on prices. She said in a note that it would be “a disappointment” if the E.C.B. failed to ease rates and “announce further unconventional policies to boost bank lending.”

Two nations are staggering under depression-level jobless rates: Greece, where the European sovereign debt crisis began, had a rate of 27.2 percent in January, the latest month for which data are available; Spain had unemployment of 26.7 percent in March. Portugal was next at 17.5 percent. Germany, which has the largest economy in the European Union, was at just 5.4 percent, with only Austria, at 4.7 percent, lower. Britain’s rate stood at 7.8 percent, while France’s was at 11 percent.

Mr. Solveen forecasted that the euro zone economy would shrink by 0.2 percent this year, but he pointed to progress in some countries, including Italy and Spain, in addressing problems that he said would eventually help turn things around. Still, Spain’s “catastrophic” unemployment rate is a reminder that its burst housing bubble is still sapping the economy.

“The correction there has to go on,” he said, “because there is still a huge number of unsold homes.”

Mr. Solveen said that Germany had reduced its dependence on its euro zone neighbors, and the key to its economic growth was now tied to the global economy.

Article source: http://www.nytimes.com/2013/05/01/business/global/european-unemployment-sets-another-record.html?partner=rss&emc=rss

Britain Avoids Triple-Dip Recession

LONDON — Britain’s economy avoided entering an unprecedented — and politically damaging — third recession in five years, according to official estimates released Thursday.

During the first quarter of this year the country recorded an increase of three-tenths of a percent in gross domestic product, compared with the previous three-month period when it contracted by a similar amount, the Office for National Statistics said. Gross domestic product had been broadly flat over the last 18 months, the agency added.

The British economy managed some growth despite continued weakness in the construction sector, which shrank by 2.5 percent, and despite the cold weather early in the year that some analysts feared would hurt economic activity.

Though the estimates paint a picture of a flat economy, they are slightly better than most analysts expected and will be a relief for the chancellor of the Exchequer, George Osborne.

“Today’s figures are an encouraging sign the economy is healing,” Mr. Osborne said in a statement. “Despite a tough economic backdrop, we are making progress.”

A triple-dip recession would have raised more questions about his austerity policies at a time when bad economic news has been piling up.

Last week, the International Monetary Fund raised doubts about the fast pace of Mr. Osborne’s deficit-reduction strategy and Fitch became the second credit rating agency to downgrade Britain from its prized triple-A status. Employment figures, which had been one of the rare spots of good news for Mr. Osborne, also turned sour, with a jump of 70,000 in joblessness in the three months to the end of February.

Mr. Osborne has already had to slow his deficit reduction plans, and a triple dip would have increased political pressure on him to slow even further.

A recession is normally defined as two consecutive quarters of economic contraction. The British statistical agency said that prospect was averted mainly by an increase in output from service industries, which grew by 0.6 percent. Mining and quarrying increased by 3.2 percent; construction was down 2.5 percent.

The Office for National Statistics said snowfall and cold weather in the early part of the year “appears to have had a limited impact on G.D.P. growth.”

“The strongest evidence was that it reduced retail output in January and March 2013 but boosted demand for electricity and gas in February and March, which increased output in the energy supply industries,” it said.

Nawaz Ali, a market analyst covering Britain for Western Union Business Solutions, said the “surprising and bullish outcome from today’s G.D.P. data has sent the pound soaring in currency markets this morning.”

“Doubts about the British economy’s performance over the coming quarters will remain,” he added. “However, the positive figures end the triple-dip threat and will certainly ease pressure on the Bank of England to shift course on quantitative easing, which has been a big worry for currency investors.”

Though it makes little difference economically whether or not the threshold was crossed, headlines referring to recession could have a psychological impact on consumers, making them even less willing to spend.

Across Europe the debate is growing about the wisdom of tough austerity policies and whether they are trapping economies in a cycle of stagnant growth, reduced tax receipts and higher debt.

In Britain the opposition Labour Party has been calling on the coalition government of Conservatives and Liberal Democrats to change course. Ahead of the announcement of the data, Chris Leslie, a Labour member of Parliament who is its spokesman on the economy, argued that even a small increase in growth would be insufficient.

“Growth of just 0.3 percent would simply mean the economy is back to where it was six months ago,” he said in a statement. “This isn’t good enough. After nearly three years of flat-lining we need to see decisive evidence that a strong and sustained recovery is finally under way.”

Article source: http://www.nytimes.com/2013/04/26/business/global/britain-avoids-triple-dip-recession.html?partner=rss&emc=rss

Britons Reflect on Split Over Thatcher

While many current and former politicians seemed to form lines to offer their reaction to her death of a stroke at age 87 on Monday, and radio shows were filled with recordings of her best-known utterances, some isolated protests broke out overnight in London, Bristol and Glasgow, reflecting the same social schism between haves and have-nots that characterized the debate over her legacy.

Hundreds of her opponents gathered at the site of violent protests against her policies in the 1980s, with a small crowd in Brixton, in south London — where anti-Thatcher riots broke out in 1981 — chanting, “Maggie, Maggie, Maggie — Dead, Dead, Dead.”

The protest was reminiscent of the early days of the Thatcher era, when joblessness soared as faltering industries were denied subsidies and a record 10,000 businesses went bankrupt. “Things will get worse before they get better,” she said at the time, depicting the economic malaise as a legacy of left-wing rule. With riots in Liverpool, Manchester and Bristol as well as Brixton, Mrs. Thatcher later recalled 1981 as the worst of her 11 years in office.

At what was billed as a celebratory street party in the southwestern city of Bristol overnight, around 200 people clashed with police officers trying to disperse them early on Tuesday, the police said, and six officers were injured in scuffles. One officer remained in the hospital on Tuesday, and one partygoer was arrested on a charge of violent disorder.

“We can’t deny that Lady Thatcher divided opinion,” Prime Minister David Cameron said on Monday. But some who castigated her as divisive also paid grudging respect to her stature.

On Tuesday, her admirers depicted her policies, like encouraging private business and crushing labor unions, as liberating the economy from years in the doldrums, while her foes characterized them as ruinous for the poor. Many critics also remembered what was widely seen as a catastrophic political misjudgment toward the end of her third and final term as Britain’s longest-serving prime minister of the 20th century when she sought to impose a so-called community charge, which was widely known as the poll tax, provoking mass public protests.

“Margaret Thatcher broke Britain and replaced what had come before with something crueller, nastier,” the left-wing Daily Mirror said in an editorial. In the northern city of Sheffield, which blamed her for the loss of jobs, a headline in The Star, a regional newspaper, said, “We can never forgive her.”

Several radio shows were devoted to Mrs. Thatcher’s record in crushing organized labor after confrontations with miners and printers, among others. But others recalled more popular measures — like selling public housing to private buyers at reduced prices — that extended private ownership to citizens along with opportunities for small investors to buy stakes in privatized state industries.

The liberal-leaning Guardian said in an editorial: “There should be no dancing on her grave but it is right there is no state funeral either. Her legacy is of public division, private selfishness and a cult of greed, which together shackle far more of the human spirit than they ever set free.”

By contrast, conservative newspapers like The Daily Telegraph and The Daily Mail offered enthusiastic praise for the person whom The Mail, in an online commentary echoing Mr. Cameron, called “the woman who saved Britain” and “a giant beside whom other peacetime politicians of the 20th and 21st centuries look like mere pygmies.”

On Monday, Mr. Cameron said Parliament would be recalled from a recess to assemble on Wednesday so that lawmakers can offer their views in advance of a ceremonial funeral with military honors next week. There Mrs. Thatcher’s body will be taken to St. Paul’s Cathedral on a gun carriage — the traditional cortege for royalty and leaders of stature, including Winston Churchill.

Buckingham Palace said Tuesday that Queen Elizabeth II would join hundreds of dignitaries at the service on April 17 — the first time she has attended the funeral of a former prime minister since Churchill’s death in 1965.

As is the practice between the monarch and serving prime ministers, the queen and Mrs. Thatcher met for private conversations at weekly audiences. But a biography of Queen Elizabeth by Ben Pimlott said their relationship displayed “a rigidity that never softened.”

Her body will not lie in state and the ceremony will not be a state funeral, according to the British authorities. But it will be conducted with the trappings of a historic moment, with streets cordoned off and military honor guards. The funeral will be conducted with the same level of pomp and formality as those of Diana, Princess of Wales, in 1997 and the Queen Mother in 2002, British authorities have said.

Article source: http://www.nytimes.com/2013/04/10/world/europe/thatcher-death-reaction.html?partner=rss&emc=rss

Lew’s Visit to Europe Reveals a Wide Policy Divide

Mr. Lew pointed to evidence that increased government spending and looser monetary policy had helped the United States recover at a much faster pace than the Continent has. But even as some European leaders expressed concern about rising unemployment and deepening recession, it was clear that Europe’s political constraints — and Germany’s insistence that bringing down deficits and reassuring lenders is the best route to sustained growth — was preventing a more expansionary approach from taking hold.

“Nobody in Europe sees this contradiction between fiscal consolidation and growth,” said Wolfgang Schäuble, the German finance minister, sitting alongside Mr. Lew at a joint news conference in Berlin on Tuesday. “We have the common position of a growth-friendly process of consolidation, or sustainable growth.”

Consumed by the problems of the American economy and its efforts to hold off deep budget-cutting proposals from Republicans in the United States, the Obama administration has hardly been in a position in recent years to lecture other nations on good policy.

But Mr. Lew’s trip to Brussels, Frankfurt, Berlin and Paris — his first swing through Europe since becoming Treasury secretary — gave the administration an opportunity to highlight the diverging economic fortunes of the United States and Europe and to make the case that more expansionary policies could actually help with budget deficits.

The United States has pointed out that its quick rescue of the financial system, front-loaded stimulus measures and delayed budget-cutting have helped foster 14 straight quarters of growth and a falling unemployment rate — even if the recovery has proved sluggish by historical standards.

In contrast, Europe has lurched from one crisis to another, hobbled by a complicated political structure and skittish financial markets. It continues to suffer through rising joblessness and economic stagnation. Greece, Spain and Portugal all remain mired in deep recessions, and even the large economies of Germany, Italy and France were contracting as well at the end of 2012.

A Treasury official, speaking on condition of anonymity to discuss the sensitive diplomatic conversations, said that while the Americans did not endeavor to lecture the Europeans, they did focus on the profound need for growth on the Continent, for the good of Europe as well as the world.

As Mr. Lew said in Berlin, “The driver for economic growth will be consumer demand and policies that would help to encourage consumer demand in countries that have the capacity would be helpful.”

But some of the biggest levers that governments employ to bolster their economies during a downturn are seemingly out of the question in Europe, given its political constraints and some countries’ heavy debt burdens. Any calls for more stimulus spending, less austerity or looser monetary policy face entrenched resistance in powerful Germany. The view there, shared in other Northern European countries like Austria and Finland, is that the European Central Bank has already gone far out on a limb with measures to prevent a collapse of the 17-nation euro zone.

Michael Heise, chief economist of the German insurance giant Allianz, said Tuesday that the central bank should already be thinking about how to reabsorb some of the money it has pumped into euro zone banks by issuing unlimited cheap loans. Otherwise, he said, easy money policies could feed new asset bubbles and remove pressure for economic reforms.

Looking on the bright side, the Treasury official said the European representatives all recognized the urgent need to focus on employment and growth. The official also said that there seemed to be growing pragmatism in Europe, with more officials willing to allow budget flexibility in certain economies, for instance.

Jack Ewing contributed reporting from Frankfurt and Steven Erlanger from Paris.

Article source: http://www.nytimes.com/2013/04/10/business/global/us-advice-to-europe-gets-polite-refusal.html?partner=rss&emc=rss

Economix Blog: Yes, Even Young College Graduates Have Low Unemployment

CATHERINE RAMPELL

CATHERINE RAMPELL

Dollars to doughnuts.

I’ve written recently about the job prospects for college graduates versus those without bachelor’s degrees, noting that the unemployment rate for college graduates is about half that for workers with no more than a high school diploma (3.7 percent versus 8.1 percent as of January). Several readers wrote me to take issue with the fact that I was looking at the whole universe of workers with these credentials, rather than just the recently graduated. Perhaps college graduates from generations past are more protected than those just entering the work force, they wrote, and it is misleading to say that young graduates are equally secure.

It is true that young workers have higher unemployment rates than their older counterparts, at just about all levels of education. A recent report published by the Bureau of Labor Statistics on the job prospects of new college graduates, for example, found that as of October 2011, the graduates of the class of 2011 had an unemployment rate of 14 percent.

But that number refers to joblessness just a few months after graduation. If you look at all recent college graduates in their 20s, the unemployment rate drops sharply. It is especially impressive when compared with the jobless rate for all high school graduates in the same age group.

Sources: October School Enrollment Supplement, Current Population Survey, Bureau of Labor Statistics; Thomas Luke Spreen. Sources: October School Enrollment Supplement, Current Population Survey, Bureau of Labor Statistics; Thomas Luke Spreen.

As you can see, the unemployment rate for people in their 20s with college degrees or more education was 5.7 percent (for those whose highest credential was no more than a bachelor’s, the number was 5.8 percent). For those with only a high school diploma or G.E.D., it was more than twice as high, at 16.2 percent.

Here are comparable numbers for the employment-population ratio, or the share of people within each population who have a job (as opposed to being unemployed or not looking for work at all).

Sources: October School Enrollment Supplement, Current Population Survey, Bureau of Labor Statistics; Thomas Luke Spreen. Sources: October School Enrollment Supplement, Current Population Survey, Bureau of Labor Statistics; Thomas Luke Spreen.

The data are from Thomas Luke Spreen, who wrote the Labor Department report mentioned above. His numbers are culled from the 2011 October School Enrollment Supplement, an annual supplement to the Current Population Survey. (The Bureau of Labor Statistics’ public data on unemployment by educational attainment usually covers all workers 25 or older only, rather than narrower or younger ranges of workers.)

Of course, many of those college-educated 20-somethings are getting jobs that don’t really require college-level skills. But at least they’re finding work, unlike their less-educated peers. And as the economy continues to improve, those recent college graduates will be better situated to find promotions to jobs that do use their higher skills and pay better wages.

Article source: http://economix.blogs.nytimes.com/2013/03/05/yes-even-young-college-graduates-have-low-unemployment/?partner=rss&emc=rss

Euro Watch: Euro Zone Unemployment Rose to New Record in February

PARIS — The unemployment rate in the euro zone edged up in January to a new record, official data showed Friday, as the ailing European economy continued to weigh on the job market.

Unemployment in the 17-nation euro zone stood at 11.9 percent in January, up from 11.8 percent in December, and from 10.8 percent in January 2012, Eurostat, the statistical office of the European Union, reported from Luxembourg.

For the 27 nations of the European Union, the January jobless rate stood at 10.8 percent, up from 10.7 percent in December. All of the figures were seasonally adjusted.

A separate Eurostat report showed price pressures easing in February. In the euro zone, the annual inflation rate came in at 1.8 percent, down from 2.0 percent in January, and below the European Central Bank’s 2 percent target.

The jobless data “suggest that wage growth is set to weaken from already low rates” and further depress consumer spending, which has already been damped by government austerity measures, Jennifer McKeown, an economist at Capital Economics in London, wrote in a research note.

Ms. McKeown noted that the low inflation numbers and high joblessness “should leave the E.C.B.’s policy options open,” and she said it was possible the central bank “might discuss an interest rate cut or other unconventional policies” when its governing council meets on Thursday.

There was a small bit of bright news Friday. A survey of European purchasing managers by Markit, a data and research firm, showed German manufacturing output growing in February for second straight month, as new business levels improved. The composite German purchasing managers’ index improved to 50.3 in February — just above the level that signals growth — from 49.8 in January.

“German industry is clearly rebounding and taking advantage from better external traction,” Gilles Moëc, an economist at Deutsche Bank in London, wrote.

Employment is sometimes seen as a lagging indicator of economic growth, since companies try to avoid adding to their costs until they are convinced that a rebound is at hand. Despite the green sprouts in German industry, there are few signs that recovery is certain. Markit’s overall euro zone purchasing managers’ index was unchanged in February, at 47.9, a level that signals continued contraction.

European unemployment bottomed in early 2008, just as the financial crisis was getting in motion, and has been on a rising trend ever since. The January numbers were the highest since the creation of the euro.

In absolute terms, Eurostat estimated Friday, 19 million people in the euro zone and more than 26 million people in the overall European Union. were unemployed.

Spain’s unemployment rate in January was 26.2 percent, and Portugal’s was 17.6 percent. Austria, at just 4.9 percent, had the lowest rate, followed by Germany and Luxembourg, both of which stood at 5.3 percent.

Greece’s unemployment rate in November, the latest month for which Eurostat has figures for the country, was 27 percent.

France, the second-largest euro-zone economy after Germany, had a 10.6 percent jobless rate in January. In Britain, not a euro member, the jobless rate stood at 7.7 percent.

Those numbers compare with the United States, where the January unemployment rate stood at 7.9 percent. In Japan, 4.2 percent of the work force was counted as unemployed in December.

This article has been revised to reflect the following correction:

Correction: March 1, 2013

An earlier version of this article carried a headline that misstated the month of the data. The report was for January, not February.

Article source: http://www.nytimes.com/2013/03/02/business/global/euro-zone-unemployment-rose-to-new-record-in-february-as-inflation-eased.html?partner=rss&emc=rss

Obama Pushes for Increase in Federal Minimum Wage

The proposal directly addresses the country’s yawning levels of income inequality, which the White House has tried to reduce with targeted tax credits, a major expansion of health insurance, education and other proposals. But it is sure to be politically divisive, especially given the weakness of the recovery and the continued high levels of joblessness.

The proposal would see the federal floor on hourly wages reach $9 in stages by the end of 2015. Tying the minimum wage to inflation would allow it to rise along with the cost of living. If enacted, the measure would boost the wages of about 15 million low-income workers, the White House estimated. The $9 minimum wage would be the highest in more than three decades, accounting for inflation, but still lower than the peaks reached in the 1960s and 1970s.

“Even with the tax relief we’ve put in place, a family with two kids that earns the minimum wage still lives below the poverty line. That’s wrong,” Mr. Obama said in his State of the Union address Tuesday night. “Let’s declare that in the wealthiest nation on earth, no one who works full time should have to live in poverty.”

The White House said that the move would have profoundly positive effects for low-income families without unduly burdening businesses or raising the unemployment rate. It cited research showing “no detectable employment losses from the kind of minimum wage increases we have seen in the United States.” The White House also pointed to companies like Costco, the retail discount chain, and Stride Rite, a children’s shoe seller, that have previously supported increasing the minimum wage as a way to reduce employee turnover and improve workers’ productivity.

But the move would almost certainly face stiff opposition. Many companies that hire low-wage workers — both small businesses and large businesses — have in the past vociferously opposed raising the minimum wage, as it increases their cost of business. By making employees more expensive for companies to hire, some economists argue that higher minimum wages increase the unemployment rate — a particularly toxic possibility given the high levels of joblessness that remain long after the recession has ended.

Moreover, some economists, like David Neumark of the University of California, Irvine, have even argued that minimum wages are counterproductive at reducing poverty.

On top of that, conservatives have often argued that higher minimum wages burden job creators, especially during times when the economy is weak. House Speaker John A. Boehner voted against a 2006 bill letting the minimum wage rise to its current level of $7.25 from $5.15. The legislation ultimately passed with bipartisan support in 2007, though many Republicans voted against it.

But many centrist, labor and liberal groups have pushed for higher minimum wages, and left-of-center research groups praised Mr. Obama’s new push on Tuesday evening.

“The president said he was putting jobs and the economy front and center tonight, and that’s exactly what he did by calling for a minimum wage increase,” Christine Owens, the executive director of the National Employment Law Project, said in a statement. “A higher minimum wage is key to getting the economy back on track for working people and the middle class. The president’s remarks also cement the growing consensus on the left and right that one of the best ways to get the economy going again is to put money in the pockets of people who work.”

Many state and local government set their own minimum wages above the federal floor. Currently Washington is the only state that sets a minimum wage above $9 an hour, but several states exceed the current rate of $7.25.

The White House said that the $1.75 increase in the minimum wage would be enough to offset roughly 10 to 20 percent of the increase in income inequality since 1980. According to data compiled by the economists Thomas Piketty, at the Paris School of Economics, and Emmanuel Saez, at the University of California, Berkeley, inequality has worsened considerably during that time, and many metrics show that wages have stagnated or declined for millions of working families. The income share of the top 1 percent of earners has doubled, to 20 percent in 2011 from 10 percent in 1980. Between 1980 and 2008, according to analysis by the Economic Policy Institute, the top 10 percent of earners captured 98 percent of all income gains.

The proposal is one of several that the White House has put forward to tackle that inequality. In the speech, Mr. Obama also proposed expanding early childhood education programs — another path that experts say can tackle inequality by leveling the playing field and increasing mobility among children from low-income families. “Every dollar we invest in high-quality early education can save more than $7 later on by boosting graduation rates, reducing teen pregnancy, even reducing violent crime,” Mr. Obama said. “Let’s do what works, and make sure none of our children start the race of life already behind. Let’s give our kids that chance.”

In his 2008 campaign, Mr. Obama proposed lifting the minimum wage yet higher, to $9.50. Under the current proposal, the White House said that a family earning $20,000 to $30,000 would see an additional $3,500 of income a year.

“This single step would raise the incomes of millions of working families,” said Mr. Obama on Tuesday night. “It could mean the difference between groceries or the food bank, rent or eviction, scraping by or finally getting ahead. For businesses across the country, it would mean customers with more money in their pockets. In fact, working folks shouldn’t have to wait year after year for the minimum wage to go up while C.E.O. pay has never been higher.”

Article source: http://www.nytimes.com/2013/02/13/us/politics/obama-pushes-for-increase-in-federal-minimum-wage.html?partner=rss&emc=rss

Economy Grew Modestly Last Month, Fed Report Says

The economy “expanded at a modest to moderate pace” from late November through the end of December on increased holiday retail sales, demand for services and oil-and-gas extraction, the Fed said in its beige book business survey. At the same time, most industries saw “limited permanent hiring,” and the housing market remained “sluggish.”

The report may reinforce the views of a majority of Fed officials, who see an economy that is expanding without being strong enough to reduce joblessness as quickly as they would prefer. The unemployment rate dropped to 8.5 percent in December from 9.4 percent a year earlier. Fed officials are urging lawmakers to try more housing-aid programs.

“The reports on balance suggest ongoing improvement in economic conditions in recent months,” the Fed said in the report, which comes out two weeks before each meeting on monetary policy. “The combination of limited permanent hiring in most sectors and numerous active job seekers has continued to keep a lid on general wage increases.”

The beige book report reflects a “slightly better tone, slightly better data,” said Joseph LaVorgna, chief United States economist at Deutsche Bank Securities in New York. Even so, “the financial market has taken recent Fed commentary as generally dovish and as a signal that the Fed is perhaps exploring more easing measures.”

The last beige book, released Nov. 30, said the economy expanded at a “slow to moderate” pace in 11 of 12 districts, led by gains in manufacturing and consumer spending. St. Louis was the only region to report a decline in economic activity.

The Federal Open Market Committee will meet Jan. 24-25 in Washington as officials debate whether to try new actions to lower borrowing costs. Fed policy makers will for the first time publish projections for the benchmark federal funds rate and will also update their forecasts for economic growth, unemployment and inflation.

The beige book said that “upward wage pressures were modest over all” for workers across the country. The Labor Department said Jan. 6 that 200,000 jobs were added to payrolls in December, the most since September. The jobless rate declined for a fourth consecutive month to the lowest since February 2009.

Even so, the New York Fed president, William C. Dudley, said last week that the “outlook for unemployment is unacceptably high” and that it was appropriate for the Fed to consider steps to ease monetary policy.

The residential real estate market “largely held steady at very low levels” except for increasing construction of multifamily homes, the beige book said. The rental market tightened in some areas, the report said.

The Fed said in the report that inflation and pressures to raise prices were limited at the end of last year. Several district banks reported that “upward price pressures from rising commodity and input prices have eased substantially,” the Fed said.

Lending edged up on higher demand from businesses, with the New York and Cleveland regions reporting increased loans in commercial mortgages, the Fed said.

Consumer lending “was largely flat compared with the prior reporting period,” the central bank said.

A separate Fed report Jan. 9 showed that consumer borrowing in the United States rose in November by the most in 10 years. Credit increased by $20.4 billion, the biggest jump since November 2001, to $2.48 trillion.

Most regions said that holiday retail sales “were up noticeably over last year’s season,” and that consumer spending and confidence had improved, the Fed said.

Commercial and industrial loans from banks have increased to $1.34 trillion as of Dec. 28, the highest since October 2009, from $1.21 trillion a year earlier. They peaked at $1.62 trillion in October 2008.

Article source: http://feeds.nytimes.com/click.phdo?i=4aa8e13ea8e3cd6a1f412ee64f8b9845