November 19, 2017

Economix Blog: Handicapping May’s Job Numbers

6:30 p.m. | Updated to include new data from a New York Times/CBS News poll.

CATHERINE RAMPELL

CATHERINE RAMPELL

Dollars to doughnuts.

The much-anticipated May jobs report comes out Friday morning at 8:30, and economists are expecting more of the same: a gain of about 165,000 jobs — the same number added in April — and a flat unemployment rate of 7.5 percent.

Many economists have warned that there may be risks to the downside, though, given a steady stream of disappointing economic data over the last few weeks. The construction spending numbers, the Institute for Supply Management’s nonmanufacturing index and the ADP employment report all came in below expectations. Talk of a “spring swoon” is resurfacing.

“In general, the economy is just puttering along,” said Joshua Shapiro, chief United States economist with MFR Inc. “Companies can get by without hiring people, so they do. I don’t see any reason to break out of the pattern this month.”

Consumers themselves have been pretty upbeat nonetheless, according to recent polling data.

In a New York Times/CBS News poll conducted May 31-June 4, 39 percent of respondents said that the condition of the economy these days was very or fairly good, the highest share saying this both since President Obama took office and even since the recession officially began in December 2007. About a third of respondents said that the economy is getting better, similar to what the trend had been in the previous six months. (Another 24 percent saying it’s getting worse and 42 percent say it is staying about the same.)

Nearly half of respondents – 46 percent — rated the job market in their area as very or fairly good these days, with a third saying that they think their local job markets will improve over the next year. (The poll has a margin of sampling error of plus or minus 3 percentage points.)

Some of this optimism likely has to do with rising home and stock market values, which makes consumers feel wealthier. Given the positive outlook among consumers, it’s not clear what’s dragging on the economy and the job market, particularly given how well the housing market seems to be doing.

One explanation has to do with weird weather.

Usually a lot of economic activity slows down during the winter — when frigid, snowy weather makes it difficult to build, for example — then picks up in the spring, when the weather is more accommodating. (The organizations and agencies that release economic data usually adjust the numbers with these predictable patterns in mind.) This year, though, the country had a mild winter and a cold spring, which means some of the economic activity usually tied to spring-temperature weather happened earlier than usual, and some of it may occur later than usual. In addition, there was a lot of rebuilding over the winter as a result of Hurricane Sandy, which put construction workers to work earlier than usual.

“There’s hiring that took place when it wouldn’t normally take place,” Mr. Shapiro said. “There are all these construction workers who were already hired, and maybe they’re moving on to something different now, but that’s not being counted as a new job.”

All of this could make recent job numbers look weaker than they might otherwise be.

The across-the-board federal spending cuts that officially began on March 1 — known as the sequester — may also be hurting the private sector, although it is hard to tell how much.

“Any negative news is going to be blamed on the sequester, which I think is becoming a bit of an excuse at this point,” said Joseph A. LaVorgna, chief United States economist at Deutsche Bank. “It’s a factor, but it’s not as big as people believe it is.”

All the same, when the jobs report comes out on Friday, economists will be looking at changes in the federal employment numbers, as well as sectors like manufacturing and professional services, to see if they are being obviously affected by the spending cuts. Much of the effect will be hard to detect, particularly if people directly harmed by the sequester are furloughed rather than laid off.

Another explanation for the weak string of economic data is that the numbers may be misleading — that they’re understating the “true” strength of the economy. That’s based on a pattern of revisions in recent months, particularly to the jobs report.

The first release of a month’s employment numbers, put out by the Bureau of Labor Statistics typically on the first Friday of the subsequent month, is an initial guess at what happened with hiring and firing, based on incomplete data. It gets the most attention, even though revisions to that initial estimate in the following two months, based on more complete data, can be significant.

For whatever reason, recent revisions have been very pro-cyclical: That is, when there were job losses, they turned out to be worse than initially estimated, and when there were job gains, they turned out to be much better than initially estimated. Whatever happened with employment, the initial release underestimated the change.

Here is a chart showing the difference between the third estimate (for example, the job change from February, as shown in a jobs report released in May) and the first estimate (the job change from February, as shown in a jobs report released in March):

Source: Bureau of Labor Statistics, via Haver Analytics Source: Bureau of Labor Statistics, via Haver Analytics

And here’s that same data series (the revisions) shown alongside what the change in payrolls was ultimately determined to be once all the data were in:

Source: Bureau of Labor Statistics, via Haver Analytics Source: Bureau of Labor Statistics, via Haver Analytics

Economists are hopeful that the job changes from the last couple of months will likewise be revised upward, and that even if Friday’s number disappoints, that it will understate the real job growth in the economy.

Article source: http://economix.blogs.nytimes.com/2013/06/06/handicapping-mays-job-numbers/?partner=rss&emc=rss

Bucks Blog: African-Americans See Debt Reduction as Top Priority

Paying down debt is the top financial priority for African-Americans, who have higher levels of debt — particularly, student loan debt — than the general population, a biennial survey from Prudential Financial finds.

While educational debt generally is becoming a cause for concern, it’s an issue of particular concern among African-Americans. College-educated African-Americans are twice as likely to have student loan debt, compared with all college-educated Americans, the survey found. While the student debt is a sign of economic progress, it also hampers the ability to invest or save for  retirement.

Prudential’s African-American Financial Experience survey was conducted by Gfk Public Affairs and Communications, from March 7 to 19, using a probability-based Internet panel. The survey included 1,153 African-Americans 25 to 70 years old, with household income of at least $25,000, who have primary or shared responsibility for household financial decisions. The margin of sampling error for African-Americans was plus or minus 5 percent.

The survey found that debt plays a major role in the financial lives of African-Americans, who are significantly more likely to have some type of debt (94 percent) compared to the general population (82 percent).

Credit card debt, student loan debt, and personal debt are all significantly higher in the African-American community. Debt is a major issue even for more affluent African-Americans, the survey found.

African-Americans have a median household debt of $18,000, not including home mortgages, which is about 50 percent higher than the household debt for the general population.

One in four African-Americans has felt anxiety or depression as a result of debt, the survey found.

When asked how they would use an extra 10 percent of income, almost half (48 percent) of African-Americans indicated their top priority would be paying down debt — a higher percentage than the general population.

The survey is one of a series of reports from Prudential examining financial trends in multicultural communities.

If you are African-American, please share your thoughts about debt — particularly student loan debt — in the comments section.

Article source: http://bucks.blogs.nytimes.com/2013/05/21/african-americans-see-debt-reduction-as-top-priority/?partner=rss&emc=rss

Bucks Blog: Why Retirement Savings Are Falling Short

Courtesy Ameriprise Financial

It’s not just the recession that has set back Americans’ retirement savings, a new survey from Ameriprise Financial says.

Asked about events that have “derailed” their retirement plans, many said personal events had affected their ability to save.

One fourth, for instance, said they were supporting a grown child or grandchild, and an equal proportion said their pension was not worth as much as they’d thought or had been discontinued.

“Expecting the unexpected is clearly more important than ever in preparing for retirement,” Suzanna de Baca, vice president of wealth strategies at Ameriprise Financial, said in a statement.

The survey was conducted for Ameriprise Financial by Koski Research, which surveyed 1,000 employed and retired adults, age 50 to 70, by telephone. All participants had assets of at least $100,000, including employer retirement plans, but not real estate. The margin of sampling error was plus or minus 3 percentage points.

The vast majority of older Americans who have saved at least $100,000 toward retirement have experienced some sort of “derailer,” whether an economic event or a personal one, that has affected retirement saving goals, the survey found.

The average survey participants said they had experienced four such events, which set back their savings plans by $117,000 on average. Nearly 37 percent of the participants said they had experienced five such events, costing them roughly $144,000.

The most-cited events were recession-related. For instance, nearly two-thirds of participants said low interest rates had affected the growth of their investments. More than half said their savings were significantly lowered by market declines, and a third said their home equity was going to contribute less to their retirement than they had expected.

As a result, only a third of participants said they were fully confident that they would be able to afford an unexpected expense, like a large home repair, in retirement.

When asked what they would do differently, more than half say they would have started saving earlier.

What sort of events have you experienced that have thrown off your retirement savings plans? How are you getting back on track?

Article source: http://bucks.blogs.nytimes.com/2013/05/15/why-retirement-savings-are-falling-short/?partner=rss&emc=rss

Bucks Blog: Older Workers Say Age Bias Is Common

About two-thirds of older workers say they have seen or experienced age discrimination in the workplace, and most of them say it’s common, a new survey from AARP finds.

Of those who say they have seen or experienced age discrimination, many (58 percent) say they believe it begins in the 50s.

The survey also found, however, that a majority (75 percent) of employed older workers said their age had not caused their employer to treat them differently from other workers.

That may be because people don’t perceive different treatment in general, said Jean Setzfand, vice president of financial security for AARP. But when they consider specific circumstances in which their age may have been a factor in their careers, their perception changes.

For instance, about 19 percent said they had not gotten a job they applied for because of age; 12 percent said they were passed up for a promotion; and 9 percent said they were laid off or fired, or denied access to training opportunities, because of their age.

The AARP, a nonprofit group that advocates for people over 50, surveyed 1,502 adults age 45 to 74 by telephone in November and December 2012. The margin of sampling error is plus or minus 3 percentage points.

Other data supports workers’ perceptions about age discrimination, Ms. Setzfand said. The average duration of unemployment, for instance, is significantly longer for older workers. As of April, it was 50.2 weeks for workers 55 and older against 36.9 weeks for those under 55.

“That’s a hard data point showing something working against older workers,” she said.

The Age Discrimination in Employment Act of 1967, and its subsequent amendments, prohibit employment discrimination based on age for those age 40 and older. But a Supreme Court decision in 2009 made it more difficult to prove age discrimination.

More than a third of older workers said they weren’t confident that they could find another job quickly, without having to move or take a pay cut, the survey found.

So what strategy should you use to overcome possible age bias when job hunting?

For starters, “Don’t start with a preconceived notion that ‘I’m disadvantaged, just because I have more experience,’” she said.

Rather, focus on your skills and polish your presentation to potential employers “so you can present yourself with the best foot forward.”

Also, focus on sectors where opportunities are the ripest, she said. In fields where there is high turnover and a chronic skills gap — health care, for example — employers have a harder time finding candidates with the required skills, so recruiting is more robust. “Think about what you have to offer as a skill set and home in on that,” she said.

The AARP puts out a list each year of the employers that are especially friendly to older workers.

Do you feel that your age has counted against you in the workplace, or in your job search? How did you react? And do you have advice for others?

Article source: http://bucks.blogs.nytimes.com/2013/05/08/older-workers-say-age-bias-is-common/?partner=rss&emc=rss

Bucks Blog: Worried About Taxes, Some Consumers Cut Back

As time ticks away for a resolution to the so-called fiscal cliff mess, some consumers aren’t taking any chances.

About one in three Americans has cut back on personal spending over the last month or so because of worries about the impact on the economy — and their pocketbooks — if an agreement isn’t reached, a survey from Bankrate.com finds.

But despite all the drama, drastic belt-tightening seems premature to me. Some economists argue that the impact of the “fiscal cliff” — shorthand for a combination of automatic tax increases and spending cuts that will take effect unless the government acts — will probably be felt gradually, rather than all at once. And the impact of cuts on the military and other programs can be mitigated, if Congress gets its act together relatively early in 2013. Meanwhile, the economy appears to be gaining steam. The unemployment rate has fallen to 7.7 percent, and the housing market continues to recover.

It’s true, though, that some effects, including a two percentage point increase in the payroll tax and the end of unemployment benefits for more than two million people — would be felt right away. And those two hits may weigh most heavily on consumers who are most likely to say they’re cutting back. Consumers most inclined to have cut their spending over the last 30 days, the survey found, include those with annual income under $30,000 and those with no more than a high school diploma.

“The risks of going over the fiscal cliff are beginning to resonate with consumers much the way they have with businesses that have held back in recent months,” Greg McBride, Bankrate’s senior financial analyst, said in a statement.

The telephone survey of 1,001 adults was conducted by Princeton Survey Research Associates International from Dec. 6 to 9. The margin of sampling error is plus or minus four percentage points.

Are you cutting back on spending because of worries about the tax situation? What steps have you taken?

Article source: http://bucks.blogs.nytimes.com/2012/12/26/worried-about-taxes-some-consumers-cut-back/?partner=rss&emc=rss

Bucks Blog: Cash and Debit Prevail This Holiday Season

Holiday shoppers in Boston.Associated PressHoliday shoppers in Boston.

The holiday season is one time when my credit card gets a heavy workout, and this year is no different. But I’m apparently an outlier, according to a survey of holiday consumer spending.

Roughly three-fourths of Americans are buying gifts with cash or a debit card this year, according to a survey from ING Direct. And 63 percent are spending the same on holiday gifts as they did last year.

The finding dovetails with reports finding that consumers are better managing their credit card debt.

I consider myself a responsible credit card user — I always pay my monthly balance in full. But it’s true that paying with cash or a debit card can help you stick to a budget and force you to consider whether you really want to spend money on a given item. Perhaps a little cash-only experiment should be added to my growing list of New Year’s resolutions.

The fourth-annual national survey of 1,000 adults was conducted by both landline and mobile phones by ORC International on November 23-25. The margin of sampling error is plus or minus three percentage points. (Online bank ING Direct, which is now a division of Capital One, will be re-branded next year as Capital One 360.)

Have you been relying more on cash or debit card spending for holiday shopping this year? Has it helped you keep the lid on spending?

Article source: http://bucks.blogs.nytimes.com/2012/12/20/cash-and-debit-prevail-this-holiday-season/?partner=rss&emc=rss

Bucks Blog: It’s Tipping Time Again

Getty Images

It’s that time again, when we mull what sort of holiday tip to give cleaning people, nannies, doormen, hairdressers and others who work on our behalf all year.

Last year, housekeepers were tipped most often and received the biggest tips, according to Consumer Reports’ annual holiday tipping survey. Sixty-four percent of people who use housekeepers reported tipping them, and the median, or typical, tip was $50.

But 39 percent of those surveyed said they didn’t tip any of those on the list. Some said they rewarded only exceptional service, and about a fourth said they don’t tip at all. The main reason given by the nontippers was a tight budget.

For the survey, the Consumer Reports National Research Center interviewed 2,028 adults by telephone in January. The margin of sampling error is plus or minus 2 percentage points. (Consumer Reports conducts the survey each January, when tipping is fresh in consumers’ minds, and releases results for the following holiday season.)

The survey asked about 10 different service providers, including garbage collectors and teachers. Garbage collectors were the least likely to be tipped; just 7 percent of those surveyed said they did so.

In reporting its survey results, Consumer Reports quoted Daniel Post Senning, great-great-grandson of the etiquette maven Emily Post, as saying a heartfelt “thank you” can be appreciated too. “A genuine and thoughtful thank-you goes a long way.”

Do you tip at the holidays, or do you prefer a “thoughtful thank-you?”

Article source: http://bucks.blogs.nytimes.com/2012/11/29/its-tipping-time-again/?partner=rss&emc=rss

Bucks Blog: Your Worst Financial Mistake

My husband and I have managed, so far, to avoid making a truly devastating financial mistake. I wish I could say this is because we’re super savvy about money. But the truth is that, while we are diligent about saving, cautious with debt and try to do our homework on investments, there’s a strong element of luck involved.

That’s not to say we haven’t made boneheaded choices that have hit our bank accounts — sometimes hard. Take my brilliant (not) decision 12 years ago, at the height of the Internet bubble, to put $2,000 in the Janus Mercury fund, which had dazzled us with its soaring performance. (I know, I know! All I can say is that I wasn’t alone. At the peak of the dot-com bubble in early 2000, half of the money flowing into mutual funds went to Janus funds, according to the Times columnist Joe Nocera.)

We all know how that story ended: Mercury burst along with the tech bubble, and so did most of my hard-earned money.

So I was somewhat comforted to read the results of a study just released by the Consumer Federation of America and the financial services firm Primerica, which found that two-thirds of middle-class Americans admit to having made costly financial mistakes.

Sixty-seven percent said that in the past they had made at least one “really bad” financial decision, and nearly half acknowledged making more than one. The median, or typical, cost of these blunders was $5,000, but the average was $23,000 (apparently because a few of those errors were real whoppers).

The analysis is based on a national telephone survey of 2,015 adults, conducted in July by ORC International. The margin of sampling error is plus or minus 4 percentage points for middle-class queries.

Despite conceding such errors, though, large majorities of those surveyed said they thought they were “good” or “excellent” at managing their finances, like budgeting their income, managing credit card debt and saving for retirement.

Maybe that’s because they learned a lesson from their mistakes. (My painful Mercury debacle taught me a hard but important one, about the folly of following the crowd and chasing hot returns.)

Or, maybe they’re just all in denial.

What’s the worst financial decision you’ve ever made, and how much did it cost you? Do you still think you’re good at handling your finances, despite your mistake?

Article source: http://bucks.blogs.nytimes.com/2012/09/20/your-worst-financial-mistake/?partner=rss&emc=rss

Bucks Blog: Many Struggling With Prescription Drug Costs

Pills line the shelves of a pharmacy in Los Angeles.ReutersPills line the shelves of a pharmacy in Los Angeles.

While health insurance premiums may be increasing more modestly than they were a year or two ago, consumers who take multiple drugs but lack prescription drug coverage are nearing a “crisis point” because they can’t afford to pay for them, a new report finds.

Consumer Reports’ annual prescription drug poll finds that more Americans who lack a drug benefit are failing to fill prescriptions because of cost. Almost half of Americans (45 percent) under 65 who lack drug coverage failed to fill a prescription because of cost, the report found — up from 27 percent last year.

Those without drug coverage also reported being more likely to cut back on other costs, including groceries, to pay for medications.

Nearly half (46 percent) of American adults take prescription drugs; the average is 4.1 prescriptions. A fourth of those ages 18 to 39 regularly take two prescription drugs, the report noted, suggesting that a reliance on multiple drugs is no longer confined to older Americans.

The poll was conducted in May and June by the Consumer Reports National Research Center using a telephone survey of a total of 1,158 interviews with adults 18 years of age and older. The margin of sampling error is plus or minus 3 percentage points.

Consumer Reports suggests saving on drug costs by using $4 generic versions available at many chain drug stores, switching to generics if you haven’t already and even splitting pills “where appropriate.”

Have you skipped a prescription in the last year due to costs?

Article source: http://bucks.blogs.nytimes.com/2012/09/13/many-struggling-with-prescription-drug-costs/?partner=rss&emc=rss

Bucks Blog: Holiday Spending Stress

Tony Cenicola/The New York Times

Holiday spending is a source of concern and stress for many Americans, even as they plan to spend less money, according to recent CBS News polls. A third say they feel more stress than usual about the amount they plan to spend on gifts, and half are concerned they will not be able to afford the gifts on their list this season. And with these anxieties, few anticipate spending any more this year than last year.

Not surprisingly, household income plays a role in how people consider their holiday budgets. Those who are less affluent are more likely to spend less money on gifts this year, are more concerned about not being able to afford what they want to buy, and express more anxiety about the spending money on gifts this year. The poll was taken Nov. 18-21 with 951 adults.

Half of all Americans and two-thirds of those with annual incomes under $50,000 are very or somewhat concerned that they will not manage to pay for the holiday presents they want to purchase. Twenty percent of those surveyed with incomes over $50,000 say they are feeling more stress about their holiday spending this year than usual, while more than twice as many less affluent Americans feel that way.

Another CBS News poll, taken Nov. 6-10 with 1,182 adults, suggests that few Americans are feeling generous this year. Just 9 percent of respondents said they would spend more on gifts this year than they did last year. About half said they would spend about the same amount on holiday presents. And four in 10 expect to spend less money shopping for gifts this year than last year.

Again, less affluent holiday shoppers will be making more economies this year than those who are better off.

Both surveys were conducted with landlines and cellphones nationwide and each has a margin of sampling error of plus or minus 3 percentage points for all adults. The margin of sampling error for subgroups is larger.

Article source: http://feeds.nytimes.com/click.phdo?i=f1abdb31c9c67e8bafe2cc1f35e9ee16