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Northeast Storm Spurs Surge of Jobless Claims

November 17, 2012 by Leave a Comment

Initial claims for state unemployment benefits rose 78,000 to a seasonally adjusted 439,000, the highest level since April 2011, the Labor Department said on Thursday.

It was the biggest one-week increase since a spike caused by Hurricane Katrina in September 2005.

Because the storm’s impact is expected to be temporary, the data gave few clues as to the underlying health of the nation’s economy. But it appears the short-term hit could be greater than economists previously thought.

“We will likely see a step back in job growth,” Ryan Sweet, senior economist at Moody’s Analytics in West Chester, Pa. The nation’s jobs market has had a painfully slow recovery from the 2007-09 recession and the unemployment rate remains near 8 percent.

In addition to the storm, the economic recovery is laboring against the uncertainty over the path of federal budget policy.

Economic growth is expected to slow sharply in the fourth quarter as businesses and consumers hold back on purchases as a result of fears of the impact of mandated tax increases and spending cuts, a Reuters poll showed on Thursday.

Economists expect job growth in the United States to slow to an average 144,000 jobs a month over the final three months of the year from 174,000 in the third quarter.

An analyst from the Labor Department said several states from the mid-Atlantic and Northeast reported large increases in new filings for unemployment benefits last week because of he storm.

Retail sales data on Wednesday pointed to a softening in consumer spending early in the fourth quarter as Sandy discouraged automobile purchases last month.

Separately, data from the Philadelphia Federal Reserve Bank showed manufacturing in the mid-Atlantic unexpectedly contracted this month. The Philadelphia Fed’s business activity index slumped to -10.7 from 5.7 the month before.

Any reading below zero indicates a decline in the region’s manufacturing. The storm led firms in the region to reduce activity by about two days on average, the Philadelphia Fed said.

The Labor Department said in another report that the Consumer Price Index edged up just 0.1 percent last month, with a rise in shelter costs offsetting a drop in gasoline prices.

Article source: http://www.nytimes.com/2012/11/16/business/economy/sagging-economic-data-reflect-storms-impact.html?partner=rss&emc=rss

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Consumer Confidence and Spending Rise, Reports Show

November 4, 2012 by Leave a Comment

WASHINGTON (AP) — A flurry of reports on Thursday showed that American consumers were growing more confident and spending more, strengthening a still-weak economy just five days before the presidential election.

Consumer confidence surged in October to its highest level in nearly five years. Americans were encouraged by recent declines in the unemployment rate. And they responded by spending more on cars and trucks, at retail businesses and on goods produced in the nation’s factories.

Still, businesses remain nervous about where the economy is headed and that could affect hiring. The October jobs report, to be released Friday, is expected to show another month of tepid job growth. Hurricane Sandy could also slow economic growth slightly in the final months of 2012.

On Thursday the stock market welcomed the signs of improved economic health. The Dow Jones industrial average closed up 136.16 points, or 1.04 percent, at 13232.62, and broader indexes also increased.

“U.S. economic data are at least all moving in the right direction,” Robert Kavcic, an economist at BMO Capital Markets, said in a note to clients.

Reports released Thursday showed:

¶ The Conference Board’s consumer confidence index rose to 72.2 last month, its highest reading since February 2008. While the index is still below the 90 reading consistent with a healthy economy, it has risen from 40.9 a year ago. That is the biggest one-year increase since 1994, Mr. Kavcic said.

¶ Sales in retail stores open at least one year rose 5 percent in October, according to a tally from 21 retail chains by the International Council of Shopping Centers. That exceeded analysts’ predictions. Some of the increase may reflect higher spending for generators, batteries, water and other supplies in preparation for Hurricane Sandy.

¶ Manufacturing expanded for the second straight month, largely because of higher consumer demand. The Institute for Supply Management, a private trade group, said its index of factory activity edged up to 51.7 in October, from 51.5 in September. A reading higher than 50 indicates expansion. Factory activity is growing again after contracting from June through August. The October reading was still slightly below the average for the last year of 52.2.

¶ Weekly unemployment applications fell 9,000 to 363,000 last week, according to the Department of Labor. That suggests hiring is unlikely to pick up much from its current pace of about 150,000 new jobs a month.

¶ A report by the payroll provider ADP showed that businesses added 158,000 jobs in the last month, up from 114,000 in the previous month. ADP updated its method for the October report. It has frequently diverged sharply from the government’s figures.

¶ Auto sales also rose in October, even though the storm caused dealers on the East Coast to lose three days of business. Toyota sales rose almost 16 percent, Chrysler’s 10 percent and General Motors was up 5 percent. Ford sales increased only slightly, 0.4 percent.

¶ Construction spending rose 0.6 percent in September, the Commerce Department said. A healthy gain in spending on home construction and renovation outpaced declines in commercial and government building.

¶ Manufacturing in China also improved in October, although the two surveys released Thursday show factory activity in the region was still struggling to grow. The reports are rare good news for the world economy, which has weakened because of Europe’s debt crisis and slower growth in emerging markets such as China, India and Brazil.

The United States economy expanded at a 2 percent annual pace in the July-September quarter, up from 1.3 percent in the second quarter.

Many economists predict slightly slower growth in the fourth quarter, partly because of disruptions from the storm. Still, the economy is not growing fast enough to bring relief to the roughly 12 million jobless Americans soon. With the unemployment rate still high, steady growth of more than 3 percent is generally needed to create enough jobs.

Article source: http://www.nytimes.com/2012/11/02/business/economy/claims-for-us-jobless-benefits-drop.html?partner=rss&emc=rss

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Claims for Jobless Benefits Up in Latest Week

December 29, 2011 by Leave a Comment

WASHINGTON — The number of people seeking unemployment benefits for the first time rose last week, the Labor Department said Thursday, but the broader trend over the past month suggested job growth could pick up in the new year.

Meanwhile, an index of signed contracts for home purchases in November rose 7.3 percent to 100.1 points, the highest level in a year and a half, according to a report Thursday from the National Association of Realtors.

A reading of 100 points is considered healthy, but a growing number of buyers are canceling their contracts at the last minute, making the gauge less reliable.

Weekly applications for jobless benefits increased by 15,000 to a seasonally adjusted 381,000 after three weeks of declines, the Labor Department said.

Still, the four-week average, a less volatile measure, dropped for the fourth consecutive week to 375,000. That’s the lowest level since June 2008.

Applications generally need to fall consistently below 375,000 to signal that hiring is strong enough to reduce the unemployment rate.

While layoffs have fallen sharply since the recession officially ended two and a half years ago, many companies have been slow to add jobs.

Still, employers have added an average of 143,000 net jobs a month from September through November, almost double the average for the previous three months.

Next year is expected to be even better. A survey of 36 economists by The Associated Press this month found that they predicted the economy would generate an average of about 175,000 jobs a month in 2012.

More small businesses plan to hire than at any time in three years, a trade group said earlier this month. And a separate private-sector survey found more companies are planning to add workers in the first quarter of next year than at any time since 2008.

In November, the unemployment rate fell to 8.6 percent from 9 percent. Still, about half that decline occurred because many of the unemployed gave up looking for work. When people stop looking for a job, they’re no longer counted as unemployed.

And Congress last week agreed to keep emergency unemployment benefits for two additional months. Economists worried that ending the extended unemployment benefits program would have left Americans with less money to spend.

Article source: http://feeds.nytimes.com/click.phdo?i=95ee6c54b021b52bd871d53658cfafcc

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Signs of Hope in Jobs Report; Unemployment Drops to 8.6%

December 2, 2011 by Leave a Comment

The unemployment rate fell to 8.6 percent, after having been stuck around 9 percent for most of 2011, the Labor Department said Friday. Additionally, a separate government survey found that the nation’s employers added 120,000 jobs last month, after adding 100,000 jobs in October.

These numbers were not particularly impressive by historical standards — they were just about high enough to keep up with population growth — but employment in the previous two months was revised upward substantially, too.

“If you go back to August, all sorts of people were telling us that the economy was headed straight into recession,” said Paul Ashworth, senior United States economist at Capital Economics. “Since that point, we’ve become more and more worried about the euro zone and other areas of the global economy, but somehow, at least for the moment, the U.S. economy seems to be shrugging all that off.” Still, concerns remain about the economy’s ability to withstand these international dangers.

The jobless rate fell partly because more workers got jobs, but also because about 315,000 workers dropped out of the labor force, and the jobless rate counts only people who are actively looking for work. Even so, the country still has a backlog of more than 13 million unemployed workers, whose periods of unemployment averaged an all-time high of 40.9 weeks.

“They say businesses are refusing to look at résumés from the unemployed,” said Esther Perry, 59, of Bedford, Mass., who participated in a recent report on unemployed workers put together by USAction, a liberal coalition. “What do you think my chances are? Once unemployment runs out, I don’t know what I will do.”

The continued fragility of the economy underscores just how much President Obama needs additional stimulus, a tidy and fast resolution to the European debt crisis or some other breakthrough to reinvigorate the job market before the 2012 presidential election.

On the issue of government action to stimulate the economy, there has been some movement in Washington toward extending the payroll tax cut, which is currently scheduled to expire at the end of this month. Economists have said that allowing the expiration of the tax cut — which lets more than 160 million mostly middle-class Americans keep two percentage points more of their pay checks — could be a severe drag on both job creation and output growth.

“If isn’t extended, it will have an impact on consumer spending in the first half of next year because it’ll put a big dent in consumer income,” said Conrad DeQuadros, senior economist at RDQ Economics. “To the extent that reduces spending, there will be second-round effects on hiring.”

The other major stimulus program scheduled to expire by 2012 is the extended unemployment insurance benefits, which allow some jobless workers to continue receiving benefits for as long as 99 weeks. Already, millions of workers have exhausted their benefits, and ending extended benefits is likely to affect another sizable chunk of the unemployed.

“In January alone, 1.8 million workers who currently receive federal unemployment insurance or would have begun to receive it will be cut off if Congress does not renew the program,” according to a recent report from the National Employment Law Project.

Unemployment benefits are believed to have one of the most stimulative effects on the economy, since recipients of these benefits are likely to spend all of the money they receive quickly and so pump more spending through the economy.

Article source: http://feeds.nytimes.com/click.phdo?i=cc9db1f61f6cf275ba25161498431303

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You’re the Boss: The Case for Optimism

November 10, 2011 by Leave a Comment

Thinking Entrepreneur

An owner’s dispatches from the front lines.

All right, hope had a good run. It elected a president, made people feel good for a while, and sold some expensive artwork. Three years later, the unemployment rate is still high, most homeowners are still licking their wounds from diminished values, and many companies are not back to where they were before the Great Recession.

That’s the bad news. Now, here’s the good news. For many — not those who are still unemployed, of course — things are getting better. No, I am not an economist. Nor am I running for office. And I am not intoxicated. I am, however, an entrepreneur who owns businesses that sell things that are bought with discretionary income. These businesses certainly did see a drop in sales at the end of 2008, and 2009 was not a banner year. But, yes, things have slowly been getting better. In 2011, I hired about five additional people. And I really hired them. No 1099 contract workers, no temporary workers, no part time.

If you have been tracking my blog posts, you will understand that I took these steps very slowly, very carefully, and with much apprehension. The sting of laying off people or cutting back hours is still fresh, both emotionally and financially. The last thing I want to do is find myself with too many employees again. And that is why I believe we have reason to be optimistic. I am seeing an increase in the amount of furniture people are buying, partially because houses have been selling again and people are moving again. Large real estate projects in the corporate world that have been on hold are being completed, and art is being bought for the walls. And my picture-framing business has started to see customers who come in with art they say they have been meaning to frame.

My sense is that other business owners are in a similar position. They would rather run overtime than take the chance of over-hiring. When their confidence builds that an increase in business activity is not just a blip, they hire people. It has probably already started.

Part of the reason is pent up demand. With the exception of things like restaurant meals and car washes, many purchases can be put off only so long. Eventually, they have to happen. Roofs, air conditioning units, clothes, cars and even dental care will be bought. In my business, I have been buying new equipment –  trucks, computers — and taking care of maintenance that had been avoided the previous couple of years. I have talked to four car dealers who say they are very busy, as well many other business owners from roofing contractors to a large carpeting business. Almost all say things are better and that they believe pent-up demand is one reason.

Is pessimism nature or nurture? Or maybe nature or torture would be more accurate. It’s very hard to be optimistic if you watch the news — the 24/7, in-your-face, unfair-and-unbalanced news cycle. There is good money to be made in bad news. Double-dip recession? Bad policy? Socialism? Class warfare? The collapse of Europe? The fact is, we are in an election cycle and it is in the best interest of people to make things sound as bad as possible. I don’t disagree that the high unemployment rate is a huge problem, but I still see positive signs. I believe that companies are starting to give raises again. I have. For many employees, it has been four years since their last raise. That is a long time. The raises might not be what they used to be, but they are something, and inflation has been low.

There is something else that has been going on the last few years. Smart companies recognized that this was not just a recession but a new world order, and they have made some changes. From real estate moves to Internet strategies to efficiency improvements, smart companies are coming out of the last three years better positioned for growth. The companies that are just waiting for things to get better might not be so fortunate. Could something happen to cause another slowdown? Sure. But the question is, how much damage are you going to do to your business by either letting opportunity slip through your fingers or by giving a competitor a chance to grab market share?

With growth comes hiring, and with hiring comes less gloom and doom. As I said, I’m not an economist, but I believe that my forecast is at least as reliable as the predictions I’ve heard from most of the professionals. But please tell me: Is it just me? Or are you seeing cause for optimism in your businesses, too? Don’t worry, I won’t tell anybody!

Jay Goltz owns five small businesses in Chicago.

Article source: http://feeds.nytimes.com/click.phdo?i=ac87d4316f833bf0f6078d2f351352cf

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Economix Blog: Nancy Folbre: The Recession in Pink and Blue

October 24, 2011 by Leave a Comment

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Nancy Folbre is an economics professor at the University of Massachusetts, Amherst.

Measured in terms of absolute job loss, men bore the brunt of the Great Recession, hence the term “mancession.” On the other hand, men have fared better than women in regaining jobs during the slight rebound sometimes called the recovery.

Today’s Economist

Perspectives from expert contributors.

Interesting comparison, but gender differences in economic hardship reach beyond employment statistics.

Many people – even those who live alone – share a portion of their earnings or devote unpaid hours of work to family members, including children and others who are dependent as result of age, sickness, disability or unemployment. Measures of economic hardship should take responsibility for dependents into account.

Women tend to be more vulnerable in this respect than men, primarily because they are more likely to take both financial and direct responsibility for the care of children.

In 2010, according to Census data, about 23 percent of children under the age of 18 lived with mothers but not fathers, about 3 percent with fathers but not mothers and 4 percent with neither parent. In 2007 (the latest year for which data are available), slightly more than half of all custodial parents had formal child support agreements or awards, and less than half of those received the full amount they were due.

Even mothers receiving support from fathers tend to take more responsibility for meeting family needs, intensifying the experience of economic insecurity.

A recent report issued by the Institute for Women’s Policy Research assessed some of the most stressful consequences of a high unemployment rate, based on a nationwide telephone survey conducted last fall in conjunction with the Rockefeller Survey of Economic Security.

The report emphasizes the effects of unemployment on families rather than individuals. More than one-third of respondents reported that they or someone else in their household experienced unemployment during the previous two years. The percentage reached almost one-half for black and Hispanic respondents, and more than half for single mothers.

Unemployment made daily life more difficult for almost everyone touched by it. Still, the gender differences are striking, even among married couples.

Married mothers reported that they were more likely to cut back on household spending than married fathers (80 percent, compared with 66 percent). There was also a noticeable, though not statistically significant, difference between the percentages of married mothers and fathers who reported problems paying their rent or mortgage (31 percent, compared with 26 percent).

Health care anxieties were intense: married mothers were more likely than married fathers to report that they had trouble getting or paying for medical care for themselves or family (34 percent, compared with 17 percent) and that they were worried about the possibility that their employer would cut back health care coverage or increase its costs (43 percent, compared with 34 percent).

Whether single or married, mothers are more directly affected than fathers by cutbacks in public child care provisions resulting from state budget shortfalls and the withdrawal of federal stimulus funds. A new report from the National Women’s Law Center estimates that families in 37 states are worse off under one or more key child care policies in 2011 than they were in 2010.

This emerging pattern of economic insecurity could affect the size and shape of the gender gap in voter preferences. Red may be the Republican color, but over all, pink tilts Democratic.

According to exit polls, unmarried women have typically given more support to Democratic candidates than have married women.

In hard times, however, this “marriage gap” may diminish.

Article source: http://feeds.nytimes.com/click.phdo?i=00d626eabc1b408fac92bc1598836248

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Off the Shelf: ‘Keynes Hayek’ Views Origins of an Economics Debate — Review

October 22, 2011 by Leave a Comment

What these men actually thought — about the economy and each other — is more complicated, as Nicholas Wapshott demonstrates in “Keynes Hayek: The Clash That Defined Modern Economics” (W. W. Norton, $28.95). This lively book explores one of the most pressing economic questions of our time: To what extent should government intervene in markets? And in that search, it traces the interaction of the two men most responsible for the way we approach this question: the British economist Keynes and the Austrian economist Hayek.

Both men came of intellectual age in the aftermath of World War I. They lived through the boom of the 1920s and through the Great Depression and arrived at radically different views of the wisdom of letting free-market capitalism run its course.

Keynes concluded that markets would not automatically provide full employment and that during downturns there could be long periods of large-scale unemployment. He argued that it was the government’s duty to relieve the plight of the jobless by increasing aggregate demand for goods and services.

Mr. Wapshott, a Reuters contributing columnist and a former senior editor at The Times of London, skillfully reconstructs the context in which Keynes formulated his theory. During the 1920s, Britain endured persistently high unemployment. Successive policy makers, worried about rising expenditures and falling tax revenue, ignored Keynes’s calls for public spending, setting off what he called a “vicious circle.”

“We do nothing because we have not the money,” Keynes said in 1930 to a government committee investigating the causes of the economic crisis. “But it is precisely because we do not do anything that we have not the money.” With the unemployment rate now at 9.1 percent, I gulped long and hard as I read these pages.

Hayek came to a very different conclusion. After serving in World War I, he found his beloved Vienna “devastated and its people’s confidence broken,” Mr. Wapshott writes. During the ensuing decade, hyperinflation pummeled the Austrian economy, melting away the savings of millions of people.

This experience, Mr. Wapshott argues, hardened Hayek “against those who advocated inflation as a cure for a broken economy.” And he came to believe “that those who advocated large-scale public spending programs to cure unemployment were inviting not just uncontrollable inflation but political tyranny.”

Thus, the author writes, the battle lines between Keynes and Hayek were drawn. Yet it was a duel characterized by mutual respect. Keynes, for example, shared Hayek’s distrust of socialism, while Hayek conceded that in the case of chronic unemployment, planning might play a role without leading to oppression.

But it was still a duel. In 1936, Keynes published “The General Theory of Employment, Interest and Money,” which took on classical economics and people like Hayek who subscribed to its tenets. Keynes’s targets included several long-accepted ideas: that employment levels are determined by the price of labor, that supply creates its own demand and that savings automatically translate into investment.

Keynes didn’t expect that his findings would lead to an infringement of personal liberty. Instead, the author writes, Keynes believed “that a prosperous society in which everyone is employed was the surest way of maintaining the independence of thought and action he considered the guarantor of true democracy.”

Hayek did not publicly detail any criticisms of “The General Theory.” But in 1944, he brought out “The Road to Serfdom,” which has become a libertarian classic. Hayek aimed to expose socialism and fascism as twin evils, warning of the potential dangers of central economic planning in the aftermath of World War II.

“It is Germany whose fate we are in some danger of repeating,” Hayek wrote.

Keynes was swift to respond, reminding Hayek that the rise of National Socialism was fueled not by big government but by mass unemployment and a failure of capitalism.

Article source: http://feeds.nytimes.com/click.phdo?i=3cb1c4facdf74e2e52866cc7eabf2629

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Businesses Struggle With the Burden of Unemployment Claims.

October 20, 2011 by Leave a Comment

Ms. White, 51, the founder of BnBFinder.com, a bed-and-breakfast search engine and booking site, hired the employee after the employee’s previous company, a Web site that matched aspiring authors with ghostwriters, went out of business. But then the ghostwriting site’s owner resurrected his business and hired the employee back. “And then, lo and behold, he went out of business again,” Ms. White said.

That left the employee unemployed and made Ms. White’s company responsible for $1,956 in unemployment claims. That put Ms. White’s account in deficit and threatened to drive up her unemployment insurance tax rate — even though the former employee had left her company voluntarily.

“You sit here afraid to hire anyone else,” Ms. White said. “It gives me pause and goes into my decisions. As a small business, I’m paying attention to what brand of coffee I buy for the office.”

With the economy stalled and the official unemployment rate hovering stubbornly around 9 percent, many small businesses are struggling to understand how unemployment insurance premiums are determined. The system is anything but simple and it varies by state, but it can be mastered and managed. Above all, owners should know that the more unemployment claims a company generates, the more it has to pay into the system.

The federal government charges employers a base rate of 0.6 percent of the first $7,000 of each employee’s wages each year. That federal money is used to cover the administrative costs for state unemployment programs; a loan program for states that do not have enough in their unemployment trust funds to pay claims; and extended unemployment benefits during economic downturns. When a state does not repay its loans — states now owe the federal government about $39 billion — the federal government raises the employer tax rate in annual increments of 0.3 percentage points. Right now, Michigan employers are facing a 0.9 percent surcharge.

While employers have no control over federal unemployment insurance rates, they can mitigate their state costs. In general, the states charge an unemployment insurance tax on part of each employee’s income based on the company’s unemployment history. Most states calculate a business’s tax rate each year based on a formula that considers payroll size, the amount the company has paid into the system and the amount of unemployment benefits former employees have collected.

That means a worker who collects unemployment can push his former employer (or multiple former employers, when there are several over the state’s base period) into a higher unemployment insurance tax bracket, often for several years.

A typical unemployment claim against a business increases the amount that business pays in state premiums in a range of $4,000 to $7,000 over a three-year period, said David Prosnitz, owner of Personnel Planners, a company based in Chicago that fights 15,000 unemployment claims a year for its 1,000 business clients. But it can be much worse.

Here is how the math works: Say you have a 10-employee business in Illinois. If you had not had any unemployment charges during the previous three years, the state unemployment insurance rate would be 0.7 percent — the Illinois minimum — of the first $12,740 of each employee’s wages, costing your business about $900 per year. If a laid-off employee then collected $10,000 against your account, your rate would go up to almost 5 percent, increasing what you pay to more than $6,000 a year for three years and costing your business more than $16,000 in increased unemployment insurance payments over that period — more than the employee would collect.

How can an owner manage the process?

“Hiring the right people is the first step in managing unemployment costs,” said David Blaine, a Bakersfield, Calif., employment lawyer with Klein, DeNatale, Goldner, Cooper, Rosenlieb Kimball. But if you make a mistake, act quickly. In Illinois and Virginia, for example, an employer becomes liable for unemployment benefits after 30 working days. It is important to know the period in your state and to be aware of the target date for each employee you hire.

“If you recognize you’ve made a bad hire,” said Ronald Adler, chief executive of Laurdan Associates, a human resources company in Potomac, Md., “the sooner you fire them, the better.”

Article source: http://feeds.nytimes.com/click.phdo?i=624fc68ec85d46434534e028208afa7a

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Recession Officially Over, U.S. Incomes Kept Falling

October 10, 2011 by Leave a Comment

Between June 2009, when the recession officially ended, and June 2011, inflation-adjusted median household income fell 6.7 percent, to $49,909, according to a study by two former Census Bureau officials. During the recession — from December 2007 to June 2009 — household income fell 3.2 percent.

The finding helps explain why Americans’ attitudes toward the economy, the country’s direction and its political leaders have continued to sour even as the economy has been growing. Unhappiness and anger have come to dominate the political scene, including the early stages of the 2012 presidential campaign.

President Obama recently called the economic situation “an emergency,” and over the weekend he assailed Congressional Republicans for opposing his jobs bill, which includes tax cuts that would raise take-home pay. Republicans blame Mr. Obama for the slump, saying he has issued a blizzard of regulations and promised future tax increases that have hurt business and consumer confidence.

Those arguments may be heard repeatedly this week, as the Senate begins debating the jobs bill. The full bill — a mix of tax cuts, public works, unemployment benefits and other items, costing $447 billion — is unlikely to pass, but individual parts seem to have a significant chance.

The full 9.8 percent drop in income from the start of the recession to this June — the most recent month in the study — appears to be the largest in several decades, according to other Census Bureau data. Gordon W. Green Jr., who wrote the report with John F. Coder, called the decline “a significant reduction in the American standard of living.”

That reduction occurred even though the unemployment rate fell slightly, to 9.2 percent in June compared with 9.5 percent two years earlier. Two main forces appear to have held down pay: the number of people outside the labor force — neither working nor looking for work — has risen; and the hourly pay of employed people has failed to keep pace with inflation, as the prices of oil products and many foods have jumped.

During the recession itself, by contrast, wage gains outpaced inflation.

One reason pay has stagnated is that many people who lost their jobs in the recession — and remained out of work for months — have taken pay cuts in order to be hired again. In a separate study, Henry S. Farber, an economics professor at Princeton, found that people who lost jobs in the recession and later found work again made an average of 17.5 percent less than they had in their old jobs.

“As a labor economist, I do not think the recession has ended,” Mr. Farber said. “Job losers are having more trouble than ever before finding full-time jobs.”

Mr. Farber added that this downturn was “fundamentally different” from most previous ones. Historically, other economists say, financial crises and debt-caused bubbles have led to deeper, more protracted downturns.

Mr. Green and Mr. Coder said the persistently high rate of unemployment and the long duration of unemployment helped explain the decline in income during the recovery.

In the recession, the average length of time a person who lost a job was unemployed increased to 24.1 weeks in June 2009, from 16.6 weeks in December 2007, according to the federal Bureau of Labor Statistics. Since the end of the recession, that figure has continued to increase, reaching 40.5 weeks in September, the longest in more than 60 years.

The new study by Mr. Green and Mr. Coder is based on monthly census surveys, rather than the annual data that appeared in last month’s census report on income. The monthly figures allow researchers to measure income changes more precisely during a recession or a recovery and provide more current information. The annual report is based on surveys conducted early in the following year, and people sometimes confuse how much money they are making at the time of the survey with how much they made the previous year. Additionally, recessions usually do not line up with a calendar year.

A committee of academic economists at the National Bureau of Economic Research, a private group widely considered the arbiter of the business cycle, judged that the most recent recession began in December 2007. The bureau defines a recession as a significant, broad-based decline in economic activity.

The economists said the recession ended in June 2009. In every quarter since then, the economy has grown.

Some economists see signs that the United States may be in or about to enter another recession, though the evidence is mixed.

In their new study, Mr. Green and Mr. Coder found that income dropped more, in percentage terms, for some groups already making less, a factor that they say may have contributed to rising income inequality.

From June 2007 to June of this year, they said, median annual household income declined by 7.8 percent for non-Hispanic whites, to $56,320, and by 6.8 percent for Hispanics, to $39,901. For blacks, household income declined 9.2 percent, to $31,784.

Mr. Green and Mr. Coder, who both worked at the Census Bureau for more than 25 years, found other income changes over the four-year period examined.

For example, income, after adjustment for inflation, declined fairly substantially for households headed by people under age 62, but it rose 4.7 percent for those headed by people 65 to 74, many of whom are not in the labor force. The change was negligible for those 62 to 64.

The type of employment also made a difference. Real median annual income declined to a similar degree for households headed by private-sector wage workers (4.3 percent) and government-sector workers (3.9 percent), but fell much more for the self-employed (12.3 percent).

Family households generally had larger declines in real income than other households. Men living alone showed a bigger decline than women living alone.

Education levels were also a factor. Median annual income declined most for households headed by someone with an associate’s degree, dropping 14 percent, to $53,195, in the four-year period that ended in June 2011, the report said.

For households headed by people who had not completed high school, median income declined by 7.9 percent, to $25,157. For those with a bachelor’s degree or more, income declined by 6.8 percent, to $82,846.

Article source: http://feeds.nytimes.com/click.phdo?i=bbe8245c5c3936f87941de68fd48cbd4

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Unrelenting Downturn Is Redrawing America’s Economic Map

September 26, 2011 by Leave a Comment

The once-booming South, which entered the recession with the lowest unemployment rate in the nation, is now struggling with some of the highest rates, recent data from the Bureau of Labor Statistics show.

Several Southern states — including South Carolina, whose 11.1 percent unemployment rate is the fourth highest in the nation — have higher unemployment rates than they did a year ago. Unemployment in the South is now higher than it is in the Northeast and the Midwest, which include Rust Belt states that were struggling even before the recession.

For decades, the nation’s economic landscape consisted of a prospering Sun Belt and a struggling Rust Belt. Since the recession hit, though, that is no longer the case. Unemployment remains high across much of the country — the national rate is 9.1 percent — but the regions have recovered at different speeds.

Now, with the concentration of the highest unemployment rates in the South and the West, some economists and researchers wonder if it is an anomaly of the uneven recovery or a harbinger of things to come.

“Because the recovery is so painfully slow, people may begin to think of the trends established during the recovery as normal,” said Howard Wial, a fellow at the Brookings Institution’s Metropolitan Policy Program who recently co-wrote an economic analysis of the nation’s 100 largest metropolitan areas. “Will people think of Florida, California, Nevada and Arizona as more or less permanently depressed? Think of the Great Lakes as being a renaissance region? I don’t know. It’s possible.”

The West has the highest unemployment in the nation. The collapse of the housing bubble left Nevada with the highest jobless rate, 13.4 percent, followed by California with 12.1 percent. Michigan has the third-highest rate, 11.2 percent, as a result of the longstanding woes of the American auto industry.

Now, though, of the states with the 10 highest unemployment rates, six are in the South. The region, which relied heavily on manufacturing and construction, was hit hard by the downturn.

Economists offer a variety of explanations for the South’s performance. “For a long time we tended to outpace the national average with regard to economic performance, and a lot of that was driven by, for lack of a better word, development and in-migration,” said Michael Chriszt, an assistant vice president of the Federal Reserve Bank of Atlanta’s research department. “That came to an abrupt halt, and it has not picked up.”

The long cycle of “lose jobs, gain jobs, lose jobs” that kept Georgia’s unemployment rate at 10.2 percent in August — the same as it was a year earlier — is illustrated by Union City, a small city on the outskirts of Atlanta.

It suffered a blow when the last store in its darkened mall, Sears, announced that it would soon close. But the city had other irons in the fire: a few big companies were hiring, and earlier this year Dendreon, a biotech company that makes a cancer drug, opened a plant there, lured in part by state and local subsidies.

Then, Dendreon announced this month that it would lay off more than 100 workers at the new plant as part of a national “restructuring.”

Union City, with a population of 20,000, now calls itself the place “Where Business Meets the World” and has been trying to lure companies by pointing out its low business taxes, various incentive programs and proximity to Hartsfield-Jackson Atlanta International Airport.

Steve Rapson, the city manager, said that the challenge there, as in much of America, has been to get employers to hire again. “It’s hard to get your mind around what can you do as a city to encourage future jobs and jobs growth,” he said.

The reordering of the nation’s economic fortunes can be seen in the Brookings analysis, which found that many auto-producing metropolitan areas in the Great Lakes states are seeing modest gains in manufacturing that are helping them recover from their deep slump, while Sun Belt and Western states with sharp drops in home values are still suffering. The areas that have been hurt the least since the recession, the study said, rely on government, education or energy production. Places that were less buoyed by the housing bubble were less harmed when it burst.

In Pennsylvania, the analysis found, the Pittsburgh area — which is heavily reliant on education and health care — is weathering the downturn better than the Philadelphia area. In New York, areas around long-struggling upstate cities like Buffalo and Rochester are recovering faster by some measures than the New York City metropolitan area. And the rate of recovery in Rust Belt areas around Youngstown and Akron, two Ohio cities that were hit hard, has outpaced that of former boomtowns like Colorado Springs and Tucson.

Article source: http://feeds.nytimes.com/click.phdo?i=a90fa0f14bd76cf967be60e5583c254f

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