Wall Street jumps after recovery from Twitter-led drop

Traders work on the floor at the New York Stock Exchange, April 19, 2013.

Credit: Reuters/Brendan McDermid

By Chuck Mikolajczak

NEW YORK | Tue Apr 23, 2013 9:27pm EDT

NEW YORK (Reuters) – Stocks climbed on Tuesday in a broad rally, recovering from sharp declines sparked by a “bogus” Associated Press tweet about explosions at the White House.

A false tweet by hackers of two explosions at the White House that injured U.S. President Barack Obama provoked a steep drop in stocks, before they quickly recovered minutes later.

Thomson Reuters data showed the benchmark S&P 500 index fell 14.6 points, or 0.93 percent, in the space of 3 minutes when the tweet hit the market. With the S&P 500 valued at about $ 14.6 trillion at the time of the false tweet, the plunge briefly wiped out $ 136.5 billion of the index’s value.

“If that was true that had happened, that’s a justified selloff, but because people suffer from information overload, people tend to overreact and don’t wait to substantiate things – that is the downside to a 24-7 news cycle,” said Jason Weisberg, managing director of Seaport Securities Corp in New York.

“You want instantaneous pricing, you want all the advantages of the technology, well then, you have to live by the negatives that the speed and expediency provide.”

The move was a reminder of the May 6, 2010, tumble in markets now known as the “flash crash,” when the Dow industrials dropped more than 600 points, eventually piling up a loss of about 1,000 points, in a few minutes before recovering.

Stocks had seen a solid advance before the tweet, lifted by a host of strong corporate earnings, including Travelers Cos Inc (TRV.N), Netflix Inc (NFLX.O) and Coach Inc (COH.N).

After the closing bell, Apple Inc (AAPL.O) climbed 4.9 percent to $ 425.95 after the iPad and iPhone maker reported second-quarter earnings and unveiled plans to double the amount of capital it returns to shareholders.

The Dow Jones industrial average .DJI rose 152.29 points, or 1.05 percent, to close at 14,719.46. The Standard & Poor’s 500 Index .SPX gained 16.28 points, or 1.04 percent, to finish at 1,578.78. The Nasdaq Composite Index .IXIC advanced 35.78 points, or 1.11 percent, to end at 3,269.33.

Netflix Inc shares jumped 24.4 percent to $ 216.99 while Coach shot up 9.8 percent to $ 55.55. They were the S&P 500′s two biggest percentage gainers.

Shares of Netflix shot higher after the movie streaming service reported earnings that beat expectations and strong subscriber growth. Coach stock leaped after the upscale leather goods maker and retailer reported higher-than-expected quarterly sales.

Travelers Cos (TRV.N) helped lift the Dow, up 2.1 percent at $ 86.35 after the insurer posted earnings that topped expectations and boosted its dividend.

Earnings season has been largely positive, with more than 68.9 percent of S&P 500 companies that have reported results so far beating expectations, according to Thomson Reuters data. Since 1994, 63 percent have surpassed estimates on average, while the beat rate is 67 percent for the past four quarters.

“We are encouraged to see the market focusing on fundamentals, because we had been in a period where the macro trade was pretty much driving things – whatever the global macro event was or political event was seemed to be affecting the movement of the markets for a period of time,” said Paul Mangus, head of equity research and strategy at Wells Fargo Private Bank in Charlotte, North Carolina.

The benchmark S&P 500 index has risen 2.4 percent over the past three sessions.

Analysts see earnings growth of 2.3 percent this quarter, up from expectations of 1.5 percent at the start of the month.

Housing stocks ranked among the best performers, after Barclays raised its rating on the homebuilding sector to “positive” from “neutral.” The sector also got a lift from encouraging housing data, with U.S. new home sales up 1.5 percent in March.

The PHLX housing sector index .HGX rose 3.8 percent, led by a 9.3 percent gain in Toll Brothers (TOL.N) to $ 34.13. Barclays raised its recommendation on Toll Brothers’ stock to an “overweight” rating as part of the firm’s broader sector call.

Volume was active, with about 6.39 billion shares traded on the New York Stock Exchange, NYSE MKT and Nasdaq, slightly above the daily average of 6.38 billion. Advancing stocks outnumbered declining ones on the NYSE by a ratio of 4 to 1, while on the Nasdaq, more than three stocks rose for every one that fell.

(Editing by Jan Paschal)

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Reuters: Business News

Wall Street jumps after recovery from Twitter-led drop

UPDATE 1-IMF calls for more action to spur global economic recovery

Sat Apr 20, 2013 3:23pm EDT

WASHINGTON, April 20 (Reuters) – Leaders of the International Monetary Fund on Saturday said an uneven global economic recovery is emerging, and policymakers must take more steps to foster swifter growth and job creation.

“We need to act decisively to nurture a sustainable recovery and restore the resilience of the global economy,” the IMF’s steering committee said in a communique at the conclusion of the international finance organization’s annual spring meeting.

Central banks in the world’s biggest economies should continue their accommodative monetary policies, the International Monetary and Financial Committee’s communique said, and their eventual withdrawal of monetary expansion “will need to be carefully managed and clearly communicated.”

Nevertheless such easy-money initiatives alone cannot be counted upon to provide sufficient stimulus, the IMFC said.

“Credible medium-term fiscal consolidation plans remain crucial, in particular for the United States and Japan,” the IMFC communique said.

“The commodity that is in shortest supply now is confidence,” Singapore Finance Minister Tharman Shanmugaratnam, chairman of the IMFC, said at a press conference following the communique’s release.

Reuters: Financial Services and Real Estate

UPDATE 1-IMF calls for more action to spur global economic recovery

Jobless rates plummet in states with housing recovery

Job seekers apply for the 300 available positions at a new Target retail store in San Francisco, California August 9, 2012.

Credit: Reuters/Robert Galbraith

By Lisa Lambert

Fri Apr 19, 2013 1:53pm EDT

(Reuters) – Unemployment rates dropped in most U.S. states in March from the year before, including California where joblessness fell to a four-year low, as the recovery picked up in places hit hard by the housing downturn.

Federal data released on Friday showed that, altogether, unemployment rates fell from March 2012 in 39 states and the District of Columbia, increased in eight, and were the same in three. From February, rates dropped in 26 states and the District of Columbia, rose in seven and were unchanged in 17.

Nevada had the sharpest decrease over the year – the rate fell to 9.7 percent from 11.6 percent in March 2012. In California the unemployment rate fell to 9.4 percent, the lowest since December 2008 and more than a percentage point below March 2012, when it was 10.7 percent.

California and Nevada, two places where housing had flourished, have consistently had some of the highest unemployment rates in the country over the last few years. Even with the drops in March, Nevada held the highest unemployment rate of all the states and California the third highest.

Nevada’s rate also rose from 9.6 percent in February and the state lost 2,900 jobs during the month, when seasonally adjusted.

“So far this year, job growth appears to be slowing a bit after exceeding expectations in the second half of 2012,” said Bill Anderson, chief economist for Nevada’s employment department, in a statement.

“Despite the decline in non-farm payroll jobs and a slight increase in the unemployment rate, nearly all over-the-year comparisons are evidence of an ongoing mild recovery in Nevada’s labor market,” he added.

Rhode Island had the second biggest decline from the year before, with its jobless rate dropping to 9.1 percent from 10.6 percent in March 2012, followed by Florida, where the rate was 8.9 percent compared to 7.5 percent the year before.

In Idaho, Washington, Hawaii and Colorado, the jobless rates also were more than a percentage point lower than a year before.

Unlike previous downturns, the 2007-09 recession was fairly uniform, sparing only a few states. The recovery, though, began unevenly, with states rich in oil, natural gas and commodities pulling ahead and those where housing had been the major source of jobs limping for years after the real estate market collapsed.

Meanwhile, in March the Illinois jobless rate rose the most since March 2012 – to 9.5 percent from 8.8 percent.

The state also had the second highest jobless rate in the country last month, followed by California and Mississippi, even as it added 36,000 jobs from the year before, according to its employment department.

“Economic uncertainty nationally and abroad dampened our country’s job growth. When that happens, Illinois’ share tends to be a negative number,” said Jay Rowell, director of the employment department, in a statement.

“Monthly snapshots capture a moment in time. When those moments are evaluated together, we see progress away from a global recession and through a stubborn economic growth cycle,” he added.

Indiana, Mississippi, New Hampshire, Pennsylvania, Delaware, North Dakota and Wisconsin also saw rate increases from March 2012. Meanwhile, the rates were unchanged in Alabama, New Mexico, and West Virginia.

NEW JERSEY’S UNEMPLOYMENT RATE TUMBLES

From February, the jobless rate increases were mild, with Louisiana seeing the biggest rise, to 6.2 percent from 6 percent.

Alaska, Florida, New Jersey, Rhode Island, Utah, Vermont, and Virginia experienced the largest decreases – 0.3 percentage points each.

New Jersey’s unemployment rate drop in March to 9 percent was greeted as good news by the state’s political leaders.

Last year, the jobless rate climbed steadily to the highest level in 35 years, 9.8 percent in July. Along with neighboring New York, New Jersey was the only state where the average jobless rate increased in 2012 from 2011. The signs of a slow recovery prompted New Jersey Governor Chris Christie to abandon claims that the state was in the middle of a comeback.

But now the rate has edged down and the state added 10,400 private sector jobs in March.

“Once again, jobs and unemployment are moving in the right directions, reflecting the growing strength in the state’s economy,” New Jersey’s Chief Economist Charles Steindel said in a statement.

(Reporting by Lisa Lambert, additional reporting by Hilary Russ in New Jersey;editing by Sofina Mirza-Reid)

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Reuters: Economic News

Jobless rates plummet in states with housing recovery

Risk assets hit as U.S., China data stirs recovery worry

1 of 5. Pedestrians holding umbrellas stand in front of a stock index board showing various stock prices outside a brokerage in Tokyo April 3, 2013.

Credit: Reuters/Yuya Shino

By Chikako Mogi

TOKYO | Sun Apr 14, 2013 8:30pm EDT

TOKYO (Reuters) – Asian shares fell on Monday after global equities and commodities slumped late last week on weak U.S. growth and rekindled worries in the euro zone, turning investor sentiment cautious ahead of a batch of Chinese data due later in the day.

The MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was down 0.2 percent, after ending last week with a gain of 1.7 percent, its biggest such rise in three months.

Resources-reliant Australian shares .AXJO fell 0.5 percent, hit by a sharp drop in metals prices such as gold and copper as well as oil on Friday.

South Korean shares .KS11 were down 0.6 percent, weighed by North Korean risk, weak earnings outlooks and the yen’s moves.

North Korea prepared for the annual celebration of its founder’s birth on Monday, having rejected talks with South Korea aimed at reducing tensions and reopening a industrial park shared between the two countries.

The North has threatened for weeks to attack the United States, South Korea and Japan since new U.N. sanctions were imposed in response to its latest nuclear arms test in February.

World equity markets fell on Friday after a poor reading of U.S. consumer sentiment and unexpectedly weak retail sales raised concerns the U.S. economy may be losing momentum and could hurt global growth, which remains vulnerable in the face of a deteriorating European economy, struggling Japanese growth and China’s uncertain recovery.

China will publish major data later in the session, including first-quarter gross domestic product, March retail sales and March industrial output.

“The regional data highlight is China’s Q1 GDP. Perhaps due to ‘smoothing’, the headline reading is usually quite close to consensus, which is 8 percent year-on-year, from 7.9 percent in the fourth quarter,” Westpac said in a note to clients, adding that deviations from forecasts could trigger a knee jerk reaction in Asian currencies.

The Nikkei stock average .N225 opened down 1 percent, after briefly hitting its highest level since July 2008 on Friday. .T

The weak U.S. data pushed the dollar lower on Friday, sending it as low as 98.08 yen, but the dollar rebounded to 98.50 early in Asia on Monday.

The yen’s rise against the dollar also helped send the euro down to a low of 128.70 yen on Friday, but the euro was trading at 129 yen early on Monday.

Gold prices sagged 4 percent to their lowest level since July 2011 on Friday, breaking below $ 1,500 per ounce, as a draft plan for Cyprus to sell bullion to help pay for its bailout triggered a sell-off. <GOL/>

Gold was at $ 1,492.60 an ounce early on Monday.

Euro zone finance ministers backed a 10 billion euro bailout for Cyprus on Friday and the European Commission said it would try to help the island’s economy grow again with better use of EU structural funds.

News about cash-strapped Cyprus asking for more help because of its deteriorating economy also boosted demand for safe-haven U.S. Treasuries.

Brent oil hit an eight-month low just above $ 101 a barrel on Friday as the outlook for global crude demand growth dimmed.

U.S. crude futures were down 0.7 percent to $ 90.65 per barrel early on Monday. <O/R>

(Editing by Eric Meijer)

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Reuters: Business News

Risk assets hit as U.S., China data stirs recovery worry

PODCAST: Economic recovery for the long haul, J.C. Penney CEO fall

Glenn Hubbard, former Chair of the White House Economic Council of Advisers under President George W. Bush, discusses the entitlement reform, the economic recovery, and taxes.

J.C. Penney CEO Ron Johnson has been given the boot after just 17 months as head of the struggling department store chain, but were his ideas really that bad?

The aluminum maker Alcoa kicked off corporate earnings season last night with a better than expected report. Alcoa kept its forecast steady at 7 percent growth in aluminum demand this year. Juli Niemann, analyst with Smith, Moore & Company, discusses the latest earnings reports and what they signal about the economy. 

Latest Stories on Marketplace.org

PODCAST: Economic recovery for the long haul, J.C. Penney CEO fall

Analysis: Jobless youths could drag on recovery

Jesus Pardal (2nd L), an unemployed 29-year-old father-to-be, waits inside a government-run employment office with wife Yolanda Garcia (L), 24, as he takes out garbage belonging to other people to earn .50 Euro cents (.60 U.S. cents) in Cadiz, southern Spain November 2, 2012.

Credit: Reuters/Marcelo del Pozo

By Mike Dolan

LONDON | Wed Apr 3, 2013 2:03am EDT

LONDON (Reuters) – The global economy is recovering – although the younger you are and the longer you’ve been out of work, the less likely it is that you’ll have noticed.

A modest upturn in the major developed economies flagged last week by the Organisation for Economic Cooperation and Development should be a considerable relief for Western countries still struggling to run down huge debts.

But with persistent recession across Europe and high levels of youth unemployment and long-term joblessness, signs that growth is picking up may offer little cheer.

“The rise of long-term unemployment, with more of the unemployed moving off unemployment insurance onto less generous social benefits, is worsening poverty and inequality,” the OECD said on Thursday, adding the issue was especially bad in Europe.

The consequent drain on demand could hinder recoveries before they reach what some economists call “escape velocity” and policymakers are starting to fret that the longer high joblessness persists, the harder solving the problem becomes.

More than 40 percent of U.S. unemployed have been out of work for more than six months, almost double the previous post-World War Two record.

Even news on Tuesday of falling registered jobless in employment blackspot Spain may reflect more darkness than light, with economists at Citi saying the decline in March resulted from a tightening of the criteria for accessing benefits.

There is particular anxiety among policymakers – and increasingly global investors – that leaving hordes of youths without work even after a turn in the economic cycle could threaten social and political stability in many economies.

HOMING IN

A growing amount of investment research in recent weeks has homed in on the problem, making links with the huge anti-establishment vote in Italy’s election in February and even the conditions that triggered the ‘Arab Spring’ uprisings in 2011.

“The rising trend of youth unemployment around the world threatens not just current economic growth but also political stability and the potential demographic dividend,” according to a report published by Credit Suisse late last month.

That “demographic dividend” – which CS claims explained 44 percent of the rise in per capita output in developing Asia in the 30 years to 2000 – tends to kick in as the number of young workers swells relative to their older and younger dependents.

But it hinges on high levels of labor force participation, meaning potential gains may be evaporating as growing numbers of those in the 15-24 age bracket are left idle.

With International Labour Organisation data showing worldwide youth unemployment at 12.7 percent – or 74.6 million people – in 2012, up about one percentage point from pre-crisis levels, the global problem is pretty clear.

Rather ominously, the region most riven by social and political unrest over the past two years – the Middle East and North Africa – had youth unemployment rates of more than twice the world average in 2012.

Developed economies and the European Union came next, with an average young jobless rate of 18 percent.

Recent official statistics show more than 50 percent of young Spaniards and Greeks are out of work, and more than 30 percent in Italy, the highest among the Group of Seven nations. Bailed-out Ireland and Portugal also have youth unemployment running at more than 30 percent.

Youth joblessness across the euro zone has been more than twice the overall unemployment rate, while the connection between lack of work and inequality can be seen in Eurostat data showing a rising proportion of 15-24 year olds at risk of poverty and social exclusion over the six years to 2011.

Neither is problem solely European. The last time U.S. youth unemployment was below 10 percent was at the height of the dot.com boom in 2000, while it reached 17 percent in 2011.

NEET CUTS

Many people’s preferred measure of the true level of youth unemployment – so-called NEETs or those Not in Employment, Education or Training – reduces the more alarming numbers.

So despite oft-cited statistics that almost every second Spanish or Greek youth is out of work, high levels of third-level education there show NEETs much lower at about 18 percent.

However, as Credit Suisse’s head of demographics and pension research Amlan Roy points out, a lack of progress in creating jobs for young adults means there’s no guarantee those staying in education will find work on graduation.

In a summit statement last month, EU leaders committed to a “youth employment initiative” that sets aside almost 6 billion euros for the worst-affected regions over seven years.

But with this amounting to less than 1,000 euros for each jobless young person in the EU, many are skeptical of success.

“The longer the disengagement lasts, the harder it is to bridge the skills gap and get a foot on the employment ladder. This has an effect on future wealth and living conditions,” wrote Roy at CS.

(Editing by Catherine Evans)

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Reuters: Economic News

Analysis: Jobless youths could drag on recovery

Housing recovery boosts pickup, SUV sales in March

1 of 3. A Ram truck grill logo is shown at the Criswell Chrysler-Dodge-Jeep-Fiat-Ram truck dealership in Gaithersburg, Maryland in this file photo taken October 2, 2012.

Credit: Reuters/Gary Cameron/Files

By Ben Klayman and Deepa Seetharaman

DETROIT | Tue Apr 2, 2013 10:41am EDT

DETROIT (Reuters) – Ford Motor Co (F.N) and Chrysler Group LLC reported on Tuesday slightly better-than-expected U.S. auto sales in March, buoyed by greater demand for sport utility vehicles and pickup trucks, while General Motors Co (GM.N) fell short of estimates.

March is expected to be the fifth consecutive month that the industry’s annual sales pace has held above 15 million vehicles, a sign that rising home values are helping American consumers feel more confident about buying a new vehicle.

Industry officials also have cited the all-time high average age of cars on the road – more than 11 years – as a major reason for strong demand, as consumers can no longer put off buying a replacement. Several analysts have raised their full-year sales forecasts in the last week.

Ford, the No. 2 U.S. automaker, said March was its best month since May 2007. For Chrysler, the No. 3 automaker, it was the best month since December 2007.

But GM’s results fell short of the estimates of at least three analysts. The largest U.S. automaker sold 245,950 cars and trucks in March, up 6.4 percent from a year earlier.

All three U.S. automakers said sales of larger vehicles outpaced their overall gains. Ford posted a 5.7 percent overall sales rise, a 15.4 percent spike in SUVs, such as the Escape crossover, and a 16.3 percent increase in sales of F-Series pickup trucks.

GM said crossover sales were up 31 percent. Sales of pickup trucks that are slowly being phased out rose 6 percent. GM is launching two new truck models later this year, the 2014 Chevrolet Silverado and GMC Sierra.

“Trucks have improved in lockstep with the housing market, and the strength of the crossover market signals that America’s families are more confident about their financial health,” said Kurt McNeil, head of GM’s U.S. sales operations.

‘RESILIENT’ U.S. CONSUMER

Auto sales each month are an early indicator of economic health. The auto industry is in the midst of its fourth year of recovery from an economic downturn that pushed GM and Chrysler into bankruptcy in 2009.

Ford sold 236,160 vehicles in March. Chrysler, a unit of Italian automaker Fiat SpA (FIA.MI), said sales rose 5 percent to 171,606 vehicles. German automaker Volkswagen AG (VOWG_p.DE) reported a 3.1 percent increase in U.S. sales to 37,704 vehicles.

VW America CEO Jonathan Browning expressed caution about the strength of the broader U.S. economy, saying there were still “potholes and bumps” on the road to recovery. But he said there were encouraging signs during the second half of March.

“I give credit to the U.S. consumer,” Browning said. “The U.S. consumer is one of the most resilient that I’ve come across around the world.”

The U.S. auto market is among the strongest in the world and is increasingly critical for major automakers as European car sales tumble. Sales in Spain, for example, fell 13.9 percent in March, figures released on Tuesday showed.

Analysts polled by Thomson Reuters were expecting an annual sales rate of 15.3 million vehicles in March.

(Additional reporting by Paul Lienert in Detroit; editing by John Wallace)

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Reuters: Economic News

Housing recovery boosts pickup, SUV sales in March

Bank of Italy warns political impasse dents economic recovery

The headquarters of the Bank of Italy is pictured in downtown Milan January 11, 2013.

Credit: Reuters/Alessandro Garofalo

ROME | Sat Mar 23, 2013 8:40am EDT

ROME (Reuters) – Italy’s political stalemate and renewed financial market turbulence could undermine the country’s recovery from its longest recession in two decades, a Bank of Italy official said on Saturday.

Italian President Giorgio Napolitano on Friday asked center-left leader Pier Luigi Bersani to see whether he can win backing in parliament to form a government and end the deadlock left by elections in which no one won a working majority.

Almost a full month has passed since the vote and Italy, the euro zone’s third-largest economy, still could be facing weeks of uncertainty just as the bank crisis in Cyprus renews fears of another outbreak of market turmoil in the currency bloc.

“In the past few weeks, uncertainty about the outlook for the Italian economy has been reawakened,” deputy director general of the central bank, Fabio Panetta, said in the text of a speech he delivered at a conference in Perugia, Italy.

“The very moderate recovery foreseen for the last part of the year is under threat by the unpredictable domestic political situation and the re-emergence of financial turbulence in the euro area.”

On Thursday, the caretaker government of Mario Monti slashed its growth forecast for this year to -1.3 percent from -0.2 previously, and raised its fiscal deficit target to 2.9 percent of gross domestic product from 1.8 percent previously.

Italy has been mired in recession since the middle of 2011 and is not expected to show any growth until the second half of this year at the earliest.

In the past five years, Italy has weathered two recessions, losing 600,000 jobs and 7 percentage points of GDP, Panetta said. Facing such a dire economic situation, Panetta urged banks to make sure their balance sheets were in order.

Panetta said the Bank of Italy was checking the adequacy of write-downs made by a large number of big and mid-sized lenders and had asked for correction measures when necessary.

“Keeping an adequate level of risk coverage allows banks to keep foreign investors’ confidence and attract external funding at low cost,” he said.

He said the central bank had asked banks to slash costs, also by using new technologies, sell non-core assets and adopt coherent dividend policies to boost profitability, beef up their balance sheets and keep lending to the real economy.

Italian banks have cut lending as the crisis has reduced the quality of loans, increased the cost of funding, and reduced their profitability.

(Reporting by Steve Scherer in Rome and Danilo Masoni in Milan; editing by James Jukwey)

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Reuters: Business News

Bank of Italy warns political impasse dents economic recovery

Housing recovery: Good for would-be homeowners?

The Federal Reserve’s bond and mortgage purchases have kept long-term interest rates low, but they haven’t done what the Fed intended — which was to help would-be home buyers get affordable mortgages.

Instead, they’ve fueled a new round of speculation by investors and real estate developers. And that’s meant a new generation of Americans has become renters rather than owners.
   
Yes, home sales and prices have been rising, which in turn has created lot of construction jobs and made some home-owners feel a bit wealthier. All good for the economy, at least for now.

But the housing market hasn’t turned around because banks are issuing lots of new mortgages. Lending standards are still tight, and banks are reluctant to lend — especially to younger. Unemployment remains high among millennials — more than 8 percent even for recent college graduates. And their student debts keep mounting. As a result, the number of first-time home buyers is still shrinking, and young buyers now make up their smallest share of the housing market in more than a decade.

The rise in home prices and construction is being fueled instead by big investors — many of whom are paying cash and have no intention of living in the homes they buy or build. They’re getting a high return on investment by borrowing at rock-bottom rates and then turning the properties into rental units, which young individuals and families are moving into in record numbers.

Last month, a Pew Research Center survey found that the share of millennials who own their homes has fallen from 40 percent to 34 percent since the start of the recession, with a similar decline in residential debt.

Overall, the percent of Americans owning their homes continues to drop, while the percent renting is growing.

The housing market may be bouncing back, but not homeownership. And that’s a big change for an economy and society once based on the ideal of owning your own place.

Latest Stories on Marketplace.org

Housing recovery: Good for would-be homeowners?

Recession Through Recovery Employment Situation in Pictures

Please consider a table of various employment statistics for February of each year between 2008 and 2013.

Year	Population	Labor Force	Not in LF	Employed	FT Employed	PT Employed	Unemployed	SNAP
2008	232,809	152,503	80,306	144,550	119,452	25,098	7,953	26,316
2009	234,913	153,804	81,109	140,105	112,947	27,158	13,699	28,223
2010	236,998	153,194	83,804	137,203	109,100	28,103	15,991	33,490
2011	238,851	152,635	86,216	138,093	110,731	27,361	14,542	40,302
2012	242,435	154,114	88,322	140,684	112,587	28,096	13,430	44,709
2013	244,828	154,727	90,100	142,228	114,191	28,037	12,500	46,609
Change	12,019	2,224	9,794	-2,322	-5,261	2,939	4,547	20,293
OC	9,915	923	8,991	2,123	1,244	879	-1,199	18,386

Abbreviations and Notes

• LF – Labor Force
• FT – Full-Time
• PT- Part-Time
• SNAP stands for Supplemental Nutrition Assistance Program, widely known as Food Stamps.
• Change is the difference between since the start of the recession and now, using February 2008 as the approximate start although the official start is a couple months earlier.
• OC is the change in Obama years (2009 and 2013), February to February.

All of the columns except “SNAP” are BLS Unadjusted Numbers.

SNAP data is fiscal year annual data. I used fiscal year 2012 for the 2013 column (and so forth for the other rows).

All of the numbers are in thousands.

In The Last 5 Years

• The Civilian Institutional Population Rose 9.9 Million
• The Labor Force Rose .9 Million
• Those Not in the Labor Force Rose 9.8 Million
• Employment Fell by 2.3 Million
• Full-Time Employment Fell by 5.3 Million
• Part-Time Employment Rose by .9 Million
• Unemployment Rose by 4.5 Million
• Food Stamp Usage Rose by 20.3 Million

Non-Workers to Workers

Let’s consider the ratio of workers to non-workers. Workers are those employed, non-workers are everyone else (the unemployed + those not in the labor force).

• In the last five years, the number of non-workers rose by 14.3 million while the number of workers fell by 5.3 million.
• In 2008 there were 144.6 million workers supporting 88.3 million not working.
• There are now roughly 142.2 million workers supporting 102.6 million.

Ratio of Employed to Not Working

Reader Tim Wallace put together a nice chart showing the ratio of those employed to those not working.

click on chart for sharper image

In the year 2000, there were 1.78 workers per every non-worker. Now there are only 1.39 workers per every non-worker. Meanwhile, food stamp usage is up from 17.2 million to 46.6 million, and medical costs are soaring.

Wallace comments “the economic burden on the 1.39 is only going to increase unless spending is put under control and the ratio moves back to a higher average number.”

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com

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Mike “Mish” Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Mish’s Global Economic Trend Analysis

Recession Through Recovery Employment Situation in Pictures

The sequester vs. the jobs recovery

Economists expect a status-quo jobs report from the Bureau of Labor Statistics this morning — 150,000 to 175,000 jobs added in February, depending on which economist you check with, and unemployment sticking around 7.9 percent. That would be, more or less, the same slow, steady labor-market pulse we’ve seen for months. Any underperformance in February will probably be due to weather — a powerful winter storm that hit the Northeast and might have delayed hiring — rather than the result of government fiscal policy.

But what about the sequester, budget cuts, hundreds of thousands of layoffs and furloughs at government agencies and private contractors?

We’re not seeing employers dampen their hiring yet. But the job cuts will come, says John Canally, economic strategist at LPL Financial in Boston.

“750,000 [job losses] if the full extent of the sequester remains in place throughout the whole year,” says Canally, citing recent figures from the Congressional Budget Office. “That’s a pretty big number — when you’re only creating 150,000 to 200,000 jobs per month, and you’re going to give back 60,000 or 70,000 [per month] of those because of the sequester — that’s a big deal.”

And Canally says there’ll be leakage from people’s paychecks — both direct government workers and those indirectly dependent on government contracts — at everything from aerospace and defense companies, to hospitals, schools, and national parks.

“So if civilian and non-civilian employees are furloughed — which means basically being told not to show up to work a couple days per month — that might reduce hours,” says Canally. “You might see more part-time work instead of full-time work.”

Weep for the well-paid government bureaucrat?

“I think the notion that it’s mid-wage professional government workers is one of the real misconceptions,” says Steve Bell of the Bipartisan Policy Center in Washington. He predicts that a lot of the jobs lost will be at private contractors — some guy named ‘Joe,’ he says, whose construction firm is fixing a state courthouse roof, or whose tool-and-die shop makes parts for Lockheed Martin’s F-35 fighter jet.

“And Joe’s either going to let people go — mechanics and sheet-metal people — or he’s going to not hire people he otherwise would hire,” says Bell.

Assuming Congress doesn’t revise or cancel the sequester budget cuts, we can expect to see these job losses start to show up in the employment numbers over the next several months.

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The sequester vs. the jobs recovery

Premature Fed pullback could "short-circuit" recovery: Bernanke

Chairman of the U.S. Federal Reserve Ben Bernanke testifies at the House Committee on Financial Services on Capitol Hill in Washington, February 27, 2013.

Credit: Reuters/Larry Downing

Fri Mar 1, 2013 10:07pm EST

(Reuters) – Ben Bernanke, the chairman of the Federal Reserve, said on Friday that pulling back on aggressive policy measures too soon would pose a real risk of damaging a still-fragile recovery.

There has been some disagreement within the Fed of whether the U.S. central bank’s bond-buying program, which is designed to push down long-term interest rates, should be phased out.

Fed Board Governor Jeremy Stein argued recently there were signs of overheating in certain financial markets and that the central bank should consider using monetary policy to address such risks if they persist.

The Fed chief was not convinced, saying that, even for the purposes of financial stability, a continuation of the central bank’s aggressive stimulus, conducted through purchases of Treasury and mortgage securities, remains the optimal approach.

“In light of the moderate pace of the recovery and the continued high level of economic slack, dialing back accommodation with the goal of deterring excessive risk-taking in some areas poses its own risks to growth, price stability, and, ultimately, financial stability,” Bernanke said in remarks prepared for delivery at a conference sponsored by the Federal Reserve Bank of San Francisco.

In response to the financial crisis and deep recession of 2007-2009, the Fed not only chopped official rates to effectively zero, but also bought more than $ 2.5 trillion in assets in an effort to keep long-term rates low.

Still, economic growth remains subdued and is expected to register just 2 percent this year, while the jobless rate remains elevated at 7.9 percent currently.

“Premature rate increases would carry a high risk of short-circuiting the recovery, possibly leading – ironically enough – to an even longer period of low long-term rates,” Bernanke said.

He noted that a stimulative monetary policy was simply a response to economic conditions, rather than any attempt to keep rates artificially low to inflate asset prices.

Policymakers are cognizant of possible risks to financial stability, he said, while indicating a preference for employing regulatory and supervisory tools to mitigate any possible fallout from the Fed’s low-rate policy.

“We pay special attention to developments at the largest, most complex financial firms,” Bernanke said.

He argued banks had gone some way toward repairing their balance sheets since the financial crisis. The Federal Deposit Insurance Corp. reported this week that bank profits rose in 2012 to their highest levels since 2006, the year before the subprime mortgage meltdown gained momentum.

Earlier this week, Bernanke delivered a strong defense of the Fed’s unconventional monetary policies in testimony before Congress. He also warned lawmakers to avoid the looming short-term spending cuts known as the sequester.

(Reporting By Pedro Nicolaci da Costa in Washington, D.C.; Editing by Leslie Adler)

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Reuters: Economic News

Premature Fed pullback could "short-circuit" recovery: Bernanke

Shares, euro extend losses as Europe recovery hopes dim

1 of 7. Visitors cast their shadows on the logo of the Tokyo Stock Exchange, prior to a ceremony marking the end of trading in 2012 at the Tokyo Stock Exchange in Tokyo December 28, 2012.

Credit: Reuters/Kim Kyung-Hoon

By Richard Hubbard

LONDON | Thu Feb 21, 2013 3:43am EST

LONDON (Reuters) – World share markets fell and the dollar and safe-haven assets rose on Thursday, a day after minutes of the Federal Reserve’s last policy meeting cast doubts over how much longer the U.S. central bank would stick to its stimulus plan.

After the minutes were released the euro skidded to a six-week low against the dollar of $ 1.3235, Asian shares experienced their worst day in seven months and gold hit its lowest price since last July, at $ 1,554.49 an ounce.

“Disagreement over the current path is causing concern for a market that demands certainty,” Ben Taylor, a trader at CMC Markets, said of evidence Fed officials were divided on policy.

MSCI’s world equity index .MIWD00000PUS, which only on Wednesday had touched a 4-1/2 year high, fell 0.5 percent as the benchmark S&P 500 index .SPX suffered its steepest daily percentage decline since mid-November.

European markets joined in the selloff with the FTSE Eurofirst 300 index .FTEU3 shedding 0.5 percent, led lower by the banks .SXIP, which have been at forefront of recent gains. London’s FTSE 100 .FTSE, Paris’s CAC-40 .FCHI and Frankfurt’s DAX .GDAXI were all down as much as 0.7 percent.

However, market sentiment could get some support from the release of first reading from February Purchasing Managers’ Indexes (PMIs) from across Europe later in the day.

The euro-zone composite PMI is expected to have risen for a fourth consecutive month in February to around 49.0, adding to evidence that economic conditions across the recession-hit region are gradually improving.

The PMI reading would still leave the composite index below the 50 mark which separates expansion from contraction and analysts estimate it would be consistent with a small fall in GDP for a fourth consecutive quarter.

In the fixed income market, German bonds, normally considered a safe haven, saw prices rise with the main Bund futures contract up 30 ticks to 142.85. The move reversed a fall seen on Wednesday but kept the contract within a narrow band before an Italian general election this weekend.

Spain was set to test market sentiment for peripheral euro zone debt with the sale of up to four billion euros of new paper.

The dollar followed up a big gain on Wednesday against a basket of major currencies to add a further 0.1 percent, although it dipped slightly against the yen to 93.41.

Among commodities, London copper struck its lowest in nearly two months, at $ 7,880 a metric ton, while crude oil extended losses after posting its biggest daily fall so far this year on Wednesday.

(Reporting by Richard Hubbard; Editing by Alastair Macdonald)

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Reuters: Business News

Shares, euro extend losses as Europe recovery hopes dim