Signs of Life in the Job Market

Amy Berson-Sayers has been unemployed since March of 2008. She recently admitted that shortly after her 99 weeks of unemployment benefits ran out, she stopped searching for a job. Even when she was spurred on to look for work, she did it “half-assedly.”

“It was ridiculous,” said Ms. Berson-Sayers, 52, an Upper West Side resident who worked for ad agencies and magazine publishers most of her career. “I’ve always gotten a job immediately, by circling ads in the want ads and calling a live person. That is over. Now you go online, fill out a frustrating application, there’s a lottery and if you win someone looks at your application.”

Recently, the 52-year-old ex-executive administrative assistant sees a change in the job climate. She described a more encouraging environment that may be compelling others in her situation to return to the job hunt.

“I’m building up steam now, big time,” said Ms. Berson-Sayers. “The last six months or so, it just feels more positive out there, like…getting a job is possible again.”

Discouraged workers returning to the work force is an important part of the economic recovery. No one knows exactly how many discouraged workers there are in addition to the 13.5 million Americans currently looking for a job. Experts do agree their return to the job hunt is a very positive sign – which can send off mixed signals in the form of a higher unemployment rate. Adding to confusion, the uneven nature of the discouraged workers returning also makes for uneven pressure on the rate, as was the case last month.

March’s 8.8% unemployment rate marks a new two-year low, and initial jobless claims continue to improve, dropping by 6,000 this week alone. Many economist’s have said the job market has finally begun to find its feet. In fact, the data shows that the local job market has been improving for over a year. In 2010 alone, the unemployment rate for New York City fell from 10 percent in January to 8.8 percent in December.

Overall, New York State has recovered 30 percent of the jobs lost during the recession, according to a March 9 report by the Department of Labor.

But today, as we focus on the latest unemployment numbers, labor-market experts are watching people like Berson-Sayers to see just how their return to the labor force effects the overall rate.

“The faster the recovery, the quicker you pull people back in,” said Jim Brown, labor analyst for the New York State Dept. of Labor.

Paradoxically, as the job market improves and people like Ms. Berson-Sayers become optimistic enought to start looking for work again, they drive up the unemployment rate.

The mixed signals are the result of a formula used by the Labor Department, which does not recognize a person like Berson-Sayers as unemployed. A person who is not actively looking for a job is not technically unemployed. In the eyes of the Labor Department, they have dropped out of the workforce.

Once “discouraged workers” actively search for a job, they officially rejoin the ranks of the unemployed and are counted in the monthly survey used to calculate the unemployment rate.

That’s why the unemployment rate ticked up in January – due to renewed participation, said Brown. He said their return, and the upward pressure they put on the unemployment rate, is another milestone on the road to full recovery.

“The recession officially ended in the middle of ’09 and the unemployment rate peaked in the fourth quarter of ’09, so this may be a fast one,” Brown said.

Berson-Sayers said the improvements she sees are subtle. “People are looking me in the eye during the interview, just small stuff, but it makes a different impression,” said Berson-Sayers. While she is fueled by the encouraging unemployment numbers and the new optimism she is encountering lately in her own job search, she doesn’t personally feel that the job market recovery has been in any way fast.

“This is the longest I’ve ever been out of work – by years.”

Consumer Confidence in March Shaken By Inflation Fears

U.S. consumer confidence was dealt a gut-wrenching blow in March, falling to 63.4 from a three-year high of 70.4 in February, the biggest one month decline in over a year.

While U.S. consumers may have been able to shrug off a trifecta of disasters in Japan, a viral series of uprisings in and around the Middle East and the increasingly likely prospect of yet another round of European debt crises, they buckled under the weight of inflation fears surrounding rising food and gasoline prices, according to the Conference Board.

“The sharp decline in confidence was prompted by a sharp decline in expectations.  Consumers’ inflation expectations rose significantly in March and their income expectations soured, a combination that will likely impact spending decisions,” said Lynn Franco, director of the Conference Board’s Consumer Research Center.

Analysts surveyed by Bloomberg, who had forecasted a modest 3 to 4 point deviation from February’s figure, awoke this morning to an even more deflated picture of consumer sentiment than expected.

In a research note released on Tuesday from Jefferies Securities, chief financial economist Ward McCarthy seemed to agree with Franco’s evaluation of the situation.  “The confidence data this month is troubling,” wrote McCarthy, “but the positive assessment of the current situation offers hope that if price increases in food and gasoline end up being temporary, consumers will feel better about the outlook and overall confidence will improve.”

The Present Situation Index, which measures consumers’ current attitudes, rose moderately from 33.8 in February to 36.9 in March, while the Expectations Index, which assesses consumers’ expectations for the economy six month from now, took a drubbing, falling 16.4 points, from 97.5 in February to 81.1 in March.

Inflation Worries

Earlier this month, a prescient Bart van Ark, senior vice president and chief economist at the Conference Board, said, “Headwinds continue to include a still weak housing market and renewed concerns about the negative consequence of high and rising energy and food prices.”

Well those headwinds appear to have peaked in March, making consumers like Keeron Thomas, 29, of East New York, Brooklyn, a bit more jittery than usual at the supermarket checkout counter.

“I don’t know,” said Thomas.  “Times are tough.  Things that you’d just toss into your shopping cart a month or so ago you’re now having to think twice about.  It’s crazy.  And with the price of gas the way it is, I’m just glad I don’t drive.”

While economists tend to focus much of their attention on the “core” Consumer Price Index—an assessment of inflation in consumer goods and services that excludes the oftentimes schizophrenic costs of food and energy—recession-battered consumers are forced to be far more practical, as food and gasoline make up an increasingly large portion of their monthly spending as of late.

“That doesn’t make any sense,” said Thomas.  “The things we use the most are the things they’re saying we should pay the least attention to.  Does that make sense to you?”

Bernard Baumohl, chief global economist at the Economic Outlook Group, said, “Clearly, the inflation outlook of those polled points to a belief that inflation is going to be higher over the next 12 months.”  And the Conference Board’s measure is not the only indicator painting a disconcerting picture of future inflation.  “The Michigan survey also seems to suggest that consumers believe that prices are headed higher,” Baumohl said.

Despite repeated attempts in recent months by Fed Chairman Ben Bernanke to allay inflation fears, Americans—who increased their spending in March—may soon start to tighten their purse strings if food and gas prices continue to mount, a trend that would be anathema to a still fragile recovery.

“They have to spend more on food and gasoline, yet they are unable to ask their employers for higher pay because the job market is still very soft,” Baumohl said.

While he said that he can appreciate Bernanke’s desire to “keep inflation expectations anchored,” Baumohl added “there is a growing sense by many that inflation pressures are actually heating up.  We see that not only from the most recent consumer confidence survey, but we also see that in other areas, such as the latest CPI, which was up 2.1 percent over the past 12 months—making it the fastest rate since April 2010.”

Washington Fix Unlikely Even As Home Prices Fall

Rep. Dennis Cardoza, a fifth-term Democrat from California’s Central Valley, doesn’t need an economic indicator to describe the state of the housing market. Three cities in his district—Modesto, Stockton and Merced—have foreclosure rates among the ten worst in the country. Seventy percent of Central Valley homeowners are underwater on their loans, owing more than their homes are worth.

“People have walked up to me in the street and handed me their house keys,” Cardoza said. “They don’t have anywhere to turn. This is a major fundamental crisis. People are desperate.”

In spite of the ongoing economic recovery, the housing crisis continues. Distressed sales have pushed home prices down, forcing more borrowers underwater and leading to more distressed sales. The vicious cycle holds dire consequences for millions of homeowners, but no solution is readily apparent. In Washington, Republicans and Democrats are divided on whether government should aid struggling borrowers. Negotiations between all 50 state attorney generals and major loan servicers offer some hope, but are unlikely to bring relief anytime soon.

For the present, the housing market is in the tank, and it is unlikely to be rescued. That doesn’t sit well with Cardoza.

“Even those who aren’t underwater have lost tremendous wealth,” he said. “It’s critical that we do something to stop the downward spiral of home prices.”

Home prices have already reached a nine-year low. Median prices on existing home sales fell to $156,100 in February, the lowest level since April 2002, according to a report released Mar. 21 by the National Association of Realtors. Existing sales plunged 9.6 percent to a seasonally adjusted rate of 4.88 million, well below the 5.13 million projected by economists polled by Bloomberg News.

Bargain prices on existing homes took a toll on new home sales, which fell to an annual rate of 250,000, according to a report released on Mar. 23. That number represented the lowest pace of new home sales since the Commerce Department started tracking the statistic in 1966.

Recovery in the housing market will be driven by job growth, but prices will not rebound overnight, said Scott J. Brown, chief economist at Raymond James & Associates.

“Where I live in Tampa, half of the homes are underwater,” said Brown, adding that the addition of 192,000 jobs to the economy in February was only a small start. “It’s going to take job growth on the order of 250,000 to 300,000 per month for the next two or three years for us to see a full recovery.”

Washington policymakers are split on whether time is the only thing that can fix the housing market. On Mar. 29, House Republicans passed a bill to end the Housing Affordability Modification Program, an Obama Administration initiative to help troubled borrowers stay in their homes.

“The government should have stayed out of this mess,” said Peter Wallison, the Arthur F. Burns Fellow in Financial Policy Studies at the American Enterprise Institute, a conservative think tank. “The solution from the beginning should have been let prices fall to their natural levels, and let them recover from there.”

But while Republicans would like to remove the government from the private mortgage market, it is widely believed that the White House would veto the HAMP repeal in the unlikely event it passed the Democrat-controlled Senate.

With lawmakers deadlocked, hope has emerged that negotiations between attorneys general from all 50 states and the mortgage servicing industry might lead to loan modifications that break the cycle from distressed sales to declining home prices and back again. While the attorneys general have a proposed a settlement that would force banks to modify more loans, the complicated nature of deal and the acrimonious political climate surrounding negotiations make a timely agreement unlikely.

“As unlikely as a congressional fix may be, I think this settlement engagement is going to be as equally contentious,” said Jason Gold, Senior Fellow for Housing and Financial Services Policy at the Third Way, a moderate think tank. “The shame of is that while we’re arguing about how to make the best policy out of it, the crisis is putting people out in the street.”

For his part, Cardoza introduced the Housing Opportunity and Mortgage Equity Act. Following a plan laid out by two deans at the Columbia Business School last year, the bill would direct federal agencies to help homeowners with government-backed loans refinance at long-term fixed market rates, but without contentious principal write-downs.

While the current calculus makes passage unlikely, the California congressman warned that dire state of the housing market carried high stakes.

“President Obama may have inherited the housing crisis, but it’s his crisis now,” Cardoza said. “We’ve got over 30 million government-backed mortgages. That’s potentially 60 million voters two years from now.”

Updated Mar. 29.

Manufacturers Leading Recovery Despite Inflation

Prices for raw materials have skyrocketed but manufacturers are still charging forward.

The manufacturing sector has a number of things going for it. The auto and machinery industries are doing quite nicely. Firms are cash rich right now and beginning to hire again. Also, a tax break that comes into affect this year makes it more attractive for firms to spend on software. Prices have risen but firms have been confident enough to pass on costs, which shows confidence.

Worries over inflation loom, however. High demand abroad for industrial metals has continued to push prices upward. There also remains the issue of the economy’s capacity. There may not be enough demand in the market to justify adding facilities.

February auto sales far exceeded expectations. General Motors Co. showed a 46 percent increase in sales, with increases across car, truck, and SUV segments.

Machinery companies are especially strong. John Deere & Co. reported profits of $513.7 million, or $1.20 per share, for the first quarter ended January 31, compared with $243.2 million, or $0.57 per share, during the same period in 2010. Demand for farm equipment in the United States and Canada was the driving force. Caterpillar Inc.’s CEO Doug Oberhelman predicted plentiful years as ahead due demand for construction and mining equipment around the world. Annual Income recovered to nearly 4 billion in 2010.

The March Business Survey of manufacturers conducted by the Philadelphia Federal Reserve Bank, considered a leading indicator, showed positive signs. Across the board the numbers reflected improvement or little change from the previous month.

Over sixty percent of the firms reported an increase in prices paid from March to February.

Fifty five percent of firms reported new order growth, up from 42 percent in February. The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, increased to 43.4, the highest measure since 1984, up from 35.9 in February. Seventy five percent of firms anticipated an increase in production in the second quarter of this year. Twenty five percent of the firms reported increases in hiring.

A new tax law that encourages self-investment has also gone into effect. Thanks to the new Section 179 Deduction, businesses can now spend up to $2 million on corporate software, the upward limit on deductions being $500,000. If firms take the bait, then business investment in equipment and software is likely to continue to rebound from the trough in the second quarter of 2009. Fixed investment increased 3.8 from 2009 to 2010, compared to an 18.3 percent decrease between 2008 and 2009, according to the Bureau of Economic Analysis.

Businesses may not need to spend however, according to Russel Price of Ameriprise International.

“There’s not really a need for additional facilities right now.” Price said. “Certainly there’s still a decent amount of capacity within the United States’ economy.”

And worries over inflation continue to dog.

When pressed about inflation worries, Mike Trebling of the Philadelphia Fed stressed that the survey corresponded only to Philadelphia manufacturers and that prices could decrease just as easily.

“We have seen these index levels as high as they are now back just a few years ago when energy prices were being passed on.” Trebling said. “They can come down as fast they’ve gone up. It’s just one sector of manufacturing firms with regard to their pricing.”

Companies facing raising raw material prices may not see it that way.

Jerry Heid oversees domestic sales for Zero Internaional Inc., a Bronx-based gasketing company involved primarily with safety pertaining to doors in commercial construction.

“Expectations are guarded.” Heid said. “I did see some increased activity in certain activities in the country.”

Inflation is here, according to Heid, and businesses need to learn how to live with it.

“There are inflationary pressures. There’s no doubt about that. So that is a concern about that, but it’s probably nothing that we’re going to be able to control.” Heid said. “We’re going to have to work around it and figure out how to deal with it.”

Fed Says ‘Inflations Ok’ But Higher Food Prices Strain Citizens

“Can I get the 2 for $3,” said 64-year-old Sarah Cabezas.

“It’s 2 for $4 now,” retorted the McDonalds cashier.

“What? When did it go up?” the befuddled high school teacher exclaimed.

Cabezas’s exclamation was a first-hand account of the sudden but painful pinch of inflation.

The Labor Department said on Thursday its Consumer Price Index rose 0.5 percent, the largest gain since June 2009, after increasing 0.4 percent in January. The February increase was the fastest rise in the inflation-measuring index in more than year and a half.

However, economists are not concerned. The core CPI rate, which excludes food and energy only increased by 0.2 percent after advancing by the same margin in January. Economists feel that the overall rate is being driven by higher food and energy prices.

“Virtually every measure of price behavior shows inflation pressures building,” said Bernard Baumohl of the Economic Outlook Group.

The small increase being felt by Cabezas may only raise her daily food budget by a couple of dollars but businesses like Bronx County Collision have had to absorb the increase price of business for the first half of the year.

“People don’t like you already because you tow their car. But when you tell them they have to pay close to $300, they flip out more than usual,” said “Big” John De Simone, owner of the Bronx based towing company.

But economists fear that core CPI rate is climbing at a faster than expected rate. Baumohl and other economists are in agreement that on its current trajectory the indicator will likely reach the Federal Reserve Board’s projected target rate before the summer.

Yet the Federal Reserve remains steadfast in its latest massive round of Quantative Easing or how some call it QE2.  The Federal Reserve is currently buying up Treasury bonds in excess of $600 billion in an attempt to keep the U.S. economic recovery charging ahead.

This policy has been panned by detractors as a possible road to runaway inflation, a fear that is fueled by fears Detractors are afraid of huge price jumps at a time when American’s have little bargaining power for wage increases.

However, the Fed feels that consumers are capable of absorbing the increases for the short term a sentiment expressed by Cabezas.

“Despite the core CPI increasing expectations for a 0.1 percent gain, it suggested that surging costs for energy and other commodities, which have been hitting producers and consumers alike, had yet to generate the type of broad inflation that would spur the Federal Reserve to respond,” said Ellen Beeson-Zentner of Bank of Tokyo-Mitsubishi UFJ.

The Fed and economists like Beeson-Zentner point to people like “Big” John De Simone as an example of businesses absorbing higher prices in order to remain competitive.

De Simone’s Bronx based towing business only recently decided to increase their tow and impound fees to cover the rising cost of fuel for their 7 trucks.

Their fleet of vehicles has been chugging on gallons of gasoline for over 10 years, with the last two being especially painful. “Big” John noted that the average fill up cost for a truck as $80 but has increased to $120 since November.

“We’re a tow truck company. We can’t do business without the trucks so I got to shell out so much more, so when people scream at the price of gas you can imagine how I feel, I have 7 trucks!,” said De Simone.

Beeson-Zentner  added, “If core inflation continues to rise, while job growth remains slow and the U.S. expansion is threatened by developments in the Middle East and Japan, then the Fed will be in a very tight spot.”

“With what appears to be a definitive turn in core inflation, the Fed may be running out of time to spare before tightening monetary policy,” said the Bank of Tokyo economist.

This could place the Fed in a “lose-lose” situation. As described the Fed may have to change its position on its Quantitative Easing policy as they have to decide to fight higher inflation or slow growth.

“The Fed’ two principal mandates – maximizing jobs and containing inflation -are moving in opposite directions. The last time the Fed faced such a quandary was the late 1970s,” said Baumohl.

Baumohl is noting how then Federal Reserve Chairman Paul Volcker decided that inflation was the greater threat to the economy.  A position that might have to be revisited by current Federal Reserve Chairman Ben Bernanke.

“Bernanke will have to fight inflation, not unemployment, the reason? Inflation is suffered by everyone, while unemployment hurts just the jobless,” said Baumohl.

As the core inflation continues to rise and job growth remains slow people like Cabezas and De Simone will have to make harder decisions when planning their daily budgets.  Cabezas has already substituted lower priced goods for higher-priced ones in hopes of tempering the effects of price increases.

“I’ll buy a big tub of not-so good yogurt that cost me less, but I won’t give up my egg McMuffins. They are just too dear to my morning,” quipped the teacher.

Japan Crisis Will Push Down the LEI

The Index of Leading Economic Indicators (LEI) moved up to .08 from .01.

However it will falter when March’s LEI is released because of the unexpected rise in oil prices caused by the unrest in the Middle East and especially the crisis in Japan.

“The increase of gas prices affects everybody,” said New York City Councilman Peter Koo, a member of Committee of Small Businesses. “Everything depends on oil.”

He said many products are transported or produced using oil and could increase the price of those products for the consumer. Also since it is used as a power source, the price will push down consumer sentiment, which is one of the indicators in the LEI.

A survey from Thomson Reuters and the University of Michigan measuring consumer sentiment released early march showed consumer expectations for inflation jumped to 3.2 percent from 2.9 percent last month as gasoline prices soared.

As of right now the gasoline price is at $3.57 per gallon, which is a $0.78 increase from last year at this time according to U.S. Energy Information Administration.

In addition insecurity about the Middle East and Japan and their affects on businesses is worrisome according to President Pinsky, president of the New York City Economic Development Corporation, a government agency that promotes business in the city.

“Uncertainty is never good for business,” said he said. “And it’s just one of those things we have to monitor.”

Specifically, the uncertainty over Japan’s recovery will continue to make stock prices highly volatile in March. As another component in the LEI, it can either boost or hit the index depending on speculators view on the recovery.

However, Councilman Koo said that Japan is likely to recover quickly from the tsunami and its damaged nuclear plants. This in turn will lower down the speculation raising the gas prices.

Regardless, the current rise in gas prices is not being felt by the business in New York City as severely as in other areas of the United States. According to Seth W. Pinsky, this is because the city is more energy efficient.

“I haven’t noticed any significant increase at my business,” said Tom Adams, owner of Bergen Street Comics in Park Slope.

The shop regularly gets its products shipped to the store from Diamond Comic Distributors, Inc., a comic book wholesaler but Adams has not noticed a dramatic increase in prices. He said it could be a problem if it stays high during the summer when he would need an air conditioner.

Even if the consumer sentiment and the stock prices go down, most of the other LEI components should keep the index from faltering too severely.

“In terms of the other indicators a lot of them have been experiencing underlining improvements since the recovery began in mid-2009 and there is no reason why that shouldn’t continue,” said Ellen Zentner, Senior U.S. Macro Economist for The Bank of Tokyo-Mitsubishi UFJ, Ltd.

Building permits will only have a slight weaken the index. The low permit numbers is a result of builders requesting permits early to bypass stricter building codes for 2011.

That should be compensated by an increase in average manufacturing workweek and lower initial unemployment claims that are continuing to rebound after the snowstorms.

Food and energy prices soar

In the desserts aisle of a bustling Manhattan grocery store, South Carolina natives Nancy and Keith Huffaker place a box of assorted cookies in their shopping basket. They’ve come out to satisfy their after-dinner sweet tooth and though they admit the prices are higher in New York, they don’t believe food prices are on the rise.

“I’ve been here for three years and I don’t think it’s too bad,” said Mr. Huffaker. “But you can use more discretion with food, like change brands. Gas prices are a bigger threat.”

U.S. wholesale prices increased for the eighth consecutive month in February, led by a sharp rise in food prices—the highest since 1974. Energy prices also jumped. But some consumers, like the Huffakers, say they have yet to notice a difference on their grocery tab. Economists said producers might feel the pinch as they struggle to pass on the higher costs.

Continue reading Food and energy prices soar

Payroll Tax Cut Provides High Price Relief

Effects from the payroll tax cut boosted retail sales, offsetting the impact of higher prices of food and gasoline.

Purchases for the month of February were $387.1 billion, representing a 1 percent increase from the previous month, and an 8.9 percent increase compared to the previous year. February was the eight consecutive month of growth, and the 1 percent gain was the largest since last October’s 1.6 percent uptick.

11 of the 13 areas on retail sales showed positive growth, with the biggest winner being gas service station sales, which rose 1.4 percent as a reflection of the raise in gas prices.

However, despite consumers’ willingness to spend over the course of the last month, their confidence in the economy has fallen.

The University of Michigan’s index of consumer sentiment fell 9.3 points in March to 68.2, the largest drop in more than five years.

But even with that decline, consumers had no qualms about spending money on retail.

“You didn’t witness any credit usage or the drawing of savings,” said Tom Porcelli, chief U.S. economist at RBC Capital Markets “This was completely organic.”

The benefits of January’s payroll tax cut have kept up the growth of retail sales. The average annual expected benefit per worker is $695, and more than 159 million working Americans are expected to receive larger paychecks this year then they would otherwise, according to a press release by the White House.

Mike Tommasino, a stock clerk at Waldbaums, is one of those Americans.

“I heard about the cut, but I didn’t realize what it meant until I got my paycheck,” said Tommasino. He estimated that he took home $20 more than usual on his last paycheck.

But that money did not last long. Tommasino, who drives a 2010 Hyundai Santa Fe SUV that maintains an estimated 20-miles per gallon, spent it at the pump.

“The extra money is definitely a help,” said Tommasino. “I don’t feel like I’m broke after going to the gas pump.”

He spent $47.53 at a local CITGO station to top off what was left in his gas tank, and it would have cost him $76.11 to fill his entire 19-gallon tank in New York.

Just a month earlier, he would have spent $68.66 to fill the same amount. The national average for gas has increased 40 cents over the past three weeks, to $3.52 per gallon.

While the tax cut has provided Tommasino a cushion for the rising gas prices without cutting into his other expenses, further rising of gas prices could cause a drop in retail sales.

Roughly one-third of Americans already have begun reducing discretionary spending because of fuel costs, according to the RBC Consumer Outlook Survey. Another 18 percent said would reduce spending if prices reached $3.75 a gallon.

But although there remains a fear that gas will rise to a price that will cause consumers to cut spending in any non-essential area, sales in February weren’t affected.

Excluding sales of motor vehicles, building materials and at gas stations, retail sales increased 0.6 percent, identical to the gain in January and consistent with much of the slow but steady growth that existed over the fourth quarter of 2010. “The rise in prices started in early February, but we still had a good month,” said Porcelli.

The warmer weather of February helped to further pull consumers out from their homes, as sales at restaurants and other food services locations gained 3.5 percent over the previous month.

So despite dropping consumer confidence and rising prices, retail sales continue to grow. Is this a case of consumers crying wolf?

“What consumers say and do are often two different things,” said Porcelli.

Public Sector Layoffs Add To Unemployment Rolls

Hiring in key areas of the private sector has been bullish, but increasing layoffs in the private sector are still a major headwind to job growth.

According to the US Bureau of Labor Statistics, the construction industry, which has been hampered by a weak housing market and bad weather in the past few months, has added 33,000 jobs in February. The professional and business services industry also hired 47,000 workers.

“Part of the increase in professional and business was in temporary workers,” said Sean Incremona, an analyst at 4Cast Limited. “Hiring a temp worker is the first stage towards increasing regular payrolls.”

The job increases in the private sector has been dampened by cuts in the public sector. Due to decreased tax revenues and increased payouts to unemployment claimants, many states have had to resort to removing public employees from their payrolls to balance their budgets.  Nationwide, 30,000 public employees lost their jobs in February.

Continue reading Public Sector Layoffs Add To Unemployment Rolls

Trade Deficit Widens due to Unexpected Surge in Imports

The U.S. trade deficit widened by an unexpected 15.1 percent to $46.3 billion in January due to a 5.2 percent jump in imports. Economists surveyed expected a gap of $41.5 billion.

Higher purchases of capital goods, industrial supplies and auto pushed imports up to $214.1 billion. Capital goods imports of industrial machines and engines increased by 16.2 percent, a sign that companies are beginning to invest.

“As the economy recovers, one element of growth is that consumption will increase so we would expect imports to be higher,” said Nathaniel Karp, chief U.S. economist for BBVA Group. “[International trade] is one of the indicators that are spelling good news.” Continue reading Trade Deficit Widens due to Unexpected Surge in Imports