Another sign economy may be turning

I don't see how the govt. is going to subsidize an even larger waste of money on green energy programs.

 

Sure I'd take it, it's like getting a portion of my taxes back.

On the other hand, I still don't see how they're going to afford the soup kitchens and to sell widgets that cost $2 to make for $1 each.

The strategy seems to be to make up for the losses with volume.

 

http://www.reuters.com/article/economicNews/idUSN1450507420090518?pageNumber=1&virtualBrandChannel=0

FEATURE-Blue collar U.S. males lose more ground

Mon May 18, 2009 7:00pm EDT
* U.S. male unemployment rate surges past national average
* Blue collar men take worst hit, wages keep falling
* Construction may recover; many assembly jobs are gone

By Ed Stoddard

DALLAS, May 19 (Reuters) - Rodney Ringler is an unemployed blue collar male without a college degree. He's hardly alone. Men like him have been the main victims of the current recession in the United States.

"I haven't worked since December of 2007, around the time this recession started," Ringler, a 49-year-old computer technician, said as he walked his dog in a Dallas suburb.

He sees little light at the end of the tunnel.

"I've been looking to get into law enforcement because it's a growth area," he said, but had no immediate prospects.

One statistic that stands out in America's recession-stung economy is the unemployment rate for adult men: in April for the second month in a row it surged ahead of the national average to 9.4 percent versus 8.9 percent for all workers. The jobless rate for adult women was 7.1 percent.

The reasons are clear: male-heavy sectors such as construction and manufacturing have been hard hit. But the implications may be dire for the broader economy and hamper the recovery as families that once had male breadwinners struggle.

"In the 2001 recession, 51 percent of all job losses were for men. It was evenly split. But in this recession 80 percent of the jobs that have been lost have been men's," said Andrew Sum, a labor economics professor at Northeastern University who has studied this issue in detail.

Men also incurred about 80 percent of the job losses in the 1990-91 recession, but Sum said by his calculations the numbers this time were dramatically different. In the 1990-91 recession, men lost 1.037 million jobs. They have lost 4.5 million to date in this one.

"This time around it is amazingly different in terms of the magnitude," Sum said.

It's difficult to compare to earlier recessions because women entered the workforce in big numbers from the 1970s, and industries that continue to grow such as health services favor women.

The male jobless rate is pumped up by white collar banking jobs lost during the global financial crisis. A few of these may have been sent overseas but job growth in this sector should come back in time, analysts said.

HARD TIMES AHEAD

The fact that American males without a college degree are especially vulnerable in this cycle point to more hard times ahead for the U.S. working class, which has endured stagnant and declining wages for the last three decades.

The skilled and semi-skilled jobs they traditionally held have been moving overseas to places like China and Vietnam. The jobs that remain pay less, amid declining union membership.

One study by Julia Isaacs of the Brookings Institution think-tank found median U.S. family income rose to $53,280 by the middle of this decade in 2004 dollars from $37,384 in 1964. But for males aged 30 to 39, average annual personal income fell from the mid-1970s by around $5,000 to $35,000.

The growth in family incomes is mostly from women entering the workforce. But during this recession that will hardly compensate given the scale of male job losses.

For those without a college degree or better, it has been a bloodbath.

"College-educated men have lost 1.4 percent of their employment levels since right before the beginning of the recession in November 2007, but for men as a whole it has been nearly six percent," said Sum.

Sum said in the last recession the effects were felt more evenly across gender and occupational lines and that construction jobs grew from mid-2002 onward at a strong rate through 2007. But production and manufacturing jobs fell steadily through 2005 before making a modest recovery, and then falling swiftly.

EXPANDED WOMEN'S ROLE

This is grim news for struggling blue collar families. While women's role in the workforce has expanded, by some estimates the male remains the main breadwinner in about 75 percent of two-income U.S. households.

"When males lose their jobs ... women become more important to family income, and those that have not been working will re-enter the labor market to sustain family income," said Peter Doeringer, a Professor of Economics at Boston University.

Patti Sutton, 58, a coffee shop worker in the Phoenix Valley, falls into this category.

Her husband Scott was laid off in October last year. He had worked for 18 years for a company as a heavy equipment operator excavating the foundations for luxury homes, earning about $800-900 a week without overtime, and was among the last five workers to be laid off from a staff of 155.

"I am now the family breadwinner," said Sutton. She went out to work to get health insurance coverage for her husband in the year before he was laid off after he lost coverage for a heart condition from his employer. He needs a heart transplant, and was facing insurance costs of $1,800 a month.

"It's not like I'm exactly earning enough to be the breadwinner," she said. "Basically this job is for insurance, what I bring home barely covers food and maybe a utility."

Her situation may be permanent, she said, though construction jobs are seen coming back eventually, spurred in part by President Barack Obama's $787 billion fiscal stimulus plan that includes funds for road and bridge construction.

But many manufacturing jobs are gone for good, as huge sectors like the auto industry suffer profound cuts.
Doeringer said the recession will leave the economy "sharply restructured".

"The construction jobs will return, but we are seeing an unusually sharp drop in what is left of manufacturing and much of that drop will not be recovered when the recession ends, and much of what does remain will have be at lower wages with reduced fringe benefits," he said.

(Additional reporting by Tim Gaynor in Phoenix, editing by Philip Barbara)

 

http://money.cnn.com/2009/05/20/news/economy/fed_minutes/index.htm

Fed's economic forecast worsens

Central bank now expects unemployment to rise to a range of 9.2% to 9.6% this year. Fed also predicts a sharper decline in GDP than it had forecast in January.

By Chris Isidore, CNNMoney.com senior writer
Last Updated: May 20, 2009: 4:20 PM ET

NEW YORK (CNNMoney.com) -- The Federal Reserve's latest forecasts for the U.S. economy are gloomier than the ones released three months earlier, with an expectation for higher unemployment and a steeper drop in economic activity.

The Fed's forecasts, released as part of the minutes from its April meeting, show that its staff now expects the unemployment rate to rise to between 9.2% and 9.6% this year. The central bank had forecast in January that the jobless rate would be in a range of 8.5% to 8.8%, but the unemployment rate topped that in April, hitting 8.9%.

The Fed also now expects the gross domestic product, the broadest measure of the nation's economic activity, to post a drop of between 1.3% and 2% this year. It had previously expected only a 0.5% to 1.3% decline.

At the April meeting, the Fed decided to once again leave its key federal funds rate near 0%, a level it has been at since last December. The central bank also announced that it did not plan on increasing purchasing more long-term Treasury notes anytime soon.

The Fed disclosed plans to begin buying $300 billion's worth of such Treasurys in March in order to try and keep long-term rates down and boost economic activity.

But according to the minutes, some members of the central bank's policy committee indicated they were open to increasing its purchases of Treasury notes and mortgage securities as a way of spurring more lending.

Treasury prices rallied after the minutes were released, pushing their yield, which moves in the opposite direction, down to 3.18%.

Stocks, which have moved sharply higher during the past two months on hopes that the recession may soon be ending, fell Wednesday afternoon.

According to the minutes, Fed members did indicate they expected GDP to increase slightly in the second half of this year. However, it would not be enough to overcome the anticipated declines in the first half. GDP shrunk more than 6% in the first quarter.

Policymakers acknowledged that there were some better economic readings in the period leading up to the April meeting, but added that they were not convinced the economy was out of the woods yet.

In the minutes, Fed members indicated that there are a number of factors that "would be likely to restrain the pace of economic recovery over the medium term" and added that the credit crunch would "recede only gradually" and that "households would likely remain cautious" in their spending.

Fed members expressed concerns about rising problems in the commercial real estate market as well, indicating that this could cause further problems for financial institutions still struggling with the effects of the collapse of home prices and rising mortgage defaults.

The Fed also reduced its GDP targets for 2010 and 2011, but the central banks still expects the economy to grow in both years.

Rich Yamarone, director of economic research at Argus Research, said that the Fed's new forecasts were "more of a reality check than a revision," given the deterioration in the labor market and overall economy since January.

But he and other economists said it also appeared from the minutes that the Fed is pleased with how the economy has started to respond to the steps it has taken, including the purchases of mortgages and Treasurys.

"I read [the minutes] as 'We think it's working, let's wait a few months to see how it plays out,'" said Gus Faucher - director of macroeconomics at Moody's Economy.com. He added that it did not seem like the Fed felt a "sense of urgency" to increase the scope of its Treasury purchase program.

And Yamarone said it's important to remember that the forecasts and minutes are three weeks old, and that economic readings since the meeting, including home sales and the rate of job losses, have generally showed signs of improvement.

"These minutes look like they have a bleaker assessment, but things were darker then," he said. "I can't say it's an accurate interpretation of their outlook today. I think that would be a little more favorable."

First Published: May 20, 2009: 2:17 PM ET