Weak economic data suggest recovery is fizzling

[Dr. A ♥ O 203]

Weak economic data suggest recovery is fizzling

By CHRISTOPHER S. RUGABER, AP Economics Writer – 1 hr 52 mins ago

WASHINGTON – Fears that the economic recovery is fizzling grew Thursday after the government and private sector issued weak reports on a number of fronts.

Unemployment claims are up, home sales are plunging without government incentives and manufacturing growth is slowing.

Meanwhile, 1.3 million people are without federal jobless benefits now that Congress adjourned for a weeklong Independence Day recess without passing an extension. That number could grow to 3.3 million by the end of the month if lawmakers can't resolve the issue when they return.

All of this worries economists. As jobless claims grow and benefits shrink, Americans have less money to spend and the economy can't grow fast enough to create new jobs. Some are revising their forecasts for growth in the third quarter. Others are afraid the country is on the verge of falling back into a recession.

"We find the level and direction in jobless claims somewhat troubling and the increase is likely to feed double-dip fears," said John Ryding, an economist at RDQ Economics in a note to clients.

New claims for benefits jumped by 13,000 to a seasonally adjusted 472,000, the Labor Department said Thursday. The four-week average, which smooths fluctuations, rose to 466,500, its highest level since March.

Claims have remained stuck above 450,000 since the beginning of the year. Requests for unemployment benefits dropped steadily last year after reaching a peak of 651,000 in March 2009. Economists say they will feel more confident about sustained job growth when initial claims fall below 425,000

Adding to that is the growing number of people who stand to lose government support while they search for work.

For the third time in as many weeks, Senate Republicans blocked a bill Wednesday night that would have continued unemployment checks to people who have been laid off for long stretches. The House is slated to vote on a similar measure Thursday, though the Senate's action renders the vote a futile gesture as Congress prepares to depart Washington for its holiday recess.

During the recession, Congress added up to 73 weeks of extra benefits on top of the 26 weeks typically provided by states. Democrats in the House and Senate want them extended through November. Republicans want the $34 billion cost of the bill to be paid for with money remaining from last year's stimulus package. Democrats argue that it is emergency spending and should be added to the deficit.

Some economists say they may revise their forecasts for growth in the third quarter if the benefits are not extended.

"People whose benefits are going to run out will simply not have the spending power necessary to help drive growth," said Dan Greenhaus, chief economic strategist at Miller Tabak.

The housing market is also weighing on the economy. The number of buyers who signed contracts to purchase homes tumbled 30 percent in May, the National Association of Realtors said. And construction spending declined 0.2 percent in May as residential building fell, the Commerce Department said.

Both were affected by the expiration of government incentives to buy homes. Buyers had until April 30 to sign sales contracts and qualify for tax credits.

The tax credit's impact also showed up in the jobless claims report. Greater layoffs by construction firms fueled the increase, a Labor Department analyst said.

Separately, the Institute for Supply Management, an industry trade group, said its manufacturing index slipped in June. But it is still at a level that suggests growth in the industrial sector, which has helped drive the economic recovery.

Surveys released Thursday in China showed a slowdown in factories' growth as exports faltered and analysts worry that cutbacks in government lending will cool the economy's rapid rise. Reports from Markit Economics also indicated that manufacturing sector growth in India, South Korea, Australia and Taiwan was slowing.

The industrial sector's growth also cooled slightly in the 16 countries using the euro and the United Kingdom.

The troubling information on the economy comes a day before the Labor Department is scheduled to release the June jobs report. That is expected to show a modest rebound in private-sector hiring. Overall, employers are expected to cut a net total of 110,000 positions, but that includes the loss of about 240,000 temporary census jobs. Private employers are projected to add 112,000 jobs, according to a survey of economists by Thomson Reuters.

That would be an improvement from May, when businesses added only 41,000 workers. But the economy needs to generate at least 100,000 net new jobs per month to keep up with population growth, and probably twice that number to bring down the jobless rate.

The unemployment rate is expected to edge up to 9.8 percent from 9.7 percent in May.

Layoffs are rising in the public sector, as states and local governments struggle to close persistent budget gaps. New York City approved a budget Tuesday that cuts about $1 billion in spending and would eliminate 5,300 jobs from the city's 300,000-person work force.

___

Associated Press Writer Stephen Ohlemacher contributed to this report.

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[Dan J 277]

The irony is that focusing on news like this, can easily become a self-fulfilling prophecy, since much of the economy is driven by peoples emotions.

[mendeleev 68]

The irony is that focusing on news like this, can easily become a self-fulfilling prophecy, since much of the economy is driven by peoples emotions.

Especially these days, when nonrational behavior dominantes economic activity more than normal.

[Dr. A ♥ O 203]

True that it's hard to be rational when one's emotional. Hunger has made people emotional, i.e. angry and that can lead to irrational behaviors.

Edited July 1, 2010 by Cleocatra

[alienlovechild 75]

The irony is that focusing on news like this, can easily become a self-fulfilling prophecy, since much of the economy is driven by peoples emotions.

Is the converse also true? Remember when Ben Bernanke talked about seeing "green shoots" in the economy back in spring 2009? Did talking up the economy help?

The herd mentality isn't smart as fools are buying gold at high prices and shunning homes which may be undervalued and a bargain if you've got the money. There's a lot of pent up consumer demand out there and that is going be a big factor.

[Dan J 277]

Is the converse also true? Remember when Ben Bernanke talked about seeing "green shoots" in the economy back in spring 2009? Did talking up the economy help?

The herd mentality isn't smart as fools are buying gold at high prices and shunning homes which may be undervalued and a bargain if you've got the money. There's a lot of pent up consumer demand out there and that is going be a big factor.

Absolutely, look at the run up to the recession, how many people bought into the sham that house prices never go down?

Can a single person talk up the economy? Probably not, need others to support it.

[Darnell 8,479]

This is supposed to be a 'jobless' recovery - ie - no 'new jobs' created, but I view that 'unemployment rising' as BS, as there's a lot of jobs that are getting filled, as well.

[alienlovechild 75]

This is supposed to be a 'jobless' recovery - ie - no 'new jobs' created, but I view that 'unemployment rising' as BS, as there's a lot of jobs that are getting filled, as well.

It's not that there is huge surge in new jobless claims but there simply hasn't been enough jobs created to pick up the slack. It's like digging a deep hole and climbing part way out= the economy is still in the hole.

Haven't heard much from the unemployed on this forum so I'm assuming it's the old case of a recession is when you know someone who lost a job but a depression is when you lost yours and can't find another one quick enough.

[Dan J 277]

It's not that there is huge surge in new jobless claims but there simply hasn't been enough jobs created to pick up the slack. It's like digging a deep hole and climbing part way out= the economy is still in the hole.

Haven't heard much from the unemployed on this forum so I'm assuming it's the old case of a recession is when you know someone who lost a job but a depression is when you lost yours and can't find another one quick enough.

There are jobs, but unfortunately, many of the openings require a college degree. Many of the unemployed don't have any post secondary education. The unemployment rate for those with college degrees is much lower than those without.

[Dr. A ♥ O 203]

There are jobs, but unfortunately, many of the openings require a college degree. Many of the unemployed don't have any post secondary education. The unemployment rate for those with college degrees is much lower than those without.

This may depend on where one lives. I have a college degree and I've been looking for work for the past seven months with only one call back for an interview and they didn't hire me. I've got my resume up on job websites and I'm registered with the department of labor for my state. I've submitted my resume to temp agencies and they don't have work for me. I've rewritten my resume 10 times already and applied for over 100 jobs I'm well qualified for or over qualified for and even sucky low wage labor jobs. Right now I've resigned myself to watching my 4 month old niece as a temporary job for $4 an hour. I have to wake up everyday and commute 45 mins in rush hour traffic there and back just to do this work and make some kind of money and the majority of my money goes to gas. I work 10 hours straight with no one to give me a lunch break. But hey at least I get computer access to keep looking for work and apply for more jobs.

Employers have said to me that they get 200 resumes to look at for every one job opening. That so many people with years of experience who have become recently unemployed are applying for the same jobs that recent college graduates are applying for. This is what we're up against. And I've been told that basically, right now, you have to know someone to get an in with a job opportunity. Everyone that I know who's graduated from college across the country is pretty much having the same problem as I am. I see their status updates on facebook as most of us are keeping a tally of how many jobs we've applied for, and how many call us for interviews, and how many job offers we get. It's really bad right now and damn depressing. I never had this problem before in my life. We'd move to where the jobs are but we barely scrap enough money together to get moved and we don't want to move and be stranded in a place where we don't have work lined up.