Posts Tagged job
Stock investors ask: What’s the next big thing?
Posted by Tetyana Matychak in Fund Markets on March 11th, 2010
A year after the stock market began its comeback from 12-year lows, investors are looking for the next big thing.
Stocks have lost some of the momentum that propelled the Dow Jones industrial average up 61.4 percent from its close of 6,547 on March 9, 2009. That’s natural - bull markets tend to slow down as they head into their second year. But the lethargic pace of the economic recovery has also been a bit of a drag on stocks. And so investors are waiting for signs that the economy is ready to put up some solid, sustainable growth numbers.
The most likely trigger: job growth. Investors need to see a Labor Department report that says employers are creating more jobs than they’re cutting.
Until then, investors are going to stay cautious. Analysts say the market is likely to move sideways or drift higher, as it’s been doing over the past few weeks. Tuesday’s trading fit the pattern of modest moves. The Dow rose nearly 12 points. The average is up 1.3 percent so far this year.
But that doesn’t mean the market isn’t going to have its fitful moments. And it certainly has volatile industries that are expected to move the rest of the market. On Tuesday, the financial companies that led stocks higher in the past year again drove trading. Analysts said financial shares rallied as investors reacted to rumors that the government might prohibit the trades known as short sales in stocks of companies it owns. The government has large stakes in Citigroup Inc., American International Group Inc. and mortgage companies Fannie Mae and Freddie Mac after bailing them out during the 2008 financial crisis. Read the rest of this entry »
Low Rates Needed for ‘Some Time’
Posted by Tetyana Matychak in Banks on March 9th, 2010
Federal Reserve Bank of Chicago President Charles Evans said low interest rates are likely to be needed “for some time” as high unemployment lingers and inflation stays below his goal.
“With the unemployment rate at 9.7 percent and inflation significantly under my benchmark for price stability, there is no conflict between our policy goals,” Evans said in the text of a speech in Arlington, Virginia. Weakness in the job market, including long-term unemployment, means that “This accommodation will likely be appropriate for some time.”
Fed Chairman Ben S. Bernanke said last month the U.S. economy is in a “nascent” recovery that still requires low interest rates to encourage demand by consumers and businesses once federal stimulus fades. At the same time, policy makers are winding down emergency programs and laying plans for an eventual reduction of the Fed’s balance sheet to prevent an increase in inflation as the economy recovers.
The U.S. unemployment rate held at 9.7 percent in February and payrolls dropped 36,000, less than forecast, a sign that the labor market may be stabilizing after a recession that has eliminated 8.4 million jobs. The economy expanded at a 5.9 percent annual pace in the fourth quarter, the fastest rate in six years, the Commerce Department reported last month. Read the rest of this entry »
Bernanke May Face Concerns on Second Jobless Recovery in Decade
Posted by Tetyana Matychak in Budget on February 24th, 2010
Federal Reserve Chairman Ben S. Bernanke, in two days of congressional testimony beginning today, will probably face questions on how he plans to end the worst jobs slump since the Great Depression.
Unemployment “will be a big topic” when the Fed chief faces the Senate Banking Committee, Senator Bob Menendez, a New Jersey Democrat and a panel member, said in an interview. “How do we help small- and mid-sized businesses, because they’re the ones who are going to create the jobs? What is he going to do and the Federal Reserve going to do to help grow this economy?”
Democratic leaders are pushing legislation to stimulate the job market amid concerns that unemployment will translate into losses in November elections. The Senate is scheduled to vote today on a $15 billion bill that provides a payroll tax holiday for hiring workers who have been jobless for at least 60 days.
Bernanke will deliver his semi-annual monetary policy report before the House Financial Services Committee at about 10 a.m. today. He plans to testify before the Senate Banking Committee tomorrow. Read the rest of this entry »
Unemployment Rate Holds At 10%
Posted by Tetyana Matychak in Budget on February 5th, 2010
The Labor Department released it’s December job’s report on Friday which saw job losses climb once again, after revisions showed a slight gain of 4,000 jobs from November. While the unemployment rate remained at 10%, that figure is a little misleading because it doesn’t factor in the growing number of people that have stopped looking for work.
Nonfarm payroll employment edged down (-85,000) in December, and the unemployment rate was unchanged at 10.0 percent, the U.S. Bureau of Labor Statistics reported today. Employment fell in construction, manufacturing, and wholesale trade, while temporary help services and health care added jobs.
While the pace of job losses has definitely slowed over the past few months, many economists still expect a weak labor market for years to come. The unemployment rate has doubled from 5% and over 7 million jobs have been lost since December 2007.
That being said many forecasts expect the economy to grow around 3% this year but the main reason will be that there is still a lot of government stimulus that is working it’s way through the system. But while inflation is not a problem for the moment, it is something the central bank will have to deal with eventually. Read the rest of this entry »
The Great Recession Continues
Posted by Tetyana Matychak in Budget on January 27th, 2010
The December jobs report has doused the hope that we were at the beginning of a sustained economic recovery.
The unemployment rate managed to hold at 10% in December only because of an extraordinary shrinkage in the labor force: Some 661,000 gave up looking for a job.
Bureau of Labor Statistics’ (BLS) nonfarm payroll data indicate that December job losses totaled 85,000. But the bureau’s household survey, a better and more comprehensive measure of both the unemployed and underemployed, indicated a loss of 589,000 jobs. Since the Great Recession began in 2007, some 8.6 million jobs have been lost, according to the bureau; and small businesses, the normal source for new jobs, are still shedding workers. Fewer than 10% added employees, while more than 20% cut back—and the cuts averaged nearly twice as many per firm as the hires at the expanding companies.
Unemployment, in short, has graduated from being a difficulty, a worry. It is now a catastrophe, with some 15.3 million Americans out of work, according to the BLS. Read the rest of this entry »
Portfolio makeover: Is our big debt doing us in?
Posted by Tetyana Matychak in Budget on January 6th, 2010
Marc and Sharon LeRoux always dreamed of opening a business together. They took the plunge in 2006, tapping home equity to buy a franchise selling pre-made meals to busy families. Alas, the business failed, and last year the couple closed it down.
Fortunately, neither had quit their day jobs - Sharon is an engineer at Hewlett-Packard, Marc owns a specialty game store. But they still have $154,000 on a home-equity line of credit from the venture dragging them down. “Our income is very good, but we’re living paycheck to paycheck,” say Sharon. “And I’m sure we’re underfunding our retirement and our kids’ college.” (They are parents of Marie, 15, Nicole, 12, and Marc, 5.)
That debt is indeed an obstacle, says Salem, Ore. financial planner Ron Keleman. It eats up $1,000 a month. In spite of that, they’ve been keeping up with retirement, managing to stash away $12,000 a year. At that pace, says Keleman, they’ll have about $1.25 million by age 65, assuming a 7% average annual return (which they may be able to get if they build more growth into their portfolio).
The good news: That amount, along with Social Security, should be enough for their modest income goals. The bad news: They’ve been unable to start an emergency fund - savings that are essential in such uncertain times. As for college, they’re aiming to have saved a year of state-school tuition for each kid . While they can probably get there, wiping out the HELOC would allow them to cover even more. Read the rest of this entry »
Open enrollment offers many choices
Posted by Tetyana Matychak in Budget on December 9th, 2009
At many companies in Silicon Valley, the “open enrollment” period for employee benefit plans is in full swing. Jenny Vonderwerth, a human resources and benefits consultant with Liberty Benefit Insurance Services in San Jose, says a majority of companies renew their employee benefit plans as of Jan. 1 each year, and many employees are enrolling for their 2010 benefits this month. It’s a sometimes daunting process in which employees frequently face a range of choices about which health care plans to choose, and whether to sign up for benefits such as “flexible spending accounts.”
As a consultant, Vonder-werth works with insurance companies to identify the benefit plans that will meet employers’ needs, doing financial analysis on the cost to the employer and explaining what the plan will deliver to the company and workers.
Mercury News staff writer Sue McAllister spoke recently with Vonderwerth about some of the issues during open enrollment, and how companies could do better in communicating with their workers on the topic.
Q What exactly is an “open enrollment” period? Read the rest of this entry »
Why Treasury Needs a Plan B for Mortgages
Posted by Tetyana Matychak in Banks on December 8th, 2009
AFTER months of playing pretend, the Treasury Department conceded last week that the Home Affordable Modification Program, its plan to aid troubled homeowners by changing the terms of their mortgages, was a dud. The 10-month-old program is going nowhere, the Treasury said, because big institutions charged with implementing it are dragging their feet.
“The banks are not doing a good enough job,” said Michael S. Barr, assistant Treasury secretary for financial institutions, in an article published last Sunday in The New York Times.
After the government spent hundreds of billions of dollars bailing out banks, the Obama administration rolled out the $75 billion loan modification plan to show its support for beleaguered homeowners. But if the proof of the pudding is in the eating, homeowners are going hungry.
A stalled loan modification plan might not be worrisome if the foreclosure crisis were abating. Yet at the end of September, a record 14.4 percent of borrowers were either in foreclosure or delinquent on their mortgages, the Mortgage Bankers Association reported.
It’s time for the government to acknowledge the flaws in its program and create one that might actually succeed. Only then will the supply of homes for sale, and the pressure on prices associated with that overhang, be reduced. Read the rest of this entry »
Numbers big (joblessness) and small (interest)
Posted by Tetyana Matychak in Budget on November 3rd, 2009
This week is as big as they come for economic news.
Tuesday and Wednesday, the Federal Reserve’s policymaking committee meets to consider what comes next for monetary policy. The basic outcome of the meeting is largely a foregone conclusion: The central bank will probably leave its target interest rate near zero, and it will proceed with previously announced plans to wind down a program to purchase $1.25 trillion in mortgage-backed securities by the end of March 2010.
Fed watchers will be scrutinizing the statement released Wednesday afternoon after the meeting for signs that the central bank is starting to eye an end to its zero-interest-rate policy, particularly backing away from language in recent statements that rates are likely to remain “exceptionally low” for “an extended period.”
But market chatter notwithstanding, don’t bet on a change. The economic outlook has, if anything, become more muddled since the Fed’s last meeting at the end of September. And already fragile markets would be likely to react dramatically to even the slightest hint that the Fed may be ready to raise rates. Finally, and most simply, many Fed policymakers think that the economy is so weak that zero interest rates are likely to be necessary for quite a bit longer, and so they would be disinclined to send any signal otherwise.
Friday is the day for the October jobs report, which economists expect will show that the unemployment rate rose to 9.9 percent from 9.8 percent and that employers shed another 175,000 jobs. Those numbers would be a welcome change from a disappointing September report, when employers cut 263,000 jobs. Read the rest of this entry »
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