Fed officials warn weak recovery won't spur job growth

[Balog]

Well, that's encouraging. I love the "jobless recovery" concept.


http://news.yahoo.com/s/ap/20091110/ap_on_bi_ge/us_fed_economy


Fed officials warn weak recovery won't spur jobs
AP

WASHINGTON – Unemployment likely will remain high for the next several years because the economic recovery won't be strong enough to spur robust hiring, Federal Reserve officials warned Tuesday.

The cautionary note struck by the presidents of regional Fed banks in San Francisco and Atlanta were the first public remarks of Fed officials since the government reported last week that the nation's jobless rate bolted to 10.2 percent in October. It marked only the second time in the post-World War II period that the rate surpassed 10 percent.

In separate speeches, Janet Yellen, president of the Federal Reserve Bank of San Francisco, and Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, warned that rising unemployment could crimp consumers, restraining the recovery. Consumer spending accounts for about 70 percent of economic activity.

"With such a slow rebound, unemployment could well stay high for several years to come," Yellen said. "In other words, our recovery is likely to feel like something well short of good times."

Yellen envisions the shape of the recovery kind of like an "L" with a gradual upward tilt of the base.

Lockhart said "very slow net job gains" may occur "sometime next year."

Troubles in the commercial real estate market and the plight of small businesses also will weigh on the recovery, they said.

Small businesses — which held up reasonably well in the 2001 recession — have been clobbered by the downturn, accounting for about 45 percent of net job losses through the end of 2008, Lockhart said. During the last two economic recoveries, small businesses contributed about one-third of net job growth. Lockhart said he doubted that would be the case this time.

That's because many small businesses rely on smaller banks for credit. But troubled commercial real estate loans are concentrated at those banks, hobbling the flow of credit. Lockhart said he is "particularly concerned" about that linkage.

Meanwhile, Eric Rosengren, president of the Federal Reserve Bank of Boston, weighed in on a different hot-button issue for Congress: how best to handle huge financial companies whose failure could endanger the economy.

Rosengren endorsed "living wills" that outline wind-down arrangements in the event of failure, rather than having the government restrict the size or activities of financial firms. "I am skeptical such dramatic action would significantly limit systemic risk," he said in a speech in London.

The Obama administration has called on Congress to set up a mechanism to safely dismantle failed financial companies — along the lines of what the Federal Deposit Insurance Corp. does for collapsed banks. Although key legislative proposals revamping the nation's financial rules contain such a provision, some lawmakers and others have expressed interest in limiting the size of colossal firms or breaking them up if they get too big.

[Balog]

As hard as the MSM and fed.gov are trying to fake a recovery, businesses aren't biting.

http://finance.yahoo.com/news/Job-openings-remain-close-to-apf-1854524839.html?x=0

Job openings remain close to record-lows
Job openings stuck near record-lows as companies hesitate to hire despite recovery

    * By Christopher S. Rugaber, AP Economics Writer
    * On 5:07 pm EST, Tuesday November 10, 2009

WASHINGTON (AP) -- Job openings are at rock-bottom levels, according to government and private surveys released Tuesday, a trend that could keep the unemployment rate high even as layoffs slow.

Small businesses in particular are reluctant to add workers as they struggle to obtain credit. Many are pushing their current employees to produce more. Economists say small businesses account for about 60 percent of new jobs.

Still, there are some pockets of hiring as demand for information technology and sales professionals grows, according to government reports and job search Web sites. And there are signs that companies are adding more human resources personnel, which could signal more hiring down the road.

"We've seen a real spike in the hiring of contract recruiters," said Phil Haynes, managing director of AllianceQ, an employers' association that includes companies such as Starbucks Corp., Bank of America Corp. and Intuit Inc. "The recruiters come before the jobs."

But overall, it's a tough time to be out of work. There are about 6.1 unemployed workers, on average, competing for each job opening, a Labor Department report shows. That's down slightly from 6.2 last month, the most since the department began tracking job openings nine years ago.

It's a sharp increase from only 1.7 workers per opening when the recession began in December 2007.

The department's Job Openings and Labor Turnover survey said employers advertised about 2.5 million job openings at the end of September, up slightly from the previous month. That's down from a peak of 4.8 million openings in June 2007.

Layoffs are slowing a bit. Employers cut a net total of 190,000 jobs in October, the government said last week, much lower than the average of about 700,000 a month in the first quarter of this year. But until companies are willing to hire, the unemployment rate is likely to keep rising from its current level of 10.2 percent, the highest in 26 years.

The increase in joblessness came even as the economy grew by 3.5 percent in the July-September quarter, the strongest signal yet that the recession is over.

Many economists worry the U.S. will experience a jobless recovery. That happened after the last two recoveries in 1991 and 2001, when the unemployment rate didn't peak until 15 months and 19 months, respectively, after those recessions ended.

The National Federation of Independent Business said Tuesday that small companies remain skeptical about the recovery. Its Index of Small Business Optimism rose 0.3 points to 89.1 last month, the third straight increase but still below the 94.6 reading in December 2007.

Small businesses are reluctant to hire or invest in expansion, the monthly survey found. Sixteen percent of the survey respondents plan to cut jobs over the next three months, while only 9 percent plan to hire.

"Overall, the small business job machine is still in reverse," said William Dunkelberg, NFIB's chief economist.

Many small businesses also are still having a hard time getting loans, the report said.

Ray Pinard, the CEO of Boston-based 48HourPrint.com, was able to borrow to buy additional printing equipment but said it took much longer to find a lender than the last time the company needed a loan in 2007.

The additional equipment may eventually require more workers, but not anytime soon. "As we ramp up the volume on the equipment, we'll try to use existing personnel first," Pinard said.

Still, some companies are looking to increase revenue by hiring more sales people.

The Conference Board's Help Wanted Online report, released last week, found that sales jobs saw the largest increase in vacancies among the 10 largest occupations, with a jump of about 11 percent. But overall, total jobs posted fell by 83,200 last month to nearly 3.3 million, the business research group said.

Opel Solar Inc., an 8-year-old solar panel designer based in Shelton, Conn., and Toronto, Ontario, has added six positions this year as the government's stimulus package helped companies and communities get funding for solar projects.

Opel has one active opening, in sales, and will probably add one or two additional positions soon, vice president Pat Agudow said.

In addition, the information technology sector has been slowly adding jobs in recent months. According to the Labor Department's employment report last week, the computer systems sector added about 4,500 jobs in October.

Tom Silver, senior vice president for North America at Dice.com, a job site for technology professionals, said that job postings are increasing in two large technology markets -- Silicon Valley and New York City -- as well as some smaller locations, such as Austin, Texas, and Charlotte, N.C.

New York-based job postings have risen 16 percent so far this year, he said, while they are up 6 percent in Silicon Valley.

"For the first time in more than a year, recruiters and hiring managers have more confidence in the underlying business climate," he said.

AP Business Writer Tali Arbel in New York contributed to this report.

[Balog]

Interesting story about Las Vegas anglos competing with illegals outside Home Depot for day labour.

http://www.lasvegassun.com/news/2009/nov/02/new-faces-day-labor/

[RevDisk]

Granted, employment is a lagging indicator.  But I really don't consider an economy to actually be fully recovered until employment kicks back up.  We're not going to see that.  We'll just see government spending treated as GDP growth.

[Jamisjockey]

Similar topics merged.

[Standing Wolf]

Federal officials aren't looking for jobs. Why should they care?