Following article appeared on MSNBC by By PAUL WISEMAN Associated Press 1/9/2011:
WASHINGTON — A steady decline in layoffs is giving the vast majority of adults who have jobs the confidence to spend more freely and help energize the economy. They no longer worry so much about losing their jobs.
Their renewed confidence has boosted retail sales — just what's needed to spark what economists call a "virtuous cycle": Higher consumer spending raises company profits, which spurs hiring, which fuels more spending and growth.
Consumer spending is critical because it powers about 70 percent of the economy. It rose for five straight months through November, kicking off the strongest holiday shopping season since 2006. Many shoppers are showing enough confidence to splurge on new cars: Auto sales rebounded 11 percent in 2010, the first increase since 2005.
"The strongest showing for consumers since the peak years of the last expansion signals that the broader economy is near a threshold of self-sustaining growth," analysts at Citi Investment Research & Analysis wrote last week.
Federal Reserve Chairman Ben Bernanke echoed that point Friday. He told a Senate panel he sees evidence that a "self-sustaining" recovery is taking hold because consumers and businesses are spending more.
Morgan Stanley economists say 4 percent growth is "likely, perhaps even conservative" in 2011, up from an estimated 3.1 percent last year. Late this month, the government will estimate economic growth for the final quarter of 2010.
Consumer spending is rising because the vast majority of working-age Americans are now breathing easier, despite 9.4 percent unemployment. People who had jobs feared being laid off during the recession, which ended in June 2009, and for months after. Fewer worry now, because most companies have stopped cutting staff.
Workers who survived the job cuts of the past three years have begun to conclude: "If they haven't fired me by now, they're not going to," says Michael Koskuba, portfolio manager with Victory Capital Management.
By October 2010, layoffs and other dismissals had sunk to their lowest point since August 2006. In December, employers added just 103,000 jobs — too few even to keep up with population growth. But that was mainly because they're still reluctant to hire, not because they're still cutting jobs.
The number of people applying for unemployment benefits — a proxy for the pace of layoffs — has dropped in the past four months. And economists think employers will finally ramp up hiring this year.
"You've got 10 percent unemployment, and you add another 5 or 10 percent" for discouraged workers or those stuck in part-time positions, because they can't find full-time work, says Doug Hart, a retail specialist at the consulting firm BDO USA. But the remaining 80 percent, having survived the worst of the layoffs, "are feeling more secure about their jobs."
In 2009, consumers across all income groups froze up. The Labor Department's Bureau of Labor Statistics recorded the first annual drop in consumer spending in records dating to 1984.
Now, BDO's Hart says, "The fear factor has subsided."
That's evident among consumers like Monique Aguilar, 27, of Saugus, Mass. Aguilar put off a car purchase last year after the restaurant chain where she's a manager announced layoffs. But there she was Friday at a Chevrolet dealership in neighboring Lynn, Mass., shopping for a new Malibu.
What's changed? She doesn't worry so much about being let go. Her employer's sales have improved, and she's encouraged by reports of slowing layoffs and of companies starting to hire.
"In general, I feel like we're going in the right direction," Aguilar says. "That makes me comfortable in my purchase."
Many households also feel better able to spend because they've sharply reduced credit card and other debt they ran up during the mid-2000s.
Economists say consumers seem increasingly divided into "haves" and "have-nots." The haves are more secure in their jobs. Their finances are solid. So is their credit.
They dominate the highest-earning 20 percent of Americans, who contribute nearly 40 percent of consumer spending. Among managers and professionals, for instance, unemployment in December was just 4.6 percent — less than half the overall unemployment rate.
The have-nots are struggling with shaky finances and job security. Unemployment is running at 12 percent for transportation workers, for example. It exceeds 20 percent for construction workers.
A 20 percent run-up in the Dow Jones industrial average since July has also skewed the consumer rebound in favor of upper-income shoppers — and the luxury stores that serve them.
"It's a two-tier market," says Doug Roberts, chief investment strategist for Channel Capital Research. The affluent "are beginning to feel more confident because their (stock) portfolios are up."
During the holidays, high-end retailers like Nordstrom Inc. and Saks Inc. reported the strongest sales. Michael Niemira, chief economist at the International Council of Shopping Centers, says luxury sales rise and fall almost in lockstep with the stock market.
After hunkering down during the recession, for example, Jerrie McKennon of Burleson, Texas, last year splurged on a Lexus and two expensive vacations. The main reason was that most of her investment portfolio had recovered from its losses during the financial crisis.
http://today.msnbc.msn.com/id/40990619/ns/business-eye_on_the_economy/
Sunday, January 9, 2011
Thursday, January 6, 2011
American Companies Hiring More Workers
Following article appeared on CNN.com by Chris Isidore:
"Hire more workers" appears to be a popular New Year's resolution for employers this year.
Economists are raising their forecasts for employment growth, as various job readings are suggesting that the long-awaited hiring boom may finally be here -- or at least near.
"It's about time," said economist Robert Brusca of FAO Economics.
All eyes will be on the monthly employment report from the Department of Labor, due out on Friday, which will show how many jobs were added to payrolls last month.
"There's a lot of reason to think we could get a big number for December," Brusca said.
Economists surveyed by CNNMoney are predicting a gain of 150,000 jobs, which would be a big jump from the 39,000 jobs added in November. The economists also expect that disappointing number to be revised higher, to just more than 60,000 new jobs.
Brusca, the most bullish of those surveyed, is forecasting a gain of 300,000 jobs for December.
Signs of life in the job market: The four-week moving average of those filing for first-time unemployment benefits fell to the lowest level in more than two years in the most recent reading. And Wednesday, a report showed that 297,000 private sector jobs were added in December, according to payroll services firm Automatic Data Processing. That's the largest gain since ADP began tracking jobs in 2000. The report is viewed as a bellwether of the government jobs reading that follows, leading some economists, including Brusca, to raise their forecasts for December's payroll reading.
In addition, job placement firm Challenger, Gray and Christmas reported only 32,004 job cuts announced in December, the lowest number since 2000.
Strength in the broader economy: Signs of better hiring ahead are also present in a variety of economic readings, from strong holiday sales figures to increased demand for autos.
December same-store sales increased 3.1%, marking a 15-month streak in the measure, and bringing holiday sales back above pre-recession levels. And U.S. auto sales rose 11% in December, capping the strongest quarter of sales since the fall of 2008 when the industry was roiled by the financial crisis. "We've seen a lot of the indicators come in better than expected," said Sam Bullard, senior economist with Wells Fargo Securities, which is forecasting a gain of 156,000 jobs in December, and November's gain to be revised up to 100,000. "It does seem that the acceleration in hiring is starting."
More hiring on main street: One key factor lifting expectations is that small businesses seem to have caught the hiring bug, Bullard said. About seven out of eight jobs added in the ADP report came from small and medium-sized companies.
And a December survey of more than 1,700 small business CEOs conducted by Vistage found 54% expect to increase staff in the next 12 months. It's the first time in more than three years that survey has shown more than half of those bosses planning to hire, said Rafael Pastor, CEO of the small business membership group. "This is a remarkable leap in confidence in both the overall economy and hiring," said Pastor. He attributes the hiring to the fact that 77% believe their revenue will increase in the next year and that they'll need more staff to capture those additional sales.
He said in the current environment, it is more risky not to add staff than it is to hire, a change from the uncertainty most small businesses faced only a few months ago. Still, unemployment is expected to stay high; CNNMoney's survey forecasts a 9.7% unemployment rate in December, down only slightly from the 9.8% reading in November. The improved labor market could keep that number relatively high even as hiring picks up, as long-term jobless not counted among the unemployed start seeking work once again. But the key number, according to economists, is the number of jobs being added, not the unemployment rate.
Some economists believe that snow storms in December in the East and Midwest could keep Friday's report in check. "At this time of the year, it is not uncommon for economic data releases to essentially be weather reports," said Joseph LaVorgna, chief U.S. economist for Deutsche Bank. But Deutsche Bank still raised its December payroll estimate to 150,000 on Wednesday from 100,000, in the wake of the positive news.
Even if December's payroll number is modest, many economists are forecasting much stronger hiring ahead. The average full-year forecast of the 27 economists is for 2.3 million jobs added in 2011, or just under 200,000 a month. That's more than double the pace of hiring forecast for all of last year.
http://money.cnn.com/2011/01/05/news/economy/jobs_outlook/index.htm
"Hire more workers" appears to be a popular New Year's resolution for employers this year.
Economists are raising their forecasts for employment growth, as various job readings are suggesting that the long-awaited hiring boom may finally be here -- or at least near.
"It's about time," said economist Robert Brusca of FAO Economics.
All eyes will be on the monthly employment report from the Department of Labor, due out on Friday, which will show how many jobs were added to payrolls last month.
"There's a lot of reason to think we could get a big number for December," Brusca said.
Economists surveyed by CNNMoney are predicting a gain of 150,000 jobs, which would be a big jump from the 39,000 jobs added in November. The economists also expect that disappointing number to be revised higher, to just more than 60,000 new jobs.
Brusca, the most bullish of those surveyed, is forecasting a gain of 300,000 jobs for December.
Signs of life in the job market: The four-week moving average of those filing for first-time unemployment benefits fell to the lowest level in more than two years in the most recent reading. And Wednesday, a report showed that 297,000 private sector jobs were added in December, according to payroll services firm Automatic Data Processing. That's the largest gain since ADP began tracking jobs in 2000. The report is viewed as a bellwether of the government jobs reading that follows, leading some economists, including Brusca, to raise their forecasts for December's payroll reading.
In addition, job placement firm Challenger, Gray and Christmas reported only 32,004 job cuts announced in December, the lowest number since 2000.
Strength in the broader economy: Signs of better hiring ahead are also present in a variety of economic readings, from strong holiday sales figures to increased demand for autos.
December same-store sales increased 3.1%, marking a 15-month streak in the measure, and bringing holiday sales back above pre-recession levels. And U.S. auto sales rose 11% in December, capping the strongest quarter of sales since the fall of 2008 when the industry was roiled by the financial crisis. "We've seen a lot of the indicators come in better than expected," said Sam Bullard, senior economist with Wells Fargo Securities, which is forecasting a gain of 156,000 jobs in December, and November's gain to be revised up to 100,000. "It does seem that the acceleration in hiring is starting."
More hiring on main street: One key factor lifting expectations is that small businesses seem to have caught the hiring bug, Bullard said. About seven out of eight jobs added in the ADP report came from small and medium-sized companies.
And a December survey of more than 1,700 small business CEOs conducted by Vistage found 54% expect to increase staff in the next 12 months. It's the first time in more than three years that survey has shown more than half of those bosses planning to hire, said Rafael Pastor, CEO of the small business membership group. "This is a remarkable leap in confidence in both the overall economy and hiring," said Pastor. He attributes the hiring to the fact that 77% believe their revenue will increase in the next year and that they'll need more staff to capture those additional sales.
He said in the current environment, it is more risky not to add staff than it is to hire, a change from the uncertainty most small businesses faced only a few months ago. Still, unemployment is expected to stay high; CNNMoney's survey forecasts a 9.7% unemployment rate in December, down only slightly from the 9.8% reading in November. The improved labor market could keep that number relatively high even as hiring picks up, as long-term jobless not counted among the unemployed start seeking work once again. But the key number, according to economists, is the number of jobs being added, not the unemployment rate.
Some economists believe that snow storms in December in the East and Midwest could keep Friday's report in check. "At this time of the year, it is not uncommon for economic data releases to essentially be weather reports," said Joseph LaVorgna, chief U.S. economist for Deutsche Bank. But Deutsche Bank still raised its December payroll estimate to 150,000 on Wednesday from 100,000, in the wake of the positive news.
Even if December's payroll number is modest, many economists are forecasting much stronger hiring ahead. The average full-year forecast of the 27 economists is for 2.3 million jobs added in 2011, or just under 200,000 a month. That's more than double the pace of hiring forecast for all of last year.
http://money.cnn.com/2011/01/05/news/economy/jobs_outlook/index.htm
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