Policy Points

20.01.2010 Policy Points Comments Off on Around the Dial – Jan. 20

Around the Dial – Jan. 20

Economic policy reports, blog postings, and media stories of interest:

20.01.2010 Policy Points Comments Off on The Job Crisis in Brief

The Job Crisis in Brief

A new fact sheet from the Economic Policy Institute places the ongoing job crisis in context. Among the findings are the following (as of January 8, 2010):

Number unemployed: 15.3 million (up from 7.5 million in December 2007)
• Portion of unemployed who have been jobless more than six months: 39.8%
• Total jobs lost during the recession: 8.1 million
• Jobs lost in December 2009: 85,000
• Jobs needed to return topre-recession unemployment rate: 10.6 million
• Number of jobseekers per job opening: 6.4
• Unemployment rate: 10.0%
• States with double-digit unemployment in November 2009: 15
• White unemployment: 9.0%; black unemployment: 16.2%; Hispanic unemployment: 12.9%
  • Number unemployed: 15.3 million (up from 7.5 million in December 2007)
  • Portion of unemployed who have been jobless more than six months: 39.8%
  • Total jobs lost during the recession: 8.1 million
  • Jobs lost in December 2009: 85,000
  • Jobs needed to return to pre-recession unemployment rate: 10.6 million
  • Number of jobseekers per job opening: 6.4
  • Unemployment rate: 10.0%
  • States with double-digit unemployment in November 2009: 15
  • White unemployment: 9.0%; black unemployment: 16.2%; Hispanic unemployment: 12.9%
    20.01.2010 Policy Points Comments Off on Credit Conditions in the Southeast

    Credit Conditions in the Southeast

    A December survey sponsored by the Atlanta Federal Reserve Bank offers insights into the credit needs and experiences of businesses in the South (not including North Carolina). The survey suggests that a lack of sales, not unusually tight credit conditions, are dissuading firms from seeking credit. Additionally, most firms that are seeking credit report being able to access it. Reports the Atlanta Fed:

    So, how did businesses surveyed respond? Slightly more than half the respondents said that they had sought to obtain a loan or line of credit from a bank in the last six months. The primary reasons given by those seeking credit were to replace an existing loan (cited by 50 percent of those respondents) and/or to obtain additional working capital (cited by 45 percent of those respondents).
    ….
    The degree of difficulty firms felt they had in obtaining credit was mixed, with about 60 percent of respondents saying they were able to obtain all or most of the bank credit they sought. The small size of the survey (206 respondents) limits the accuracy of any sector-by-sector comparisons. However, it is interesting to note that construction firms stood out as the business type that had the greatest difficulty having their demand for financing satisfied, with 70 percent of them saying they were unable to obtain the funding they sought. That percentage compares with 50 percent of small manufacturers surveyed and 25 percent of retailers responding they were unable to obtain the funding they desired.
    ….
    Of those businesses that had not sought credit during the last six months, the dominant reason given was poor sales/revenue (cited by 55 percent of those respondents). Other reasons for not seeking additional credit included sufficient cash reserves.

    Although this survey is neither national nor definitive in scope, it points to an economy hampered by a lack of demand. Writes the Atlanta Fed:

    To the extent that the firms in our survey are representative, it appears most going concerns have been able to obtain all or most of the credit they need. What they don’t have are customers.

    19.01.2010 Policy Points Comments Off on Around the Dial – Jan.19

    Around the Dial – Jan.19

    Economic policy reports, blog postings, and media stories of interest:

    19.01.2010 Policy Points Comments Off on GDP Projections – 2009, Quarter 4

    GDP Projections – 2009, Quarter 4

    On January 29th, the U.S. Bureau of Economic Analysis will release its advance estimate of the Gross Domestic Product during the fourth quarter of 2009. The estimate, which will be subject to two revisions, will feature prominently in assessments of the national economy’s health and debates over the future direction of national policy. However for several reasons, the advance estimate may prove to be relatively high and paint a portrait of an economy that is stronger than it actually is.

    Explains Calculated Risk:

    In a research note released last night, Goldman Sachs raised their estimate of Q4 GDP from 4.0% to 5.8%. They cautioned that the ‘headline will be an eye-popper’, but that this growth is mostly due to inventory changes: ‘More than two-thirds of our estimated increase comes from a sudden stabilization in inventories’. They also noted ‘anything between 4½% and 7% is possible given the volatility of the inventory data’.

    The rest of the note cautions on 2010, and Goldman still sees sluggish growth of just under 2.0% with the unemployment rate peaking in early 2011.

    This is what we’ve been discussing – GDP boosted by inventory changes in the 2nd half of 2009, followed by sluggish growth in 2010.

    Meanwhile, Paul Krugman of The New York Times places the potential “blip” in historical context:

    [Calculated Risk] asks when we last saw growth that high combined with rising unemployment, and says 1981. That’s true. However, the last time we saw an initial report of 5.8 percent growth combined with rising unemployment is much more recent: the first quarter of 2002. The quarter’s growth was later revised down, but at the time there was much unwarranted celebration (unemployment didn’t peak until summer 2003).