Economic policy reports, blog postings, and media stories of interest:
For the benefit week ending on July 10th, 18,120 North Carolinians filed initial claims for state unemployment insurance benefits, and 149,387 individuals applied for state-funded continuing benefits. Compared to the prior week, there were more initial and continuing claims. (Note that there normally is a rise in new claims in the middle of July.) These figures come from new data released by the U.S. Department of Labor.
Averaging new and continuing claims over a four-week period — a process that helps adjust for seasonal fluctuations and better illustrates trends — shows that an average of 13,963 initial claims were filed over the previous four weeks, along with an average of 147,373 continuing claims. Compared to the previous four-week period, there were more initial and fewer continuing claims.
One year ago, the four-week average for initial claims stood at 24,743 and the four-week average of continuing claims equaled 213,690.
While the number of claims has dropped over the past year, so has covered employment. Last week, covered employment totaled 3.8 million, down from 4 million a year ago.
The graph (right) shows the changes in unemployment insurance claims (as a share of covered employment) in North Carolina since the recession’s start in December 2007.
Both new and continuing claims appear to have peaked for this business cycle, and the four-week averages of new and continuing claims have fallen considerably. Yet continuing claims remain at an elevated level, which suggests that unemployed individuals are finding it difficult to find new positions.
Also, little change has occurred within recent months. Since April 2010, the four-week average of initial claims has ranged consistently between 13,987 and 12,586.
Martin Feldstein doesn’t like the odds of the American recovery running out of steam.
Recent US data have clearly raised the probability that the economy will run out of steam and decline during the next 12 months. The key reason for increased pessimism is that the government stimulus programs that raised spending since the summer of 2009 are now coming to an end. As they have wound down, spending has declined.
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The government programs failed to provide the “pump-priming” role that was intended. They provided an early spark, but it looks like the spark did not catch. For example, a tax subsidy for car purchases caused GDP to rise in the third quarter of 2009, with more than two-thirds of the increase attributable to motor-vehicle production. But now that the subsidies have ended, the level of both sales and production has declined. A recent survey of consumers reported the lowest level of intended car buying in more than 40 years.
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The second quarter benefited from a surge in home purchases, as individuals rushed to take advantage of the tax subsidy for home buyers that expired in April. But what will happen in the third quarter and beyond now that that program has ended?
Economic policy reports, blog postings, and media stories of interest:
Calculated Risk graphs changes in homeownership rates by age group between 1989 and the second quarter of 2010. The rates are now below the 1989 and 1999 levels for every age cohort between the ages of 30 and 60 with the single hardest-hit group being the 30-35 age bracket.
The graph below also traces the changes in the overall homeownership rate that occurred between 1989 and early 2010. Risk predicts that the overall rate will fall to 66 percent, down from a high of 69 percent at the peak of the housing bubble. This level is not much different that what would be expected based on changes in the population that have taken place since 1989.
So much for all that “financial innovation.”
From the Federal Reserve Bank of Richmond’s latest survey of service-sector activity in the South Atlantic (District of Columbia, Maryland, North Carolina, South Carolina, Virginia and West Virginia):
Service sector revenues picked up in July, fueled by solid gains at non-retail services firms, according to the latest survey by the Federal Reserve Bank of Richmond. Retail sales remained flat, however, while big-ticket sales dropped sharply. Shopper traffic also fell this month. Retail inventories declined, although reductions were somewhat less prevalent than a month ago. Retail merchants and survey respondents at non-retail firms were upbeat about sales prospects for the next six months.
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Service sector labor markets weakened in July, with a drop in the number of retail employees and no change in hiring at non-retail services firms. In addition, average wages in the service sector flattened.
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Price growth edged up mildly in July. Compared to their outlook of a month ago, survey respondents looked for slightly slower price growth through the rest of the year.
Economic policy reports, blog postings, and media stories of interest:
From the Federal Reserve Bank of Richmond’s latest survey of manufacturing activity in the South Atlantic (District of Columbia, Maryland, North Carolina, South Carolina, Virginia and West Virginia):
Manufacturing activity in the central Atlantic region expanded for the sixth consecutive month but at a more moderate pace in July, according to the Richmond Fed’s latest survey. Looking at our main components of activity, employment continued to grow at a modest rate, while shipments and new orders grew at a rate below June’s pace. Most other indicators also suggested slower growth. Backlogs eased and capacity utilization continued to grow more slowly. Vendor lead-time grew at a considerably slower rate, while inventories grew at a somewhat quicker pace.
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Looking forward, manufacturers’ optimism about their business prospects continued to wane, compared to a month ago — slowing was most evident in shipments, new orders, capacity utilization, and capital expenditures. In contrast, contacts expected employment and the average workweek to grow more quickly.
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