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Are things
really that bad?
Sure, there's
plenty of negative news out there, including reports like these:
"New
Breed of Americans Going Hungry" (USA
Today)
The recession
may officially be over, but Sonia Cruz of Issaquah, Wash., a suburb of
Seattle, still finds herself having to say "no" to many things.
No to the kids'
request to go to the movies with friends. No to $1 Redbox
movies. And definitely no to those trips to Cold Stone Creamery for ice
cream.
"There's
no way we can afford that anymore," she says.
Cutting back
became a necessity for many American families during and after the recession.
But what the Cruz family and a growing number of other once-thriving
middle-class families didn't expect was to find themselves qualifying for
— and needing — the support of federally funded food assistance
programs.
After job
losses, home foreclosures, mounting debt and bills some can no longer afford
to pay, families such as theirs have become part of the new face of hunger in
America.
"Home
Values Show Sharpest Quarterly Decline Since 2008; Negative Equity Rises to
28.4% According to Q1 2011 Zillow® Real Estate
Market Reports" (PR
Newswire)
Key facts:
- U.S. home
values posted their largest quarter-over-quarter decline since Q42008,
falling 3 percent. Home values have fallen 29.5 percent from their peak in
June 2006.
- Negative
equity reached a new high with 28.4 percent of all single-family homes with
mortgages underwater, up from 27 percent in Q4 2010, due to accelerating home
value declines.
- New data
reveals bottom in home values unlikely to appear in 2011. Zillow
has revised its forecast and now predicts a bottom in 2012 at the earliest.
"Number
of People Using Food Stamps on the Rise?" (CBS21.com)
Nation-wide the
number of people using food stamps is rising and Pennsylvania is no
exception.
The report is
coming from the US Dept of Agriculture who just released the study. People
here say without looking at a study they think the number of people on food
stamps is rising. During the height of the recession food stamps ballooned as
more Americans lost their jobs.
“The
trend started about three years ago and it has increased significantly we
have some stores up 40% from last year,” said Scott Karns
owner of seven Karns Supermarkets in central PA. Karns said he was shocked to see more reported in his
stores. The national average is up more than 14 percent, PA is behind at a
little over 13 percent.
“You have
to wait in line sometimes two hours, sometimes it takes your whole
day,” said Donna Harber who relies on the food
stamps.
"Caring
for Poor, Hospitals Reach Brink of Closure" (Associated
Press)
CHICAGO - Two
charity hospitals in Illinois are facing a life-or-death decision. There's
not much left of either of them - one in Chicago's south suburbs, the other
in impoverished East St. Louis - aside from emergency rooms crowded with
patients seeking free care. Now they would like the state's permission to
shut down.
The institutions, which have served low-income people in the state for more
than 100 years, represent a significant development that's gone largely
unnoticed as the nation climbs out of the recession. Many charity hospitals,
already struggling with rising costs, are on the brink of failure because of
looming budget cuts, increasing numbers of uninsured patients and a slow
economic recovery.
"With
economic downturns, you can finesse them for 12 months or 24 months,"
said Jim Tallon, president of the nonprofit United
Hospital Fund of New York, a research and philanthropic organization.
"But now everybody's used up all their tricks. That's when people throw
their hands up in the air and say we're not going to be able to continue
operating.
"Homeless
Count Skyrockets, Recession Blamed" (Inland
News Today)
RIVERSIDE
– Homelessness has skyrocketed, according to results of a new census.
Ron Stewart,
DPSS deputy director of Riverside County’s homeless programs,
isn’t surprised.
“It’s
another result of this down turned economy. We’re gonna
take a look at why some cities have a worse problem than others.”
"After
Recession, Teens Still Find Jobs in Short Supply" (The
Star-Ledger)
Summer, that
most-awaited season for teens itching to get out of school, is also a
traditional chance to make some cash from jobs like summer camp counselor or
amusement park worker.
Getting summer
work can be a job in itself for teens—the overall unemployment rate in
the United States is 9 percent, but nearly a quarter of those between 16 and
19 are unemployed.
"If we
think about the iconic job in New Jersey, somebody who works on the
boardwalk, if the young woman worked there last year, graduated from high
school and is in college, she might still want to work there," said Carl
Van Horn, director of the John J. Heldrich Center
for Workforce Development at Rutgers. "That forecloses opportunities for
the younger workers, the kid who’s still in high school, the kid who
just graduated. It’s not that 45-year-olds are competing for those
jobs, but certainly the 20-somethings can push out the teenagers."
Van Horn
wouldn’t get any arguments from Carlos Mejias,
a 17-year-old sophomore at Arts High School in Newark, who said 45 percent or
so of his friends want jobs but can’t find them.
"I applied
for Walmart, Kmart, a lot of places," Mejias said. "They say they’ll call me back
and they never do. It’s crazy."
"Gallup:
Consumer Spending Flat in April"
(123Print.com)
Consumer
spending in the U.S. remained level in April, according to a Gallup poll released
this week, as high gas, food and other commodity prices likely restrained
Americans' purchasing habits
According to
the report, consumers' self-reported daily spending in stores, restaurants,
gas stations, and online averaged $65 per day last month, compared to $64 in
March - a statistically insignificant difference.
"Consumer
spending over the first four months of 2011 is virtually unchanged from the
same period last year and in 2009," wrote Dennis Jacobe,
Chief Economist at Gallup. "Nearly two years after economists declared
the recession over, spending remains far below the pre-economic-crisis levels
of early 2008."
"Rate of
Insured Workers Hit by Economy" (Sacramento
Business Journal)
The 2007-2009
recession has taken a toll on employment-based health coverage, a new report
by the Employee Benefit Research Institute concludes.
The percentage of workers with coverage through their own job fell to 52
percent in 2009 from 53.2 percent in 2008. The percentage of workers with
coverage as a dependent fell to 16.3 percent in 2009 from 17 percent in 2008.
Rising unemployment and fact that some business owners have responded to the
economic squeeze by dropping health benefits, scaling them back or asking
workers to pay more caused the decline, according to the report.
"Small-Business
Pessimism Deepens" (Real
Time Economics)
Small-business
owner pessimism worsened in April for a second consecutive month, even though
current sales performance was the best in 40 months, according to data
released Tuesday.
The National
Federation of Independent Business‘s small-business optimism index
dropped 0.7 point to 91.2 in April. That followed a 2.6-point decline to 91.9
in March.
The NFIB called
the April index “a disappointing outcome following the March
decline.”
The report said
the weak economy and political uncertainty were dimming the outlook. The
drags mentioned by NFIB members included the government deficit, a potential
inflation threat, and rising gas prices. The subindex
of expected business conditions in the next six months fell 3 percentage
points to -8%, and the expected higher real sales index slipped 1 point to
5%.
"Mall
Vacancies at Highest Level in a Decade" (Bloomberg
via Worcester Telegram)
Vacancies at
U.S. regional malls rose to the highest in at least a decade in the first
quarter, a sign that landlords are struggling to keep tenants after the
recession even as retail sales increased, Reis Inc. said.
The vacancy rate climbed to 9.1 percent from 8.9 percent a year earlier and
8.7 percent in the fourth quarter, the New York-based research firm said in a
recent report. It was the highest since Reis began publishing data on
regional malls in 2000.
"The
Underfunding of State and Local Pension Plans"
(Congressional Budget Office via Docuticker)
From the
summary:
The recent
financial crisis and economic recession have left many states and localities
with extraordinary budgetary difficulties for the next few years, but
structural shortfalls in their pension plans pose a problem that is likely to
endure for much longer. This issue brief discusses alternative approaches to
assessing the size of those shortfalls and the implications of those
approaches for funding decisions:By any measure,
nearly all state and local pension plans are underfunded, which means that
the value of the plans' assets is less than their accrued pension liabilities
for current workers and retirees.
But there are exceptions. Here are a
few examples:
"CEO Pay
Exceeds Pre-Recession Level" (Associated
Press)
In the
boardroom, it's as if the Great Recession never happened.
CEOs at the
nation's largest companies were paid better last year than they were in 2007,
when the economy was booming, the stock market set a record high and
unemployment was roughly half what it is today.
The typical pay
package for the head of a company in the Standard & Poor's 500 was $9
million in 2010, according to an analysis by The Associated Press using data
provided by Equilar, an executive compensation
research firm. That was 24 percent higher than a year earlier, reversing two
years of declines.
Executives were
showered with more pay of all types — salaries, bonuses, stock, options
and perks. The biggest gains came in cash bonuses: Two-thirds of executives
got a bigger one than they had in 2009, some more than three times as big.
CEOs were
rewarded because corporate profits soared in 2010 as the economy gradually
got stronger and companies continued to cut costs. Profit for the companies
in the AP analysis rose 41 percent last year.
"U.S. Luxury Spending by Rich
to Rise" (Reuters)
Spending by
rich Americans on luxury goods is set to grow by $26.6 billion in 2011, with
the number of affluent families planning to spend more almost doubling in the
past three years, a poll found on Friday.
As the
United States gradually emerges from its worst economic crisis in decades,
the American Express Publishing and Harrison Group survey forecast spending
on luxury goods to increase nearly 8 percent to $359 billion this year
compared to 2010.
"It
is a relief to finally be able to see a significant return of affluent
consumers to the luxury marketplace," Jim Taylor, vice-chairman of
Harrison Group, said in a statement.
"‘Squatter
Rent’ May Boost Spending as Mortgage Holders Bail on Payments" (Bloomberg)
Melissa White
and her husband stopped paying their mortgage in May 2008 after it reset to
$3,200 a month, more than double the original rate. That gave them extra cash
to pay off debts and spend on staples until their Las Vegas home sold two
years later for less than they owed.
“We
didn’t pay it for about 24 months,” said White, who quit her job
as a beautician during that period after becoming pregnant with her first
child and experiencing medical complications. “What we had, we could
put towards food and the truck payments and insurance and health things I was
dealing with.”
Millions of
Americans have more money to spend since they fell delinquent on their
mortgages amid the worst housing collapse since the Great Depression. They
are staying in their homes for free about a year and a half on average,
buying time to restructure their finances and providing an unexpected support
for consumer spending, which makes up about 70 percent of the economy.
So-called
“squatter’s rent,” or the increase to income from withheld
mortgage payments, will be an estimated $50 billion this year, according to
Michael Feroli, chief U.S. economist at JPMorgan
Chase & Co. in New York. The extra cash could represent a boost to
spending that’s equal to about half the estimated savings generated by
cuts to payroll withholding in December’s bipartisan tax plan.
"U.S.
Stocks Carry Gains into Third Day" (MarketWatch)
U.S. stocks
tallied robust gains Tuesday to extend a winning run into a third session
after Microsoft Corp. said it would buy Internet-phone company Skype for $8.5
billion.
The deal
bolstered expectations of more buyouts to come.
“Small-cap
[and] midcap stocks have been leading the market and continue to do so.
Today’s deal is a perfect example,” said Paul Nolte, managing
director at Dearborn Partners. “All of the deal activity is occurring
in the midcap space, so if you’re an investor that is where you are
seeing companies purchased and some of that outperformance now,” he
said.
Perhaps we all
need to stop focusing on the negatives and start looking at the bright side.
Yeah, right.
Michael J. Panzner
Editor, Financialarmageddon.com
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