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Many people seem
to think that U.S. markets are jittery because of fears about what
developments in Europe might mean for the rest of the world. But even if
there was no sovereign debt crisis, I would be hard-pressed to overstate just
just how bad things are here at home. While I've posted plenty of articles
detailing the dismal state of the U.S. economy from the perspective of the
man in the street (not the one on Wall Street, mind you), all you need is
Google, an internet connection, and a few moments of time to see that there's
plenty more bad news where the rest came from. After reading the following
articles, the first thing that pops into my head is: Why does what is
happening overseas even matter?
"In Brutal Job Market, More Than a Million Quit Looking" (CNBC.com)
If you think the
jobs situation has become pretty hopeless, you're not alone. Roughly 1.1
million workers have given up hope of finding employment.
The staggering
level of "discouraged workers" as the government calls them has
swelled to historic proportions in 2010, past the million barrier for the
first time since the Bureau of Labor Statistics has been tracking the number.
Though a bit off
its all-time high of 1.2 million recorded in February, the metric stands as
perhaps the most daunting statistic of last Friday's gloomy jobs report,
which showed that almost all the new employment is coming from temporary
government Census jobs and not the kind that will sustain an economy.
"The fact
that people are sitting down indicates just how bad the market is for some
categories of people," says Peter Morici, professor at the University of
Maryland's Smith School of Business and the former chief economist at the US
International Trade Commission.
"Drag on Recovery: Consumer Debt-Cutting" (Wall
Street Journal)
Anyone who has
struggled with addiction knows recovery is a long, slow process.
So it shouldn't
come as too much of a surprise that the economic rebound is moving at such a
gradual pace.
Despite a
vigorous bounce-back in corporate earnings and a veritable factory boom, job
growth is decidedly sluggish. Gross domestic product is growing at only half
of the 7% to 8% pace that typically has been seen after past deep recessions.
One reason: deleveraging.
After years of bingeing on debt, U.S. households are paring back. Those not
doing so by choice are often being forced, because lending standards remain
tight.
The question now,
both for consumer spending and growth more broadly, is how much further the
process has to go.
The answer is
probably a lot.
"Employers Lowballing New Hires" (Wall
Street Journal)
The job market
may be recovering, but some salary offers are still a few years behind.
Since the labor
market began picking up steam, companies hiring for entry-level or
administrative spots with pay that would normally range from $40,000 to
$50,000 have been offering workers $28,000 to $38,000, says Randy Miller,
founder and chief executive of ReadyMinds, a Lyndhurst, N.J., provider of
online career counseling and coaching.
.For
workers further up the food chain, an offer that might have been $100,000 a
few years ago is now coming in at $85,000 or $90,000, he says.
"Companies
are more worried these days about margins, profitability, and they are
cutting costs across the board. Even though [workers are] qualified and have
prior experience, the hiring department has been told to set a budget at a
lower range," Mr. Miller says. "Everybody is more price-sensitive
these days."
"Big Increase in Mortgage Foreclosures Predicted for this
Year" (Miami Herald)
Real estate experts
predicted this week that 3.5 million homes nationally will go into
foreclosure this year as risky adjustable-rate mortgages written in 2005
reset and unemployment continues.
That's up from
2.8 million homeowners who faced foreclosure in 2009, and sets a pace that
isn't likely to plateau until late 2011, said RealtyTrac Senior Vice
President Rick Sharga.
Sharga spoke this
week in Austin during the 44th annual National Association of Real Estate
Editors conference.
``The second wave
of toxic loans is about to hit,'' said Sharga, whose Irvine, Calif.-based
company tracks foreclosure filings.
Sharga's panel of
speakers, which included a Bank of America representative and Arizona-based
mortgage modification executive, painted a bleak picture for anyone who thought
the worst of the real estate meltdown is over.
"CFOs Signal Worsening Job Market" (CFOZone.com)
More bad news on
the hiring front.
CFOs say they are
less likely to hire people now than they were three months ago.
According to the
latest quarterly Robert Half Financial Hiring Index, six percent of chief
financial officers said they plan to hire full-time accounting and finance
employees during the third quarter of 2010.
In the prior
survey conducted three months ago, seven percent of CFOs indicated they
planned to add full-time accounting and finance employees during the second
quarter. At the time, the folks at Robert Half celebrated the fact this was the
highest hiring forecast since the first quarter of 2009.
Well, that party
was short-lived.
Meanwhile, in the
latest survey, nine percent of CFOs said they anticipate staff reductions.
This is up from eight percent in the prior quarterly survey.
Add it up, and
CFOs are more pessimistic now than they were three months ago. Not a recipe
for bringing down the nation's stubbornly high unemployment rate.
"More than 40m Now Use Food Stamps" (Boston
Globe)
WASHINGTON
— The number of Americans receiving food stamps in March topped 40
million for the first time as the jobless rate hovered near a 26-year high.
Recipients of
Supplemental Nutrition Assistance Program subsidies for food purchases
totaled 40.2 million, up 21 percent from a year earlier and 1.2 percent more
than in February, the Department of Agriculture said yesterday in a statement
on its website. The number of recipients has set records for 16 straight
months.
"Food Pantries Fear the Future" (Times
Herald-Record)
Less assistance,
more demand strain resources
KINGSTON —
With donations drying up, state money cut and demand skyrocketing, food
pantries and soup kitchens in the Hudson Valley are struggling to stay
afloat.
"We're doing
so much more with fewer resources," said Diane Reeder, executive
director of Queens Galley in Kingston. "Even our regular fundraisers
aren't pulling in the kind of money we're used to seeing."
For instance,
Reeder and the soup kitchen — which serves about 9,000 meals a month
— usually raise at least $5,000 by selling food at the Hudson Valley
Mayfaire.
But this year,
the organization walked away from the May event with only $600.
"We're going
into our biggest season with no money and no help," she said.
The financial
problems are widespread.
The Regional Food
Bank of Northeastern New York expects to receive a cut of $100,000, to
roughly $3.2 million, from the state's Hunger Prevention and Nutrition
Assistance Program for the grant year that begins July 1, said Executive
Director Mark Quandt.
The Florida
Community Food Pantry these days runs almost entirely on that money.
The pantry
exhausted its grant two months ago and has been dipping into reserves to fund
operations. For the first time in 15 years, Florida pantry Director Denise
Thibault has to eye the bank statements very closely.
"I think
everyone is feeling the pinch," she said. "My concern is, I want to
make sure that we don't get into a position where we can't supply food."
Money isn't the
only problem.
With the school
year nearly over, many kitchens and pantries are bracing for increased demand
from families whose children rely on the schools for meals nine months of the
year.
Michael
J. Panzner
Editor, Financialarmageddon.com
Michael J. Panzner is a
25-year veteran of the global stock, bond, and currency markets and the
author of Financial Armageddon: Protecting Your Future from Four Impending
Catastrophes, published by Kaplan Publishing.
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