Wednesday, 8 June 2011

Anything But Healthy

 

To most reasonable observers -- even those without any training or academic background in economics whatsoever -- the following reports indicate that the U.S. economy is -- and has been -- anything but healthy:

"Americans Increasingly Dour on Economic Recovery, According to AlixPartners Survey" (Businesswire)

63% Feel "Not Good" or "Bad" about the Direction of the Economy; 61% Do Not See Economic Recovery until 2014, If Ever

Despite some recent signs of economic recovery, 63% of Americans continue to feel “not good” or “bad” about the state of the U.S. economy, representing a significant increase from May 2010 when only 49% of Americans felt this gloomy. That’s according to a survey released today by AlixPartners LLP, the global business-advisory firm.

“Americans continue to push their expectations for returning to a pre-recession ‘normal’ further and further into the future – close enough for comfort, but far enough away to seem realistic. But as that happens, more and more it seems that normal is actually where we are right now.”
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“We’re seeing a lot of mixed signals on the economy, both from consumers and businesses,” said Fred Crawford, CEO of AlixPartners. “There is a lot of positive out there, but it’s being overshadowed by a stubborn, pervasive feeling of uncertainty among Americans and businesses, which has only been compounded by recent global unrest.”

In each of five surveys on the economy since February 2009, AlixPartners has learned that the majority of Americans believe it will be about three years before their pre-recession lifestyles –including pre-recession spending – returns. In this most recent poll, AlixPartners found that 61% of Americans do not expect to return to their respective pre-recession lifestyles until the spring of 2014, if ever (with 10% saying never).

“Despite the recent uptick in consumer spending, we continue to find that Americans are only cautiously optimistic, if that,” said Crawford. “Americans continue to push their expectations for returning to a pre-recession ‘normal’ further and further into the future – close enough for comfort, but far enough away to seem realistic. But as that happens, more and more it seems that normal is actually where we are right now. ”

"US Data Chief Warns on Employment" (Financial Times)

Poor US payrolls data for May appear to reflect a “general weakening in job growth” rather than any temporary distortion, the head of the agency that compiles the statistics said in an interview with the Financial Times.
“Probably the most notable thing about [the jobs report] is there isn’t anything notable about it,” said Keith Hall, commissioner of the Bureau of Labor Statistics.
The US added only 54,000 jobs in May, well below this year’s average gain of 182,000, stoking fears that the US recovery has lost momentum.
Some analysts suggest the slowdown may reflect supply chain disruptions after Japan’s tsunami or extreme weather events that hit the US in May, rather than any deeper slowdown.
Mr Hall said this is hard to see in the data. “There was really no jump at all in people reporting work disruption. So whatever has happened this month is probably not a weather effect.” He said supply chain disruptions would be most likely to cause a fall in hours worked rather than outright job losses.

The slowdown in job growth was spread across many industries, rather than concentrated in manufacturing.

"NFIB Jobs Statement: On Main Street, Job Creation is Collapsing" (National Federation of Independent Business)

“After solid job gains early in the year, progress has slowed to a trickle. The two NFIB indicators—job openings and hiring plans—that predict the unemployment rate both fell, suggesting that the rate itself will rise.

“May’s job numbers will disappoint; meaningful job creation on Main Street has collapsed.

“Twelve percent (seasonally adjusted) of small-business owners reported unfilled job openings (down 2 points). Further indications of minimal future growth include the fact that in the next three months, 13 percent plan to increase employment (down 3 points), and 8 percent plan to reduce their workforce (up 2 points). That yields a seasonally adjusted net negative 1 percent of owners planning to create new jobs, a 3 point loss from April.
“Overall, reports of job reductions have returned to historically normal levels. However, the percent of owners hiring has not recovered to levels historically observed after two years of expansion. With one in four owners still reporting ‘weak sales’ as their No. 1 business problem, there is little need to add employees, especially with the uncertainty about future labor costs arising from new regulation and legislation. And, if Congress doesn’t deal effectively with the trillion dollar deficit, we’ve got plenty to keep us worried.”

"10-Year Real Wage Growth Worse Than In Depression" (Investors Business Daily)

The past decade of wage growth has been one for the record books — but not one to celebrate.
The increase in total private-sector wages, adjusted for inflation, from the start of 2001 has fallen far short of any 10-year period since World War II, according to Commerce Department data. In fact, if the data are to be believed, economywide wage gains have even lagged those in the decade of the Great Depression (adjusted for deflation).
Two years into the recovery, and 10 years after the nation fell into a post-dot-com bubble recession, this legacy of near-stagnant wages has helped ground the economy despite unprecedented fiscal and monetary stimulus — and even an impressive bull market.
Over the past decade, real private-sector wage growth has scraped bottom at 4%, just below the 5% increase from 1929 to 1939, government data show.
To put that in perspective, since the Great Depression, 10-year gains in real private wages had always exceeded 25% with one exception: the period ended in 1982-83, when the jobless rate spiked above 10% and wage gains briefly decelerated to 16%.

"Survey Finds Older Americans Struggling to Recover From Recession" (ElderLaw Answers)

Although the recession has affected everyone, older Americans have been hit particularly hard. A new report by the AARP finds that it may take a long time for them to recover.

The AARP surveyed 5,027 Americans aged 50 and older who are currently in the labor force, or had been in it at some time in the three years before being interviewed, and found that the unemployment rate for individuals aged 55 or more was higher than during any other recession in the past 60 years. Nearly 30 percent of the survey respondents said they were either unemployed and looking for work or had been unemployed within the last three years.

Regardless of employment status, older Americans were also affected in other ways. Nearly one-third of respondents' homes declined in value and 19.4 percent fell behind on credit card debt. In addition, one in seven respondents had trouble paying the rent or mortgage and one in eight lost their health insurance. To make ends meet, those 50 and over have been forced to cut down on expenses, withdraw money from savings accounts, delay getting medical care, or use a credit card for daily expenses, among other things.

"The New Face of Poverty: Families" (Greensboro News & Record)

They don't look poor.

Until they show you.

There's the refrigerator dotted with family pictures. Open it. It's empty.

The pantry: empty.

Cupboards: empty.

Under the sink: watered-down dishwasher detergent.

In the bathroom: McDonald's napkins for toilet paper.

The walls are bare, not by design but by choice, in case they need to leave quickly.

Meet the Struble family: father Todd, mother Diane and their five kids, ages 6 to 17.

Pull up a chair. You're welcome to stay for dinner.

As long as you like soup.

--* Poverty has a new face: families.

"Americans Avoiding Doctors In Weak Economy, Health Insurers Say" (Reuters)

Americans' use of medical services has not yet rebounded during the weak economy, health insurers say, in a trend that keeps the companies' costs down and could bolster their profits further this year.

Low healthcare utilization was a major reason behind the health insurers posting first-quarter profits well above analyst forecasts earlier this year.

The companies have been factoring increases into their pricing for their plans, but executives at an investor conference this week said utilization continued to stay low.

"Medical costs have not come back to trend levels we anticipated," UnitedHealth Group Inc CEO Stephen Hemsley told the conference, held by Sanford Bernstein.

Nonetheless, some economic "experts" -- I use the term loosely -- apparently see things differently.

"Nightly Business Report for June 3, 2011" (PBS)

[Council of Economic Advisers Chairman Austan] Goolsbee: This is not a double dip recession. I don`t think the market is pricing that in. I think the fact that we`ve added a million jobs in the last six months looks nothing like a double dip recession. Most of the private forecasters are seeing a fairly strong rebound in the second half of the year.

I wonder: how can allegedly educated, highly-paid hacks like this even look themselves in the mirror?


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