Source: The Star Online
WASHINGTON: In a positive sign for the U.S. economy, companies are laying off fewer workers as they prepare to ramp up production to replenish their depleted stockpiles of goods.
Many analysts pointed to Thursday's drop in jobless claims as evidence of a trend signaling fewer job losses in coming months, particularly compared with the flood of layoffs earlier this year.
Still, job openings remain scarce.
And most economists expect the unemployment rate to keep rising to 10 percent or higher by the end of this year.
On Friday, the government will report the July unemployment rate.
First-time claims for jobless benefits dropped to a seasonally adjusted 550,000 last week, down from 588,000 in the previous week, the Labor Department said Thursday.
The four-week average of claims, which smooths out fluctuations, dropped to 555,250, its lowest point since late January.
"The lower claims figures are an important economic development and confirmation that the economy is turning the corner," Joseph LaVorgna, chief U.S. economist at Deutsche Bank, wrote in a note to clients.
Fewer layoffs could help boost consumer sentiment.
That's because those who are spending less now for fear of losing their jobs could grow more confident.
If they start borrowing and spending more, it would help invigorate the economy.
Many economists say an improved job market could be evident in the unemployment report to be issued Friday.
LaVorgna, for example, has cut his projection of job losses for July to 150,000 from 325,000.
That would be the fewest since last July.
Overall, analysts expect the report will show the unemployment rate rose to a 26-year high of 9.6 percent last month, up from 9.5 percent in June, according to survey by Thomson Reuters.
Employers are forecast to have cut 320,000 jobs in July, the survey found, down from 467,000 in June and from an average of 645,000 in the six months from November to April.
But many economists think the July job losses will be smaller.
Dean Maki, chief U.S. economist at Barclays Capital, expects Friday's report to show a 275,000 drop in payrolls.
Analysts generally expect production to ramp up in the July-September period as manufacturers restock shelves and warehouses.
Layoffs in the construction industry should also decline, Maki said, because home building has recovered from record lows.
Spending on residential construction rose in June for the first time in more than three years, the Commerce Department said Monday.
"We think the trend is toward smaller and smaller job cuts" until the last three months of the year, Maki said, when employers may actually add jobs - which hasn't happened since December 2007.
Many companies have cut as many workers as they possibly can while still maintaining an adequate output of goods, said Rob Saam, senior vice president of Lee Hecht Harrison, a consulting firm that helps find jobs for laid-off professionals.
In many cases, these companies have managed to boost the productivity of their diminished staff.
"You can only maintain that level of productivity for so long before you wear out your work force," Saam said.
Other figures out Thursday indicated that jobs are still scarce.
The number of people who are continuing to claim unemployment benefits rose by 69,000 to 6.3 million, after having dropped for three straight weeks - evidence that the unemployed are having difficulty finding new work.
The figures for continuing jobless claims lag behind those for initial claims by a week.
When emergency extensions of unemployment are included, the total jobless benefit rolls climbed to a record 9.35 million for the week ending July 18, the most recent period for which figures are available.
Congress has added up to 53 extra weeks of benefits on top of the 26 typically provided by the states.
Despite the decline in new jobless claims, they remain far above the 300,000 to 350,000 that analysts say is consistent with a healthy economy.
New claims last fell below 300,000 in early 2007.
Separately, many retail chains reported sluggish July sales Thursday as consumers proved reluctant to spend.
Mall-based chains, such as Macy's Inc. and teen retailers Abercrombie & Fitch, were the hardest hit as shoppers focused on necessities.
Financial markets fell in afternoon trading.
The Dow Jones industrial average dropped 24 points, or 0.27 percent, while broader stock averages also declined.
The recession, which began in December 2007 and is the longest since World War II, has eliminated a net total of 6.5 million jobs.
More job cuts were announced this week.
The publisher of the Milwaukee Journal Sentinel said it would slash 92 jobs as the current advertising slump continues to ravage the newspaper business.
Elsewhere, about 6,000 General Motors Co. blue-collar workers have taken the latest round of early retirement and buyout offers.
But GM wants to cut about 13,500 workers, setting the stage for more layoffs. - AP
Showing posts with label US Economy. Show all posts
Showing posts with label US Economy. Show all posts
Friday, August 7, 2009
Sunday, July 26, 2009
China economy growing again while US limps
Source: The Star Online
WASHINGTON (AP): It's a tale of two economies, China and the United States. The United States, the world's largest economy, remains mired in recession as do most of its fellow top industrial powers.
China, poised to pass Japan as the world's second-largest economy perhaps by late this year, recently announced its Gross Domestic Product grew by more than 7.1 percent in the first half of this year.
That puts it alone among the top 10 world powers whose economy has expanded in recent months, making it the first major country to emerge from the worst global slump since the 1930s. Many analysts suggest that China could help to lead the rest of the world out of the doldrums.
For China's part, it hopes the U.S. and other Western countries will also recover and revive their now-depressed demand for Chinese goods, further buoying the Chinese economy. U.S. officials, however, suggest that, with recession-shocked American consumers spending less and saving more, those glory days for Chinese exporters will not return anytime soon.
Economic and strategic cooperation among the two world economic superpowers tops the agenda as top officials from both countries hold a two-day meeting in Washington, beginning Monday.
"China is increasingly becoming a responsible citizen in the global community," said economist Allen Sinai of Decision Economics. "No longer lawless, no longer difficult to deal with, much more responsible. It is now a powerhouse among economies and finance. And it's a rich country."
China stands out as a case study in how government economic-stimulus can work. In the United States, there are fierce debates over whether President Barack Obama's $787 billion stimulus, passed by Congress in February, is having much impact. Designed to help create jobs, U.S. unemployment continues to rise at a steep pace and the economy is still shrinking.
By contrast, Beijing's $586 billion stimulus effort, put in place last November, has been hugely successful by nearly all accounts.
It freed up massive public-works spending and made bank loans more available, spurring a huge increase in Chinese construction and purchases of cars, homes and other goods.
If anything, some economists suggest the Chinese stimulus may actually be working too well, threatening to overheat the Chinese economy. That raises concerns that the flood of easy money will cause inflation and set the stage for the same kind of housing-credit "bubble" that triggered the U.S. financial meltdown.
Why did China's stimulus work when the U.S. version was slow to kick in?
For one thing, China had many of the programs, including public works projects, in the planning stages for two or three years so they got a head start once hit last year by the global downturn. China also didn't have to go through the tortuous gyrations that the Federal Reserve and Treasury did to inject money into U.S. banks in hopes of getting them to resume lending.
"Credit was flowing not because Chinese bankers were inherently confident about their economy. Credit was flowing because the Communist Party was telling the banks to lend," said Charles Freeman, former assistant U.S. trade representative for China affairs and now with the Center for Strategic and International Studies.
While exports may not be as much a driver of the Chinese economy as in the past, China is well situated to benefit in any upturn, particularly because of its reputation for manufacturing inexpensive products, said Freeman. "Cheap goods are relatively in demand in times of economic trouble, and so China is the first and last resort for cheap goods," he said.
In addition to better economic cooperation, Beijing is also Washington's most important partner in efforts to discourage or contain North Korea's nuclear ambitions. Still, the U.S.- Chinese relationship isn't all rosy.
There remain security concerns as China bulks up as a military superpower as well as an economic one.
And there is still much trade friction between the two countries. Many in Congress and in organized labor still view China warily as a fierce competitor for U.S. manufacturing jobs.
"New opportunities in President Obama's new green economy will go to big players like GM and to businesses in China, where the government understands global commerce is played by rules of prison football," said Peter Morici, a business economist at the University of Maryland and former chief economist at the U.S. International Trade Commission.
"China has more than 100 million rural underemployed workers who, if moved into factories, could replace every manufacturing job in the United States, Western Europe and Japan," Morici said.
China and the United States are each other's second-largest trading partner. But the trade is way out of whack. The U.S. trade deficit with China remains its largest, even though trade overall has been down because of the global recession.
The Economic Policy Institute, a union-funded think tank, says that China represents a staggering 83 percent of the entire U.S. trade deficit in non-oil goods, up from 26 percent in 2000.
There is also a long-simmering dispute between the U.S. and China over exchange rates. U.S. officials claim China's currency policies end up overpricing U.S. goods there and making Chinese-made goods less expensive in the U.S.
And, as the largest holder of U.S. debt - mostly in the form of Treasury bonds - Beijing holds vast economic leverage over the United States. Suddenly selling those Treasurys or significantly reducing its debt holdings could send shock waves through the global financial system and make it harder for the U.S. to finance its mushrooming debt.
Most economists believe China is unlikely to make any such moves, because it would reduce the value of its own vast holdings in Treasurys. But Beijing might slow down its purchases of Treasurys and other dollar-denominated investments, complicating efforts for the United States to finance a budget deficit expected to surpass $1.8 trillion this year and a cumulative national debt approaching $12 trillion.
Also, there's one area in which China has now surpassed the U.S. and remains the world leader, even if it's hardly an honor. It is now the world's largest carbon emitter.
U.S. policymakers recognize that costly steps taken by Western nations to reduce pollution to help control global warming will mean little if China, with its population of 1.3 billion people, does not join in the effort.
But so far, the U.S. has been unable to persuade China to work to lower its emissions. China argues with conviction that it has a right to develop rapidly in hopes of attaining Western living standards and that its per capita pollution remains a fraction of that in the U.S. It also claims to have made great recent strides in energy efficiency and cleaning up coal plants.
WASHINGTON (AP): It's a tale of two economies, China and the United States. The United States, the world's largest economy, remains mired in recession as do most of its fellow top industrial powers.
China, poised to pass Japan as the world's second-largest economy perhaps by late this year, recently announced its Gross Domestic Product grew by more than 7.1 percent in the first half of this year.
That puts it alone among the top 10 world powers whose economy has expanded in recent months, making it the first major country to emerge from the worst global slump since the 1930s. Many analysts suggest that China could help to lead the rest of the world out of the doldrums.
For China's part, it hopes the U.S. and other Western countries will also recover and revive their now-depressed demand for Chinese goods, further buoying the Chinese economy. U.S. officials, however, suggest that, with recession-shocked American consumers spending less and saving more, those glory days for Chinese exporters will not return anytime soon.
Economic and strategic cooperation among the two world economic superpowers tops the agenda as top officials from both countries hold a two-day meeting in Washington, beginning Monday.
"China is increasingly becoming a responsible citizen in the global community," said economist Allen Sinai of Decision Economics. "No longer lawless, no longer difficult to deal with, much more responsible. It is now a powerhouse among economies and finance. And it's a rich country."
China stands out as a case study in how government economic-stimulus can work. In the United States, there are fierce debates over whether President Barack Obama's $787 billion stimulus, passed by Congress in February, is having much impact. Designed to help create jobs, U.S. unemployment continues to rise at a steep pace and the economy is still shrinking.
By contrast, Beijing's $586 billion stimulus effort, put in place last November, has been hugely successful by nearly all accounts.
It freed up massive public-works spending and made bank loans more available, spurring a huge increase in Chinese construction and purchases of cars, homes and other goods.
If anything, some economists suggest the Chinese stimulus may actually be working too well, threatening to overheat the Chinese economy. That raises concerns that the flood of easy money will cause inflation and set the stage for the same kind of housing-credit "bubble" that triggered the U.S. financial meltdown.
Why did China's stimulus work when the U.S. version was slow to kick in?
For one thing, China had many of the programs, including public works projects, in the planning stages for two or three years so they got a head start once hit last year by the global downturn. China also didn't have to go through the tortuous gyrations that the Federal Reserve and Treasury did to inject money into U.S. banks in hopes of getting them to resume lending.
"Credit was flowing not because Chinese bankers were inherently confident about their economy. Credit was flowing because the Communist Party was telling the banks to lend," said Charles Freeman, former assistant U.S. trade representative for China affairs and now with the Center for Strategic and International Studies.
While exports may not be as much a driver of the Chinese economy as in the past, China is well situated to benefit in any upturn, particularly because of its reputation for manufacturing inexpensive products, said Freeman. "Cheap goods are relatively in demand in times of economic trouble, and so China is the first and last resort for cheap goods," he said.
In addition to better economic cooperation, Beijing is also Washington's most important partner in efforts to discourage or contain North Korea's nuclear ambitions. Still, the U.S.- Chinese relationship isn't all rosy.
There remain security concerns as China bulks up as a military superpower as well as an economic one.
And there is still much trade friction between the two countries. Many in Congress and in organized labor still view China warily as a fierce competitor for U.S. manufacturing jobs.
"New opportunities in President Obama's new green economy will go to big players like GM and to businesses in China, where the government understands global commerce is played by rules of prison football," said Peter Morici, a business economist at the University of Maryland and former chief economist at the U.S. International Trade Commission.
"China has more than 100 million rural underemployed workers who, if moved into factories, could replace every manufacturing job in the United States, Western Europe and Japan," Morici said.
China and the United States are each other's second-largest trading partner. But the trade is way out of whack. The U.S. trade deficit with China remains its largest, even though trade overall has been down because of the global recession.
The Economic Policy Institute, a union-funded think tank, says that China represents a staggering 83 percent of the entire U.S. trade deficit in non-oil goods, up from 26 percent in 2000.
There is also a long-simmering dispute between the U.S. and China over exchange rates. U.S. officials claim China's currency policies end up overpricing U.S. goods there and making Chinese-made goods less expensive in the U.S.
And, as the largest holder of U.S. debt - mostly in the form of Treasury bonds - Beijing holds vast economic leverage over the United States. Suddenly selling those Treasurys or significantly reducing its debt holdings could send shock waves through the global financial system and make it harder for the U.S. to finance its mushrooming debt.
Most economists believe China is unlikely to make any such moves, because it would reduce the value of its own vast holdings in Treasurys. But Beijing might slow down its purchases of Treasurys and other dollar-denominated investments, complicating efforts for the United States to finance a budget deficit expected to surpass $1.8 trillion this year and a cumulative national debt approaching $12 trillion.
Also, there's one area in which China has now surpassed the U.S. and remains the world leader, even if it's hardly an honor. It is now the world's largest carbon emitter.
U.S. policymakers recognize that costly steps taken by Western nations to reduce pollution to help control global warming will mean little if China, with its population of 1.3 billion people, does not join in the effort.
But so far, the U.S. has been unable to persuade China to work to lower its emissions. China argues with conviction that it has a right to develop rapidly in hopes of attaining Western living standards and that its per capita pollution remains a fraction of that in the U.S. It also claims to have made great recent strides in energy efficiency and cleaning up coal plants.
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