Unemployment hits 9.5% in June
July 2, 2009
Written By Arthur Delaney reported on Huffingtonpost.com
The U.S. economy lost 467,000 jobs in June as the national unemployment rate rose to 9.5 percent, the government announced on Thursday morning. While that’s only one-tenth of a percentage point from May, the current rate is the highest rate in 26 years.
Heidi Shierholz, an economist with the Economic Policy Institute, said that the loss of 6.5 million jobs since the start of the recession combined with the growth of the workforce means that the gains of the previous business cycle have been completely blown away.
“This is the only recession since the Great Depression to wipe out all jobs growth from the previous business cycle, a devastating benchmark for the workers of this country and a testament to both the enormity of the current crisis and to the extreme weakness of jobs growth from 2000-2007,” said Shierholz in a statement.
The ranks of the long-term unemployed — people out of work for 27 weeks or more — grew by 433,000 in June to a total of 4.4 million. Three in 10 of the unemployed are now long-term unemployed. The collapse of the housing industry contributes to their plight.
“We know right now because of the housing crisis that people can’t move to find another job,” Shierholz said. “People that in previous recessions may have been able to relocate to find another job can’t now.”
The Huffington Post has been profiling people who’ve been out of work for long periods of time. Marvin Bohn of Ohio hasn’t worked for a year and has been paying for his meds out-of-pocket. Steve Dittmann of Kansas said of the unemployed life, “I feel like I’m on the other side of a Plexiglass wall looking in.”
A broader measure of labor underutilization that accounts for people who’ve stopped looking for work hit 16.5% in June, a 0.1 percentage point increase.
“In June, there were large decreases in manufacturing, construction, and professional and business services,” said Bureau of Labor Statistics Commissioner Keith Hall in a statement. “Together, these three sectors have accounted for nearly three-quarters of the jobs lost since the recession began.
Many economists have predicted that even when the recession is technically over with the economy beginning to expand, there will be a “jobless recovery” as unemployment hovers in the double-digits.
Unemployment Climbs To 8.9%, Highest Since 1983
May 8, 2009
Written by Jeannine Aversa AP
WASHINGTON — The pace of layoffs slowed in April when employers cut 539,000 jobs, the fewest in six months. But the unemployment rate climbed to 8.9 percent, the highest since late 1983, as many businesses remain wary of hiring given all the economic uncertainties.
The Labor Department tally released Friday wasn’t nearly as deep as the 620,000 job cuts that economists were expecting, and was helped by a burst of federal government hiring of temporary workers to prepare for the 2010 Census. The rise in the unemployment rate from 8.5 percent in March matched economists’ forecasts.
The new report underscored the toll the longest recession since World War II has taken on America’s workers and companies. However, the slowdown in layoffs may bolster expectations that the worst of the downturn’s hefty job losses are past.
“There are glimmers of hope. We are moving in the right direction in terms of layoffs. They are measurably less bad than what we’ve been through,” said Mark Zandi, chief economist at Moody’s Economy.com.
On Wall Street, the employment news gave stocks a lift. The Dow Jones industrials gained about 100 points in morning trading.
Still, companies will remain cautious in hiring, making it harder for laid-off workers to find new jobs.
If laid-off workers who have given up looking for new jobs or have settled for part-time work are included, the unemployment rate would have been 15.8 percent in April, the highest on records dating back to 1994. The total number of unemployed now stands at 13.7 million, up from 13.2 million in March.
Companies also kept a tight rein on workers hours. The average work week in April stayed at 33.2 hours, matching the record low set in March.
Since the recession began in December 2007, the economy has lost a net total of 5.7 million jobs.
As the recession eats into sales and profits, companies have turned to layoffs and other cost-cutting measures to survive the storm. Those including holding down workers’ hours, and freezing or cutting pay.
Job losses in February and March turned out to be deeper, according to revised figures. Employers cut 681,000 positions in February, 30,000 more than previously reported. They cut 699,000 jobs in March, more than the 663,000 first reported.
The deepest job cuts of the recession _ 741,000 came in January. That was the most since the fall of 1949.
Employers last month cut the fewest jobs since 380,000 in October. Nonetheless, the April job losses were widespread.
Construction companies axed 110,000 jobs, down from 135,000 in March. Factories got rid of 149,000 jobs, down form 167,000 the month before. Retailers cut payrolls by nearly 47,000, less than the nearly 64,000 cut in March. And job losses in financial activities dropped by 40,000, down from 43,000 in the previous month.
The slower pace of job losses _ along with 66,000 more federal jobs _ helped to temper the overall payroll reductions in April. The pickup in federal employment was mainly due to the hiring of 63,000 temporary Census workers.
Looking ahead, economists expect monthly job losses for most _ if not all _ of this year. However, they hope the reductions won’t be as deep.
Labor Secretary Hilda Solis, wouldn’t speculate on the future pace of layoffs, but warned that some of the jobs lost “may not come back.” She urged jobseekers to get the training and education needed to be contenders for work in growing industries, such as health care, which added nearly 17,000 jobs in April.
Fallout from housing, credit and financial crises _ the worst since the 1930s _ has hurt America’s workers and companies, and the pain will continue. The jobs market traditionally doesn’t rebound until well after an economic recovery starts.
Federal Reserve Chairman Ben Bernanke earlier this week gave his most optimistic prediction yet about the end of the recession, saying he expects the economy to start growing again this year _ although the comeback could be weak and more jobs will disappear even after a recovery takes hold.
Companies will have little appetite to ramp up hiring until they feel the economy is truly out of the woods and a recovery is firmly rooted.
Against that backdrop, many economists predict the unemployment rate will hit 10 percent by the end of this year. Bernanke stopped short of that figure, saying it will be somewhere in the 9 percent range. Regardless, both private economists and Bernanke agree the unemployment rate will keep climbing into next year.
The Fed says unemployment will remain elevated into 2011. Economists say the job market may not get back to normal _ meaning a 5 percent unemployment rate _ until 2013.
And the job cuts have continued this week. Steelmaker Severstal International said it’s idling plants in Wheeling, W.Va., and Warren, Ohio, resulting in 3,100 layoffs due to the continuing deterioration of the steel industry. Microsoft Corp. said it was starting thousands of the 5,000 job cuts it announced in earlier this year and left the door open to even more layoffs.
The Commerce Department on Friday said wholesale inventories dropped 1.6 percent in March, much larger than the 1 percent fall that analysts had expected. That followed a 1.7 percent drop in February, the largest monthly decline on records that go back 17 years.
It was the seventh straight month that wholesale inventories fell as businesses struggled to get stockpiles in line with plunging sales. Wholesalers saw sales drop 2.4 percent in March, the fifth decline in six months.
Still, glimmers of hope have emerged that the recession may be losing its grip on the country.
The Labor Department on Thursday said the number of newly laid-off workers filing applications for jobless benefits plunged to the lowest level in 14 weeks, a possible sign that the wave of layoffs has peaked. Still, the number of unemployed workers drawing benefits climbed to a new record _ 6.35 million.
Other reports showed sales at many retailers fared better in April, with Wal-Mart Stores Inc. leading the way.
However, Friday’s employment report showed that workers’ wages barely budged in April, meaning consumers will probably stay somewhat cautious in the months ahead. Average hourly earnings nudged up to $18.51 in April, a 0.1 percent rise from the previous month.
In the U.S., the economy shrank at faster than a 6 percent annual rate late last year and early this year, the worst six-month performance since the late 1950s. Analysts think it is still shrinking now _ but probably at about half that pace. Many predict the economy could start growing in the third or fourth quarter as tax cuts and government spending on big public works projects included in President Barack Obama’s $787 billion stimulus package take hold.
Out of Work and Challenged on Benefits, Too
March 28, 2009
In Record Numbers, Employers Move to Block Unemployment Payouts
Washington Post Staff Writer
Thursday, February 12, 2009; Page A01
It’s hard enough to lose a job. But for a growing proportion of U.S. workers, the troubles really set in when they apply for unemployment benefits.
More than a quarter of people applying for such claims have their rights to the benefit challenged as employers increasingly act to block payouts to former workers.
The proportion of claims disputed by former employers and state agencies has reached record levels in recent years, according to the Labor Department numbers tallied by the Urban Institute.
Under state and federal laws, employees who are fired for misbehavior or quit voluntarily are ineligible for unemployment compensation. When jobless claims are blocked, employers save money because their unemployment insurance rates are based on the amount of the benefits their workers collect.
As unemployment rolls swell in the recession, many workers seem surprised to find their benefits challenged, their former bosses providing testimony against them. On one recent morning in what amounts to one of Maryland’s unemployment courts, employees and employers squared off at conference tables to rehash reports of bad customer service, anger management and absenteeism.
“I couldn’t believe it,” said Kenneth M. Brown, who lost his job as a hotel electrician in October.
He began collecting benefits of $380 a week but then discovered that his former employer, the owners of the Gaylord National Resort and Convention Center, were appealing to block his unemployment benefits. The hotel alleged that he had been fired for being deceptive with a supervisor.
“A big corporation like that. . . . It was hard enough to be terminated,” he said. “But for them to try to take away the unemployment benefits — I just thought that was heartless.”
After a Post reporter turned up at the hearing, the hotel’s representative withdrew the appeal and declined to comment. A hotel spokesperson later said the company does not comment on legal matters. Brown will continue to collect benefits, which he, his wife and three young children rely on to make monthly mortgage payments on their Upper Marlboro home.
Unemployment compensation programs are administered by the states and funded by payroll taxes that employers pay. In 2007, employers put up about $31.5 billion in such taxes, and those taxes typically rise during and after recessions, as states seek to replenish the funds.
With each successful claim raising a company’s costs, many firms resist letting employees collect the benefit if they consider it undeserved.
“In some of these cases, employers feel like there’s some matter of principle involved,” said Coleman Walsh, chief administrative law judge in Virginia, who has handled many such disputes. But, he said, “nowadays it appears their motivation has more to do with the impact on their unemployment insurance tax rate. Employers by and large are more aware of unemployment as a cost of business.”
The cost of unemployment insurance has created an industry of “third-party agents” — companies that specialize in helping employers deal with the unemployment insurance administration. These firms represent employers in disputes with former employees over jobless benefits.
One of the largest is …., a St. Louis company active in the Washington area, which claims more than 8,000 clients.
The company’s Web site says that it removes “over $6 billion in unemployment claims liability annually.”
Joyce Dear, chief operations officer for tax management services at …., said firms such as hers help bring to light the issues surrounding an employee’s departure.
“You are limited to what is permissible,” she said. “What an employer can do is provide the facts around a separation. The awarding of the benefits is in the hands of the state.”
Wayne Vroman, a researcher at the Urban Institute, has documented the rise of challenges to unemployment claims using the Labor Department data. He found that the proportion of claims challenged on the basis of misconduct has more than doubled, to 16 percent, since the late 1980s. Claims disputed on the grounds that the worker simply quit represent about 10 percent of the otherwise eligible applications.
Even as more employers have alleged employee misconduct, their success rate has stayed relatively stable — they lose on such issues about two-thirds of the time.
“What is clear is that employers have become more willing to contest claims from claimants,” Vroman said of the data.
Hearing officers and others in the industry said it isn’t clear why the number of challenges to unemployment claims has grown. The labor force has changed over the years, with less of it devoted to manufacturing and more of it from the service sector.
Some suggested the rise in disputed benefits stems from the fact that it is easier today for employers to track claims and try to block those they consider unwarranted.
“Automation has contributed to the ease with which protests from the employer can be filed,” said Doug Holmes, president of UWC Strategy, a group that claims large and small employers among its members and represents their interests in unemployment matters.
Others speculated that changes in the law have made it easier for employers to block unemployment claims.
Rick McHugh, a staff attorney for the National Employment Law Project who began handling such cases in the 1970s, said court rulings have slowly enlarged the definition of employee misconduct, making it easier for employers to say they rightfully fired a worker.
“The courts are just not showing as much sympathy for employees who get fired,” he said. “There’s a higher standard of behavior that is expected of employees.”
For example, back in 1941, the Wisconsin Supreme Court considered the case of a cab driver who’d had three accidents in two weeks and also shorted the company on a 40 cent fare, turning in only 25 cents.
The court ruled that the driver was entitled to unemployment benefits because unintentionally careless or shoddy work did not constitute misconduct. It’s unlikely, McHugh said, that the case would be determined the same way today.
In many states, hearings are held daily on unemployment claims. The outcome most often turns on whether the former employee was guilty of misconduct.
With employees and employers as adversaries, it’s often difficult to determine the facts of a case, and just as difficult at times to separate misconduct from incompetence, which is not a reason to withhold the benefits.
During a day of hearings this week in Wheaton, human resources personnel sat across tables from former employees, and the discussion often turned to written warnings, company handbooks and who-told-what-to-whom.
A former assistant manager at Ri Ra, an Irish Bar in Bethesda, fended off complaints that, among other things, he’d failed to greet guests at the door and one time poured a beer for himself after hours.
A Verizon technician was charged with, in company terms, “detour and frolic.”
And a former salesman at Ethan Allen complained that there was no way he could have made his $35,000 sales quota — and that’s why he quit.
“It’s almost like a daily soap opera — but it’s real life,” veteran hearing examiner Scott Karp said. “In this economic climate, the threshold for what employers consider minimum acceptable behavior has changed. They decide they’re not going to put up with it anymore, so they start documenting the employee’s behavior and often enough, the issue winds up here.”
Our Perspective:
Unemployment claims are a much overlooked business expense.
Did you know that Unemployment Tax is the 2nd largest Employer mandated tax?
Basically, the Unemployment Fund can be seen as being a checking account with the state.
The state determines what your rate is.
The rate determines how much money you put into this account to pay claims.
Then the state notifies you how much they have taken out of the account to pay claims.
How do you know these rates are correct?
How do you know your reserves are correct?
How do you know if you are paying the proper amount for each claim?
Many business never ask this question!
This is one of the only employer taxes that you can control!
You could be overpaying unemployment taxes into the fund.
You may be overpaying claims!
You may be paying for claims that are not your responsibility!
We have worked with clients to review their rates and have provided a long term solution to manage their claims. As a result, we have reduced their rates and reduced the contribution they have to annually pay into the unemployment fund.
Would you like to know more, email george@hbsadvantage.com or you may call
856-857-1230.
We have clients who have operations thruout the United States.
We are a boutique firm with success with many high profile clients.
Visit us on the web to learn more
Despair over financial policy
March 21, 2009
Written by Paul Krugman NY Times
The Geithner plan has now been leaked in detail. It’s exactly the plan that was widely analyzed — and found wanting — a couple of weeks ago. The zombie ideas have won.
The Obama administration is now completely wedded to the idea that there’s nothing fundamentally wrong with the financial system — that what we’re facing is the equivalent of a run on an essentially sound bank. As Tim Duy put it, there are no bad assets, only misunderstood assets. And if we get investors to understand that toxic waste is really, truly worth much more than anyone is willing to pay for it, all our problems will be solved.
To this end the plan proposes to create funds in which private investors put in a small amount of their own money, and in return get large, non-recourse loans from the taxpayer, with which to buy bad — I mean misunderstood — assets. This is supposed to lead to fair prices because the funds will engage in competitive bidding.
But it’s immediately obvious, if you think about it, that these funds will have skewed incentives. In effect, Treasury will be creating — deliberately! — the functional equivalent of Texas S&Ls in the 1980s: financial operations with very little capital but lots of government-guaranteed liabilities. For the private investors, this is an open invitation to play heads I win, tails the taxpayers lose. So sure, these investors will be ready to pay high prices for toxic waste. After all, the stuff might be worth something; and if it isn’t, that’s someone else’s problem.
Or to put it another way, Treasury has decided that what we have is nothing but a confidence problem, which it proposes to cure by creating massive moral hazard.
This plan will produce big gains for banks that didn’t actually need any help; it will, however, do little to reassure the public about banks that are seriously undercapitalized. And I fear that when the plan fails, as it almost surely will, the administration will have shot its bolt: it won’t be able to come back to Congress for a plan that might actually work.
What an awful mess.
Let us know your thoughts? You may leave a comment.
Geothermal Energy Gains Steam
March 17, 2009
As reported by triplepundit
Geothermal is the bastard child of renewable energy.
Constantly overlooked in articles and headlines in lieu of the much sexier solar and wind, which have become the go-to cleantech representatives, geothermal energy use could quietly double in the next six years.
It requires no fuel, can provide baseload power, and is emissions-free after initial plant construction. Yet not many people know about geothermal’s immense advantages and capabilities.
Here’s to changing that.
Without getting all Wikipedia on ya’, geothermal energy is basically using the natural heat below the earth’s crust to generate electricity–hence geo and thermal.
Though there are many ways to do that, the most common is to inject water into a pre-drilled hole. The naturally heated water is then introduced to heat transfer fluid. The hot water vaporizes the fluid, which drives a turbine, creating electricity.
That two-step process is intuitively called a binary cycle plant.
Gaining steam (pun intended) in the geothermal world is a process called enhanced geothermal systems, in which a heat transfer fluid is heated directly by being injected down hold drilled deep in dry rock.
For individual household applications, geothermal heat pumps pass air through a pipe below ground that stays a constant 50 to 60 degrees, heating in the winter and cooling in the summer, saving boatloads on utility costs in the process.
Not as exciting as getting power from giant wind turbines or panels that take in the sun’s rays, but clean, efficient, and deserved of our attention nonetheless.
And it’s much easier to get excited about geothermal power once you see the growth numbers.
Geothermal Energy Forecast
Global geothermal energy capacity will grow 89% between now and 2015, according to the most recent information available from GlobalData. Capacity will surge from 11,0007 MW at the end of 2008 to over 20,800 MW in the next six years.
Here’s the chart:
And in case you’re interested, here’s how the market share shakes out by region:
- Asia-Pacific, 47.6%
- North America, 42.3%
- Europe, 10.0%
- South America, <0.10%
Here in the States, forecast growth is on par with global growth on a percentage basis, with an estimated compound annual growth rate (CAGR) of 9.5% each. In the next six years, geothermal energy capacity in the U.S. will grow 89%, from 3,112 MW to 5,884 MW. That’s a world-leading sum.
Notable mentions in the geothermal growth category include Indonesia (3,200 MW by 2015), the Philippines (3,246 MW by 2015), and Mexico (1,481 MW by 2015). Iceland’s success with geothermal almost goes without saying.
As you can see, geothermal energy is no slouch, and probably deserves a bit more attention and respect, as does the investment potential of the sector.
Geothermal Energy Investment Forecast
Like most other market sectors, geothermal stocks have lost significant value over the past year. Here’s the visual:
That’s a two-year chart of Ormat Technologies (NSYE: ORA), U.S. Geothermal (AMEX: HTM), and Raser Technologies (NYSE: RZ), three of best pure play public geothermal companies around.
Losing 50% of your value in two years is no joke. But indicators are pointing to a rebound in the geothermal sector that will coincide with growth in geothermal capacity. It only makes sense, right?
The recently-passed stimulus did its part to ensure investing in geothermal energy remains attractive. The bill extends the production tax credit (PTC) until 2013, allowing project developers to recoup 30% of a new plant’s cost. The stimulus creates a cash grant program to support the industry as well.
It’s a win-win according to Geothermal Energy Association executive director Karl Gawell:
We estimate that the geothermal power industry has doubled its workforce in the US in the past two years, and the economic stimulus bill provides a framework of support that will continue if not accelerate growth in this industry adding tens of thousands of new jobs with even greater positive effects across the economy.
Federal incentives will lure private capital to the sector, allowing financing to go through for new projects. Banks will be more likely to lend given a 30% credit that gives stability to and reduces payback times.
Here’s Karl Gawell once again: “All of this adds up to making significant progress towards expanding our use of this largely untapped energy resource, which is good news for the environment and the economy.” A double bottom line. . . you don’t say?
What’s more, positive financials are once are once again returning to the sector.
Ormat recently reported strong fourth quarter results, beating even the high-end of estimates despite ongoing global financial recession.
This trend for Ormat, and other geothermal stocks, will only continue as western States move toward more aggressive renewable portfolio standard with targeted geothermal carve-outs. And Asian countries are also making a strong push to exploit geothermal energy, as noted earlier.
Most analysts have a price target on Ormat above $40.00, which implies a near doubling of price–in line with global and U.S. capacity growth estimates.
That should be enough to get anyone excited about geothermal.
Geothermal energy, despite its lackluster reputation, is gaining steam both as a clean energy source and investment catalyst.
Be sure to spread the word.
To learn more about Geothermal opportunities and the financial models available to make this investment affordable email george@hbsadvantage.com or call 856-857-1230
Telecommuting: Once a Perk, Now a Necessity
March 16, 2009
US Economy shrinks at 6.2%
February 28, 2009
By JEANNINE AVERSA • Associated Press • February 28, 2009
Excerpts as reported in Courier Post
The economy contracted at a staggering 6.2 percent pace at the end of 2008, the worst showing in a quarter-century, as consumers and businesses ratcheted back spending, plunging the country deeper into recession.
The Commerce Department report released Friday showed the economy sinking much faster than the 3.8 percent annualized drop for the October-December quarter first estimated last month. It also was considerably weaker than the 5.4 percent annualized decline economists expected.
A much sharper cutback in consumer spending — which accounts for about 70 percent of economic activity — along with a bigger drop in U.S. exports sales, and reductions in business spending and inventories all contributed to the largest revision on records dating to 1976.
Looking ahead, economists predict consumers and businesses will keep cutting back spending, making the first six months of this year especially rocky.
“Right now we’re in the period of maximum recession stress, where the big cuts are being made,” said economist Ken Mayland, president of ClearView Economics.
The new report offered grim proof that the economy’s economic tailspin accelerated in the fourth quarter under a slew of negative forces feeding on each other. The economy started off 2008 on feeble footing, picked up a bit of speed in the spring and then contracted at an annualized rate of 0.5 percent in the third quarter.
The faster downhill slide in the final quarter of last year came as the financial crisis — the worst since the 1930s — intensified.
Consumers at the end of the year slashed spending by the most in 28 years. They chopped spending on cars, furniture, appliances, clothes and other things. Businesses retrenched sharply, too, dropping the ax on equipment and software, home building and commercial construction.
Before Friday’s report was released, many economists were projecting an annualized drop of 5 percent in the current January-March quarter. However, given the fourth quarter’s showing and the dismal state of the jobs market, Mayland believes a decline of closer to 6 percent in the current quarter is possible.
The nation’s unemployment rate is now at 7.6 percent, the highest in more than 16 years. The Federal Reserve expects the jobless rate to rise to close to 9 percent this year, and probably remain above normal levels of around 5 percent into 2011.
A smaller decline in the economy is expected for the second quarter of this year. But the new GDP figure — like the old one — marked the weakest quarterly showing since an annualized drop of 6.4 percent in the first quarter of 1982, when the country was suffering through an intense recession.
“It’s going to be a challenging 2009,” Scott Davis, chief executive officer of global shipping giant UPS, said Thursday while speaking to the U.S. Chamber of Commerce in Washington.
American consumers — spooked by vanishing jobs, sinking home values and shrinking investment portfolios have cut back. In turn, companies are slashing production and payrolls. Rising foreclosures are aggravating the already stricken housing market, hard-to-get credit has stymied business investment and is crimping the ability of some consumers to make big-ticket purchases.
It’s creating a self-perpetuating vicious cycle that Washington policymakers are finding hard to break.
To jolt life back into the economy, President Barack Obama recently signed a $787 billion recovery package of increased government spending and tax cuts. The president also unveiled a $75 billion plan to stem home foreclosures and Treasury Secretary Timothy Geithner said as much as $2 trillion could be plowed into the financial system to jump-start lending.
For all of 2008, the economy grew by just 1.1 percent, weaker than the government initially estimated. That was down from a 2 percent gain in 2007 and marked the slowest growth since the last recession in 2001.
With Friday’s figures, Mayland lowered his forecast for this year to show a deeper contraction of just over 2 percent.
In the fourth quarter, consumers cut spending at a 4.3 percent pace. That was deeper than the initial 3.5 percent annualized drop and marked the biggest decline since the second quarter of 1980.
Businesses slashed spending on equipment and software at an annualized pace of 28.8 percent in the final quarter of last year. That also was deeper than first reported and was the worst showing since the first quarter of 1958.
Fallout from the housing collapse spread to other areas. Builders cut spending on commercial construction projects by 21.1 percent, the most since the first quarter of 1975. Home builders slashed spending at a 22.2 percent pace, the most since the start of 2008.
A sharper drop in U.S. exports also factored into the weaker fourth-quarter performance. Economic troubles overseas are sapping demand for domestic goods and services.
Businesses also cut investments in inventories — as they scrambled to reduce stocks in the face of dwindling customer demand — another factor contributing to the weaker fourth-quarter reading. The government last month thought businesses had boosted inventories, which added to gross domestic product, or GDP.
GDP is the value of all goods and services produced in the United States and is the best barometer of the country’s economic health.
Fed Chairman Ben Bernanke earlier this week told Congress that the economy is suffering a “severe contraction” and is likely to keep shrinking in the first six months of this year. But he planted a seed of hope that the recession might end his year if the government managed to prop up the shaky banking system.
Even in the best-case scenario that the recession ends this year and an economic recovery happens next year, unemployment is likely to keep rising.
That’s partly because many analysts don’t think the early stages of any recovery will be vigorous, and because companies won’t be inclined to ramp up hiring until they feel confident that any economic rebound will have staying power.
More job losses were announced this week. JPMorgan Chase & Co. on Thursday said it would eliminate about 12,000 jobs as it absorbs the operations of failed savings and loan Washington Mutual Inc. That figure includes 9,200 cuts announced previously and 2,800 jobs expected to be lost through attrition.
The NFL said Wednesday that the league dropped 169 jobs through buyouts, layoffs and other reductions. Textile maker Milliken & Co. said it would cut 650 jobs at facilities worldwide, while jeweler Zale Corp. said it will close 115 stores and eliminate 245 positions.
Our Perspective:
The news keeps getting gloomier! I guess there is no easy way t0 say it. We took our eye off the ball. We elected officals to represent our interest and take care of our welfare. We can try to point fingers but we are all responsible. We all drank the kool-aid.
We thought this could never happen to us. We’re educated, life is good. We became complacient and did not plan for our future. I know President Obama is throwing a lot against the wall, hoping something will stick.
Roosevelt introduced the NewDeal. If something didn’t work, he said let’s tweak it, what else can we do. Obama is following this lead. It may not be pretty, but we are not left with many alternatives. We can see what happens when we do nothing or we are caught up in our own self interest.
We are all one and we are here to help one another. We must approach this dilemna with the hopes of picking everyone up, not just a few. There will be difficult decisions. We are resilient and we will rebuild and prevail You may leave a comment or email george@hbsadvantage.com .
Let us know your thoughs?
Preparing for a Flood of Energy Efficiency Spending
February 26, 2009
KNOXVILLE, Tenn. — To the casual eye, the basement of this city’s Firehouse 9 looks like a jumble of old hydrants, Dr Pepper cartons, rakes and random gear. To specialists in energy efficiency, the 1960s-era building is a mess of a different sort: wasteful hot water heaters for the firefighters’ showers, ancient refrigerators and outdated lights.
Wrapping up an elaborate energy audit, Knoxville is about to find out which of 99 city buildings are wasting the most energy. It hopes to begin repairs this summer, just in time to catch a tsunami of federal stimulus money earmarked for such unglamorous tasks as replacing light bulbs and fixing leaky insulation.
Knoxville’s timing is excellent. The city began the arduous work of cataloging deficiencies before the stimulus bill passed, and it is well along in planning its next steps. But experts worry that other beneficiaries, especially cities, are not ready to oversee the huge sums of energy-efficiency money about to come their way.
The money in the bill is enough to pay for a tremendous expansion of efficiency efforts across the country. But as with other parts of the stimulus package, the efficiency plan is creating tension between spending the money quickly, to get rapid economic stimulus, and spending it well, to do the most good over the long run.
“There’s enormous opportunity here for expansion of energy efficiency in this country,” said Lowell Ungar, the policy director for the Alliance to Save Energy, an advocacy group. “But there is certainly the potential for waste.”
President Obama signed the stimulus package into law on Feb. 17, hailing it as a shot of money big enough to help shake the economy from its lethargy while advancing many of his campaign priorities. Accelerating the country’s energy transition is at the top of his list. Many experts in the field agree with him that carefully chosen investments in efficiency will ultimately save more than they cost, by cutting energy bills.
At least $20 billion in the stimulus bill was earmarked for programs like improving the efficiency of government buildings and the homes of poor people, and trying to find better ways to save energy. That is far more, advocates say, than any bill in history. Within a few months, the money is likely to start landing in the bank accounts of thinly staffed state and city agencies that are accustomed to scraping for a dime here, a dollar there.
Utah expects that its state energy office will receive $40 million for energy efficiency, renewable energy and related programs — 123 times the size of the office’s current budget, said Jason Berry, who manages the four-person unit. He is about to go on a hiring spree.
The package contains $5 billion to weatherize low-income homes through the Department of Energy, enough to give the state programs that manage that work 10 to 30 times the money they received last year, said Christina Kielich, a department spokeswoman.
For advocates of this relatively obscure program, “it’s like they finally got to the other side of the desert and it’s pouring rain,” said Seth Kaplan, a vice president of the Conservation Law Foundation, an environmental group.
The stimulus package also contains $4.5 billion to modernize federal buildings and $2.5 billion for research into energy efficiency and renewable energy. The biggest chunk, $6.3 billion, will be distributed by the Energy Department in grants to state and local governments, which can spend the money on things as diverse as thicker window panes for state capitols and rebates for homeowners who change their light bulbs.
Homes and commercial buildings account for 39 percent of national energy consumption. Experts say that improving their efficiency is not only cost-effective but also a good way to reduce the nation’s emissions of the greenhouse gases that cause global warming.
But figuring out how to spend the money effectively — learning which university buildings need their doors caulked, for example, or which firehouse walls have insulation that is too thin — can involve time-consuming, tricky analysis by skilled technicians.
“People are very conservative about their buildings,” said Donald Gilligan, the president of the National Association of Energy Service Companies, a trade group. “Nobody wants to put a failed technology into the school buildings or have the lights not work.”
In Knoxville, a team of auditors hired by the city is spending six months peering into the grimy nooks of fire and police stations and even the convention center, where one employee referred to the downstairs boiler area as a “money-eating room.”
In the Southeastern region of the country, where Mr. Plack works, low electricity prices have often made saving energy an afterthought, unlike in California and much of the Northeast. For example, Nashville, nearly 200 miles west of Knoxville, has not conducted an energy audit of its city buildings, though it hopes to use stimulus money to look through its own stock of fire stations and libraries.
“There’s a lot of municipalities out there who are completely unaware this is moving forward,” Mr. Kaplan said, referring especially to smaller cities. “They just don’t have the infrastructure in place to deal with this.”
The Energy Department, which is doling out most of the grants, has been assailed on Capitol Hill for delays in disbursing other types of assistance for clean energy. Ms. Kielich said in an e-mail message that the department hoped efficiency grants would begin flowing to city and state energy offices within 120 days, and that it planned to begin disbursing weatherization money “expeditiously and responsibly.”
On the receiving end, absorbing the huge increase in money for weatherization could be particularly challenging, said Ian Bowles, the secretary of energy and environmental affairs for Massachusetts. Though he contends it can be done, “the weatherization folks are going to have to quintuple their effort in order to put that money out,” he said.
In some cases, the managers of efficiency programs may not need to look far to find ways to spend the money.
In Knoxville, the Community Action Committee, whose operations include helping poor people weatherize their homes, works from a building with a $14,000 monthly utility bill — some of it because of an enormous skylight that lets in too much blistering Tennessee sunshine in the summer.
“It’s embarrassing,” said Barbara Kelly, executive director of the committee. “We do better for our clients than we do for us.”
Our Perspective:
I applaud the stimulus but I am always nervous when large sums of money is out into the government’s hands. Responsible spending is the key to this stimulus spending. Investing in the infrastructure ( roads, bridges, rails and energy), is an investment in our future. This will only make us a stronger nation.
Irresponsible spending and earmarks will only tarnish our efforts and be counterproductive. The United States is poised to lead the next great energy evolution.
Let’s be sure to hold our elected officials accountable!
Let us know your thoughts? You may leave a comment or email george@hbsadvantage.com
Wholesale inflation takes biggest jump in 6 months
February 20, 2009
- Thursday Feb 19, 2009
Wholesale inflation jumps by largest amount in 6 months, reflecting higher energy costs
WASHINGTON (AP) — Inflation at the wholesale level surged unexpectedly in January, reflecting sharply higher prices for gasoline and other energy products.
The Labor Department said Thursday that wholesale prices increased by 0.8 percent last month, the biggest gain since last July and well above the 0.2 percent increase that economists had expected.
The acceleration was led by a 3.7 percent surge in energy prices with gasoline prices jumping by 15 percent, the biggest gain in 14 months.
Even outside the volatile food and energy sectors, wholesale prices showed a bigger-than-expected increase, rising by 0.4 percent. Economists had expected a slight 0.1 percent rise in so-called core inflation.
Food prices were well-behaved last month, falling for a second straight month. The 0.4 percent decline in January reflected lower costs for beef and dairy products which offset gains in the price of vegetables and chicken products.
In addition to the big jump in gasoline costs, prices for home heating oil were up by 5.4 percent and liquefied petroleum gas, which is often used to heat homes in rural areas, surged by 20.2 percent, the biggest jump in more than six years.
Outside of food and energy, there were increases for pharmaceuticals, light trucks and passenger cars and civilian aircraft.
Despite the big jump in wholesale prices in January, economists do not believe inflation is on the verge of becoming a problem, given the country’s deep recession.
That downturn, which began in December 2007, has been keeping a lid on inflation pressures, which has given the Federal Reserve the room to slash a key interest rate to nearly zero without having to worry about kindling inflation.
Federal Reserve Chairman Ben Bernanke told an audience at the National Press Club on Wednesday that he saw little risk that the Fed’s efforts to fight the recession and a severe financial crisis would trigger inflation presusres.
He said that once the economy begins to rebound and financial markets stabilize, the Fed will be able to quickly reverse the actions it has taken before inflation becomes a problem.
The Stimulus Is Here — Now What?
February 16, 2009
As reported in Huffington Green
Written by Dave Burdick
So it’s finally passed — a huge chunk of money will be flowing to infrastructure projects that are supposed to be green in nature and reinvigorate a faltering economy. But passing the stimulus was easy compared to what comes next:
In order to accomplish the task ahead, Energy Secretary Steven Chu thinks he’ll have to retool his agency, according to WSJOnline.com.
From Commerce to Energy, bureaucrats are wondering how their already limited staffs can accommodate the funding requests that will flood in. Even before the stimulus, projects awaiting approval have been stalled for months and years.For instance, Massachusetts-based Beacon Power Co. has been waiting 25 months for a $50 million loan guarantee toward an electricity-storage plant, according to the article. Without the loan, Beacon can’t break ground.
And that’s just at the federal level. The Associated Press reports on the plights of several individual states and summarizes the problem this way:
While many states have made their lists of “ready-to-go” infrastructure projects available online for public review, others have resisted, in part because the limited stimulus funding means only a fraction of the projects will receive money. Watchdog groups say it’s likely that state officials fear angering constituents if a project appears on a wish list and then is struck from the final allocation.
Our Perspective:
The new buzzword is “shovel ready.” All these projects that have been waiting on the sideline just waiting for the federal miracle.
Let’s not lose sight of what projects these dollars are used for. I am all for true infrastructure repair.
I heard the other day that one town was using the dollars to help beautify the entrance as you drive into their town. That project should be put on the sideline. There are too many bridges and roads that actually do need repair, for they create a peril. This should be their focus.
Everyone is talking about clean energy. We are faced witha real problem. Our demand for energy continues to grow but we will not be able to support this growth in the next 8 to 10 years with our existing electric grid infrastructure.
The future rest in our hands. Let’s keep our eye on the ball and act responsibly.
Let us know your thoughts? You may leave a comment or email george@hbsadvantage.com
