Welcome to the News Room
In the News Room you will find links to news stories; reports by the various Federal Reserve banks; and surveys conducted by universities and other private institutions that report business and economic news that reflects what is really important to the future direction of the economy.
These items are posted on a random basis so please feel free to visit the site frequently to stay informed.
U.S. Unemployment Rate Increases to 17.3% in December
December was the worst month for U.S. unemployment since the Great Recession began. The labor force contracted by 661,000. This did not show up in the headline jobless rate because so many Americans dropped out of the system. The broad U6 category of unemployment rose to 17.3pc. That is the one that matters.
There is a large pool of 6 million out-of-work adults who have become discouraged and stopped looking for work and are therefore not counted as unemployed. As employers start hiring again, many of those will flood back into the labor force. That will drive up the unemployment rate. Unemployment rate predicted to stay high for at least the next six years.
The Consumer Is Still Toast, Housing Is Down, And Everyone Is Delinquent On Everything
We are on the precipice of a massive mandatory consumer debt-forgiveness program that will likely see private sector credit taps turned off for good … but the government will be there to provide the financing. This is the next bubble — government finance (but as Richard Koo points out in this week’s Barron’s interview, this is what the government must do to prevent an all-out deflationary depression as the private sector deleveraging continues unabated).”
Staggering numbers of Americans are still unemployed and nearly a quarter of all homeowners owe more on their mortgages than their homes are worth. Forget the false hope of modestly improving monthly job numbers. The real story right now is the entrenched suffering (with no end in sight) that has been inflicted on scores of millions of working Americans by the Great Recession and the misguided economic policies that preceded it.
Repeating the Mistakes of the Past
The odds are that any good economic news you hear in the near future will be a blip, not an indication that we’re on our way to sustained recovery. But will policy makers misinterpret the news and repeat the mistakes of 1937? Actually, they already are.
A dismal job market, a crippled real estate sector and hobbled banks will keep a lid on U.S. economic growth over the coming decade, some of the nation’s leading economists said on Sunday.
Homeowners with Good Credit Next to Fall
An increase in mortgage defaults among prime borrowers in 2009 is likely to accelerate this year, slowing the real estate recovery even as Americans become more optimistic about the economy, said Robert Shiller and Karl Case, the economists who created the S&P/Case-Shiller Home Price Index.
Consumer debt threatens recovery
Consumer spending on durable goods, nondurable goods and services is contracting on an annual basis for the first time since the Federal Reserve began measuring Personal Consumption Expenditures in 1959.
U.S. credit card defaults rise to record in May
Credit Card defaults rose to an all time high in the United States in May as consumer finances continue to deteriorate.
Congress authorizes the debt ceiling of the U.S. to exceed $1 trillion for the first time in history.
Just since Oct. 1, when the federal fiscal year began, our leaders have written $1,000,000,000,000 in new IOUs for our children and grandchildren to struggle under. It took two centuries from the nation’s founding until the early 1980s for Washington to overspend by a cumulative total of a trillion dollars. We have just accomplished the same feat in eight months.
Debts Coming Due at Just the Wrong Time
Massive waves of bank debt coming due may cause chaos in the financial markets.
“If You’re Not Petrified, You’re Not Paying Attention” says Howard Davidowitz, chairman of Davidowitz & Associates.
“We’re in a complete mess and the consumer is smart enough to know it,” says Davidowitz, whose firm does consulting for the retail industry. “The worst is yet to come with consumers and banks,” he says. “This country is going into a 10-year decline. Living standards will never be the same.”
Japan’s Exports Imploded Last Quarter Contributing to a Record 15.2% Decline in National Economy
Exports plunged an unprecedented 26 percent last quarter. “There was a collapse across the board,” said Yoshiki Shinke, a senior economist at Dai-Ichi Life Research Institute in Tokyo.
Continuing U.S. Jobless Claims Move Close to 7 million
Some Economists predict the rate to reach 10 percent by the end of 2009.
Producer Prices in Germany Post the Biggest Drop in 22 Years
The German government predicted the economy may shrink by 6 percent this year. It contracted by a record 3.8 percent in the first quarter.
U.S. Foreclosure Filings Jumped 30% in February
According to RealtyTrac, a California-based seller of mortgage data, an average of 230,000 borrowers a month slid to negative equity in the quarter, led by California with 43,000, Texas with 16,000 and Nevada with 15,000. Some of the top U.S. lenders own as many as 700,000 foreclosed homes they have yet to offer for sale, said RealtyTrac Executive Vice President Rick Sharga.
S&P warns more U.S. companies headed for junk status
About $209 billion in debt worldwide is at risk of being downgraded to junk status. The dismal rating trend is the latest sign that a global economic downturn and tight credit are taking a toll on corporate credit quality.
24 million go from ‘thriving’ to ’struggling’
Ten years ago, during an economic boom, 71% of Americans said it was likely that those in the next generation would be better off than their parents. One year ago, 66% agreed. Now, 59% do.
Roubini sees one in three chance of global economy slipping into near term depression
The best case scenario is a two to three year recession in advanced economies. GDP growth and employment growth will both be negative for the rest of the year.
The U.S. Financial System Is Effectively Insolvent
Nouriel Roubini, distinguished professor of economics at the New York University Stern School of Business, and chairman of economic consultancy firm RGE Monitor, believes there a rising risk of a global L-shaped depression that would be even worse than the current, painful U-shaped global recession.
Worst is yet to come for job market
The official unemployment rate reported by the government rose to a 25-year high of 8.1% in February. The less reported official government underemployment rate which counts people who have been out of work for more than six months (so called “discouraged workers”) and people who are working part-time jobs for economic reasons rather than by choice rose to 16.7% in February.
Record Number of American Homeowner’s In Foreclosure or Paying Late
With job losses intensifying and unemployment at a 16-1/2-year high about one in eight U.S. homeowners with mortgages are either in the foreclosure process or are behind on their loan payments.
Auto sales near 27-year low
U.S. auto sales experienced a steeper-than-expected drop in January as they plunged to a 27-year low.
U.S. Consumer Spending Falls for Sixth Straight Month
Spending by U.S. Consumers in December fell for the sixth consecutive straight month. The drop in consumer spending in 2008 was the worst since 1961 and is likely to continue as unemployment soars.
$6.1 Trillion in Home Value Evaporates as Depression Escalates
Almost one in six homeowners with mortgages owes more than their homes are worth. About 6.1 trillion of value has evaporated since the real estate market peaked in 2006. Real estate values have declined for eight straight quarters.
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