Bankrupting the Common People

Tens of Thousands More Layoffs Announced

January 26, 2009

AP – Tens of thousands of fresh layoffs were announced Monday and more companies are expected to cut payrolls in the months ahead... The recession, which started in December 2007, and is expected to stretch into this year, has been a job killer. The economy lost 2.6 million jobs last year, the most since 1945. The unemployment rate jumped to 7.2 percent in December, the highest in 16 years, and is expected to keep climbing...

Thousands more jobs cuts were announced Monday. Pharmaceutical giant Pfizer Inc., which is buying rival drugmaker Wyeth in a $68 billion deal, and Sprint Nextel Corp., the country's third-largest wireless provider, said they each will slash 8,000 jobs. Home Depot Inc., the biggest home improvement retailer in the U.S., will get rid of 7,000 jobs, and General Motors Corp. said it will cut 2,000 jobs at plants in Michigan and Ohio due to slow sales.

Caterpillar Inc., the world's largest maker of mining and construction equipment, announced 5,000 new layoffs on top of several earlier actions. The latest cuts of support and management employees will be made globally by the end of March. An additional 2,500 workers already have accepted buyout offers, and ties have been severed with about 8,000 contract workers worldwide. In addition, about 4,000 full-time factory workers already have been let go.

Just last week, Microsoft Corp. said it will slash up to 5,000 jobs over the next 18 months. Intel Corp. said it will cut up to 6,000 manufacturing jobs and United Airlines parent UAL Corp. said it would get rid of 1,000 jobs, on top of 1,500 axed late last year...

Almost All U.S. Cities to Lose Jobs in 2009: Forecast

January 17, 2009

Reuters - All but five U.S. cities will experience job losses this year, with New York suffering the largest decline, according to a forecast released by the U.S. Conference of Mayors on Saturday.

Global Insight, an international economic forecasting firm that put together the outlook for the mayors' group, projected that by the end of 2009 one-third of all metropolitan areas in the country would have experienced no overall job growth for the first decade of the century. New York will likely shed 181,000 jobs this year, with more than 50,000 in the financial services industry alone, the firm said. Los Angeles will lose 164,000 jobs. Overall, 171 cities will see job losses in excess of 2 percent through 2009.

Unemployment rates will rise above 10 percent this year in 70 of the 363 metropolitan areas in the United States, Global Insight said. In November, 23 cities had jobless rates of at least 10 percent, according to a report released this month by the Bureau of Labor Statistics, while 121 had rates of at least 7 percent. Metropolitan areas are home to 90 percent of the country's wage income, according to the firm.

200,000 War Veterans Homeless in U.S.

January 16, 2009

PACIFICA - We have 300,000 Iraq and Afghanistan war veterans coming home with traumatic brain injury, physical brain damage. We have 300,000 Iraq and Afghanistan war veterans who have filed disability claims with the federal government," Aaron Glantz (a journalist who has been covering the stories of US military vets returning from Iraq and Afghanistan) told Democracy Now! on Thursday. "In many cases, there is no medical services at all, because remember that many people serving in Iraq and Afghanistan come from rural communities where the VA doesn’t even have a hospital," he explained. There are 200,000 homeless war veterans in the United States...

More Than Half Americans Say They are 'Struggling': Poll

January 16, 2009

AFP – The number of Americans who say their lives are a struggle climbed steeply last year from less than half the population to nearly six in 10 people, a vast Gallup poll showed Friday. "In January of 2008, 49 percent of Americans were thriving, 47 percent struggling and four percent were suffering. In November and December, 38 percent were thriving, 58 percent struggling and four percent suffering," Gallup scientist Jim Harter commented on findings of the Gallup-Healthways Well-Being Index. "The 11-point swing in struggling Americans represents more than 22 million people," Harter said on Gallup's website...

U.S. Foreclosure Filings in 2008 Rose 81% from 2007

January 15, 2009

MarketWatch - U.S. foreclosure filings in 2008 rose 81% from 2007 and tripled from 2006, RealtyTrac reported on Thursday. A total of nearly 3.16 million foreclosure filings -- measured by default notices, auction-sale notices, and bank repossessions -- were reported in 2008. The Irvine, Calif., consultant also said that 1.84% of all U.S. housing units --1 of every 54 -- received at least one foreclosure filing during the year, up from 1.03% in 2007. In December, foreclosure filings were reported on more than 303,000 U.S. properties. That's up 17% from November and 41% from the year-earlier month, RealtyTrac reported. In the fourth quarter, foreclosure activity rose 40% from the year-earlier quarter. "Clearly the foreclosure-prevention programs implemented to date have not had any real success in slowing down this foreclosure tsunami," Chief Executive Officer James J. Saccacio said in a statement.

Housing Market Could Fall Another 20 Percent

January 7, 2009

Yahoo Finance - The already crumbling housing market could plummet an additional 20%, says Gary Shilling, president of A. Gary Shilling & Co., and author of the popular INSIGHT newsletter. Although housing is already down 25% peak-to-trough based on the latest S&P/Case-Shiller numbers, there's no near-term bottom in sight, says Shilling, one economist who presciently saw the crash coming.

Excess inventory - nearly a year's worth supply - is the "mortal enemy" of any recovery in housing, says Shilling, who does not believe the Fed's efforts to lower mortgage rates will resolve the crisis. Barring a prolonged period of weaker prices, Shilling believes only radical action - like bulldozing homes or letting immigrants into America to buy homes - can solve the crisis, as detailed here last month.

Wealth of U.S. Millionaires Down 30 Percent: Survey

January 6, 2009

Reuters - American millionaires have seen their assets shrink by 30 percent during the economic crisis, a report said on Tuesday, with only 36 percent of them pleased with the performance of their financial advisers. Of U.S. households worth $1 million or more, 55 percent are concerned they will not have enough assets to maintain their lifestyles, said Spectrem Group, a consulting firm specializing in the affluent and retirement markets. Ninety percent fear a prolonged downturn, it said.

"While they blame the government and Wall Street directly for the situation, many millionaires are not happy with their advisors' performance and few say they will increase the work they give to advisors," said Catherine McBreen, managing director of Spectrem Group.Only 14 percent said they would make more use of financial advisors in the future.

Seventeen percent of the millionaires took hits to their portfolios of more than 40 percent, according to the report "Attitudes of Affluent Investors on Surviving the Economic Crisis..."

Existing Home Sales, Prices Drop at Record Pace

December 23, 2008

Reuters - The pace of existing home sales plunged a record 8.6 percent in November and prices fell a record amount as layoffs and a stock market crash worsened an already grim housing market, a real estate trade group said Tuesday.

The median home price fell 13.2 percent on an annual basis, down for a fifth straight month to $181,300. It was the largest drop since the current data series began in 1968 and probably the largest since the Great Depression, Lawrence Yun, the chief economist for the National Association of Realtors, told reporters. The pace of sales fell to a 4.49-million-unit annual rate.

Economists polled by Reuters were expecting home resales to set a 4.90-million pace. October's figure was revised downwards to 4.91 million, from 4.98 million. "The quickly deteriorating conditions in the job market, stock market and consumer confidence in October and November have knocked down home sales to another level," Yun said. "It is, therefore, imperative to provide incentives for homebuyers to get back into the market, Yun said.

Past experience shows when home resales slid after the 1987 and 2001 stock market crashes, they then rebounded after the third month to what had been the trend, he said. "We hope the home sales impact from the stock market crash turns out to be short-lived, as was the case in 1987 and 2001," Yun said.

The inventory of existing homes for sales rose 0.1 percent to 4.203 million from 4.198 million in October. That translates into 11.2 months of supply, matching the record peak set in April, Yun said.

The housing malaise, which triggered a global financial crisis, has infected other sectors of the broader economy and sent unemployment rates higher. Analysts says stability in the housing sector is key to any recovery in the U.S. economy, which has been in a recession since late last year.

Medicaid Applicants Grow as U.S. Recession Widens

December 21, 2008

AP - Since the recession began a year ago, many states have seen increases in the Medicaid rolls just as tax revenues are falling below projections. Governors have lobbied President-elect Barack Obama and Congress to help them weather the downturn by increasing the federal government's share of Medicaid spending for at least two years.

The governors said the extra $40 billion would ease the service cuts or tax increases that legislatures need to balance state budgets.

The unemployment rate has jumped from about 4.7 percent last December, when the recession began, to 6.7 percent today. Economists estimated in a Kaiser Family Foundation report that each 1 percent gain in the unemployment rate adds 1 million people to the Medicaid and State Children's Health Insurance Program...

Unemployed Americans Competing With Immigrant Labor for Unskilled Jobs

December 20, 2008

Wall Street Journal - A year ago, a day-laborer center adjacent to a Home Depot here teemed with Latin American immigrants who showed up and found a sure day's work painting, gardening or hauling.

These days, more than immigrants are packing the Hollywood Community Job Center: Unemployed Americans are joining them. There's little work for anybody. "Everybody is coming to look for work," Rene Jemio, outreach coordinator for the hiring hall, told the Wall Street Journal. "It's not just your average immigrant anymore; it's African-Americans and whites, too."

For the first time in a decade, unskilled immigrants are competing with Americans for work. And evidence is emerging that tens of thousands of Hispanic immigrants are withdrawing from the labor market as U.S. workers crowd them out of potential jobs. At least some of the foreigners are returning home. "We see competition from more nonimmigrant workers," says Abel Valenzuela, a professor at the University of California at Los Angeles who studies day laborers. "Employers are also paying less than in previous years," he says.

In the third quarter of 2008, 71.3 percent of Latino immigrant workers were either employed or actively seeking work, compared with 72.4 percent in the same quarter a year earlier, according to a new study by the Pew Hispanic Center, a nonpartisan research organization. The 1.1-percentage-point drop "marks a substantial decrease in the labor-market participation of Latino immigrants," says Rakesh Kochhar, the Pew economist who prepared the report.

Since 2003, the labor force participation rate — the employed or job-seeking share of the population — among foreign-born Hispanics had been consistently on the rise. The decline in the third quarter of 2008 "is a testament to the character and depth of the current recession triggered by the housing slump," says the Pew report.

U.S. Soldiers Re-enlisting Because of Poor Economy

December 3, 2008

AP - Sgt. Ryan Nyhus spent 14 months patrolling the deadly streets of Baghdad, where five members of his platoon were shot and one died. As bad as that was, he would rather go back there than take his chances in this brutal job market. Nyhus re-enlisted last Wednesday, and in so doing joined the growing ranks of those choosing to stay in the U.S. military because of the bleak economy. "In the Army, you're always guaranteed a steady paycheck and a job," said the 21-year-old Nyhus. "Deploying's something that's going to happen. That's a fact of life in the Army — a fact of life in the infantry."

In 2008, as the stock market cratered and the housing market collapsed, more young members of the Army, Air Force and Navy decided to re-up. While several factors might explain the rise in re-enlistments, including a decline in violence in Iraq, Pentagon officials acknowledge that bad news for the economy is usually good news for the military.

In fact, the Pentagon just completed its strongest recruiting year in four years. "We do benefit when things look less positive in civil society," said David Chu, undersecretary of defense for personnel and readiness. "What difficult economic times give us, I think, is an opening to make our case to people who we might not otherwise have."

The retention rate of early-career soldiers in the Army has risen steadily over the past four years and now stands 20 percentage points higher than it was in fiscal 2004. As for the Navy and the Air Force, early- and mid-career sailors and airmen re-enlisted at a higher rate in October than during the same period in 2007. The Marine Corps was not immediately able to provide comparative figures on re-enlistments...

Roughly 208,000 men and women left the military in 2007. Some were rank-and-file warriors, while others worked in specialized fields such as satellite communications or computer networking. Only about 30 percent of enlisted soldiers hold a bachelor's degree.

The job market is still fairly good for veterans with technical skills, especially those coveted by defense contractors, said Carl Savino, a retired Army major who runs a company outside Washington that offers employment services to new veterans. Sgt. Michael Rodriguez, 29, of San Antonio, decided to get out after he landed a job with a defense contractor working on communications systems. "I feel pretty secure with them," said Rodriguez, who will leave the military soon. But even defense-contractor jobs could dry up as the economic crisis deepens, Savino said. "Jobs are getting harder to come by for veterans," Savino said. "The farther they deviate from the defense contractors, who are still in reasonably strong shape, the more challenging it is."

Americans Rich and Poor Pawn More to Pay Bills

December 15, 2008

Reuters - Whether it's a Tiffany diamond or a three-year-old lawnmower, more and more Americans from all social classes are pawning their possessions to make ends meet. Pawn shop owners see strong business across the country, even in unexpected locales like Beverly Hills, the mecca of luxury living and shopping. "Banks aren't lending so people are coming here for short-term loans against collateral like diamonds, watches and other jewellery," said Jordan Tabach-Bank, CEO of Beverly Loan Co, self-described "pawnbroker to the stars."

"I do see my share of actors, writers, producers and directors," he said, but also cited more visits from white-collar professionals and especially business owners struggling to meet payroll obligations. "We still do the five-, six-figure loans to Beverly Hills socialites who want to get plastic surgery, but never have we seen so many people in desperate need of funds to finance business enterprises," he added.

In the 70 years of the family business, Beverly Loan, which usually charges 4 percent monthly interest on loans, has never loaned so much as it has in the past few months, he said. "We're a lot easier to deal with than a bank," he said from his office on the third floor of a Bank of America building near Rodeo Drive. An armed security guard watches over the reception, where case after case is filled with precious gems.

It's less glamorous at Mo Money Pawn, located in the grimy area of central Phoenix, where struggling building contractor Robert Lane waited for the shop to open its doors so he could pawn a table saw he bought for $900 (598 pounds)...

Driving Continues to Decline Even as Gas Prices Drop

December 12, 2008

AP - Drivers clocked 9 billion fewer miles on the nation's roads in October even while gas prices were dropping, suggesting a downturn in driving that began a year ago is attributable to more than just energy costs.

Federal Highway Administration data released Friday show the number of miles driven dropped 3.5 percent in October compared with the same month a year ago. Between November 2007, when the driving decline began, and October, Americans drove 100 billion fewer miles. That's the largest continuous decline in driving the nation has experienced.

Gas prices averaged $3.15 a gallon in October, down from a high of $4.09 in July, according to the Energy Information Administration.

"The fact that the trend persists even as gas prices are dropping confirms that America's travel habits are fundamentally changing," Transportation Secretary Mary Peters said in a statement.

New Unemployment Claims Surge Unexpectedly

December 11, 2008

AP - New claims for jobless benefits rose more than expected last week, exceeding even gloomy expectations for an economy stuck in a recession that seems to be deepening.

The Labor Department reported Thursday that initial applications for jobless benefits in the week ending Dec. 6 rose to a seasonally adjusted 573,000 from an upwardly revised figure of 515,000 in the previous week. That was far more than the 525,000 claims Wall Street economists expected.

Elsewhere, the U.S. trade deficit rose unexpectedly in October as a spreading global recession dampened the once-strong sales of American exports and the volume of oil imports surged by a record amount, the Commerce Department said.

More layoffs were announced Thursday. New Britain, Conn.-based tool maker Stanley Works said it plans to cut 2,000 jobs and close three manufacturing facilities, while Sara Lee Corp., known for food brands such as Jimmy Dean and Hillshire Farm, said it will cut 700 jobs as the Downers Grove, Ill.-based company outsources parts of its business.

Unemployed and Hungry in the U.S.

Jobless numbers highest in 15 years, food stamp users hit record 31.6 million or 1 in 10 Americans.

December 10, 2008

The Real News - More than half a million jobs were lost in the US in November, the largest loss in a single month since 1974. Though initially the announcement had a negative effect on the markets, by the end of the day Wall Street again forgot about the little guy, the Dow closed up 260 points. The more than 1.2 million jobs lost over the past 3 months, and the 11th straight month of job losses, bring the unemployment rate to 6.7 per cent, the highest in 15 years. Also this week the Department of Agriculture released figures that show food stamp beneficiaries increased by 17 percent in the past year. That’s more than 31.6 million or 1 out of every 10 people in the US receiving food stamps or taking part in the Supplemental Nutrition Assistance Program. TRNN spoke to Dedrick Muhammad of the Institute for Policy Studies. Muhammad says that 6.7 percent is not the true unemployment number because it does not include the underemployed and those who have stopped looking for work. Muhammad also says that the bailout is a “trickle down” bailout, that by giving money to the wealthiest institutions somehow this is supposed to help the middle class and working class.

Half-million Jobs Disappear, Worst in 34 Years

December 6, 2008

AP - An alarming half-million American jobs vanished virtually in a flash last month, the worst mass layoffs in over a third of a century, as economic carnage spread ever faster and the nation hurtled toward what could be the hardest hard times since the Great Depression.

Underscoring Friday's dismaying signs of a rapidly deteriorating economy, General Motors announced yet more job cuts, and a record number of homeowners were reported behind on mortgage payments or in foreclosure.

Staring at 533,000 lost jobs, economists were anything but hopeful. Since the start of the recession last December, the economy has shed 1.9 million jobs, and the number of unemployed people has increased by 2.7 million -- to 10.3 million now out of work.

Some analysts predict 3 million more jobs will be lost between now and the spring of 2010 -- and that the once-humming U.S. economy could stagger backward at a shocking 6 percent rate for the current three-month quarter.

"The economy is in a free fall," said Richard Yamarone of Argus Research. "It is as if someone flicked off the switch on hiring."

"It's a mess," said Mark Zandi, chief economist at Moody's Economy.com. "Businesses, battening down the hatches, are concerned about their survival and are cutting workers."

President-elect Barack Obama said the crisis "is likely to get worse before it gets better," and no one was going to argue that point. Economists predicted the unemployment rate, which rose to a 15-year high of 6.7 percent in November, could soar as high as 10 percent before skittish employers begin hiring again.

Home Loan Troubles Break Records Again

December 5, 2008

AP - A record one in 10 American homeowners with a mortgage were either at least a month behind on their payments or in foreclosure at the end of September as the source of housing market pressure shifted from risky loans to the crumbling U.S. economy.

The percentage of loans at least a month overdue or in foreclosure was up from 9.2 percent in the April-June quarter, and up from 7.3 percent a year earlier, the Mortgage Bankers Association said Friday. The foreclosure crisis continued to be concentrated in states like Florida, where a stunning 7.3 percent of all loans were in foreclosure at the end of September, by far the highest in the country. In Nevada, the number was 5.6 percent. It was 3.9 percent in California — compared with about 3 percent nationally.

Distress in the home loan market started about two years ago as increasing numbers of adjustable-rate loans reset to higher interest rates. But the latest wave of delinquencies is coming from the surge in unemployment.

Employers slashed 533,000 jobs in November, the most in 34 years, catapulting the unemployment rate to 6.7 percent, the Labor Department said Friday. "Now it's a case of job losses hitting more across the board," Jay Brinkmann, the trade group's chief economist.

With the economy worsening, the much-anticipated bottom of the housing market likely will be pushed further into the future. "Things are going to get worse before they get better," said Northern Virginia housing economist Thomas Lawler. Most troubling, he said, is that the mortgage bankers' report reflects conditions before October's stock market plunge and the resulting economic fallout. "The number of homes that are in the foreclosure process is so high — right before the economy has fallen off a cliff," Lawler said.

The U.S. tipped into recession last December, a panel of experts declared earlier this week, and economists fear it could be the longest and most severe in decades. Since the start of the recession, the economy has lost 1.9 million jobs...

Meanwhile, president George W. Bush publicly acknowledged for the first time Friday that the U.S. economy is in a recession and worried aloud that Detroit's Big Three automakers may not all survive their mounting troubles.