The Collapse of the U.S. Economy

Be Prepared for the Worst

October 31, 2009

Ron Paul - The large-scale government intervention in the economy is going to end badly.

I am reminded of the outlook in 1930, when the experts were certain that the worst of the Depression was over and that recovery was just around the corner.

Any number of pundits claim that we have now passed the worst of the recession. Green shoots of recovery are supposedly popping up all around the country, and the economy is expected to resume growing soon at an annual rate of 3% to 4%. Many of these are the same people who insisted that the economy would continue growing last year, even while it was clear that we were already in the beginning stages of a recession.

A false recovery is under way. I am reminded of the outlook in 1930, when the experts were certain that the worst of the Depression was over and that recovery was just around the corner. The economy and stock market seemed to be recovering, and there was optimism that the recession, like many of those before it, would be over in a year or less. Instead, the interventionist policies of Hoover and Roosevelt caused the Depression to worsen, and the Dow Jones industrial average did not recover to 1929 levels until 1954. I fear that our stimulus and bailout programs have already done too much to prevent the economy from recovering in a natural manner and will result in yet another asset bubble.

Anytime the central bank intervenes to pump trillions of dollars into the financial system, a bubble is created that must eventually deflate. We have seen the results of Alan Greenspan’s excessively low interest rates: the housing bubble, the explosion of subprime loans and the subsequent collapse of the bubble, which took down numerous financial institutions. Rather than allow the market to correct itself and clear away the worst excesses of the boom period, the Federal Reserve and the U.S. Treasury colluded to put taxpayers on the hook for trillions of dollars. Those banks and financial institutions that took on the largest risks and performed worst were rewarded with billions in taxpayer dollars, allowing them to survive and compete with their better-managed peers...

MSM: Wilbur Ross Sees ‘Huge’ Commercial Real Estate Crash

October 31, 2009

Bloomberg — Billionaire investor Wilbur L. Ross Jr., said today the U.S. is in the beginning of a “huge crash in commercial real estate.”

“All of the components of real estate value are going in the wrong direction simultaneously,” said Ross, one of nine money managers participating in a government program to remove toxic assets from bank balance sheets. “Occupancy rates are going down. Rent rates are going down and the capitalization rate — the return that investors are demanding to buy a property — are going up.”

U.S. commercial property sales are forecast to fall to the lowest in almost two decades as the industry endures its worst slump since the savings and loan crisis of the early 1990s, according to property research firm Real Capital Analytics Inc. The Moody’s/REAL Commercial Property Price Indices already have fallen almost 41 percent since October 2007, Moody’s Investors Service said Oct. 19.

Billionaire George Soros, speaking today at a lecture organized by the Central European University in Budapest, said a “bloodletting” may be coming for leveraged buyouts and commercial real estate.

“The American consumer will no longer be able to serve as the motor for the world economy,” said Soros, 79.

His comments came in the same week that Capmark Financial Group Inc. filed for Chapter 11 bankruptcy protection after originating $60 billion in commercial property loans in 2006 and 2007.

Ross, the 71-year-old chairman and chief executive officer of WL Ross & Co. LLC, said in an interview on Bloomberg Radio that he would use “extreme caution” before putting money into commercial real estate, especially office space, because properties are losing tenants.

U.S. office vacancies hit a five-year high of almost 17 percent in the third quarter, while shopping center vacancies climbed to their highest since 1992, according to the property research firm Reis Inc.

“I think it’s going to take quite a while to work itself out,” Ross said.

As of Oct. 15, Ross said he had spent less than $100 million of at least $1.5 billion available to him under the Public-Private Investment Program, an investment pool of private and government money for purchasing distressed assets from financial institutions.

Ross used the funds he spent so far to purchase residential mortgage-backed securities, he said in a Bloomberg Television interview...

U.S. Economy: Consumer Confidence Down on Job Concern

October 27, 2009

Bloomberg - Confidence among U.S. consumers unexpectedly fell for a second month in October, reinforcing the views of Federal Reserve policy makers who say household spending will be restrained by rising unemployment.

The Conference Board’s confidence index dropped to 47.7, trailing the lowest economist forecast, from a revised 53.4 in September, a report from the New York-based private research group showed today. A measure of employment availability slid to a 26-year low.

The emerging recovery from the deepest recession since the 1930s may fall short of expectations without a sustained rebound in consumer spending, which accounts for 70 percent of the economy. A separate report showed an index of home prices rose in August, indicating the housing market, while stabilizing, may be getting a boost from government aid...

The share of consumers who said jobs are plentiful dropped to 3.4 percent from 3.6 percent, according to today’s report from the Conference Board. The proportion of people who said jobs are hard to get increased to 49.6 percent, the highest level since May 1983, from 47 percent.

The proportion of people who expect their incomes to rise over the next six months decreased to 10.3 percent from 11.2 percent. The share expecting more jobs fell to 16.3 percent from 18 percent.

Buying plans for automobiles, homes and major appliances within the next six months all decreased this month, today’s report showed.

Government reports have shown that while companies are slowing the pace of firing they are reluctant to hire. The U.S. has lost 7.2 million jobs since the recession began in December 2007. Unemployment will top 10 percent in the first quarter of next year, according to a Bloomberg survey this month.

...“Household spending remained damped, constrained in part by job losses and consumer caution,” the minutes said of the directors’ views.

Fed policy makers next meet Nov. 3-4. At their last meeting, in September, the Federal Open Market Committee repeated its vow to keep its benchmark rate low for an “extended period.”

Home sales are getting a boost from an $8,000 tax credit for first-time home buyers and mortgage rates that have been held near historic lows by the Fed’s program to buy $1.2 trillion of mortgage-backed securities...

Sales may cool after the tax credit expires. Lawmakers are debating an extension of the credit, which is currently set to lapse on Nov. 30.

Obama and the Fiscal Crisis of the States

October 17, 2009

WSWS - The class character of the Obama administration is clearly indicated by one statistic: President Obama has made available more than $12 trillion in cash infusions, loans and guarantees to the financial industry, but for state governments that are facing massive budget deficits, Obama has thus far provided only one quarter of 1 percent of that amount in federal stimulus funds—about $30 billion.

The administration has refused to provide emergency aid to the states, including some of the largest in the country, such as California and Pennsylvania, which are on the brink of default. The White House is sitting by while states across the country lay off workers and slash spending on education, health care and other essential social programs.

The crisis confronting state governments is unprecedented. States that imposed large-scale layoffs, unpaid furloughs and wage cuts, closed offices for days at a time and slashed services in order to balance their budgets for the recently ended fiscal year are once again piling up deficits.

Tax collections gathered from April through June fell by 16.6 percent, breaking records dating back 50 years, according to a report released this week by the Nelson A. Rockefeller Institute of Government. Forty-nine states saw revenues decline in the quarter, 36 by double digits.

Preliminary data suggest that tax revenue for July and August likely fell by 8 percent, about the same as the decline for the fiscal year ending in July.
Most states approved their budgets for next year at the end of July. Little more than two months later, at least 18 face unanticipated operating deficits that will necessitate further cuts in state services.

The states’ budget crisis is caused, in large measure, by the impoverishment of the American working class. Layoffs and wage cuts have driven states’ income tax collections down by 27.5 percent from the previous year. Stressed workers have, unsurprisingly, spent less on consumer goods, thus reducing sales tax receipts by 9.5 percent, according to the Rockefeller Institute.

Declining home prices have slashed local property tax revenues, which largely finance the public schools.

Soaring unemployment is not only bankrupting the states; it is creating a social crisis without parallel since the Great Depression. Five states—Michigan, Nevada, Rhode Island, California and Oregon—have official unemployment rates above 12 percent, led by Michigan, with 15.3 percent.

This social crisis is placing unprecedented demands on state budgets. States typically provide around half of all funding for unemployment insurance, food stamps and Medicaid health coverage for the poor. They provide funding as well for public schools and colleges...

Budget Deficit in U.S. Widens to Record $1.42 Trillion on Crisis Spending

October 16, 2009

Reuters - The U.S. budget deficit hit a record $1.4 trillion in the just-ended fiscal year, the government said on Friday, as the deep recession and a series of bank rescues cut a gaping hole in public finances.

The tally was $162 billion smaller than the White House had forecast in August, but it still amounted to 10 percent of total U.S. economic output, the most for any budget shortfall since World War Two...

Don't Give $250 Bonus to Social Security Recipients

October 16, 2009

Jay Hancock's Blog - There are Americans who could use a one-time, $250 bonus appropriated by Congress and approved by the president. But it's very difficult to argue that Social Security recipients should be at the top of the list. Seniors didn't get their cost-of-living increase for Social Security this year because the inflation rate was negative. Now Washington is talking about giving them an increase anyway. Why? Hard to tell. But, heck, we're handing out billions to everybody else, anyway, so why not pander to grandma, too?

The bonus would cost $13 billion. President Obama has not said how it would be paid for. In any event it's a bad idea. This is the wealthiest generation of senior citizens in history. In addition to providing Social Security, the government covers their medical costs through Medicare. Last year's cost-of-living increase for Social Security was 5.8 percent. How many workers do you know who got 5.8 percent raises last year? Social Security checks automatically keep up with inflation. Many, many workers are falling behind inflation.The senior-citizen poverty rate in the United States has fallen to about 10 percent from more than 30 percent in the 1950s.

Washington needs to stop handing out money like candy. But if it's going to write checks, how about directing them to the 1 in 10 impoverished senior citizens instead of to every single Social Security beneficiary? Or to children in poverty (34 percent of all kids 18 and under in 2007, according to the Census Bureau)? Or to workers displaced by foreign trade?

In a few years, inflation will be back and so will the COLA increases for Social Security. But I doubt seniors or anybody else will think that's a good thing, either.

Commercial Loans Looming

October 16, 2009

Reuters — Bank regulators sounded the alarm this week about the commercial real estate (CRE) sector, telling a Senate banking subcommittee that it represents the "greatest challenge" facing banks.

Officials are close to finalizing guidance that would encourage banks to recognize potential losses in their commercial real estate portfolios and not simply renew troubled loans to delay loss recognition.

"Prices for both existing commercial properties and for land... have declined sharply in the first half of this year, suggesting that banks are vulnerable to significant further deterioration in their CRE loans," U.S. Federal Reserve Board Governor Daniel Tarullo told the Senate panel on Wednesday.

As of June, commercial real estate loans totaled more than $1 trillion, or 14.2 percent of all loans and leases in the banking industry, FDIC Chairman Sheila Bair said at the same hearing. She said that area will increasingly be a driver for bank failures during the remainder of this year and 2010.

Petrasic said it is largely community banks, not national banks, that have significant commercial real estate exposures that will continue to spiral downward in value.

"It will absolutely be the most critical factor going forward," he said.

Stag-Inflation: Japanese Employment Trends in the United States: Part-time, Dispatched and Contracted Workers. A Decline in the American Consumer Standard of Living. Why the U.S. is Not Japan and This is Not Good News.

October 15, 2009

mybudget360 - ...Since 1985 the U.S. Dollar Index has fallen a stunning 54 percent. With deficits as far as the eye can see, why are we to expect the Federal Reserve and U.S. Treasury to reverse course?... We can expect a declining standard of living over the next decade.

And how does this translate for the American consumer? More expensive goods and a more insecure employment environment. ...The Japanese Yen has gotten much stronger against the dollar, so we are now buying Toyota or Sony products with a weaker currency. In other words, we get less Toyotas with the same amount of dollars. And people seem to like their flat screens and foreign cars. Yet this is how we will pay for it because in the end there is no free lunch.

The same thing will happen with China. Slowly we will see prices creeping up. Yet localized items like real estate will remain weak because wages will move sideways since a larger part-time labor force will bring home less money. So people will need to make due with less money. Short of another real estate bubble, prices will move sideways or slightly lower. Think it can’t happen? Look at Japan and as we are pointing out, they had a higher buffer to resist the double bubble pop...

Dow Jones Industrials Pass 10,000 for 1st Time in a Year

October 14, 2009

AP - The Dow Jones industrial average has reclaimed 10,000 for the first time in a year.

The Dow crossed five figures in afternoon trading Wednesday, seven months after it hit a 12-year low of 6,547.05 on March 9. The comeback by the stock market's best-known indicator is the most visible sign yet that investors believe the economy is indeed recovering from the financial crisis and recession.

Cheering erupted from traders on the floor of the New York Stock Exchange as stocks briefly moved above the psychological barrier. They fell back into the 9,990 range in the normal ebb and flow of trading.

Upbeat earnings reports from chip maker Intel Corp. and banker JPMorgan Chase & Co. Wednesday gave the Dow its final push past 10,000. The average has slipped back several points since crossing the milestone, but that's part of the normal ebb and flow of trading.

Investors are increasingly shaking off lingering doubts about the economy. However, analysts still warn that problems like rising unemployment and a weak housing market pose a threat to a solid recovery.

The Dow is now up 53 percent from its March low.

JPMorgan Chase, the first major bank to report third-quarter earnings, stoked the market's optimism as it easily beat Wall Street's expectations, reporting a profit of $3.59 billion for the July-September period. The bank also achieved record year-to-date revenue.

Investors didn't seem fazed that JPMorgan, considered one of the strongest financial institutions throughout the financial crisis, doubled the amount of money it set aside during the quarter to cover failed home and credit card loans.

Intel also beat analysts' estimates, reporting a smaller-than-expected decline in profit and sales after the market closed Tuesday. The leading chip maker said it expects sales in the final period of the year to top projections, raising hopes that the computer market is improving.

Together, the reports quieted fears that major U.S. companies won't be able to boost profits through sales growth and not just massive cost-cutting, which was a main driver behind the improvement in second-quarter results.

A smaller-than-expected decline in retail sales last month also encouraged buyers, as did another rally in commodities prices. Gold hit a new record of $1,072 an ounce, while oil rose above $75 a barrel for the first time in a year. Treasury prices and the dollar fell as investors abandoned safe-haven assets.

The Dow rose 117.07, or 1.2 percent, to 9,988.13 after trading as high as 10,001.58. The Standard & Poor's 500 index rose 14.07, or 1.3 percent, to 1,087.26, and the Nasdaq composite index rose 25.12, or 1.2 percent, to 2,165.01.

Three stocks rose for every one that fell on the New York Stock Exchange, where 328 stocks hit new 52-week highs and only two hit new lows. Volume on the NYSE came to 660.1 million shares, compared with 562 million at the same time on Tuesday.

Dollar Devaluation: A Means to Cope with Debt

October 11, 2009

Infowars - From the euro perspective, the S&P peaked at 1700 in 2000, finally re-attained 1100 in the 2007 bubble, fell below 600 in March and now stands at 700 (see nearby chart). With most of the market capitalization of U.S. stocks held by Americans, the dollar devaluation has caused a massive decline in the U.S. share of global wealth...

In a sign that more banks are under great pressure from the recession, 34 financial institutions did not pay their quarterly dividends in August to the Treasury on funds obtained under the Troubled Asset Relief Fund (TARP). The number almost doubled from 19 in May when payments were last made, and also raised questions about Treasury’s judgment in approving these banks as “healthy,” a necessary step for them to get TARP funding.

“Perhaps the Treasury made assumptions that were a little bit too rosy,” says Walter Todd, who invests in banks at Greenwood Capital. “My question is also whether the Treasury is staffed adequately to handle this tremendous undertaking.”

The U.S. government ended its 2009 fiscal year with a deficit of $1.4 trillion, the biggest since 1945, the Congressional Budget Office reported.

The deficit amounted to 9.9 percent of the nation’s economy, triple the size of the shortfall for 2008.

The nonpartisan CBO said yesterday the government was squeezed on both sides of the budget ledger in the fiscal year that ended Sept. 30. Tax revenue fell by $420 billion, or 17 percent, to the lowest level in more than 50 years.

Individual income taxes, the biggest source of tax receipts, fell by 20 percent, the agency said. Corporate income taxes dropped by 54 percent, reflecting the slow economy. At the same time, federal spending rose by 18 percent, the CBO said. About half of the spending increase, $245 billion, was driven by the costs of bailing out the financial industry and taking over mortgage financiers Fannie Mae and Freddie Mac.

The spending increases and tax cuts included in the economic stimulus package approved in February added almost $200 billion to the 2009 deficit, the CBO said...

Used vehicle prices shot to an all-time high last month, spurred by falling inventories, according to a closely watched barometer of the second-hand car business.

For those in the market for a used car, that’s not necessarily bad news, said Tom Webb, chief economist at Manheim Consulting, which produces the index of the used car market. That’s because the value of trade-in vehicles are fetching record prices, he said.

But those buying their first car or who aren’t looking to trade in a vehicle will find themselves stuck paying the higher price, Webb said.

The Manheim Used Vehicle Value Index rose 6.9% in September to a record high of 118.5. The index is adjusted for vehicle mix and seasonality. A value of 100 represents used vehicle prices in January 1995.

The index reflects the wholesale, or trade-in, value of vehicles. But Webb said retail prices move “pretty much in lockstep” with wholesale values.

The main driver behind higher used car prices is falling wholesale vehicle supply, Webb said. This summer’s wildly popular cash for clunkers program sent new vehicle sales soaring, taking dealers by surprise and clearing out inventories.

Even though new car sales dropped off in September, auto factories struggled to catch up and inventories remained low. In addition, he blamed falling vehicle turnover from rental car companies, many of whom have taken a beating in the economic recession.

Home sellers cut their asking prices by a total of $28.4 billion to attract buyers as the real estate recovery stalled, Trulia Inc. said.

The average discount was 10 percent as of Oct. 1, the San Francisco-based real estate data provider said today. Homes listed for more than $2 million were cut the most, with owners taking an average of 14 percent off the original price. Luxury homes accounted for 25 percent of all of the reductions.

Sales of existing U.S. homes unexpectedly fell in August for the first time since March, according to the National Association of Realtors, signaling the recovery will be slow to gain speed. The median price dropped 12.5 percent from August 2008.

Consumers have to be slashing the prices of the homes they list,” Pete Flint, chief executive officer of Trulia, said in an interview. There’s a “significant inventory” of homes for sale. “You’re still going to see further price declines before the market stabilizes in 2010.

Half of the 10 states with the highest percentage of discounted homes are in the Northeast: Massachusetts, Rhode Island, Connecticut, New Hampshire and New Jersey.

A third of residences for sale in those states were reduced at least once, Trulia said. New York, California and Florida accounted for 35 percent of the total value of price cuts nationally. In Nevada, Idaho, Arizona, Wyoming, Hawaii, Utah and California, sellers have dropped an average of 13 percent off the original price, according to Trulia.

Inventories at U.S. wholesalers dropped in August for a 12th consecutive month, clearing the way for a pickup in orders as sales improve.

The 1.3 percent decrease in stockpiles was larger than anticipated and followed a revised 1.6 percent drop in July, figures from the Commerce Department showed today in Washington. Wholesale inventories have had the longest series of declines since records began in 1992. Sales climbed 1 percent, the biggest gain since June 2008.

Distributors will likely increase bookings after companies drew down inventories at a record pace in the first half of the year. The gains may give the world’s largest economy a boost in the early stages of a recovery as American factories rev up assembly lines to prevent stockpiles from dwindling even more...

The U.S. trade deficit unexpectedly narrowed in August as exports climbed to the highest level of the year and oil imports plunged.

The gap fell 3.6 percent to $30.7 billion from a revised $31.9 billion in July, the Commerce Department said today in Washington. A rebound in auto making contributed to a jump in exports to Canada, while a drop in the number of barrels of petroleum bought abroad swamped an increase in fuel prices.

More than $2 trillion in government stimulus programs are reviving demand from Asia to Europe, ensuring American factories benefit from growing sales overseas as the dollar falls. Gains in production and the need to replenish depleted inventories mean imports will probably also grow in coming months.

“The credit crisis has forged an even larger gap between the rich and poor, though it might not last for long,” writes Ian Mathias in today’s issue of The 5. “The richest 10% of Americans made at least $138,000 each this year, according to Census data released last week. That’s a record high 11.4 times the average income for the opposite end of the spectrum: the poverty line around $12,000. Pre-crisis multiples were closer to 11.2.

“The middle class is getting credit crunched too. The median household income has fallen $1,860 over the last year – wiping out a decade of slow gains – to $50,303.

“But if history is any guide, this trend may be near its peak. At present, about a quarter of America’s total income is earned by 1% of its population (amazing, eh?). That level has only been attained once in US history – ironically, 1928, right around the start of the last economic depression. What followed then was a 50-year trend in the other direction.

U.S. States Suffer "Unbelievable" Revenue Shortages

October 9, 2009

Reuters - The U.S. economy may be creeping toward recovery after the worst slowdown since the Great Depression, but many states see no end in sight to their diving tax revenues.

Tax revenues used to pay teachers and fuel police cars continue to trail even the most pessimistic expectations, despite the cash from the economic stimulus plan pouring into state coffers.

"It's crazy. It's really just unbelievable," said Scott Pattison, executive director of the National Association of State Budget Officers, and called the states' revenue situations "close to unprecedented."

Most states had been pessimistic in forecasting their tax revenues for the 2010 fiscal year, Pattison said. So far, collections have fallen below even those low targets.

Lower tax revenues could lead to higher taxes or another sharp reduction in services if receipts do not show signs of improvement before year-end, as every state but Vermont is required by law to balance their budgets.

That could mean fewer teachers, early prisoner releases, and fewer highway repairs as residents battle soaring unemployment.

States are coming off a terrible first quarter, which for most states began on July 1...

In the second quarter of calendar year 2009, total state revenue was down 18 percent compared with the period in 2008, according to the National Governors Association, which projects revenue will not return to pre-recession levels until 2014 or 2015.

The American Recovery and Reinvestment Act passed in February mitigated some states' financial pain by giving them more money for Medicaid, the health-care program for the poor run by states and partially funded by the federal government. The program can eat up large portions of states' budgets.

The act also created a state fiscal stabilization fund and dedicated money to education.

"If we didn't have that money, we would have been cutting more, which is hard to believe," Pattison said.

States would like the Medicaid boost continued after the stimulus expires next year.

"The states are very, very concerned about that cliff -- they're concerned about when this recovery money stops," Pattison said.

Next Bubble to Burst: Commercial Real Estate

October 9, 2009

Bloomberg - It takes several months to assemble a pool of commercial mortgages to package as bonds, and banks are reluctant to write new loans without a means to protect against price swings on the debt.

A single commercial mortgage-backed bond sold in 2007 could contain 200 loans on as many as 350 properties, according to data compiled by Bloomberg.

The U.S. government pushed to revive the market for commercial real estate amid a pullback in lending and a 36 percent drop in property prices from their October 2007 peak.

About $524 billion of commercial mortgages held by U.S. banks and thrifts are scheduled to come due before 2012, half of which probably won’t qualify for refinancing because they exceed 90 percent of the property’s value, according to distressed- assets investor Lone Star Funds.

At least $410 billion, or two-thirds, of commercial mortgages bundled and sold as bonds coming due by 2018 will have difficulty refinancing, according to data from Deutsche Bank AG.

Sales of U.S. commercial-mortgage-backed debt slumped to $12.2 billon last year from a record $237 billion in 2007 as the credit crisis sapped demand, choking off financing to borrowers with maturing debt, according to JPMorgan Chase & Co. data...

The delinquency rate for commercial mortgages bundled and sold as bonds was 4.34 percent last month, according to FTN Financial.

Goldman Sachs Group Inc. may sell the first commercial-mortgage bond since June 2008, taking advantage of an untapped Federal Reserve program.

The five-year, $400 million loan to Developers Diversified Realty Corp. made by a unit of the New York-based bank is secured by 28 shopping centers. Developers Diversified Realty Corp. It will be used to repay debt on those properties and others, and to reduce the outstanding amounts of credit facilities, Developers Diversified said yesterday in a statement.

Developers Diversified and Goldman Sachs are working with the Fed to qualify the loan for the central bank’s Term Asset- Backed Securities Facility (TALF) to unfreeze the $700 billion market for securities backed by commercial mortgages, according to the statement.

“An actual close at reasonable terms would be a significant positive for new-issue TALF which has been slow to get off the ground,” said Aaron Bryson, an analyst at Barclays Capital in New York.

The pipeline of issuers under TALF has shrunk as unsecured debt markets opened up to real estate companies, and this deal would mark the first since the Fed program was opened to newly issued commercial-mortgage-backed securities in June.

Postal Service Pares Closings List to 371 Stations, Branches

October 9, 2009

Bloomberg - The U.S. Postal Service, which expects at least a $5 billion deficit this year, pared the number of urban and suburban facilities it may shut to 371.

The agency reduced the list from 413 post offices and other facilities it was evaluating.

The Postal Service could save $20 million to $100 million by closing facilities, Postmaster General John Potter said yesterday in a speech at the National Press Club in Washington. He said post-office closures are only part of the changes the agency must make to return to profitability.

U.S. Job Openings Fall to Lowest Level in at Least Nine Years

October 9, 2009

Bloomberg - Job openings in the U.S. fell in August to the lowest level in at least nine years, signaling the economy hasn’t improved enough to prompt companies to take on more staff.

The number of unfilled positions fell by 21,000 to 2.39 million, the fewest since records began in 2000, the Labor Department said today in Washington. Openings were down by 2.4 million, or 50 percent, since peaking in July 2007.

The report showed hiring and firing both slowed in August, indicating last month’s acceleration in payroll losses may have been due to a lack of employment rather than a pick up in dismissals. Labor Department figures last week showed employers cut staff by a net 263,000 workers in September and the unemployment rate increased to the highest level since 1983.

Gold Surges to Record on Dollar's Decline

October 8, 2009

UPI and OfficialWire - Gold surged to a record $1,045 per ounce on the New York Mercantile Exchange, prompted by a weak U.S. dollar and a run on the commodity as an inflation hedge.

The dollar, on a six-month slide, fell to near lows for the year against the euro and the yen Tuesday, The Washington Post reported.

The weak dollar "is headed for also-ran status and will continue to lose its value against many other currencies and assets," equity strategist Peter Boockvar at Miller Tabak told the Post.

"The rest of the world wants the U.S. dollar to lose influence, but no one wants it to be abrupt," he said.

Cornell University economics professor Eswar Prasad said it would be "highly unlikely" the dollar would be replaced as the world's reserve currency soon.

"Over the next decade, though, we would expect to see other currencies play a much more significant role," he said.

Gold settled slightly lower Wednesday, trading at $1,043.80 in midday trading.

U.S. Sheds 263,000 Jobs in September, Unemployment Hits 9.8 Percent

October 2, 2009

AFP - The US unemployment rate rose in September to 9.8 percent as 263,000 jobs were cut, the Labor Department reported Friday.

The report on nonfarm payrolls, seen as one of the best indicators of economic momentum was far worse than expectations for a loss of 175,000 jobs and could hurt chances of a sustainable recovery from recession.

The number of job cuts rose sharply after a revised loss of 201,000 in August.

The jobless rate of 9.8 percent was in line with expectations.

The goods-producing sector lost 116,000 jobs in September including 64,000 in manufacturing. Even worse, the services sector shed 147,000 jobs with 39,000 of those in retailing.

Since the start of the recession in December 2007, the figures showed the number of unemployed persons has increased by 7.6 million to 15.1 million, and the unemployment rate has doubled to 9.8 percent, according to the Labor Department.

The latest official data showed the US economy contracted at a 0.7 percent pace in the second quarter, nearly emerging from the recession that slashed output by 6.4 percent in the first quarter.

Most economists expect growth to return in the third quarter but say the recovery could fade without job growth.

Dow Drops Over 200

October 1, 2009

CNBC - Stocks tumbled Thursday after a disappointing ISM report on manufacturing piled on to worries about the economic recovery.

The Dow Jones Industrial Average lost 203 points, or 2.1 percent — it’s worst decline since July 2, which was before the summer rally began. The S&P 500 fell 2.6 percent and the Nasdaq dropped 3.1 percent.

The Institute for Supply Management reported its gauge of manufacturing activity fell to 52.6 in September from 52.9 in August, short of expectations.

“This was a good report even if the ‘what have you done for me lately’ crowd tries to trash it,” Joel Naroff of Naroff Economic Advisers, wrote in a note to clients. Still, “it looks like firms are leaning on productivity gains rather than hiring new workers to generate the added production,” Naroff said.

That came after an earlier report showed initial jobless claims jumped by 17,000 last week, much more than expected. And ADP said private employers cut 254,000 jobs from their payrolls in September.

Employment is certainly on investors' minds ahead of the government's September jobs report, due out tomorrow before the bell. Economists surveyed by Reuters expect to see 180,000 jobs were dropped from nonfarm payrolls, after a loss of 216,000 in August.

The market shrugged off encouraging readings on housing and construction: Pending-home sales jumped 6.4 percent in August, the seventh straight month of gains. Economists had expected a gain of just 1 percent. Meanwhile, construction spending rose 0.8 percent that month, well above the 0.2-percent gain expected...