Not Hard to Believe at All

Maybe I'm a bit of a simpleton, but in light of these reports --

"In a Job Market Realignment, Some Left Behind" (New York Times)

JACKSONVILLE, Fla. — Many of the jobs lost during the recession are not coming back.

Period.

For the last two years, the weak economy has provided an opportunity for employers to do what they would have done anyway: dismiss millions of people — like file clerks, ticket agents and autoworkers — who were displaced by technological advances and international trade.

The phasing out of these positions might have been accomplished through less painful means like attrition, buyouts or more incremental layoffs. But because of the recession, winter came early.

The tough environment has been especially disorienting for older and more experienced workers like Cynthia Norton, 52, an unemployed administrative assistant in Jacksonville.

“I know I’m good at this,” says Ms. Norton. “So how the hell did I end up here?”

Administrative work has always been Ms. Norton’s “calling,” she says, ever since she started work as an assistant for her aunt at 16, back when the uniform was a light blue polyester suit and a neckerchief. In the ensuing decades she has filed, typed and answered phones for just about every breed of business, from a law firm to a strip club. As a secretary at the RAND Corporation, she once even had the honor of escorting Henry Kissinger around the building.

But since she was laid off from an insurance company two years ago, no one seems to need her well-honed office know-how.

Ms. Norton is one of 1.7 million Americans who were employed in clerical and administrative positions when the recession began, but were no longer working in that occupation by the end of last year. There have also been outsize job losses in other occupation categories that seem unlikely to be revived during the economic recovery. The number of printing machine operators, for example, was nearly halved from the fourth quarter of 2007 to the fourth quarter of 2009. The number of people employed as travel agents fell by 40 percent.

"Millions of Jobs That Were Cut Won't Likely Return" (Associated Press)

Fewer construction workers will be needed. Don't expect as many interior designers or advertising copywriters, either. Retailers will get by with leaner staffs.

The economy is strengthening. But millions of jobs lost in the recession could be gone for good.

And unlike in past recessions, jobs in the beleaguered manufacturing sector aren't the only ones likely lost forever. What sets the Great Recession apart is the variety of jobs that may not return.

That helps explain why economists think it will take at least five years for the economy to regain the 8.2 million jobs wiped out by the recession — longer than in any other recovery since World War II.

It means that even as the economy strengthens, more Americans could face years out of work. Already, the percentage of the labor force unemployed for six months or longer is 4.3 percent. That's the highest rate on records dating to 1948.

Behind the trend are the cutbacks businesses made in the recession to make up for a loss of customers. To sustain earnings, they became more productive: They found ways to produce the same level of goods or services with fewer workers. Automation, global competition and technological efficiencies helped solidify the trend.

Diminished home equity and investment accounts have made shoppers more cautious, too. And their frugality could endure well into the recovery. That's why fewer retail workers, among others, will likely be needed.

"U.S. Government Programs Have Yet to Boost Small Business Lending" (Dow Jones)

U.S. efforts to stabilize the financial system have done little to boost small business lending and it remains unclear what impact the Obama administration's latest lending push will have, a report released Thursday said.

The report from the Congressional Oversight Panel, which oversees the government's $700 billion financial sector bailout, said it's not sure "whether Treasury's programs can or will play a major role in putting small businesses on the path to growth."

The report did note that Treasury's efforts thus far haven't resulted in an increase in loans to small businesses.

In 2008 and 2009, large banks that received government bailouts actually cut lending to small businesses. At the 22 largest banks to receive government bailouts, for example, average small business loan balances fell 4.6% between April and November of 2009, the report said. Meanwhile, originations for new loans slid by 7.4%, according to the report.

"Big banks pulled back on everyone, but they pulled back harder on small businesses," said Elizabeth Warren, the panel's chair.

"U.S. Home Seizures Reach Record as Recovery Delayed" (Blooomberg)

U.S. home foreclosures climbed to a record in April, a sign that government mortgage relief efforts have yet to turn the tide of property seizures, according to a report by RealtyTrac Inc.

“Right now it appears that the banks are focusing on processing the loans already in foreclosure, and slowing down the initiation of new foreclosure proceedings as a way of managing inventory levels,” Rick Sharga, RealtyTrac’s executive vice president, said in an e-mail. “We’ll probably see this trend continue for a while.”

Bank repossessions rose to 92,432 in April, up 45 percent from a year earlier, Irvine, California-based RealtyTrac said today in a statement. Foreclosure filings, including default and auction notices, fell 2 percent to 333,837. One out of every 387 households received a filing.

Unemployment of 9.9 percent and a rising percentage of homes worth less than the mortgages on them are combining to thwart a housing recovery, according to RealtyTrac. About 5 million delinquent loans will probably end up in the foreclosure process in addition to the 1.2 million homes already taken back by lenders, Sharga said.

Defaults may not peak until 2011 depending on how lenders process them, Sharga said.

“The underlying conditions -- mostly unemployment and millions of ‘underwater’ loans -- haven’t improved,” he said.

"Food-Stamp Tally Nears 40 Million, Sets Record" (Reuters)

Nearly 40 million Americans received food stamps -- the latest in an ever-higher string of record enrollment that dates from December 2008 and the U.S. recession, according to a government update.

Food stamps are the primary federal anti-hunger program, helping poor people buy food. Enrollment is highest during times of economic distress. The jobless rate was 9.9 percent, the government said on Friday.

The Agriculture Department said 39.68 million people, or 1 in 8 Americans, were enrolled for food stamps during February, an increase of 260,000 from January. USDA updated its figures on Wednesday.

"This is the highest share of the U.S. population on SNAP/food stamps," said the anti-hunger group Food Research and Action Center, using the new name for food stamps, Supplemental Nutrition Assistance Program (SNAP). "Research suggests that one in three eligible people are not receiving ... benefits."

"Executives Fear Double-Dip Recession, Poll Finds" (The Hill's On the Money)

An overwhelming majority of executives (84 percent) polled by consulting firm Deloitte are concerned that the economy will reverse course on its recovery and create a double-dip recession.

"Treasury says April Federal Deficit Is Largest on Record for the Month" (Associated Press)

The Treasury Department said Wednesday that the federal deficit for April soared to $82.7 billion, the largest imbalance for that month on record. That was significantly higher than last year's April deficit of $20 billion and above the $30 billion deficit that private-sector economists had expected.

The government generally runs surpluses in April, as millions of taxpayers file their income tax returns. But income tax payments were down this April, reflecting the impact of the recession, which has pushed millions of people out of work.

Total revenue for April was down 7.9 percent from a year ago, dipping to $245.3 billion.

-- it's hard to believe that anybody -- including those clueless masses in Washington and on Wall Street -- would be surprised by this one:

"Big Majority Believes US Still in Recession: Poll" (CNBC.com)

Public attitudes toward the economy have created ominous political problems for the Democratic Party and for Wall Street, according to the new NBC News/Wall Street Journal poll.

The survey shows that 76 percent of Americans believe that the US economy remains in recession; an even larger 81 percent describe themselves as dissatisfied with the economy.

That's a major reason why 56 percent of Americans say the country is still on the wrong track, notwithstanding recent positive economic news. Obama's own job approval rating rose slightly, to 50 percent, since the March survey.

That dissatisfaction has erased the edge in Congressional races that Democrats enjoyed a year ago. Now, voters split evenly on whether Democrats or Republicans should control Congress after this fall's mid-term elections. More encouraging for Republicans, their party enjoys a wide edge in enthusiasm about the election.

"We have a corrosive economy," said Republican pollster Bill McInturff, who conducts the NBC/WSJ survey with his Democratic counterpart Peter Hart. "That corrosive economy is beginning to crack an incumbent party."

But that's little comfort for Wall Street and corporate America, which have also suffered fallout from the public. Fully 58 percent of Americans agreed with the statement, "Because of corporate corruption and broker practices, the stock market is no longer a fair and open way to invest one's money." Just 35 percent said the stock market remains fair and open.

And in the debate over new financial regulations, Americans by 55 percent to 38 percent said they worry more that Congress will do too little to protect consumers and rein in Wall Street than they worry that new rules will go too far.

That same disdain for corporate America was reflected in assessments of BP's performance in handling the recent oil spill in the Gulf of Mexico. By 50 percent to 37 percent, Americans say BP is not doing enough to clean up the spill.

At the same time, Americans have not turned against offshore oil drilling itself. By 53 percent to 41 percent, Americans say the economic benefits of offshore drilling make it still worthwhile despite environmental dangers.

On the volatile issue of immigration, two-thirds of Americans say they support the strict new Arizona immigration law; a slightly larger proportion of Hispanics voters oppose it. Those cross-currents explain why Congress is unlikely to act on the issue before mid-term elections.

Comments

[roger]

A very dynamic and destructive way of living...
Under constant pressure to maintain growth,expansion and efficiency,
new ways of production are introduced every day in the economy,it's a slow
cumulative process, not perceived by the general population, at some point
in the future this composed bubble explodes and the equilibrium (a basic need
for a happy and peaceful society) is destroyed,in this process of growth the
financial world has experienced a major flood in the exchange medium,
since a few million people are made obsolete by the new modes of production
so is money and the flood turns into a minus tide.
We humans call this a (financial crisis) witch really explains nothing, so we
stay in the dark ,wondering WHY?

[Suzzana]

Do yourself a favor, turn off TV, and stop reading the newspaper. That is just full of propaganda. They have been saying we have been recovered for ages now...but go down the street and show me clear cut case examples of this.

I subscribe to the FFT newsletter at http://www.forecastfortomorrow.com that guy is calling for a bigger event to come in the next few months. He has had some great calls in the past. If you look back he has been spot on with things over many years, and someone that should be listened too! IMHO this spain will be the next big catastrophe...you can just smell it coming.

[Roberto Gomez]

I travel extesively in CA. In the last year, I have seen more small businesses going out of business, than the last 10 years combined. Tax revenues are not going to recover. Local cities and school districts should cut all salaries,NOW, by at least 10%, to prevent even a worse senerio next year.

[Small Town Gal]

I read the article in the NYT. I wonder if the irony was lost on the print journalist who wrote that article about the secretary whose profession has essentially become obsolete.

[kwark]

Between short-term U.S. Census jobs and the nonsensical jobs that aren't really jobs "created" via the BLS' birth-death model one is left to conclude that the so-called improvement in the jobs picture is largely illusory. So where does that leave us with the notion that in 5 years we'll "replace" 8+ million jobs? Seems bloody unlikely from here.

[Linda C]

Great article. I may not be too smart on some of these things, but a rotten fish still smells.

[Plan B Economics]

Speaking of 'still in recession'...let's not forget that leading economic indicators are actually flattening out now.

http://www.planbeconomics.com/2010/05/13/oecd-leading-indicator-warning/

[Youngworker]

The jobs are coming back but I dont have the qualifying 2-5 experience they ask for.

[jeff]

Great one Small Town Gal!!! ROFLOL!! I bet the irony of his article on his profession went right over his head.

I think this woman may be clueless;

"Big banks pulled back on everyone, but they pulled back harder on small businesses," said Elizabeth Warren, the panel's chair.

What small business owner would want in loan in this environmental?

[francis marion]

It saddens me to see the proud and dearly paid for superstructure of our civilization groaning under the accumulated stresses and indignities foisted by a proliferating legion of self-serving banksters and pols, of blinkered ideologues and narcissistic consumers. Where is the clarion call to return to our ideals? Where is the notion of sacrifice for a greater good? Where is common sense and natural affection? Is the inevitable result of surfeit and unbridled hubris visited upon all who fly too close to the sun? Would Icarus have given Daedalus wings if he could have foreseen the result? The whole point is he didn't. We are plunging. If we fall what world will emerge? For better or worse we meant well. God help us all. May the feathers and wax of the next age be fitted with a greater circumspection.

[Small Town Gal]

Thanks for the props, Jeff -- but unfortunately, Prof. Warren is pretty much always right. Small business is a delicate balancing act of cash flow: if you don't have access to a line of credit, have to keep an inventory balance, and one of your customers delays payment by 10 days or so -- things can get very tight. A business can run very positive at year end and not have run a positive each and every month when the rent comes due and the payroll has to be run. My family ran a business for 60 years, and I know whereof I speak.

Credit is the lifeblood of a small business. You don't want to take on debt, you usually HAVE to and usually it is a short-term problem (aside from capital improvements and sometimes repair on your productive machinery - usually you want to save for those investments, but it isn't always possible). It's especially acute in a downturn, because some of your suppliers stop allowing 30 days net terms (because they are getting squeezed) and some of your customers stop paying exactly timely (because they are getting squeezed). Your customer withholds a progress payment. Things get tight.

Worse yet, somebody in your chain declares bankruptcy, and suddenly you are a secured creditor waiting net 90 or 120 (or worse) for partial payment.

If your business model is sound, and you are generally profitable, you are probably going to take on debt in the short term to get you through the downturn, acting on faith that you will be able to earn it back when the tight spot is over. The really hard part is figuring out when to let go before it destroys you personally as well as the business. I've seen it so many times, it breaks my heart.

[Alf]

I detect a tone of hedging in this article,
especially so since this site professes to be about 'Financial Armageddon'.

Surely most folks know by now that things are going increasingly downhill, So something more is obviously afoot than merely a deeper than normal recession.

That's where one expects a site, a blogger... (or at least the folks commenting) to shed some light.
Well, since this article is pulling punches, I'll step in and call a spade a spade.

Look folks, the system is unraveling because it's bumped into the limits of growth and fraud. Quite simply, we've run out of ways to "kick the can down the road". We've run out of more suckers to pull into the Ponzi scheme. We've run out of ways to make a quick buck and leave the debris for those that follow.

Sure I could post charts detailing the exponential rise in debt being fostered on us, however there's plenty of sites already doing that. Seek out this information and it will validate what I state now:

Our government isn't run by our elected representatives. Instead we are serfs to the bankers. The politicians are merely puppets to this ultra wealthy elite.
While it's been this way for quite some time, only now are cracks in the system exposing the inherent corruption this 'shadow government' engenders with their boundless greed and quest for more control. Yes, it's the bankers and their Central Banks fronting this shakedown that controls world markets and governments. It goes beyond them taking a percentage of all commerce as a cut, way worse now is that we're increasingly being herded into accepting a unified world currency/bank/government by this behind-the-scenes ruling cabal.

The question is... are YOU going to take it?
Wake up and become aware of the underlying reality.
Educate yourself.