peggy1258
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Joined: 07 Jul 2011
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 Posted: Wed Jul 13, 2011 4:30 pm Post subject: American Sauce: Maybe the economy's not so bad? |
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Yes, unemployment is again on the rise and the June jobs report had all the strength of an ICU patient. Yes, economic stress is literally making people sick. But are things as grim as they feel?
Maybe not.
In this week's American Sauce podcast, we lay out the bad and the good, yes the good, of the economy. Listen here. Or keep reading for highlights.
The Good In The Economy
State and local taxes are going up, indicating income and spending are up. Overall, the Census Bureau says states and local government saw tax revenue jump 4.7 percent in the first three months of this year.
Even more of an exclamation point: Individual income tax revenue sprung up 11.9 percent over the year before.
And no, this is not attributed to states increasing tax rates. Texas and South Carolina, just to name two no-new-taxes states, saw tax revenue go up around 7 percent.
Gross Domestic Product has grown for the past seven quarters, starting in June 2009.
So, the economy has grown and not contracted for the past two years. Full disclosure: That positive news is overcast by the fact that much of that growth was lackluster.
Economists generally want to see 3.6 percent growth of GDP before they declare the economy is expanding and healthy. But only two of those quarters above (end of 2009, beginning 2010) hit that mark.
Still, after GDP plunged at the end of 2008 and into the start of 2009, the economy seems to have stabilized and is not tanking. Unfortunately, it is stable and stagnant. See this as a question of perspective; the glass may now be at least a quarter full.
Manufacturing is bubbling despite the earthquake and tsunami in Japan.
A key index indicates U.S. manufacturing has expanded for nearly two years. The Institute for Supply Management showed its index of manufacturing rise again in June. It has stayed at levels indicating expansion for the past 23 months.
This comes despite continued problems from the Japan earthquake and tsunami. The natural disasters have disrupted the world supply chain for parts and orders.
But U.S. manufacturing keeps humming along, including another increase in American car sales in June.
The economy may be transforming.
Ron Bancroft, an independent economic consultant in Portland, Maine, says the economy is shifting to more flexible work schedules, locations and skills.
"The good news about that is the younger generation coming into the workforce has all the tools to be flexible," he said.
Of course, that may not help experienced workers but the fact remains that businesses seem to be trending this way.
According to economic data-crunchers McKinsey and Company, 60 percent of businesses want flex workers. That includes telecommuters, part-time employees and flex-hour workers.
"Because many Americans are much less willing to move than they were ten or 20 years ago, we have pockets where we have significant unemployment problems," Bancroft said. "But there are places where there is tremendous opportunity still."
That brings us to bright spot number five.
Unemployment is down in most metropolitan areas. In some places, it's very low.
The Bureau of Labor Statistics reports that the unemployment rate went down in the majority of cities and their surrounding suburbs over the past year.
The agency's figures show 274 metropolitan areas out of a total 372 in the nation saw unemployment drop and the jobs situation improve from May 2010 to May 2011.
Some high-profile hotbeds of economic woes saw big improvement: the unemployment rate in Las Vegas went down 2.5 percentage points, Detroit's dropped 1.8 percentage points and Flint, Michigan's declined 3.4 percentage points.
And some states and cities have tantalizingly fertile jobs conditions. Iowa is sitting with 5.6 percent unemployment. Boston is at 6.6 percent. The jobless rate in Mankato, Minnesota of Little House on the Prairie fame is at 5.1 percent. And North Dakota has a jaw-dropping rate of just 3 percent unemployment.
The Bad in the Economy
Long-term unemployment continues to set all-time records.
A whopping 1.9 million Americans have been looking for work for 99 weeks or more. And a staggering 700,000 of those have been looking for 152 weeks – or three years – according to unpublished data from the Bureau of Labor Statistics obtained by CNN.
Large-scale layoffs may have halted, but massive hiring has yet to begin. Those who lost their jobs in the meantime, are stuck in between.
To hear from a man who's been looking for work nearly two years, listen to our podcast here.
Housing prices are still dismal.
The sector that sparked this economic mess remains weak and messy.
A CNN survey of 27 leading economists predicts that housing prices are on pace to drop 2.9 percent this year.
The latest data, the Case Schiller housing price index from April, shows a slight increase in prices that month. That survey showed prices were up 0.7 percent from March to April. However, April regularly produced higher home prices. And the increase this year was less than average.
Oil prices flirting around $100 a barrel again.
Crude prices are back up in the red zone, despite decisions by many world powers, including the United States, to release millions of barrels from their strategic oil reserves.
People aren't spending as much.
Retail sales inched down in May, by 0.2 percent. This was barely a decline, but stood out because it was the first drop in retail sales numbers in 11 months.
And they're less and less confident.
Consumer confidence is down and falling, no matter how you look at it.
The Consumer Board's consumer confidence index dropped in May and June. And surveys show fewer people are optimistic about the economy turning around in the next six months.
Less confidence generally leads to lower spending and therefore less economic growth.
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