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Three Surveys Show Economic Confidence Is On The Rise

by
John Zappe
Aug 26, 2009, 8:05 pm ET

New surveys this week are stoking optimism that the worst of the worst recession in (insert your choice of years here) really may be behind us.

The Conference Board, which issues some of the most watched economic indicators in the U.S., reported that consumer confidence jumped 14 percent between July and August. The Index, which hit a low of 26.9 in March, has more than doubled since then and now stands at 54.1. It’s still slightly below the 54.8 posted in May, but the rise was considerably greater than the 47.9 economists had expected, according to Bloomberg News.

Employers mirrored that confidence in a CareerBuilder / Robert Half survey that said 53 percent of businesses polled plan to hire full-time workers in 2010. The Employment Dynamics and Growth Expectations Report prepared by the two companies found 40 percent of employers planning to hire temporary or contract workers and 39 percent expecting to hire part-time workers.

The report, which has been issued annually for the last five years, found that the positions first to be filled will be in technology, customer service, and sales. Also on the list are positions in marketing/creative, business development, human resources, and accounting/finance.

Most the hires will be either entry-level (say 28 percent of the hiring managers surveyed) or staff-level professionals (32 percent). The traits most valued in a new hire? Employers cited multitasking, initiative, and creative problem-solving.

“Companies already are identifying the key skill sets they will need in new hires to take advantage of the opportunities presented by improving economic conditions,” said Max Messmer, chairman and CEO of Robert Half International. “Firms that cut staffing levels too deeply may need to do significant rebuilding once the recovery takes hold.”

Perhaps anticipating the recovery, perhaps because so many companies have already made cuts, employers are throttling back on layoffs, says outplacement firm Challenger, Gray & Christmas.

“We see more and more signs that the economy is beginning to turn around. While it is too soon to expect a massive hiring binge that will move some of the nearly 20 million jobless Americans back onto payrolls, the pace of job cuts is likely to continue its downward trend,” said John A. Challenger, CEO of Challenger, Gray & Christmas.

In January 241,749 job cuts were announced, the highest since January 2002, according to the firm, which has tracked planned layoff announcements daily since 1993. But the announced job cuts have been declining since.

The August numbers are still being counted, but the firm said it expects the four-month total from May through August to be significantly lower than the 711,100 it counted from January through April.

“Year-end job cuts are likely to increase from the levels recorded during the summer months, which typically see fewer job cuts, but we will probably not return to the levels reached between January and April,” says Challenger. “Job cuts are expected to continue the overall downward trend in 2010, when we might actually begin to see some small improvements in hiring.”

The Wall Street Journal reported this month in its Economic Forecasting Survey that economists expect, on average, the economy to lose just under 27,000 jobs a month next year. While not exactly a recovery, it’s a huge change from the 70,000 monthly job loss they predicted in July.

However, if you actually count the number of economists who predict that jobs will either not be lost or will actually be added, the number is slightly larger than those who predict continued job losses.

The Bureau of Labor Statistics will release its employment report for August next week, Sept. 4th, just in time for the Labor Day weekend.

This article is provided for informational purposes only and is not intended to offer specific legal advice. You should consult your legal counsel regarding any threatened or pending litigation.

  1. Gerry Crispin

    When you are looking for light at the end of the tunnel and you look up and see the stars, you have not one but two problems. 1. you aren’t paying attention to where you are walking and will likely miss the light at the end. 2. If it rains, the water has a way into the tunnel.

    Focus on straight ahead. It is still a long way. Learn to swim.

  2. Dave Pollock

    “…if you actually count the number of economists who predict that jobs will either not be lost or will actually be added…”

    Count the number of economists???? You’ve got to be kidding me. I’ve tried for 15 minutes to even comment further on this… and I just can’t.

    Asking job posting sites and temporary staffing agencies to survey future employment prospects is like asking two wolves and a sheep what they want for dinner.

  3. Jonathan Hefferlin

    John -

    Always great to read your posts. Pessimism is always greatest at the bottom (previous 2 posts). The Great Recession is in its 21st month, possibly to be cut back to 19 if Q3 turns positive aa Leading Indicaators up 4 months, suggest. Industrial production, the global #1 indicator, had 1st jump in months, while the CPi is off -2.1% in a year, suggesting our standard of living is increasing, if we are employed.

    Unemployment, along with millions of interest only & ‘liar loans’ needing to be refinanced in coming years, and the commercial drop in prices escerbated by vacancy factors (20% here in the ‘OC’ – 1st county south of LA) is causing fear that this may still be a bear market rally. Like the Dow ignored the sub prime mess for months after grabbing headlines, peaking at 14,280 in October of 2007 – will it have a delayed reaction.

    Not to worry, the cash for appliances program is coming, so I can replace my 17″ and move my furniture back (that make it appear like a big screen).

  4. Dave Pollock

    Johnathan –

    I believe you’ve confused my criticism with pessimism. In fact, I’m rather positive about the future. I did not mention the premise of the post. I’m talking about the “research” used to support the premise being made.

  5. Keith Halperin

    http://www.bloomberg.com/apps/news?pid=20601087&sid=aNaqecavD9ek

    Obama Raises 2010 Deficit Estimate to $1.5 Trillion (Update3)

    By Roger Runningen and Brian Faler

    Aug. 25 (Bloomberg) — U.S. unemployment will surge to 10 percent this year and the budget deficit will be $1.5 trillion next year, both higher than previous Obama administration forecasts because of a recession that was deeper and longer than expected, White House budget chief Peter Orszag said.

    The Office of Management and Budget forecasts a weaker economic recovery than it saw in May as the gross domestic product shrinks 2.8 percent this year before expanding 2 percent next year, according to the administration’s mid-year economic review issued today. The Congressional Budget Office, in a separate assessment, forecast the economy will grow 2.8 percent next year. Both see the GDP expanding 3.8 percent in 2011.

    “While the danger of the economy immediately falling into a deep recession has receded, the American economy is still in the midst of a serious economic downturn,” the White House report said. “The long-term deficit outlook remains daunting.”

    The budget shortfall for 2010 would mark the second straight year of trillion-dollar deficits. Along with the unemployment numbers, the deficit may complicate President Barack Obama’s drive for his top domestic priority, overhauling the U.S. health care system.

    “It throws a wrench in health-care reforms,” Maya MacGuineas, president of the bipartisan Committee for a Responsible Federal Budget, said in an interview. “No matter the specific numbers, they’re a constant reminder that we’re in bad, bad shape.”

    Spending Caps

    House Republican Leader John Boehner of Ohio seized on the estimates to call for the Democrat-controlled Congress to impose “strict annual caps on federal spending.”

    The health-care overhaul “is just the latest in a long line of expensive Democratic experiments that will add to the deficit, raise taxes on families and small businesses and cost more American jobs,” Boehner said in a statement.

    The two budget agencies say the shortfall is being driven by the recession as outlays rise for unemployment compensation, food stamps or other programs meant to stabilize the economy rise and tax receipts fall.

    Administration and congressional budget officials expect the unemployment rate, which was 9.4 percent last month, to keep rising. White House officials said the rate likely will rise to 10 percent by the end of 2009, averaging 9.3 percent for the entire year. It will worsen to a 9.8 percent average in 2010 instead of the 7.9 percent estimate in May.

    The CBO report also estimates the 2009 jobless rate at 9.3 percent. It puts next year’s average at 10.2 percent.

    Deficit Projections

    The OMB raised its deficit projection for fiscal 2010, which begins Oct. 1, from the $1.26 trillion forecast in May, reflecting slower economic growth this year and next because of “the severity of the crisis in the U.S. and in our trading partners,” said Christina Romer, White House chief economist, who along with Orszag briefed reporters on the report.

    The median estimate of 31 economists in a Bloomberg News survey completed Aug. 21 was for a fiscal year 2010 deficit of $1.3 trillion.

    The outlook for the 2009 fiscal year is slightly better than the previous forecast. The government’s shortfall will peak this year at $1.58 trillion before narrowing over the next decade. That is less than the $1.84 trillion projected in May because budget officials were able to delete hundreds of billions of dollars that had been set aside for bank bailouts.

    Last year’s deficit was $459 billion.

    The CBO estimates the budget deficit will total $1.6 trillion this year, or 11.2 percent of the GDP, and $1.4 trillion in 2010.

    Bailout Money

    “The Obama White House deserves some credit for managing the financial situation so that the additional bailout wasn’t necessary,” said Stan Collender, a former budget analyst for the House and Senate budget committees.

    Orszag said reining in the deficit is a “top priority” of the administration. He said the budget blueprint Obama submits to Congress in February will “include proposals to put the nation back on a fiscally sustainable path.” He declined to give specifics.

    The OMB added almost $2 trillion to the 10-year deficit from its May forecast, to $9.05 trillion. The nonpartisan CBO’s long-range projection was $7.14 trillion. The difference stems from the CBO’s assumption that tax cuts enacted in 2001 and 2003 will expire on schedule in 2011. Obama has promised to keep the lower tax rates for middle-income Americans.

    Market Reaction

    “The market will view this as a very consensus-oriented forecast” and there won’t be any significant reaction, said Mark Zandi, chief economist at Moody’s Economy.com in West Chester, Pennsylvania.

    Zandi predicted Congress will pass a second “mini” stimulus bill next year of about $250 billion to aid jobless workers, state governments and home buyers. “The economy will be growing at an uncomfortably slow rate, not enough to bring down unemployment, and of course it’s an election year” for Congress, he said.

    Orszag defended the trillion-dollar deficits during a recession and said they shouldn’t be used to block the administration’s health-care initiative. Revising the way the nation pays for medical care will help save money, he said.

    “I know there are going to be some who say this report proves we can’t afford health reform,” Orszag said. “I think that has it backwards” because savings must be squeezed from the system.

    Back to Growth

    Even with economic conditions worse that originally forecast, Romer said “we do expect positive GDP growth by the end of this year” for the fourth quarter as the economy reaches “a turning point.”

    “A return to employment growth will take longer,” Romer said, adding that the jobless rate likely will peak in the fourth quarter of this year.

    Romer said the economic stimulus package probably is adding “between 2 and 3 percentage points” to economic growth in the second quarter of this year, blunting conditions that would have been worse. A report on the effect of the stimulus program is due to Congress next month, she said.

    Inflation will remain subdued. Projections for the consumer price index show a contraction of 0.7 percent this year, a rise of 1.4 percent next year and 1.5 percent in 2011, Romer said.

    The economic assumptions were compiled by the Council of Economic Advisers, Treasury Department and the Office of Management and Budget. The estimates reflect conditions as of early June.

    To contact the reporters on this story: Roger Runningen in Washington at rrunningen@bloomberg.netBrian Faler in Washington at bfaler@bloomberg.net

    ===========================================================

    http://www.bloomberg.com/apps/news?pid=20601103&sid=apdEGYly_Qeg

    Geithner Says Unemployment May Peak in Second Half of 2010
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    By Steve Matthews and Susan Decker

    Aug. 3 (Bloomberg) — The U.S. unemployment rate may not peak until the second half of 2010, even as the broader economy shows signs of improvement, U.S. Treasury Secretary Timothy Geithner said.

    Another extension in unemployment benefits “is something that the administration and Congress are going to look very carefully at as we get closer to the end of this year,” Geithner said in an interview yesterday on ABC’s “This Week” program.

    The U.S. economy contracted at a better-than-forecast 1 percent annual pace in the second quarter, the Commerce Department reported July 31. Stabilization of housing markets and consumer spending, a lessening of financial turmoil and increased government spending all suggest the longest recession since the 1930s may be close to ending.

    “There are signs the recession is easing,” Geithner said. “The broad consensus of private forecasters is that you are going to see positive growth in the second half of this year and expect that to continue.” It is “not clear yet” how strong growth will be, he said.

    Geithner’s appraisal was backed by former Federal Reserve Chairman Alan Greenspan who said, “collapse, I think, is now off the table.

    “I’m pretty sure we’ve already seen the bottom,” Greenspan said yesterday in an interview on “This Week.” “In fact, if you look at the weekly production figures for various different industries, it’s clear that we’ve turned, perhaps in the middle of last month, the middle of July.”

    ‘Serious’ Job Picture

    Lawrence Summers, director of the White House National Economic Council, said that while the economy will resume growth in the second half of the year, the job picture “will be serious for some time to come.”

    “We have walked back from what we were facing six month ago,” Summers said on NBC’s “Meet the Press” yesterday. “It’s going to take time before you see it in the unemployment rate.”

    Summers said the Obama administration will work with Congress to “do what’s necessary to make sure appropriate unemployment benefits are available.”

    Congressman Charles Rangel, chairman of the House Ways and Means Committee, said he supports extending unemployment insurance benefits for another 13 weeks.

    “There’s no question, they deserve it,” he said on Fox News Sunday. “They are the true victims of this fiscal disaster.”

    Support From DeMint

    Senator Jim DeMint, a South Carolina Republican, said he’ll “definitely support” extending unemployment benefits.

    Economic growth will average 1.5 percent in the July-to- December period, according to a Bloomberg News survey of economists in July.

    “You are going to see the pace of job losses slow materially,” Geithner said. “Again most private forecasters, let’s use their judgment, suggest you’re going to see unemployment start to come down maybe beginning in the second half of next year.”

    Much of the economic recovery will depend on the housing market, Greenspan said.

    “I’m short-term optimistic, but with many caveats,” the former Fed chairman said. Housing markets have “stabilized temporarily” though it is “possible” the economy might relapse if there is a further slide in home prices of more than about 5 percent.

    “I don’t think it’s going to happen, but I do think it is possible that we could get a second wave down,” Greenspan said. “But the important issue is that if we don’t, and I think the probability is that we won’t, that we are close to stabilization.”

    Teachers, Police Officers

    Summers said less than 10 percent of President Barack Obama’s economic stimulus plan goes to job creation in 2009, with most new jobs coming later. He said the administration still expects the stimulus to save or create at least 3 million jobs, and pointed to teachers and law enforcement officers who kept jobs because of the additional funding as proof the program is working.

    The problem, he said, was that the economy was in worse shape last year than many economists thought.

    “Unemployment increased more than almost anyone expected,” Summers said. “Businesses were more scared than we realized and were much quicker to lay people off.”

    Bernanke’s Outlook

    Fed Chairman Ben S. Bernanke predicted a week ago the U.S. unemployment rate will top 10 percent, up from 9.5 percent in June, even as the economy recovers from the worst recession in at least five decades. Growth of about 1 percent is likely in the second half of the year, Bernanke said at a town-hall-style meeting.

    Geithner said once the recovery is established, the administration will focus on reducing government budget deficits.

    “Recovery will not be strong enough to sustain unless we can convince the American people that we’re going to have the will to bring these deficits down once recovery is firmly established,” he said.

    Greenspan also said there has been “a very significant improvement” in the financial sector, “and it’s been the financial system where the problems have been.”

    Banks and financial institutions have reported more than $1.5 trillion in credit losses and writedowns worldwide since the global credit crisis began. Many of those losses stemmed from mortgage-related investments that declined with the collapse in the housing market.

    The so-called Libor-OIS spread, a gauge of bank reluctance to lend, has narrowed to 28 basis points from 364 basis points on Oct. 10. Greenspan said in June 2008 that he wouldn’t consider credit markets back to “normal” until the Libor-OIS spread narrowed to 25 basis points.

    Lawmakers and some economists have blamed Greenspan for helping to cause the financial crisis with lax oversight of the housing boom and derivatives markets, and by keeping interest rates too low in 2003 and 2004.

    To contact the reporter on this story: Steve Matthews in Nashville at smatthews@bloomberg.net; Susan Decker in Washington at sdecker1@bloomberg.net.
    Last Updated: August 3, 2009 00:01 EDT

  6. Jeremy Langhans

    i’ve been cold called 1/2 a dozen times in the past 30 days by Headhunters for Sourcing gigs. the economy has turned the corner peeps ^^

    Jer

  7. Jonathan Hefferlin

    Dave – Got it.

    Keith – I had just read the same thing (I follow for my UPDATE – newsletter some of you receive) Since few read lengthy stuff, here is what I took out of it.

    May 09 Est. Today’s estimage
    Ave Unemployment 2010 7.9% 10.2%
    10 year deficit $7.14 Tril. $9.05 Tril
    (2009-10 1.6 Tril
    2010-11 1.4 Tril
    The unemployment pic, especailly with #s twice the above counting those forced to part time & those who gave up looking or who aren’t collection unemployment.

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