New York State Unemployment
February 6, 2011 by staff
New York State Unemployment, The objective of President Barack Obama driving the unemployment rate below 9 percent this year is threatened by national and local budget cuts that are likely to intensify as federal recovery funds are exhausted.
The austerity measures may add as much as 0.25 percentages point the unemployment rate this year, according to Mark Zandi, chief economist at Moody’s Analytics Inc.
“It could make the difference between the end of 2011, unemployment above or below 9 percent,” he said. “There is no more serious drag on economic growth and severe budget cuts at the state level and local level.”
Reductions in the public wage bill will ripple through the economy, cutting revenue to companies that rely on contracts and public spending depressing among those thrown out of work, “said Zandi. The result could be loss of 600,000 jobs in the fiscal year beginning July 1, he said.
State and local governments cut 12,000 workers from payrolls last month, a Labor Department report showed today. Total payroll increased by 36,000, depressed by the weather, and the unemployment rate fell to 9 percent from 9.4 percent.
The 18-month recession that began in December 2007 – the longest since the Great Depression 43 months – declined to state and local tax revenue while increasing the demand for services such as Medicaid and unemployment insurance. After three years of struggle to close budget gaps, many governors and mayors have used the maneuvers of a time and rainy day funds.
(AP) – Two years ago, the stock market has been roadkill along the highway funding. Now, one of the greatest bull markets in history in stock – may be enough to finally get the attention of the average investor.
The Dow Jones industrial average closed above 12,000 for the first time in two and a half years on Tuesday, putting the Great Recession further in the rearview mirror and erasing most of the damage inflicted on tens of millions of pension accounts.
A broader measure of stock market, the Standard & Poor’s 500 closed above 1300 for the first time since August 28, 2008. And at least a widely observed suggests stocks are still cheap by historical standards.
The race remarkable for stocks began March 9, 2009. The Dow stood at 6,547, its lowest level in 12 years. Since then, the fastest climb since the Great Depression, it has increased 84 percent due to soaring corporate profits, the unexpected resistance of staff costs and intervention buying of bonds by the Federal Reserve who making stocks more attractive. And some of the early gains came as investors realized that stocks have fallen too far during the financial crisis.
The total yield of the Dow, which assumes dividends were reinvested in shares, is 92 percent. Anyone who bought a fund S & P 500 index that day in March 2009 has doubled his money, assuming dividends were reinvested.
The Dow closed at 12,040.16 on Tuesday, advancing 148 points after strong corporate earnings reports and signs that the manufacturing sector had a good month of January. The S & P 500 closed at 1307.59, up 21 points.
The rebound could bring small investors back on the stock market. They shot nearly 245 billion and mutual funds from U.S. securities in June 2008, the last time the Dow was at 12,000, according to the Investment Company Institute. Earlier in the decade, they are usually put in $ 145 billion per year.
And if Americans believe the stock market again, it could accelerate the economic recovery.
“Lack of trust has acted as a sedative throughout the economy,” said David Kelly, chief strategist at JP Morgan Funds. “The Dow at 12,000 could boost U.S. investor psychology and be a stimulant more potent than anything else in the conduct of the next stage of this bull market. “Investors see rising stock portfolios are more likely to spend money and take risks that could stimulate the economy,” he said.
The market has been rising without having to buy as much by small investors. Is that professionals who have pushed stock prices higher for two years because they expected corporate profits to increase.
Companies have been sitting on a huge pile of money – the largest in proportion to their total assets since 1959. They start spending a little to upgrade their computer systems and the purchase of basic materials to expand – even though they have yet to hire again in large numbers. Alcoa, the giant aluminum company, has benefited from this expenditure, and its shares jumped 30 percent over the last three months. Technology stocks led the rally in the final push. Hewlett-Packard and IBM have each jumped more than 10 per cent over the past month.
“We are at a new stage in the economy,” said Liz Ann Sonders, chief strategist at Charles Schwab. “There is a huge amount of pent-up demand for capital spending by businesses.”
Stocks that typically do well in the first half of a bull market have been lagging the overall market recently. Shares of small companies that usually lead have stalled after rising 27 percent last year. So-called consumer discretionary stocks – hotels, restaurants and fashion shops which rely on the spending of people – tend to perform well at the beginning of a bull market, because they tend to fall more in a downturn. Lately they have been delayed. Consumer discretionary stocks rose 0.5 percent this year, far behind the 4 percent gain in the S & P 500.
Gains in the stock market have not been matched elsewhere. Real estate prices in some cities are still near the bottom they hit at the height of the financial crisis. Economists expect that this year could make record seizures. Some state and local governments are struggling to provide basic services, and the federal deficit is at its highest level in percentage of GDP since the end of the Second World War.
And agitation in Egypt shows that the market is still vulnerable to unforeseen events. The Dow fell 1.4 percent Friday, its biggest decline in more than two months because of concerns that the protests in Egypt could disrupt the global oil trade. Egypt controls the Suez Canal, a vital route for oil tankers and cargo ships.
But the economy is in better shape today than it was the last time the Dow closed above 12,000, June 19, 2008. This proved to be only one third of the way through the Great Recession. The Dow had fallen 2,000 points from its peak of 14,164 in October 2007 but was much more to fall. The unemployment rate was 5.6 percent and was on his way to 10.1 percent.
Today, the economy is expanding again. But jobs are scarce and the unemployment rate is 9.4 percent. Millions of people cannot afford to invest in a rally through the stocks.
The lack of demand for small investors is building up stocks cheap by historical standards. The Dow now trades at 14.7 times earnings per share combined the last year of the 30 stocks that make up the Dow Jones, well below the historical average of 17. If the Dow traded at 17 times earnings now, it would be at 13,877 – just 287 points below its record high.
The Dow is 15 percent below its record in October 2007 and could reach a new high this year. Pulling off that would require a total gain for 2011 of about 22 percent. The Dow Jones rose by as much or more than one year eight times since 1985, or about once every three years.
Small investors have started buying shares again. Investors and proposes $ 2.5 billion in mutual funds that held American companies during the first three weeks of January, the biggest increase since April of last year.
Major brokerages that manage investments begin to see the return of individual investors. “Our customers are showing increased confidence in economic recovery,” said Morgan Stanley Chief Financial Officer, Ruth Porat.
If unemployment starts to fall steadily, the bull market probably has more to do. Before the financial crisis of 2008, the unemployment rate was last at 9.4 percent was in July 1983. In November 1985, he was 7 percent and the Dow Jones was 23 percent higher.
AP Business Writer Pallavi Gogoi contributed to this report.
Copyright © 2011 The Associated Press. All rights reserved.
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