Tag Archives: unemployment

Disaster Planning – Are You Ready For Job Loss?

Posted on February 19, 2012 by admin

Even as the job market shows signs of improvement, a job loss is still a very real possibility for many Americans as companies continue to downsize, “rightsize”, and otherwise shrink their workforces.  When you lose your job loss, it may be several months before you can find a new position due to high unemployment rates.  Even if you never get laid off, you will benefit from thinking about and preparing for the potential loss of your job.  Getting ready for a job loss becomes especially important when you are seeing signs of trouble at your company or when you are warned that the end of your job is near. General Preparation for a Job Loss A job loss often occurs without any warning, so it is a good idea to take certain steps no matter how secure you feel your position is.  First, have an emergency fund that covers between three and six months of your living expenses. This emergency fund should tide you over and allow you to continue making mortgage or rent payments and paying the cost of other necessary expenses until you are able to find a replacement position. If you are the only breadwinner in your family or if your income covers the bulk of the family expenses, it is best to err on the side of caution and make sure your emergency fund will cover at least six months of income.  When family responsibilities are shared, three month is normally sufficient as it is less likely that you and your spouse or significant other will both lose your jobs at the same time.  If you and your spouse work for the same employer, you need a six-month reserve fund. You should have in the back of your mind that you might some day need to get a job again. Constantly look for opportunities to improve your resume, such as taking continuing education courses or earning new certifications.  Even if you do not lose your job, these things can only help you to advance in your current position. Specific Preparation for a Job Loss When you know that the end is near, preparations for the potential loss of your job become even more important and you will need to get serious about trying to ensure your financial viability after a lay-off. The first thing you should do is check into the rules for unemployment and insurance.  Find out if you are eligible based on your work history and determine how much in income you are likely to receive. This will give you a good idea of whether you can meet your basic expenses.  COBRA allows you to extend your health care coverage up to 18 months after losing your job.  You’ll have to pay the full premium, but you’ll still have health insurance and one less thing to worry about. The next step is to start cutting expenses as drastically as you can, or at least looking for ways to do so.  Cut out any unnecessary costs at this time such as the fancy cable television lineup or lunches and dinners out.  Any money that you were spending on unnecessary expenses can be set aside while you are still working to get you through the lean times after the layoff.  Once you have actually lost your job, slashing expenses will help your savings and unemployment money stretch farther.  You can also call your insurance company and look into whether you can get a reduced insurance rate since you will no longer be driving to work once you have been laid off so your car will not be used as often. Starting to network as soon as you know you are going to be laid off is a good idea as well, so you can hopefully shorten the length of time that you are unemployed.  Polish up your resume and reach out to your network of contacts to let them know you will soon be looking, start browsing job boards and consider joining local professional organizations to make contact with people who can help you to get back on the road to being employed. Continue reading →

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Weekly Jobless Claims Continue to Decline

Posted on February 17, 2012 by admin

Continuing information about the job market suggests a stronger economy is on the horizon for 2012. In the most recent U.S. Department of Labor release , initial jobless claims declined by 13,000 for the week of February 11, 2012 to a total of 348,000 initial jobless claims. The initial jobless claims report collects data on the number of Americans who apply for unemployment benefits during a specific week.  The recent decline follows the continuing decline in initial jobless claims since the most recent week marks the 10th time in the last 11 weeks that initial jobless claims have declined.  Initial jobless claims can fluctuate for a variety of reasons, including reactions from the general public to specific types of jobs or layoffs.  Looking at one week’s data may not prove to be a reliable indication of the health of the economy if taken into consideration by itself. In addition to the week’s decline in initial jobless claims, the four-week average of initial jobless claims has also declined by 1,750.  This four-week average provides a better indication of the job market since it is not as volatile a measure as a weekly statistic.  Monthly payroll growth may also be up in addition to a decrease in continuing claims. These pieces of data taken together all indicate an increase in the strength of the economy. A healthy number of initial jobless claims, usually considered by economists to be fewer than 400,000, provides a positive influence on the economy.  When more individuals are employed, consumers are more likely to feel confident in their potential to earn money and will be more likely to sift part of their earnings into the economy through consumer spending.  This analysis is particularly true around the holidays, and even more so after the holidays as retailers promote increased savings and discounted products. Additionally, some businesses may need to clear out inventory to make way for new seasonal items, and they may attempt to entice consumer with better sales. When consumer spending is on the rise, stocks will increase in value as companies see increased profit margins.  Investors will recognize the increase in consumer confidence and the availability of disposable income and will be more likely to invest money into new projects. Although one particular week’s reporting of initial jobless claims is not enough to warrant a positive prospective of the economy, when taking together with other important factors, the recent report points to signs of a healthy economy. Continue reading →

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Fed Sees US Economy Treading Water

Posted on February 16, 2012 by admin

Recently the Federal Open Market Committee (FOMC) released the minutes from the January 24 th and 25 th meeting.  The bottom line is things are not looking up, nor are they looking down.  The board was split about the overall direction of the US economy, and on what should be done in the short-term in order to influence positive direction in the long-term. The main focus of the latest meeting was a debate on the direction of the economy.  The members were split on the pace of the economic recovery and what should be done to hasten it.  The board agreed that GDP growth will accelerate through 2013, but at the same time unemployment will remain high.  It is no surprise that the announcement also confirmed that the Federal Reserve Rate will remain low through late 2014.  This news has been announced in the past, and comes as no shock to investors.  The FOMC did make as firm of a projection on inflation as they could, targeting 2% inflation in the medium-term.  They feel this number will allow for the most economic growth, while stimulating employers to continue to hire. The housing market is still in turmoil ( falling home prices , record low new home sales , and declining mortgage applications are just a few of the factors in the turmoil) and is providing no clear picture on when it will really start to pick back up.  Combine that with troubles with the European economy, and the FOMC is rightfully skeptical about a quick paced recovery for the US economy.  There was even some debate about a QE3 ( Quantitative Easing 2 was in late 2010), but there was really no substance behind it, nor any reason that another round would do any good to the economy. After the release of the latest minutes, the stock market took a tumble.  The saying “No News is Good News” certainly does not apply to the US economy.  When individuals and companies are putting their money on the line, they want a good clear picture that things are looking up.  When a lack of confidence is displayed by what is supposed to be a committee of the most intelligent economists around, investors pull their money.  Until there is a clear path defined, and a good projection set forth by the FOMC, we can expect a slow, bumpy recovery. Made up of 12 members of the Federal Reserve System, the FOMC meets 8 times per year, or about every six weeks.  Three weeks after each meeting, the minutes are released.  Four times per year the minutes are accompanied by a press release describing the most important aspects of the meeting and discussing the current economic projection (all documents can be viewed here ).  During their meetings they discuss where the economy has been, where it is going, and what needs to be done to keep it on track.  This can mean a multitude of different actions and desired results, but the most anticipated from each meeting is whether or not the Federal Reserve rate will be changed, and how many, if any, treasuries will be bought up. Continue reading →

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Jobless Claims Press Release

Posted on February 10, 2012 by admin

The U.S. Department of Labor has indicated that jobless claims decreased last week, providing yet another positive indication for the state of the economy. According to the jobless claims report , initial claims fell by 15,000 during the week of February 4. The total number of initial claims last week was 358,000. This statistic provides an important statistical figure that indicates a healthy economy. Economists typically look for jobless claims to be under 400,000. However, according to DailyFinance , it is rare for claims to be under 370,000.  When jobless claims are below 400,000 and maintain this low level, companies see enough demand that they wish to retain employees to meet this demand.  Moreover, the economy is more likely to grow and, as a result, companies are more likely to create additional jobs. The recent data demonstrates that jobless claims have dropped nine times during the last 10 weeks.  Although a weekly jobless claims report provides less reliability due to weekly fluctuations, the four-week average has also decreased to a rate of 375,750 claims. The decreasing number of jobless claims is an important indication of the health of the economy.  Lower unemployment rates indicate a stronger job market. When investors can gauge the state of the job market, they are more likely to invest when the job market seems positive.  A higher rate of employment is associated with a higher rate of demand. Additionally, when more workers are employed, people are more likely to spend the money that they receive because they are comfortable with their current income. In other words, a higher demand leads to a healthier, more stable and productive economy. From the data, analysts may speculate that the downside of a continuing decrease of jobless claims is that qualified employees may eventually run out and employers may have to increase wages to entice qualified employees to the job or to retain current qualified employees.  This situation can result in wage inflation, raised interest rates and a decrease in bond and stock prices. The jobless claims report is based on a weekly statistic.  However, when it is analyzed together with the four-week average, the new jobless claims information indicates an impending positive outlook and growth in the economy.  These data figures must always be looked at as a whole, rather than as a single unit in order to provide a clearer picture of the current state of the economy. Continue reading →

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Jobless Claims Picture Improves in January

Posted on February 6, 2012 by admin

The Department of Labor (DOL) recently released jobless claims for the week ending January 28 th .  The Bureau of Labor Statistics (BLS) also released the unemployment numbers for January.  These two measures help to suggest that the overall employment situation for the country is improving.  The surveys measure different aspects of who is working and who is not, and in both reports, the numbers are looking positive. In the month of January the unemployment number dropped by 243,000, representing a 0.2% decrease over the December numbers.  This brought the overall percentage of unemployed to 8.3%.  The unemployment rate has been steadily declining since August, having fallen 0.8% in that time period.  There is some skepticism of this number, since it measures those who are filing ongoing unemployment claims.   The Employment Situation measures those who are actively looking for a job and filing ongoing unemployment claims.  This number shows economist and investors how many people really do want to work, but are unable to find employment in the field they desire.  The portion of the population who no longer file claims, but are still not working, because they have simply given up or their benefits have run out, are not included in these unemployment numbers.  Precisely the reason the DOL also reports jobless claims numbers. For the last week of January, initial jobless claims fell by 12,000 to 367,000, slightly lower than what was expected.  More importantly than the number, though, is to look at the 4-week average.  For the third week in a row the 4-week average has declined, and this chart shows that the overall trend for the past 2 years is a considerable decline.  The jobless claims report measures those who have recently become unemployed and are filing their initial claim.  The number accurately measures those who are becoming unemployed, and will help to provide a more realistic estimate of the total number of people who are currently without employment.  Based on these numbers economists and investors can get a feel for how many people are currently without a job. As the jobless claims and unemployment claims continue to go down, the economy will continue to gain strength.  A healthy workforce is the only way the economy can also be healthy, and as corporations are realizing more profits and more demand, they have no choice but to hire more workers.  These workers in turn cause greater production for the corporations.  There is a cyclical drive, and people slowly returning to work is what sets that cycle in motion.  While the claims tick down, we can compare them to the recent releases of the how the housing markets and manufacturing jobs are doing to get a feel for where the economy is going.  At this point all indications are that America is getting back to work, and things are looking better.  But they are taking a much slower pace than many people would like them to take. Continue reading →

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Job Seekers Find Positive News in January Jobless Claims Report

Posted on January 30, 2012 by admin

The Department of Labor announced the latest jobless claims for last week ending on January 21 st .  At first glance, the data appear to look bad, but in reality are right on track for the economic recovery.  When comparing the overall numbers to the 4-week average, as well as seasonally adjusting the numbers, there should be no worries for the number of claims. For the week ending in January 21 st the initial jobless claims rose by 21,000 to 377,000.  The increase is partially due to retailers coming off the holiday shopping season.  With less consumer activity, there is not as much need and some temporary employees are let go.  Even with the increase, the 4-week moving average showed 377,500 initial jobless claims; a decline of 2,500.  The decline indicates that the economy is increasing in strength and overall more people are finding employment. For the week ending in January 14 th the insured unemployed gained 88,000 to a seasonally adjusted 3,554,000.  However, more importantly, the 4-week moving average showed a number of 3,569,000.  This represented a decrease of 15,750 from the previous week. The jobless claims measure is a good indicator of how the economy is looking, and it will give investors an idea of what direction the economy is heading.  As we see with every recession, the number of claims rises sharply, and falls slowly.  The speed of the change is what will drive investor sentiment.  While there are several number reported, the initial jobless claims is the main focus of the announcement.  These claims track the people who are filing for unemployment benefits for the first time (to receive a benefit a person must file a claim each week while they are unemployed, this number is just those filing the initial week).  The Department of Labor also reports the number of on-going claims from which the overall unemployment rate is derived. While unemployment claims are often fickle, they are a good indicator of the direction of the economy.  Many people say they are unreliable since often people just give up looking for work, or they run out of unemployment benefits so they are no longer included in the measure.  But there is merit to the claims, and by looking at the overall direction of unemployment claims, such as found on this chart , we see that the trend in claims is in a decline.  When more people are working that means more money is moving in the economy.  When the money moves, the economy grows.  There is a threshold that can be tolerated, however.  Too many people employed means employers will be unable to find help when they need it.  For the individual who is unemployed the situation is bad, but a certain number of unemployed is actually good for the economy. Continue reading →

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Consumer Sentiment Index Press Release

Posted on January 30, 2012 by admin

Another positive sign of the economy has been released, indicating that consumer sentiment has increased in the second half of the month of January. The data , released by the University of Michigan’s Consumer Survey Center, states that the consumer sentiment index is now at 76.0, making it higher than the rate that it was at one year ago. The consumer sentiment index has risen steadily since August when the low was at 55.7. The consumer sentiment index is a measure that is determined by a household survey conducted by the Institute for Social Research of the University of Michigan and Thomson Reuters. It is a measure that is available two times a month, with preliminary estimates released during the middle of the month and final estimates released at the end of the month. The survey is distributed to 500 households each month and asks questions regarding their attitudes and spending habits. The consumer sentiment index is important because it reflects the attitudes of consumers. The measure is available at a faster rate than most economic measures since the report is based on information that is regarding the current month. According to Bloomberg, consumer attitudes and consumer spending is the most influential factor for the stock and bond markets. Strong economic indications cause stocks to increase in value, while bonds measure growth compared to inflation. If the economy is growing too rapidly, bond prices may decrease in value since inflation increases. According to the release, consumer spending is responsible for the vast majority of the economy, often more than two-thirds of it. Consumer sentiment helps businesses be more aware of their customers’ attitudes. If consumers are more confident that they will have a job and they are secure about their personal finances, they are more likely to spend money and invest back into the economy. Businesses begin to pile up inventories in response to the potentially increasing consumer demand, more people are employed to maintain and stock the high inventories and investors are more likely to invest in an economy in which they feel that they can make a higher profit. Although consumer sentiment is important in determining the state of the economy, it can fluctuate. For example, an increase in gasoline prices or unemployment can cause consumer sentiment to decline, as families and individuals who travel for business are less likely to spend money because they are shelling out more for gas. If there is a high unemployment rate, consumers may also not put money into the economy as they attempt to search for a job. However, the current consumer sentiment demonstrates that more Americans are hopeful about the future. Continue reading →

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Federal Reserve to Keep Low Interest Rates Until 2014

Posted on January 27, 2012 by admin

After the conclusion of its Federal Open Market Committee (FOMC) meeting on January 25 , the Feds announced it would maintain record–low interest rates well into 2014.  Many analysts interpret the announcement as a sign that the FOMC do not expect the economy to grow much faster between now and the end of 2014. According to the Federal Open Market Committee, despite a sluggish global economy, the U.S. economy has expanded at a moderate pace. Consumer spending accounts for most of the growth. In fact, businesses have actually curtailed spending on fixed investments, which consist of physical assets like building, land, machinery, vehicles, and technology. In addition, despite a series of positive news regarding housing indicators, the sector continues to weigh down the U.S. economy. The Feds forecast an economic growth rate of 2.2% to 2.7%, for this year. Although Committee members expressed hopefulness about the state of unemployment in the nation, as the rate declined from 8.5% in November to 8.2% for December, slow economic growth will cap job growth. On the inflation front, the Feds believes inflation will remain at or below its objective of two percent going into future quarters. The Federal Reserve Act of 1913 Over 100 years ago, the U.S. Congress passed The Federal Reserve Act of 1913. This controversial piece of legislation gave the Federal Reserve System, often called the “Feds,” the power set the nation’s monetary policy. The Act establishes a Federal Reserve System, which consists of 12 Federal Reserve District Banks — Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago St. Louis, Minneapolis, Kansas City, Dallas and San Francisco. Each Federal Reserve District Bank has a board made up of nine directors. The Bank directors have responsibility for supervising its’ activities, which include the selection of a president. The president functions as chief executive officer and serves a five-year term. The Federal Reserve System’s Board of Governors must approve the Bank’s choice of CEO. Federal Reserve District Banks supervise depository institutions in its region. They provide a variety of services to those institutions as well as the public. They also help determine monetary policy by monitoring and reporting on economic developments in their region of the country. Board of Governors, FOMC and Monetary Policy The seven members of the Board of Governors serve on the 12-member Federal Open Market Committee (FOMC), which has, which has the primary responsibility for developing the country’s monetary policies. The other members of the FOMC are the president of the Federal Reserve Bank of New York and four presidents selected from a grouping of three Federal Reserve Banks, who serve one-year terms on a rotating basis. The FOMC determines monetary policy, which denotes certain actions taken by the Feds. These actions affect the availability of money, credit and interest rates as it relates to supporting the economic goals of the country. Continue reading →

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Jobless Claims Fall Dramatically in January

Posted on January 20, 2012 by admin

A recent release by the US Department of Labor provided promising information on the future of the American economy based on data they collected from the second week in January. The jobless claims for the week of January 14 fell by 50,000, compared to the previous week. This number represents the largest drop since September 2008 when economic expansion was in progress. The jobless claims report is released on a weekly basis.  It reports how many workers have filed new claims for unemployment.  A higher number of claims represents a larger amount of layoffs and economic uncertainty.  A lower amount of claims represents a stronger job market and greater economic certainty. When more individuals have jobs, investors feel more secure about the economy and are more likely to invest. Investing leads to greater economic strength and expansion.  If unemployment claims rise, investors typically respond by undertaking fewer investment opportunities. Having this new information on the jobless claims will likely inspire more activity in the stock market in the next few days.  Similarly, when more Americans have jobs, they are more likely to feel confident in their income and more likely to spend money, putting finances back into the economy.  This spending helps to stimulate the economy. Spending is constricted when more individuals are unemployed. Although the drastic decline in claims is a positive indication of the economy, it must not be used to completely predict the strength of the economy.  Jobless claims are released on a weekly basis, so they are more volatile than statistics that measure a longer duration of time.  Additionally, jobless claims in January may be affected by job loss due to seasonal unemployment, particularly amongst retailers or other holiday-related businesses.  More individuals likely filed for unemployment immediately after the Christmas holiday than in the middle of January. However, the jobless claim 4-week average continues to decrease, as it has steadily done so during the last few months.  The 4-week average of jobless claims is down by 34,000. This average uses a longer duration to measure the number of jobless claims, so it is a steadier indication of the prospective health of the economy as a whole. Coupled with increased holiday sales and a rise in inventories, the continuing decrease of jobless claims points to a stronger economy for 2012.  More consumers are feeling comfortable with their spending habits, particularly because more people are seeking employment and not solely relying on unemployment to pay their bills. Continue reading →

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Consumer Sentiment Continues to Increase in 2012

Posted on January 18, 2012 by admin

Along with job growth, consumer sentiment for 2012 is slowly working its way up.  When people are confident about their financial futures, they spend more.  Consumer spending and consumer sentiment are strongly correlated, although they don’t always match exactly every month.  The economy depends on us to spend money; in fact, two-thirds of our economy is made up of consumer spending. The year 2008 was the lowest point in for several years for consumer sentiment and the economy in general.  People were reeling from the recession, the stagnant job pool, and the credit and foreclosure crisis.  Ever since the summer of 2011, people have started to spend money again, a positive signal to economists, workers and investors.  Investors like to see high consumer confidence because it generally equates to strong stock prices.  The same is true for bonds as long as it isn’t inflationary growth.  Overall, high consumer sentiment is beneficial and boosts the economy. The Michigan Survey In order to find out the status of consumer sentiment, Thomson Reuters/University of Michigan creates a survey that inquires about financial health, conditions, and attitudes.  They send it out to 500 homes every month.  In December of 2011, the consumer sentiment index was at 69.9.  On January 13, 2011, they discovered the index had risen to 74, which was more than they had expected.  For even more comparison, the index in November was 67.7. Why is consumer sentiment rising?  A few factors, including lower gas prices and lower unemployment rates are raising this particular index.  On the other hand, it may be stymied by lowered home values and limited salary increases.  Nationwide, the unemployment rate is around 8.5 percent, which is very low compared to the rate it was two years ago.  As for gas prices, AAA states that the average price of one gallon of gas is $3.39, which is lower than it was over the summer. Inflation Expectations When surveyed about financial confidence levels, consumers responded to a future inflation estimate.  The survey takers estimated that the inflation rate would rise to 3.2 by 2013.  Shoppers have noticed that the cost of many food staples is rising.  Coffee, meat, vegetables, peanut butter, and rice are more expensive than they were only a year ago.  Going to the grocery store is starting to become an expensive endeavor for many families. Outlook for 2012 It looks like 2012 will be a good year for consumers and investors as long as the momentum keeps going in an upward direction.  Once the housing economy stabilizes and jobs become available, the consumer sentiment level should rise even more. Continue reading →

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