Obama, Dems, on way out here it is in the press
See passages highlighted in bold. In my experience, any unemployment rate 6% and above means: fewer openings, harder to get interviews for what openings there are. No way in hell will this administration survive this environment.
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Economists uncertain about future, but no one sees a rapid U.S. turnaround
By Aldo Svaldi
The Denver Post
Like a trucker navigating a steep mountain pass, the U.S. economy is shifting down a gear and struggling to avoid a stall.
Debt troubles in Europe, sluggish job gains at home and waning federal stimulus spending are all drags on an economy that needs to accelerate.
"The fact that there is even talk about it is a bit unnerving," Gary Horvath, a Broomfield economist, said about a double-dip recession.
Stock markets have fallen since late April — despite a strong uptick last week — as evidence has mounted of slower consumer spending, anemic job growth and declining home sales.
Members of the Group of 20 in late June set a goal of trying to cut their their deficits by half by 2013 at a time when some argue that another round of spending is needed.
Mainstream economic forecasts offer a view of continued, if somewhat slower, growth — although skeptics might note these same forecasters missed the crash and credit freeze of 2008.
A Bloomberg compilation of more than 93 economic forecasts calls for the U.S. economy to grow 2.75 percent in the third quarter, 2.8 percent in the fourth and 3.7 percent in the first quarter of 2011.
The forecasters are less optimistic about the unemployment rate, which they expect to remain above 9 percent for most of 2011 before dropping down to 8 percent in 2012.
On the immediate horizon is the start of corporate earnings reports for the second quarter. General Electric, Google and JP Morgan Chase are reporting this week, and the eyes of investors will be on whether they provide positive guidance for the months ahead.
The Obama administration also lacks the votes in Congress to pass a second round of stimulus spending, leaving state governments especially vulnerable.
Horvath warned that the eventual expiration of the $800 billion federal stimulus package could blow huge holes in already strained local and state government budgets, forcing more service cuts and layoffs. Horvath also is a layoff victim. He lost his job last month in a downsizing at the University of Colorado at Boulder.
The Center on Budget and Policy Priorities, which studies how fiscal policies affect low-income people, estimates state governments face a shortfall of $140 billion in the coming year.
The city of Denver last week said it expects a $100 million budget deficit next year, $20 million higher than budget officials projected in April, that could lead to layoffs.
The state of Colorado could face a $1 billion shortfall in its 2011-12 budget if an enhanced federal match for Medicaid goes away, a scenario that seems increasingly likely.
Economists choose their words carefully when talking about another recession, and most of them don't want to think about what would happen if one came.
"If the economy goes down a second time, then it likely goes down for good," predicted Peter Morici, a University of Maryland economist.
"Unemployment would rise into the teens, and the economy would sink into a depression — a deep and painful slump from which it cannot soon recover," he wrote recently.
Morici argued that the nation needs to rework its trade and industrial policies to create more jobs domestically.
Providing a counterpoint, bullish economists note that soft patches are not uncommon in any recovery.
"We are suffering from Armageddon hypochondria," Jim Paulsen,
Click on image to enlarge chief investment strategist at Wells Fargo Capital Management, recently told Bloomberg. "It is a normal pause in a recovery that is ongoing."
Headwinds the economy faced in the second quarter have eased. Interest rates are down, the price of oil is down and the U.S. dollar is weakening, which helps exports, he said.
Temporary employment firm Manpower also found the 18,000 employers it surveys regularly more optimistic about future hiring plans, especially in Denver.
David York, manager of Manpower's downtown Denver branch, said he is seeing more of his workers get hired full time, but adds that caution remains the word.
"This recovery is very slow," York said.
Part of the uphill climb the economy faces is that it must create 130,000 to 150,000 a month just to keep pace with people entering the workforce, but that doesn't help make up for the 7.9 million jobs lost since December, York said.
Some of those who do the hiring fret about how high taxes might get.
"When businesses become more comfortable with the direction and the clarity of costs, they will hire more rapidly," said Paul Larkins, chief executive of SquareTwo Financial, an asset-recovery company managing a $6.7 billion portfolio of consumer debts.
Denver-based SquareTwo has boosted its workforce by 14 percent this year and successfully raised $475 million from investors. So why isn't Larkins among the optimists?
"When I ask our human resources department about health care costs and can't get an answer, it causes me to pause when I think about growth plans," he said.
Larkins isn't expecting a double dip but is planning on what he calls the new normal — economic growth in the range of 1.5 percent to 2.25 percent a year.
"We have to operate within the environment we have," he said.
http://www.denverpost.com/ci_15482211