skip to main |
skip to sidebar
The Economy: Why it feels even worse
As you've heard us and others report, the U.S. economy, more so than other worldwide economies, is dependent on spending decisions made by consumers. Consumer behavior drives spending habits, spending habits drive corporate profitability, and corporate profitability drives the stock market.
Success in the stock market is one of those things that make Americans feel better about the economy, along with increases in wages (not happening) and increases in home prices (also not happening).
Typically, we measure economic strength or weakness using the GDP, or Gross Domestic Product, which is historically thought of as the broadest measure of economic activity.
But, while GDP may be a good measure of the whole economy (and it may not be, but that's another story), it doesn't reflect all the things that matter to you.
In the fall, we took a look at five measures of the economy that reflect how things really are out there, to see if your fears and concerns are justified. The measures we chose are those that we "touch" on a daily basis.
We looked at how the economy is affecting you, via jobs, personal income, personal savings, industrial production, and home prices.
We charted them on a scale of 0-to-10: 0 being the worst that each of them has been since 1980; 10 being the best.
1980 was our starting point because experts agree that the economy before then was so different from what it is now that it would be like comparing apples and oranges.
Now, over a year into the recession, we're taking a look at it again.
We call it the CNN "Real Feel Economic Index."
Source
Painful week.
Job cuts exceed 100,000 for the week
U.S. job losses continued to mount this week, with Pfizer, Caterpillar and Boeing reporting massive reductions.
EMAIL | PRINT | SHARE | RSS
* Yahoo! Buzz
* DIGG
* FACEBOOK
* DEL.ICIO.US
* REDDIT
* STUMBLE UPON
* MYSPACE
* MIXX IT
Subscribe to Economy
google my aol my msn my yahoo! netvibes
feed://rss.cnn.com/rss/money_news_economy.rss
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
By Aaron Smith, CNNMoney.com staff writer
Last Updated: January 30, 2009: 2:27 PM ET
AMERICA'S MONEY CRISIS
* California's cash crunch: IOUs coming
* Three regional banks fail
* New York - the next housing bust?
* Who needs a big raise? SEC staffers
* $4B shortfall - NYC may cut 23,000 jobs
NEC slashes 20,000 jobsvideo
NEC slashes 20,000 jobs
More Videos
Money Summit 2009
President Obama inherits an economy mired in recession and rising unemployment.
How does he fix it and where does he start?
CNN’s Ali Velshi and a panel of experts analyze his rescue plan.
Panelists include David Gergen, CNN Sr. Political Analyst and Andy Serwer, Managing Editor of Fortune Magazine.
Tune in Friday at 11 p.m. ET and Saturday at 8 p.m. ET.
Quick Vote
How will the economic stimulus package help your job situation?
*
It won't make any difference
*
It will help me find a job
*
It will help me keep my job
or View results
NEW YORK (CNNMoney.com) -- In a brutal week for the job market, an assortment of companies across various industries announced more than 100,000 job cuts.
The bulk of the job loss news occurred on Monday, when several major U.S. companies announced sweeping job cuts, pushing the day's total to more than 70,000.
"The picture is still pretty glum out there," said David Wyss, chief economist for Standard & Poor's, noting that January is often a bad month for the job market, because companies want to include the reductions in their annual tax returns.
Pfizer (PFE, Fortune 500), the leading drugmaker in terms of annual pharma sales, and Caterpillar (CAT, Fortune 500), a heavy equipment manufacturer based in Peoria, Ill., each said they would cut 20,000 jobs. These are the biggest reported eliminations among U.S.-based companies.
New York-based Pfizer said the cost-saving restructuring would occur before and after its merger with Wyeth (WYE, Fortune 500), to be completed later this year.
Caterpillar Chief Executive Jim Owens blamed the "rapidly deteriorating global economy" in his quarterly earnings report. Later, on Friday, Caterpillar added another 2,110 job cuts to its previously announced reductions, bringing its tally to more than 22,000.
Boeing (BA, Fortune 500) announced its massive layoffs on Wednesday. The Chicago-based airplane manufacturer said 10,000 workers, including 4,500 previously announced reductions, would lose their jobs. The company blamed this on dwindling demand for its aircraft.
Chico's (CHS), a retailer of women's clothing based in Fort Myers, Fla., said on Friday that it was cutting 180 positions. The retail industry has been hard-hit in recent months by a slow-down in consumer spending, partly because so many people have lost their jobs.
Also on Friday, the newspaper publisher A.H. Belo (AHC) said it was cutting 500 jobs. Chief Executive Robert Decherd, in a letter to colleagues, blamed the "rapid deterioration in the U.S. economy."
The U.S. economy lost 2.6 million jobs in 2008, according to government reports. This includes 21,137 mass layoffs, a seven-year high. In a mass layoff, 50 or more workers are laid off at a time.
2009 job loss tally
The job market isn't expected to get any better any time soon. The Council Board forecast two million job losses for 2009.
"[The job losses] are going to continue until sales stabilize and that might not become apparent until the summer," said Moody's chief economist John Lonski. "There's every reason to believe that the magnitude of job destruction will rise yet again in February and March."
Not everyone agrees that job losses will continue at their current pace. Robert Brusca, chief economist at Fact and Opinion Economics, said that "when the pace of the loss is this severe, the period of severity isn't very long." He said companies might be overzealous in reporting their eliminations, lessening the need for further cuts down the road.
While opinions differ about the severity of cuts, nobody's talking about job growth for the foreseeable future.
"There's no reason to anticipate a hiring frenzy any time soon," said Rich Yamarone, director of economic research at Argus Research, in an email to CNNMoney.com. "Labor usually accounts for about 75% of a company's costs, and if the outlook remains bleak, they slash jobs. There is no reason to believe this trend will stop any time soon."
Source
Bank bailout: Get ready for next phase
Economy is getting worse and banks' books are still weighed down with junk. Washington is looking at new solutions that sound familiar.
EMAIL | PRINT | SHARE | RSS
* Yahoo! Buzz
* DIGG
* FACEBOOK
* DEL.ICIO.US
* REDDIT
* STUMBLE UPON
* MYSPACE
* MIXX IT
Subscribe to Economy
google my aol my msn my yahoo! netvibes
feed://rss.cnn.com/rss/money_news_economy.rss
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
By Tami Luhby, CNNMoney.com senior writer
Last Updated: January 17, 2009: 4:17 PM ET
AMERICA'S MONEY CRISIS
* Wall Street: Here come the earnings
* Bank bailout: Get ready for next phase
* First bank failures of '09
* FDIC encourages banks to lend more
* Brutal job losses continue in 2009
BofA's 'shotgun wedding' regretvideo
BofA's 'shotgun wedding' regret
More Videos
Banks not shying from TARPvideo
Banks not shying from TARP
More Videos
Tracking the bailout
Who's getting the bank bailout money Who's getting the bank bailout money Who's getting the bank bailout money
Economy rescue: Adding up the dollars
The government is engaged in an unprecedented - and expensive - effort to rescue the economy. Here are all the elements of the bailouts.
View chart
NEW YORK (CNNMoney.com) -- It's back to square one.
The deepening financial crisis, which is undermining the government's rescue efforts so far, is prompting federal officials to revisit its original bailout measures. These include taking toxic assets off institutions' balance sheets by moving them into a so-called "bad bank", according to published reports.
As long as these assets remain on banks' books, there's no telling how long their losses will continue and how deep they will be.
Addressing these assets was the original purpose of the Troubled Asset Relief Program, the formal name of the $700 billion bailout plan the Bush administration unveiled as the credit crunch spun out of control. It was later abandoned in favor of taking equity stakes in banks, which was seen as a more direct and rapid way to help.
But as the economy worsens and banks continue to rack up multi-billion dollar losses, the incoming Obama administration will face tough choices in deciding what to do with the $350 billion remaining in the bailout plan. There are many who want a piece of the pie, and there may not be enough money to go around.
David Axelrod, a top adviser to Obama, told Reuters that the administration, which takes office Tuesday, would make an announcement in "the next few days."
Figuring out the next phase
Outgoing Treasury Secretary Henry Paulson said Friday that "a lot of work" has been done on creating a "aggregator bank" and other ideas to leverage the remaining bailout funds to deal with banks' illiquid assets, according to reports. Such a "bad bank" might buy up financial institutions' bad assets, such as mortgage-backed securities, which could stem losses and help rebuild confidence. This is how the federal government first intended to address the credit crisis in mid-September.
Paulson also talked of having the Federal Reserve expand a program to back consumer credit, scheduled to begin next month, and of letting the Fed accept riskier assets, such as commercial mortgage-backed securities. Also, the government could expand its backstop of bank assets as it did for Bank of America, as well as Citigroup.
Meanwhile, Sheila Bair, head of the Federal Deposit Insurance Corp. who will remain in office under Obama, told the Wall Street Journal that federal agencies would like to have "something in place in the not too distant future."
"Everybody agrees it's important to provide some troubled asset relief, because I think it's key to getting private equity capital bank into banks," she told the Journal. "They need to have some certainty about what the tail risk is on some of these assets."
The bank, which would be capitalized with TARP funds, would be similar to the Resolution Trust Corp., which liquidated hundreds of savings and loans in the late 1980s and 1990s, Bair said.
On Tuesday, Fed Vice Chairman Donald Kohn voiced a similar view. And the congressional panel overseeing the TARP wrote last Friday in a report to Congress that events such as November's federal bailout of Citigroup highlight how the toxic asset problem has continued to fester.
Government officials are coming under renewed pressure from financial industry lobbyists, who are pushing them to do more to help banks deal with their bad assets.
"We need to get the markets moving again," said Tim Ryan, head of the Securities Industry and Financial Markets Association. "We have no problem with capital injections, but if you do capital injections without taking care of the bad assets, it just causes the problem to go into hibernation."
Bank losses mounting
The weakening economy is throwing a wrench into the government's efforts to aid the banks. As job losses mount, a growing number of consumers are falling behind on their mortgages, credit cards and other loan payments.
On Friday, Bank of America (BAC, Fortune 500), the nation's largest bank, reported a net loss of $1.79 billion in the fourth quarter of 2008, compared to earnings of $268 million a year earlier. Analysts expected earnings of 8 cents per share.
The loss did not include Merrill Lynch's results. The recently acquired investment bank reported a loss of $15.31 billion, or $9.62 per share. Bank of America cited "severe capital markets dislocations" for Merrill's huge loss, especially late in the quarter.
Citigroup (C, Fortune 500), meanwhile, reported a much bigger-than-expected $8.3 billion quarterly loss Friday, while the beleaguered banking icon also revealed plans to split up into two businesses.
A day earlier, JPMorgan Chase (JPM, Fortune 500) reported net income fell 76% to $702 million, or 7 cents a share during the fourth quarter, from $2.97 billion, or 86 cents a share, during the same period a year ago.
Losing the public's support
Convincing the American public to support more rescue measures may be tough.
A majority of those polled say the government's financial bailout for troubled banks has not worked so far and six in 10 don't want Washington to spend more money on the rescue, according to a CNN/Opinion Research Corporation survey released Friday.
President-elect Barack Obama will have to decide how to parcel out the remaining $350 billion to all the jockeying interests.
In a nod to congressional Democrats, Obama's officials have already committed to spending up to $100 billion on assisting homeowners facing foreclosure, while Federal Reserve Chairman Ben Bernanke said Tuesday that banks will need more capital injections.
However, Obama said it's crucial to help the banks and get them lending to consumers and small businesses again.
"There's no doubt that we needed to stabilize the banking system," Obama told CNN's John King Friday.
CNN Money
New for '09: GPS tour guides
Today's penny-pinching travelers actually benefit tourism entrepreneur Lee Little, founder and CEO of BarZ Adventures in Austin. Business is booming for his three-year-old company, which sells Palm (PALM)-like GPS-enabled tour-guide devices. Called Rangers, they play audio and video keyed to points of interest at the user's location, such as a national park.
More travelers are now going lean and green on vacation, hiking and taking adventure trips closer to home instead of going abroad. A survey by TripAdvisor found that 73% of Americans say they plan to visit a national park in 2009, up from 62% a year ago.
This is where the Ranger comes in.
"During a trip to Yellowstone, I was astounded by how little information there was at national parks," says Little, who positions the BarZ service as a replacement tour guide. "All I wanted was to understand why some geysers shoot straight up and some bubble out."
His Rangers are currently in use in 18 U.S. parks, zoos and historic sites. Little says his 15-employee company is growing at an annual rate of 300% and has raised more than $2 million in funding to date. He would not specify revenues, however.
Little is also selling the Ranger as a money-making opportunity for entrepreneurs in the travel business. Bill Lilley, co-owner of Go GPS Tours in Key West, Fla., invested about $35,000 to buy 50 BarZ Rangers. He then filmed his own tour content. A year ago, Lilley started to rent Ranger units out of Lazy Dog Island Outfitters, the clothing store he co-owns. Since then Lilley has seen the number of $29 rentals rise to 20 per day (other BarZ tours rent for $9.95) and has sold 18 advertising deals for $250 to $1,000 apiece.
"We wanted something that could deliver stories with speed and accuracy and be small enough to carry," Lilley says. As of November 2008, he had almost recouped his investment.
A year ago, brothers Jeff and Trevor Swyers invested $300,000 to buy 300 Rangers to launch GeoQuest Tours, a service offering GPS tours of Utah's Bryce Canyon and Zion National Parks. After filming their own content and having BarZ weave it together, GeoQuest launched two tours - each in six languages - in August 2008. During the first few months - going into slow park season - they found they were getting only about 10 daily rentals of the $25 tours, but they are shooting for 150 per day by 2009.
Chris Jones, principal analyst at high-tech market research firm Canalys, praises BarZ's Ranger device as unique and a "neat thing." But he cautions that to reach the next level, BarZ will need to add many more locations and figure out a way for customers to take the tours using other GPS-enabled devices, such as cell phones and PDAs.
Says Jones: "There's a lot of opportunity here, but it's only as good as the content they deliver." To top of page
Have you filed for first-time unemployment benefits in the past month? Or have you accepted a significant pay cut - 20%, 30% - in order to start working again? If so, e-mail realstories@cnnmoney.com and tell us your story.
Next Little Thing 2009: Entrepreneurs whose cutting-edge ideas will keep us talking for the next 12 months.
CNN MONEY
2009: Year of the thaw
Why the great credit freeze of 2008 won't turn into the Great Depression of 2009.
(Money Magazine) -- Well, we were partly right. At this time last year, we said that the stock market would be increasingly volatile in 2008, that home prices would fall further and that a subprime blowup could propel the economy downward.
But not in our wildest dreams did we foresee anything like the kind of jaw-dropping, stomach-churning ride that lay ahead. The economy in recession (as most experts now believe)? The Dow off 40%? Credit markets frozen worse than Sarah Palin's hometown? Precious few saw all that coming.
Peering into the future is tricky in the best of times. But even though predictions always turn out to be flawed - it's impossible for even the smartest experts to nail this stuff perfectly - you cannot build a future without first guessing what challenges you'll face on the way there.
Source
Have degree - and pink slip
The number of college grads seeking work is at an all time high, which means more bad news for the broader economy.
EMAIL | PRINT | SHARE | RSS
* Yahoo! Buzz
* DIGG
* FACEBOOK
* DEL.ICIO.US
* REDDIT
* STUMBLE UPON
* MYSPACE
* MIXX IT
Subscribe to Economy
google my aol my msn my yahoo! netvibes
feed://rss.cnn.com/rss/money_news_economy.rss
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
By Jessica Dickler, CNNMoney.com staff writer
Last Updated: December 5, 2008: 2:57 PM ET
1.9 million jobs lost in 2008video
1.9 million jobs lost in 2008
More Videos
Quick Vote
Do you know anyone who has lost a job recently?
*
I have
*
A friend or family member
*
No
or View results
NEW YORK (CNNMoney.com) -- There are currently a record number of unemployed college graduates seeking work. So many, in fact, that they outnumber high school dropouts on the job hunt.
In November the number of people with a higher degree who were out of work rose to 1.413 million from 1.411 million in the previous month, according to the Bureau of Labor Statistics. Comparatively, there were 1.282 million unemployed high school dropouts, up slightly from 1.273 million in October.
"College graduates are not going to get away unscathed," said Dean Baker, director of the Center for Economic and Policy Research in Washington, DC, "everyone is being hit by this."
While the manufacturing and construction industries were hardest hit by layoffs last month - 85,000 and 82,000 jobs lost, respectively, according to the Labor Department - it is the professional and business services category that many economists view as a barometer for overall economic activity.
In its November jobs report, the Labor Department said that firms in the business and professional services category cut 136,000 jobs, the largest one-month drop on record. Additionally, financial services jobs fell by 32,000, another record decline.
Those job cuts are hitting college educated workers the hardest, according to Dr. Reena Aggarwal, a professor of finance at Georgetown University's McDonough School of Business.
"A lot of the job losses are the more higher paying jobs and it's just going to mean far fewer dollars flowing into the economy," she said.
A glass half full
But even though business and professional services saw significant layoffs, the unemployment rate among those with a higher degree held steady at 3.1% in November. The overall unemployment rate rose to 6.7% from 6.5% in October.
"You're still less than half as likely to be unemployed if you have a college degree," Baker said.
"The numbers say, despite these conditions, we still have a strong job market within the professional skills category, nearly 97% of college-educated workers are employed," said Janette Marx, senior vice president of Ajilon Global, professional staffing firm.
Going forward, "you may see an increase but it will probably remain at half or less than half of the overall unemployment rate," Marx said.
Experts agree that overall unemployment is likely to rise substantially in the months ahead. The Labor Department announced that the economy shed 533,000 jobs in November, the largest monthly job loss total since December 1974. The year's total job losses is now 1.9 million, not including the slew of large-scale job-cut announcements on Thursday.
But Baker said college graduates shouldn't panic, yet. "In a way, there's been a little bit of a lead time," she explained. "Students understand this is not going to be a market where they will have three or four offers." To top of page
Source
How to Build Your Financial Safety Net
In betrayal of 99% of the American taxpayers who opposed the pork-packed financial bailout bill of 2008, Congress passed the bill on Friday, October 3. President Bush signed it into law within minutes, and King Henry (Henry Paulson, Treasury Secretary) went right to work using taxpayer dollars to start buying up bad banking debt that nobody else would touch.
Three days later, in response to the bailout plan, the stock market plummeted and financial institutions around the world were rocked in a dangerous credit crisis that brought the world "to the edge of the abyss," as one prominent mainstream news journalist stated.
Although I strongly disagree with the use of taxpayer dollars to bail out rich, elite bankers who lost money making risky bets on outlandish financial instruments, I'll leave that for another editorial. Today, I'm here to offer you strategies on how to make the most of the post-financial bailout economy and build your own financial safety net, even if things get worse in the global economy.
Here, I'll share down-to-earth strategies on what you can do -- starting right now -- to protect your savings and actually grow your income, despite tough economic times.
To really understand why these strategies are so powerful in building your financial safety net, you'll first need to acknowledge the two greatest risks now facing the U.S. financial system in the post-bailout era:
Risk #1: Hyperinflation
Every time the Fed creates more money to bail out another financial institution, it expands the money supply, diluting the value of any dollars you already hold. As more financial institutions fail (or corporations and even U.S. states), the Fed will likely be forced to create hundreds of billions of dollars in more money, sapping the spending power of your dollars and leading us into accelerated inflation. (I'll show you how to insulate yourself from that risk in this special report.)
Risk #2: Sell off of U.S. debt
The other big risk is that international investors (central banks of other nations, primarily), will now see the U.S. as a hopeless debtor nation, and they will either stop buying U.S. debt, or they might even start selling off the U.S. debt they already hold.
On September 30, 2008, the U.S. debt reached an astonishing $10 trillion. It's going up by $500 billion a year, and that's even before considering the cost of the financial bailout. As of April, 2008, Japan held nearly $600 billion of U.S. debt, China held over $500 billion, and the U.K. held $250 billion. See the statistics for yourself at http://en.wikipedia.org/wiki/United_Sta...
The risk is that Japan and China, in particular, could start selling off U.S. debt. If that occurred, it would make it more difficult for the U.S. to sell new debt. Specifically, the U.S. would either have to 1) Offer to pay higher interest rates to new debt buyers, or 2) Print more of its own money to cover expenditures or buy back its own debt, causing more inflation (see Risk #1, above).
Those are the two risks that could seriously threaten you if you don't build a financial safety net first. They both really boil down to losing the value of the money you're earning or saving. For example, your paycheck might stay the same each week, but you'll find that you can buy fewer and fewer things with that paycheck (because the money is worth less).
So how do you build your financial safety net before global financial chaos threatens your economic livelihood? That's what this special report reveals.
This report is easily worth $39, $79 or a lot more. I could have offered it for sale on the website and probably earned at least five figures selling it. But I've decided to make it available at no charge because of the extreme risk of financial harm now facing NaturalNews readers due to the crooks in Washington, at the Federal Reserve, and the legislators on Congress who have betrayed the American people. I do not want to see any harm come to NaturalNews readers, and I want to get this into the hands of as many people as possible.
Click here to read more
Layoffs hit every corner
Eight companies spanning several different industries announce nearly 15,000 layoffs in first week of November.
By Aaron Smith, CNNMoney.com staff writer
Last Updated: November 8, 2008: 11:40 AM ET
AMERICA'S MONEY CRISIS
* Reid, Pelosi: More aid to carmakers
* Wall Street's eyes on the consumer
* 2 more banks go belly-up
* Year of the bailout - and now GM?
* Layoffs hit every corner
jobs_tally_2.gif
Quick Vote
How secure is your job?
*
Very safe
*
Safe, for the time being
*
Not safe at all
or View results
Have job losses hit bottom?video
Have job losses hit bottom?
More Videos
QUIZ
Are you a good networker?
1. If you only know someone through a social networking site like LinkedIn or Facebook, it's inappropriate to ask him or her for an in-person meeting.
True
False
NEW YORK (CNNMoney.com) -- The first week of November has been brutal for the job market, with nearly 15,000 announced job cuts from a slew of companies across multiple industries.
Eight companies announced job cuts this week as a means of cost-cutting during desperate times, representing industries as widespread as retail, finance, leisure, pharmaceutical and toy and automobile manufacturing.
On Friday, the Labor Department reported that the U.S. economy sloughed nearly 1.2 million jobs through October. Just in the month of October, the economy lost 240,000 jobs, raising the unemployment rate to 6.5%.
"We're losing jobs just about everywhere," said Robert Brusca, chief economist and Fact and Opinion Economics. "People are slowing their spending on everything. Now, even wealthier people are reluctant to spend money."
Circuit City (CC, Fortune 500), an electronics retailer based in Richmond, Va., kicked off the week by announcing on Monday that it was reducing its domestic workforce by 17%. The company would not comment on the number of employees that would be affected, but according to a recent 10K filing, Circuit City employs about 43,000 people in the U.S. That would mean roughly 7,300 positions are being lost, the biggest of the cuts in November so far.
On Tuesday, the Connecticut-based insurer Hartford Financial (HIG, Fortune 500) reported 500 cuts.
The following day, the British drug company GlaxoSmithKline (GSK) said it would cut 1,000 sales positions.
Thursday was particularly gloomy, with four companies announcing cuts: 1,300 from Fidelity Investments of Boston, 1,000 from toy maker Mattel (MAT, Fortune 500), based in El Segundo, Calif., 375 from Borgata Hotel Casino of Atlantic City, N.J., and 850 from La-Z-Boy (LZB), a furniture producer and retailer based in Monroe, Mich.
Ford Motor (F, Fortune 500) was the most recent to announce job cuts, with 2,600 cuts announced on Friday. The battered auto maker said it was trying to hold on to its dwindling cash reserves as it reported a $3 billion operating loss for the third quarter.
Most of the cuts are slated for the U.S., though Mattel said its job cuts will affect its global workforce.
"You have essentially every sector, every industry, furloughing workers, so it's going to get bad - considerably worse - before it gets better," said Richard Yamarone, director of economic research at Argus Research. "If the automotive sector falls, and it's on the ledge, then you could very easily have double-digit employment."
Lakshman Achuthan, managing director of the Economic Cycle Research Institute, said that Hartford and Fidelity are getting squeezed by the plunging value of the stock markets. But he said the other companies - and even the drugmaker GlaxoSmithKline - are getting stifled by a consumer lock-down on any type of spending that is not totally necessary.
"You don't have to buy a La-Z-Boy today, but you might have to go to the doctor, you have to eat, and you have to pay rent," said Achuthan. "[The companies] are seeing that the consumer has been stunned or is frozen and will not make any purchases that he will not absolutely have to make."
As for Glaxo, Achutan said that many Americans get their health insurance through their jobs, and when they lose their jobs, it affects the drugmakers. He said newly-uninsured people are spending their money on food and housing, instead of drugs.
Lawrence Mishel, president of the Economic Policy Institute, dismissed any notion that the job market would pick up in 2009, given the omnipresent nature of the layoffs, and the fact that they stem from a "credit freeze on top of a recession caused by a housing meltdown."
"The fact is that we're going to have very high unemployment for several years," said Mishel.
Source
What Obama stands for on economy
Here are some of the president-elect's ideas on 5 key economic issues.
By Jeanne Sahadi, CNNMoney.com senior writer
Last Updated: November 5, 2008: 2:49 AM ET
NEW YORK (CNNMoney.com) -- After months of debating the issues, Americans went to the polls on Tuesday and elected Democrat Barack Obama to serve as the nation's 44th president.
The change in administrations, of course, comes at a critical moment for the U.S. economy -- and President-elect Obama will play a central role guiding it.
What follows is a sketch of Obama's most important proposals for dealing with the financial crisis, housing, taxes, health care and energy.
Financial crisis
Obama's response to the financial and economic crisis will be guided largely by the parameters set in the massive $700 billion financial rescue package passed by lawmakers and signed into law by President Bush in October.
He voted for that bill, but also then came out with a flurry of his own proposals to ease the growing strains felt on Main Street as a result of the crisis. Obama's are aimed at helping cushion Americans in the short-term against the stunning drop in stocks, the anticipated rise in layoffs and troubles making ends meet.
Among the temporary measures he proposed: exempting seniors from having to make withdrawals from retirement savings; exempting jobless workers from having to pay income taxes on unemployment benefits and calling for an extension of those benefits; and offering a tax credit to businesses for every new hire they make in the United States.
To spur more lending to small businesses, Obama proposed temporarily reducing or suspending the fees the Small Business Administration charges banks to participate in its flagship small business loan-guarantee program.
Housing and mortgages
As the housing market unraveled over the course of the campaign, Obama weighed in with a slew of proposals.
Obama called for the Treasury to require financial institutions receiving help from the financial rescue package passed in October to put a 90-day moratorium on foreclosures for homeowners "acting in good faith."
He has called for a change to the bankruptcy law that would let bankruptcy judges reduce mortgage principals for bankruptcy filers. Proponents say such a change would encourage lenders to modify more loans for troubled borrowers rather than risk the loan being rewritten by a judge. Opponents say the change could cause a rise in interest rates because mortgage investors would price in the risk of new loan terms.
Obama has also called for the creation of a fund to help state and local governments ward off foreclosures. And he wants to boost penalties and law enforcement to fight mortgage fraud.
He supported the government's takeover of mortgage giants Fannie Mae and Freddie Mac in September as a stop-gap measure. But he has called for reform of the agencies so that ultimately their public functions will be completely disentangled from their private ones.
More broadly, Obama has proposed giving a tax credit to homeowners who don't itemize deductions and don't get a tax break for the mortgage interest they pay.
Taxes
Obama has proposed a host of new tax cuts for lower- and middle-income Americans and has said he wants to preserve for them the ones put in place by President Bush in 2001 and 2003.
To help pay for many of the new programs he's proposing as well as the cost of his new proposed tax breaks, Obama has said he would repeal some of the Bush tax cuts for high-income taxpayers - specifically by increasing the top two income tax rates and the capital gains rate to their pre-2001 levels.
To help shore up funding for Social Security, Obama would raise the amount of money high-income tax filers pay into the system, but such a move would not go into effect for 10 years.
Obama wants to lessen the bite of the estate tax. And he supports protecting the middle class from the Alternative Minimum Tax.
He has said he would consider lowering the corporate tax rate if enough corporate tax loopholes are closed.
According to a nonpartisan study, only upper-income taxpayers would see a tax increase on average under Obama's tax proposals.
Health care
The Obama campaign describes his health care reform plan as one that builds on the existing employer-based system.
The plan does not call for changes for those Americans who already get their health insurance through their employer.
To help the uninsured or those who buy costly policies on their own, Obama would require large employers to either offer a plan or pay into a new national health care plans network from which their workers could get an affordable policy.
Obama said he also wants to offer an income-based federal subsidy for people who don't get insurance from an employer or who don't qualify for government plans like Medicaid.
His plan would offer small businesses a tax credit if they provide insurance for their workers, but it doesn't specify the parameters for what defines a small business.
The Obama plan would require that all children have health coverage, but it doesn't specify what the penalty would be for parents if they didn't buy coverage for their kids.
Energy
Obama has said he wants to make long-term investments in clean energy and energy efficiency.
He proposes investing $150 billion in renewable energy over the next 10 years, and requiring that a tenth of the nation's energy come from renewable source by 2013. By 2020, he wants to reduce the nation's demand for electricity by 15%.
To reduce greenhouse gases, Obama favors a cap-and-trade auction to limit companies' carbon emissions. He wants to use the money raised from companies buying carbon permits to help fund research and development in green energy and speed the commercialization of solar, wind and other green technologies.
Obama's stated goal: by 2050, carbon emissions should be down to a level that is 80% below where they were in 1990.
Source:
CNN Money
Global markets advance
Stocks around the world rise modestly, with all eyes on U.S. presidential election.
By CNNMoney.com staff
November 3, 2008: 4:22 AM ET
LONDON (CNNMoney.com) -- Stocks around the world advanced Monday, a day before the U.S. presidential election.
U.S. futures, which give an indication of how markets may open when trading begins in New York, were higher.
Most European markets opened higher. The CAC-40 in France and Germany's DAX rose modestly in the early going. Britain's FTSE 100 was up slightly.
Major markets in Asia advanced, with South Korea's KOSPI index closing up 1.4% after the government announced a stimulus plan.
The Hang Seng index in Hong Kong was up 2.7% in afternoon trading. Markets in Tokyo were closed.
The gains overseas followed a strong finish on Wall Street on Friday. The Dow Jones industrial average, Standard & Poor's 500 and Nasdaq Composite all rose more than 1%.
The rally capped off a strong week at the end of one of the worst months in Wall Street history.
In October, the Dow lost nearly 1,526 points, its worst month ever, according to Stock Trader's Almanac info going back to 1901. On a percentage basis, the decline of 14.1% doesn't rank in the top 10.
The S&P 500 lost nearly 198 points, or 16.9% in the month, and is currently on track to post its worst month ever on a point basis and eighth worst ever on a percentage basis, going back to 1930.
The Nasdaq dropped 361 points, or 17.4% in October, tracking its seventh-worst month ever on a point basis and its fifth-worst month on a percentage basis, going back to its inception in 1971.
From: CNN
CNN Wires contributed to this report. To top of page
How the economy stole the election
Two years ago it seemed that the election would hinge on Iraq, now it's the economy that's on voter's minds. Here's how that happened.
Summer/fall 2006 - War at the forefront
Summer/fall 2006 - War at the forefront
U.S. soldiers patrol a street in Baghdad's Ghazaliya neighborhood, Aug. 15, 2006.
Iraq is voters' main concern and the economy seems strong, but the seeds of the crisis are being sown.
With the mid-term elections in full swing, the war is being hotly debated. October is the third-deadliest month for U.S. troops in Iraq. Defense Secretary Donald Rumsfeld resigns after Democrats make major gains at the polls in November.
On the home front, the economy seems strong
July - Home prices hit an all-time high.
Market talk is that Fed will raise interest rates.
But trouble lurks
New home construction continues at a brisk pace during the summer - chugging along at more than twice the current rate - after hitting its peak at the start of the year.
August - Home prices nationwide post first decline in 10 years.
Having briefly spiked over $3 a gallon following Hurricane Katrina a year earlier, gas prices now average $3 a gallon - and stay there for multiple weeks.
Source
Posts
