Weaker-than-expected job growth is fueling speculation that the Federal Open Market Committee (FOMC) will unveil new stimulus measures to prop up the economic recovery when it meets today (Tuesday) for its regular rate-setting session.
Friday's July unemployment report was by most measures a disaster, providing the latest indication the economic recovery is running out of steam with 14.6 million Americans still searching for work.
The economy shed 131,000 jobs, as 143,000 temporary census workers fell off federal payrolls. Private-sector employment grew by 71,000 in July after a downwardly revised June increase of 31,000 workers.
The private sector so far this year has added 90,000 jobs a month on average, well below the 125,000 needed to keep up with population growth - let alone recover the eight million jobs lost during the recession.
"It's a double whammy because it causes people to take a psychological step back," Tig Gilliam, chief executive of staffing firm Adecco Group North America, told The Wall Street Journal. "Now, it looks like not only has the economy slowed, but maybe it wasn't as good when it was originally reported as we thought."
Second Stimulus
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Will the Fed Opt For More Stimulus as the Economic Recovery Founders?
With Mid-Term Elections Looming, Will Democrats Fire Back with a Second Stimulus
Data last week showed a job market that's careening down a steep street with no breaks. Yet investors were able to shrug off employment concerns, as the stock market actually ended the week up 1.5% due to that rockin' Monday on the first day of the month.
That's because there is growing speculation that the Democrats are plotting a surprise stimulus in the run up to November's mid-term elections.
Let me explain...
That's because there is growing speculation that the Democrats are plotting a surprise stimulus in the run up to November's mid-term elections.
Let me explain...
United States Fears Economic Stimulus Measures Will Choke on Europe's Drastic Budget Slashing
While U.S. President Barack Obama will be gunning for more economic stimulus measures at this weekend's Group of 20 (G20) meeting in Canada, European lawmakers continue drastic efforts to rein in spending.
The coordination of global efforts to promote economic recovery will be the main issue at the weekend's meeting, which was set to spotlight the value of China's currency before Beijing announced Saturday that it would allow the yuan to appreciate. The United States and Europe's differing views on the most effective strategies to maintain global economic growth and slash bloated government budgets are increasing tensions between leaders.
"There is a need to move toward rebalancing," Stewart M. Patrick, a senior fellow at the Council on Foreign Relations in Washington, told CNN. "But every country has different domestic political demands, and that is what drives decision making."
President Obama is worried that drastic austerity measures in Europe will choke global growth and collapse a fragile recovery.
The coordination of global efforts to promote economic recovery will be the main issue at the weekend's meeting, which was set to spotlight the value of China's currency before Beijing announced Saturday that it would allow the yuan to appreciate. The United States and Europe's differing views on the most effective strategies to maintain global economic growth and slash bloated government budgets are increasing tensions between leaders.
"There is a need to move toward rebalancing," Stewart M. Patrick, a senior fellow at the Council on Foreign Relations in Washington, told CNN. "But every country has different domestic political demands, and that is what drives decision making."
President Obama is worried that drastic austerity measures in Europe will choke global growth and collapse a fragile recovery.
U.S. Consumers Feeling More Confident, Increase Retail Spending
The Reuters/University of Michigan preliminary index of consumer confidence increased in November for the first time in three months as the pace of job cuts slowed and shoppers increased retail sales.
The index of consumer sentiment unexpectedly rose to 73.4, much higher than economists had forecast, from 67.4 in November, according to the report released Friday. The December figure exceeds the average of 65 for the first nine months of the year.
Separately, U.S. retail sales rose 1.3% in November, the Commerce Department said Friday. The figure was almost twice as much as the 0.7% increase Wall Street had expected.
Improved sentiment may have helped spending as the numbers suggest consumers were buying aggressively during the crucial holiday shopping season, helping to sustain a fragile economic recovery entering 2010.
The index of consumer sentiment unexpectedly rose to 73.4, much higher than economists had forecast, from 67.4 in November, according to the report released Friday. The December figure exceeds the average of 65 for the first nine months of the year.
Separately, U.S. retail sales rose 1.3% in November, the Commerce Department said Friday. The figure was almost twice as much as the 0.7% increase Wall Street had expected.
Improved sentiment may have helped spending as the numbers suggest consumers were buying aggressively during the crucial holiday shopping season, helping to sustain a fragile economic recovery entering 2010.
Lawmakers Looking to Use Excess TARP Funds for a Second Stimulus
With the unemployment rate still lingering above 10%, House Democrats are suggesting some of the excess funds from the government's Troubled Asset Relief Program (TARP) be used to promote job creation in what would essentially be a second stimulus.
The Obama administration said in August that TARP – which Congress funded with $700 billion of taxpayer money – would only cost the $341 billion once banks repay government loans, injections and other investments. Now, the U.S. Treasury can take another $200 billion off of that, Reuters reported, citing an anonymous Treasury official.
"We're going to explain that we're going to have substantial savings, that we're going to have very substantial resources we can make available to support not just the immediate priorities the country faces in spurring investment in job creation, but also to meet our long term fiscal challenges," Treasury Secretary Timothy Geithner said in an interview with Bloomberg.
The Obama administration said in August that TARP – which Congress funded with $700 billion of taxpayer money – would only cost the $341 billion once banks repay government loans, injections and other investments. Now, the U.S. Treasury can take another $200 billion off of that, Reuters reported, citing an anonymous Treasury official.
"We're going to explain that we're going to have substantial savings, that we're going to have very substantial resources we can make available to support not just the immediate priorities the country faces in spurring investment in job creation, but also to meet our long term fiscal challenges," Treasury Secretary Timothy Geithner said in an interview with Bloomberg.
Will High Unemployment Strangle the Recovery?
The worst recession since the Great Depression has already eliminated 7.2 million jobs, and analysts figure 750,000 more jobs could disappear over the next six months. That means the administration of U.S. President Barack Obama may be forced to employ a second stimulus if it wants to preserve the fledgling recovery that has carried the […]