Markets seem skittish and almost somewhat schizophrenic about the Fed’s pessimism versus growth in industry giants indicating the economy may move slowly forward after all.

Sputtering economy spreading new fears, Press Democrat.com, July 23, 2010, by Don Lee of The Chicago Tribune, excerpt quoted verbatim:

U.S. unemployment rate expected to remain high

WASHINGTON — Even with the extension of jobless benefits for millions of workers, a growing body of evidence suggests the U.S. is heading toward an economic netherworld, avoiding a slide back into recession but growing so slowly that unemployment will remain high, home prices low and incomes essentially stagnant.

Many Americans may continue to feel much as they did during the worst recession in half a century: Filled with insecurity, financial pressures and fading hopes for a quick return to better times.

“Extended unemployment benefits is helpful but hardly the booster rocket that’s needed to get out of the gravitational pull of this terrible economy,” said Robert Reich, a public policy professor at UC Berkeley.

The former secretary of labor during the Clinton administration painted a grim picture of what the continuing economic weakness will mean for large numbers of people, including those who have lost jobs.

“If they’re over age 55 (and unemployed), it’s unlikely they’ll ever be back in the workforce. Most families that depended on two wage earners will have to substantially tighten their belts for a long time. More young people will be living with their parents, and more families will be doubling up.”

Lonnie Kane, who makes fashionable women’s sportswear, has similar concerns.

“I’m more worried about not getting better than about having a double dip,” said Kane, president of Karen Kane Inc. in Los Angeles. “I see it as just staying flat — and that’s not healthy.”

Although not all economists and business leaders see a gray future, and long-term forecasts often have been wrong, concerns over signs of renewed weakness have intensified in the past few weeks.

Policymakers at the Federal Reserve recently lowered their economic outlook, as have many private economists. Fed Chairman Ben Bernanke chilled markets Wednesday by saying the economic outlook is “unusually uncertain” and predicting unemployment would remain stubbornly high for several years.

The attitude reflects a broad range of indicators that have grown increasingly anemic or negative in recent weeks: Consumer spending is softening. The trade deficit is widening. Housing sales are faltering. And manufacturing is losing steam.

The slowdown prompted Kane last month to cut by half his budget for capital spending this year. He also put off hiring more product-development workers. As for his staff of 165, Kane had intended to give them raises later this year after a two-year wage freeze.

“But now we’re having second thoughts,” said Kane, whose business is in its 31st year. “I just don’t have the confidence to spend the cash.”

Some analysts said the recent economic retreat could be a pause in the economy as it shifts from one supported by government to one buoyed by the private sector. Business spending for equipment and software remains solid. And the $34 billion bill to extend jobless benefits, signed Thursday by President Barack Obama, also would have a positive effect on the broader economy.

Even so, economic growth of less than 3 percent this year is widely forecast because of recent setbacks. And that won’t create enough jobs to make a meaningful dent in the nation’s 9.5 percent unemployment rate, given increases in productivity and the population.

“What it means is that millions of people unemployed or underemployed (and forced to work part time) or too discouraged to look for work won’t find jobs,” said Martin Regalia, chief economist at the U.S. Chamber of Commerce.

He said many of the remaining employed will face smaller wage increases and fewer opportunities to move into new jobs and boost their incomes.

Further economic stimulus by the federal government is one possible way out of the malaise, possibly including zero-interest loans to businesses and more infrastructure projects. But with deficit hawks in Congress and across the nation digging in their heels, the chances of passing major new stimulus programs anytime soon look slim.

Obama pushed through a $787 billion economic stimulus early last year, which many agree helped rescue the economy from recession. But that’s done little for Obama’s standing with the public, and he and his advisers don’t appear interested in fighting for another large-scale stimulus.

“I think they’ve decided it’s less risky to ride it out and presumably things will be better in 2012″ when Obama is up for re-election, said Dean Baker, co-director of the Center for Economic and Policy Research in Washington.

It’s not that corporate America doesn’t have the wherewithal either.

Although many small businesses lack funds and credit to invest and expand, larger companies are sitting on mountains of cash earned from sharply rebounding profits in recent quarters. Much of that cash came from layoffs and other cost-cutting moves.

The Federal Reserve tallied companies’ so-called liquid assets at more than $1.8 trillion at the end of March, up nearly $400 billion from a year earlier. That’s money that could be used for more plants, equipment and staff.

But without American consumers spending more freely, many companies are holding back. While some corporations, such as Boeing Co. and Intel Corp., are building new plants or upgrading facilities in the U.S., others are buying rival businesses, which often leads to consolidation and job cuts. Still others are investing more abroad to tap markets in faster-growing economies in Asia and South America.

“It doesn’t seem like there’s going to be any reason to spend (the cash hoard) in the next 12 to 18 months,” said Ken Goldstein, an economist at the Conference Board.

The New York research group is projecting an anemic 1.5 percent to 2 percent growth rate in the second half of this year, a pace that would probably push the unemployment figure even higher.

Coming out of the last two deep recessions, in 1975 and 1982, the American economy gathered powerful steam at this stage of the recovery, and in both of those cases, all of the jobs lost during the downturns were recouped within a year.

By most accounts, the current recovery is already a year old. But apart from a brief burst of growth late last year, the recovery has been so tepid that the nation has recovered just 10 percent of the 8.4 million jobs erased in 2008 and 2009.

In one widely followed gauge, the University of Michigan said last week its index of consumer expectations fell last month to the lowest level since March 2009, when the nation still was mired in the recession.

“People focus on the double dip, but it’s sort of beside the point,” Baker said. “The main issue is we’re looking at a very weak growth. . . . It’s going to feel pretty bad even if it stays positive.”

See Foreclosure activity up across most US metro areas, AP on Yahoo News, July 29, 2010, by Alex Veiga.

See Fed eyes steps to bolster sputtering economy, © Evansville Courier and Press, July 14, 2010, by The Associated Press, excerpt quoted verbatim:

150 Hot Rock and Pop Tracks
for Your Listening Pleasure!

#1 Rated by Google

WASHINGTON (AP) — Federal Reserve officials cut their forecasts for growth this year and signaled they stood ready to take new steps to keep the recovery alive if the economy worsens.

A new document, released Wednesday, revealed a more cautious mood among the Fed policymakers in light of Europe’s debt crisis, a volatile Wall Street, a stalled housing market and high unemployment.

With risks growing, Fed officials at their June 22-23 meeting saw the need to explore new options for bolstering the economy. That’s a turnaround from earlier this year when they were moving to wind down crisis-era supports.

No new specific steps were disclosed or agreed upon at that time.

However, if the recovery were to deteriorate, Fed policymakers have options. They could revive programs to buy mortgage securities or government debt. They could lower the rates banks pay for emergency Fed loans. The Fed also could create a new program to spark more lending to businesses and consumers in a bid to lure them to ratchet up spending and grow the economy.

The economic and political hurdles for taking such action would be high, economists said.

“If the economy takes a nasty spill, then yes, it would take new policy action. But if we continue to see kind of mediocre, ho-hum growth, then that won’t be enough for them to move,” said Michael Feroli, an economist at JPMorgan Chase.

See Hope For Economy In Strong Manufacturing Reports, WSMV Channel 4.com, July 22, 2010, by ALAN ZIBEL, AP Business Writers, excerpt quoted verbatim:

Hope For Economy In Strong Manufacturing Reports

Leading People aren’t spending money like they used to. Unemployment is still flirting with double digits. And the housing market is still shaky. So the future looks bleak for the economy, right?

Not necessarily.

A handful of surprisingly good earnings reports Thursday suggested that some of the major U.S. companies that make things and move them around – including Caterpillar, 3M and UPS – could lead the way to an economic recovery.

It would be an unusual path back to better times. Consumer spending and housing usually lead the way.

But all three of those economic bellwether companies, plus AT&T and Union Pacific railroad, indicated business was picking up. And most said they expected it to get even stronger later this year.

Peter Buchanan, a senior economist at CIBC World Markets, said executives have taken pains lately not to raise hopes too high for big profits in future quarters. That spread fear among investors that the economy might stall.

But he says earnings results from UPS and Union Pacific should help ease such worries.

“If you’re moving stuff, it’s a broad indicator covering spending by both businesses and consumers,” Buchanan says. “Companies are erring on the side of caution in their forecasts … but on the ground the real results don’t look so bad.”

See Markets fall down after Fed economic report, AP on Kansas City.com, July 28, 2010, by Associated Press.

See Selfish and Stupid, Dubya’s Nightmare That Has Been Allowed to Continue, Daily Kos, July 28, 2010, by Badabing, excerpt quoted verbatim:

Nothing ever surprises me anymore….I am beyond the pale as they say, when I find out that Goldman Sachs, has gotten away with a bullsh*t $550 million dollar slap on the wrist, when I find out that now, according the MSM, that most ‘Americans’ think that the ‘Wars’ are ‘boring’ (so that they hope we do not pay attention to the new ‘Pentagon Papers’ of our century by WikiLeaks), or more recently, what the MSM has said: The BP Oil is now all ‘underwater’ where it does not ‘show’…you know..it must be………….wow……just ‘gone’ while BP just took $10 Billion of a subsidy paid by our own f**king government to pay off their $20 Billion so called ‘escrow account’……

Both parties, hope that if we can just ‘blame the Tea Baggers and the huge Right Swing’ in our own party’ (aka as the Blue Dogs) as being just another ‘strange beast’ that has shown up out of no where….we will all believe that same sh*t.

So I find it amazing, and hysterical that the Republicans are now calling the new Bio- Dubya’s New Book being called, ‘Selfish and Stupid’…….Let me tell you what ‘Selfish and Stupid’ really is: …

Read BP taking $10 billion tax credit from Gulf spill, a Discussion board over at Democratic Underground.

We’re Counting on YOU! Please share Evans Liberal Politics with friends! While we enjoy a certain level of popularity on the web, in order for us to keep bringing you the latest in liberal news and politics, we really need you to SHARE Evans Liberal Politics with your friends and contacts. Please help us out — we bring you the latest in liberal and progressive news and politics just to share the truth and promote liberalism. Can you help us today?

*****

To make a Word or .pdf document of an article, or share or email it, simply load the individual article by clicking the dark blue title at the very top, or use the icons beneath the article.

We’re Counting on You!
Tell Your Friends About Evans Liberal Politics!

Listen to 150 Rock and Pop Hits!

#1 Rated by Google