May 5, 2010
Working with the government is a vital skill in doing business in China but not easy to acquire.Read More
Their expansions often lead to other investments, like in legal counsel--but expectations must be adjusted.Read More
Australia benefits from being so closeRead More
to the world's economic heart.
Shin Chang-Jae took over his father's business. Now Kyobo Life is worth billions and Shin is one of South Korea's wealthiest people.Read More
Former U.S. Labor Secretary Robert Reich thinks the feds need to lay off Steve Jobs, put more heat on JPMorgan.Read More
|Click for updates: forbes.com/asia|
|Evening Market Wrap Wed May 5 17:01 2010|| |
May 5, 2010 Stocks Extend Losses As Greece Continues To Weigh On Sentiment - U.S. Commentary Stocks fell by notable margins for a second straight session on Wednesday, as concerns regarding the civil unrest and financial turmoil in Greece prompted traders to pull capital out of the markets. The major averages all closed firmly in the red, although the day's upbeat U.S. economic data helped to limit the retreat. Full Article
May 5, 2010 MBA: End Of Home-Buyer Tax Credit Increases Purchase Demand Overall demand for U.S. mortgages was driven up last week, led by a spike in purchase applications to their highest levels in seven months. The Mortgage Bankers Association reported that its purchase index increased 13 percent last week as the end of the Obama Administration's home-buyer tax credit program spurred demand. Full Article
May 5, 2010 Private Employment Increases For Third Straight Month In April Private sector employment saw a modest increase in the month of April, according to a report released by payroll processor Automatic Data Processing, Inc. (ADP) on Wednesday, with upward revisions also resulting in job growth in each of the two previous months. Full Article
May 5, 2010 ISM Service Index Unexpectedly Comes In Unchanged In AprilWhile a report released by the Institute for Supply Management on Wednesday showed that activity in the service sector expanded for the fourth consecutive month in April, the index of activity in the sector unexpectedly came in unchanged compared to the previous month. The ISM said its non-manufacturing index came in at 55.4 in April, unchanged from March. Full Article
May 5, 2010 Allegheny Energy Q1 Profit Declines, Misses Street ViewElectric utility Allegheny Energy Inc. (AYE) Wednesday reported a decrease in first-quarter profit, despite revenue growth, hurt by higher operating costs and interest expenses. On an adjusted basis, earnings per share missed analysts' forecast. The company reported first-quarter GAAP net income attributable to Allegheny Energy, Inc. of $88.2 million or $0.52 per share. Full Article
May 5, 2010 Williams Companies Q1 Loss Widens On ChargesIntegrated natural gas company Williams Companies, Inc. (WMB) reported Wednesday a wider loss for the first quarter, reflecting charges related to restructuring of Williams Partners L.P. (WPZ). Recurring adjusted earnings per share grew 64% helped by a significant improvement in Williams Partners and Exploration & Production segment results. Full Article
May 5, 2010 CenturyLink Q1 Profit Surges On Embarq Buy; Lifts FY10 EPS ViewCommunications company CenturyLink Inc. (CTL) Wednesday reported a surge in profit in the first quarter, helped primarily by the acquisition of Embarq Corp. last year. Additionally, the company guided second-quarter earnings within Street estimates and lifted its full-year earnings forecast. Full Article
May 5, 2010 Public Service Enterprise Q1 Profit Rises; Backs FY10 OutlookElectric and natural gas utility Public Service Enterprise Group, Inc. (PEG) on Wednesday reported an 11% increase in profit for the first quarter, reflecting mark-to-market gains that helped offset a 6% decline in revenues. Excluding items, operating earnings per share for the quarter declined and missed analysts' consensus estimate. Full Article
May 5, 2010 IntercontinentalExchange Q1 Profit Rises, Tops EstimateRegulated global exchanges and clearing houses operator IntercontinentalExchange, Inc. (ICE) on Wednesday reported a 40% growth in first-quarter profit, which surpassed Street view, helped primarily by higher revenues and much lower acquisition-related transaction costs. The group said it expects headcount to increase between 5% and 7% by the end of the year. Full Article
May 5, 2010 CenterPoint Energy Q1 Profit Up, In Line With ViewEnergy company CenterPoint Energy, Inc. (CNP) reported Wednesday a higher profit in the first quarter, driven by strong revenue growth mainly reflecting improved results from electric and natural gas utilities. Earnings per share were in line with market projections, while top line beat view. The Houston, Texas-based company also reaffirmed its fiscal 2010 earnings forecast. Full Article
May 5, 2010 Qwest Communications Q1 Profit Tumbles On ChargesGlobal telecommunications services provider Qwest Communications International Inc. (Q) Wednesday reported a sharp decline in its profit for the first quarter, hurt by health care charges and lower revenues. The company backed its revenue and adjusted EBITDA outlook for fiscal 2010. The company's first-quarter net income was $38 million or $0.02 per share. Full Article
May 5, 2010 Enbridge Q1 Profit DeclinesEnergy transportation and distribution firm Enbridge Inc. (ENB, ENB.TO) reported Wednesday a decline in first-quarter profit, reflecting a one-time asset disposition in 2009. Meanwhile, the company noted that quarterly results continued to benefit from the construction of Enbridge's two largest pipeline projects, Alberta Clipper and Southern Lights. Full Article
May 5, 2010 Agrium Q1 Loss NarrowsAgricultural nutrients maker Agrium Inc. (AGU, AGU.TO) Wednesday reported a net loss for the first quarter reflecting losses on gas and other hedge positions. The loss, however, narrowed year-over-year helped by a rebound in Wholesale business. Adjusted earnings surpassed Wall Street view. Further, the company issued an earnings forecast for the second quarter, which is within analysts' wide estimate range. Full Article
May 5, 2010 Progress Energy Q1 Profit Up 4%; Reaffirms FY10 OutlookElectric utility Progress Energy Inc. (PGN) on Wednesday reported a 4% increase in profit for the first quarter, helped by higher demand due to unusually cold weather. Ongoing earnings per share and revenue for the quarter beat analysts' consensus estimate. Full Article
May 5, 2010 XTO Energy Q1 Profit Falls, Yet Beats ViewOil and gas company XTO Energy Inc. (XTO) reported Wednesday a decline in first-quarter profit, reflecting higher operating expenses, as well as lower revenues. Quarterly adjusted earnings per share, however, beat market projections. In the quarter, production of gas and natural gas liquids increased, while gas and oil prices fell from the prior year. Full Article
May 5, 2010 Devon Energy Swings To Profit In Q1Independent oil and gas company Devon Energy Corp. (DVN) on Wednesday posted a profit for the first quarter, as oil prices nearly doubled, and said its board has authorized a repurchase of up to $3.5 billion of its common stock. The Oklahoma City, Oklahoma-based company's net income was $1.19 billion or $2.66 per share. Full Article
May 5, 2010 Time Warner Q1 Profit Rises, Beats EstimateMedia and entertainment giant Time Warner Inc. (TWX) Wednesday reported a higher earnings for the first quarter, boosted by advertising rebound and box office hit movies like The Blind Side and Sherlock Holmes. On an adjusted basis, earnings surpassed Street view. Full Article
May 5, 2010 Walgreen April Comps Down 0.2%; Total Sales Rise 5.9%Drug store chain operator Walgreen Co. (WAG) Wednesday reported a 0.2% drop in its April comparable stores sales, reflecting the impact of an earlier Easter this year. However, total monthly sales grew 5.9%, helped by the company's Duane Reade acquisition. Full Article
Forex Top Story
May 5, 2010 Dollar Surges As Chaos Grips Greece The dollar index rose to its highest level in more than year on Wednesday, as the buck hammered the euro after demonstrations against a Greek rescue plan turned violent. Workers clashed with police in Athens, enraged by budget cuts required as part of a plan to backstop the nation's massive sovereign debt. Full Article
May 5, 2010 Powerful Rep. David Obey To Retire At End Of Current TermDemocrats - already facing a difficult challenge in maintaining their numbers in Congress - were dealt another blow Wednesday, when Chairman of the powerful House Appropriations Committee David Obey, D-Wis., announced that he would retire at the end of his current term. "In December I will have been in public service for 48 years - over 6 years in the Wisconsin State Legislature and almost 42 years in the U.S. Congress," Obey said. Full Article
May 5, 2010 McConnell Calls On Obama To Abandon Plans To Try 9/11 Terrorists In NYCFollowing an attempted car bombing in Times Square, Senate Minority Leader Mitch McConnell, R-Ken., Wednesday called on the Obama Administration to abandon plans to have New York City host major terrorism trials. McConnell reiterated his previous opposition to bringing terrorists like alleged 9/11 mastermind Khalid Sheikh Mohammed, or KSM, to New York. Full Article
May 5, 2010 Jeb Bush Endorses Rubio In Florida Senate Race Former Florida Governor Jeb Bush endorsed former Florida House Speaker Marco Rubio in his bid for U.S. Senate in Florida on Wednesday. "Washington is broken, and Marco Rubio is the only candidate in this race that I trust to help fix it," Bush said. "He is a bright, passionate and principled leader who approaches public service with a servant's heart and a reformer's detail for policy." Full Article
May 5, 2010 Leahy Amendment Would Repeal Antitrust Exemption For Health InsurersSenator Patrick Leahy, D-Ver., Wednesday filed an amendment to the pending Wall Street reform legislation that would repeal the health insurance industry's exemption from federal antitrust laws. The Health Insurance Industry Antitrust Enforcement Act would overturn the long-held exemption from federal antitrust laws enjoyed by health insurers. Full Article
May 5, 2010 Waxman And Rockefeller Urge FCC To Consider Alternatives In Light Of Court Ruling On Net NeutralityHouse Energy and Commerce Committee Chairman Henry Waxman, D-Calif., and Senate Commerce, Science, and Transportation Committee Chairman John Rockefeller, D-W.V., sent a letter to FCC Chairman Julius Genachowski Wednesday, urging him to consider all viable options in light of the federal appeals court ruling that the FCC lacks the authority to control how broadband Internet providers manage the online traffic over their networks in an effort to enforce 'net neutrality' rules. Full ArticleMay 5, 2010 Indiana And Ohio Primaries Decided; North Carolina To Require Run-OffIndiana, Ohio and North Carolina held primary elections Tuesday, and while races in Indiana and Ohio were settled, the Democratic U.S. Senate primary race in North Carolina will require a run-off election. In Indiana, former Senator Dan Coats won the Republican nomination for his old job. Full Article
»Click Here For More Real-Time Markets Data
»click here to see the latest top stories from CNBC.com
Former Bear Stearns CEO Alan D. Schwartz provides his opening statement to the Financial Crisis Inquiry Commission regarding the failure of his former company.
» Watch Video
ALERT (INDUSTRY: FINANCIAL SERVICES)
Deal reached to drop $50 bln bank fund from reform By Ronald D. Orol MarketWatch
5/5/2010 3:01:00 PM
MarketWatch: Alert( Industy:Financial Services) Latin American Markets: Mexico, Brazil stocks gain as U.S. dollar rises. May 5th, 2010
ALERT (INDUSTRY: FINANCIAL SERVICES)
Latin American Markets: Mexico, Brazil stocks gain as U.S. dollar rises By Wallace Witkowski MarketWatch
5/5/2010 1:45:00 PM
Markets in Mexico and Brazil hold onto gains as both the peso and the real fall against the U.S. dollar.
Latin American Markets: Mexico, Brazil stocks gain as U.S. dollar rises By Wallace Witkowski MarketWatch
5/5/2010 1:45:00 PM
ALERT (INDUSTRY: FINANCIAL SERVICES)
After Hours: JDS, Prudential, THQ in after-hours action By MarketWatch
5/5/2010 1:53:00 PM
Krueger testimony before the joint economic committee
To view or print the PDF content on this page, download the free Adobe® Acrobat® Reader®.
May 5, 2010
Written Statement by
Alan B. Krueger
Assistant Secretary for Economic Policy and Chief Economist
U. S. Department of the Treasury
Joint Economic Committee
May 5, 2010
Chair Maloney, Ranking Member Brady, Vice Chairman Schumer and other members of the Committee, thank you for giving me the opportunity to discuss jobs in the United States. We are meeting at a time when the U.S. labor market is beginning to show signs of what I expect will be sustained improvement after moving through the worst downturn since the 1930s by some measures, and since the early 1980s by other measures. The current unemployment rate is 9.7 percent. That is down from a recent high of 10.1 percent last October. This is an improvement, but the rate is still unacceptably high. The economy gained an average of 54,000 jobs per month in the first quarter of 2010, a vast improvement over the 750,000 jobs lost per month in the first quarter of 2009. Yet even with the recent improvement, losses since the start of the recession amount to 8.2 million jobs.
While the collapse in the job market in the wake of the financial crisis has been devastating, job growth in the earlier part of the 2000s was also poor compared to the preceding decade. In my testimony I will focus on two periods: First, I will contrast job growth in the decade of the 1990s with job growth in the 2000s prior to the most recent recession; and second, I will analyze the job losses in the recession that began in December 2007 and the recent stabilization and probable improvement of the job market.
The theme of my remarks is that the U.S. job market is not destined for poor performance because of globalization, technological change, or demographics. Other advanced nations that are subject to these same macro forces have seen stronger job growth than the U.S. in the last decade. I will also elaborate on how the financial crisis affected various segments of the job market, and highlight the lingering effects of the crisis on labor demand, especially among small businesses.
Longer-Term Job Trends Have Not Been Favorable
A look at the jobs picture over the years in the previous decade before the recession indicates that job market performance in the U.S. was poor relative to the 1990s across a number of key metrics. In other words, while the recession has taken a terrible toll on American workers, the job market during the first eight years of the decade of the 2000s--before the recession--was already underperforming.
Table 1 provides several labor market indicators. The number of nonfarm payroll jobs, derived from the monthly establishment survey conducted by the Bureau of Labor Statistics (or BLS), is a standard indicator of employment. Looking over a long stretch of history, despite occasional recessionary periods, the U.S. job market has steadily increased employment to accommodate our growing population until the 2000s. During the 1990s (specifically, from December 1989 through December 1999), the economy gained 21.7 million payroll jobs. By contrast, from December 1999 through December 2009, the economy lost 944,000 jobs. Indeed, as Figure 1 shows, nonfarm payroll employment in the U.S. currently stands at about the same level as it did in September 1999. With no net jobs gained in more than ten years, it is no wonder that many analysts are calling this period the "lost decade." This poor performance is not only due to the recession at the end of the decade. Job gains in the 2000s are weak even if we exclude the losses that occurred during the recession: Over the first 8 years of the 1990s, the economy gained almost 16 million jobs; during the first 8 years of the 2000s, however, payroll employment rose by somewhat less than 7.5 million jobs, a little less than half of the previous decade's 8-year increase.
The lackluster job market performance that is evident in the payroll data also is evident in the BLS's Current Population Survey (CPS), which is a household survey. Consider first the employment-to-population ratio, which is the fraction of the working-age population who report being employed. As Figure 2 shows, the employment-to-population ratio rose 1.3 percentage points from 1989 through 1999, and peaked in April 2000 at a postwar high of 64.7 percent. In contrast, during the decade of the 2000s, the ratio fell nearly 5 percentage points, and is now at a level--58.6 percent--that was last seen immediately following the back-to-back recessions of 1980-82. The decline in the employment-to-population ratio was especially sharp after the recession began, but even prior to the recession the ratio had already given up all of its gains during the 1990s, an indication that job growth failed to keep up with population growth.
More detailed data allow us to compare the experience of individual demographic groups during the most recent decade with their experience in the 1990s. The data show that the trend toward increased labor market participation by women continued throughout the 1990s, but then was partly reversed prior to the 2007 recession; by the end of the decade the share of women working had returned to about the same level as it had been in 1989. The employment-to-population ratio for men edged lower during the 1990s, with an acceleration in this downward trend over the most recent decade. Male employment was then disproportionately affected by the 2007 recession: In the recession, the employment-to-population ratio for men fell more than 5 percentage points, and by 2009 the ratio had fallen to all time lows.
Employment-to-population ratios across age groups also display some noteworthy patterns. In particular, for workers age 55 and older, there was a modest uptrend in employment during the 1990s, cumulating in a 1.6 percentage point increase in the employment-to-population rate for the decade. This increase in employment among older workers accelerated during the 2000s, producing a 6.4 percentage point rise in the employment for the decade. The combination of the aging of the baby boom generation which led to an increase in the number of people over age 55 and the increase in their employment rate resulted in a 56 percent increase in the number of employees who were age 55 and over in the first decade of the 2000s. By contrast, the number of workers in each of the other age groups--as well as the share of the age group employed--declined from 1999 to 2009.
These data suggest that, while the effects of the recent recession have dominated changes in employment, the past decade saw considerable underlying softness in employment prior to the recession. BLS data from the Business Employment Dynamics (BED) program provide evidence of a related trend in gross job flows (as opposed to net job creation). The BED data measure the number of jobs added in business establishments that are opening or expanding and the number of jobs lost in business establishments that are closing or contracting. The BED data indicate a trend toward less churning--a reduction in gross labor flows across companies--beginning in the late 1990s and continuing through the 2000s. The BLS's Job Openings and Labor Turnover Survey (JOLTS) likewise shows a decline in worker turnover in the 2000s.
The U.S. labor market is well known for its dynamism, in the sense that reactions to changes in economic conditions occur relatively rapidly, regardless where we are in the economic cycle. Millions of hires take place each month even in the depths of a recession, and millions of separations occur during an expansion. Although such dynamism can be disruptive for workers and companies, it also serves to reallocate workers from declining to expanding sectors, thereby boosting productivity and, ultimately, living standards for Americans. Therefore, the decline in gross labor market flows is a potential concern if it represents a fundamental shift toward a less dynamic U.S. economy.
The decline in churning that is evident in the BED and JOLTS data, however, is at least partly a result of an aging workforce. I make this inference from an examination of job tenure. A decrease in separations and hiring would be expected to result in longer job tenure, all else equal. Indeed, the average worker age 20 to 64 had job tenure of 7.0 years in 1998 and 7.4 years in 2008 according to tabulations of the Current Population Survey (CPS) data by Henry Farber of Princeton University. If age and education are adjusted for, however, Professor Farber finds that job tenure actually fell in this period for both men and women.
Older workers tend to change jobs less frequently than younger workers. It thus appears that that the aging of the Baby Boom generation has led to a more stable workforce, leading to lower separations (and thus less need for external hiring) and less churning within companies. This older, more experienced workforce is likely a source of higher productivity.
U.S. Job Growth Lagged Other Economically Advanced Countries in the 2000s
Available international data suggest that job market performance in the U.S. in the 2000s was poor not only relative to previous decades, but also relative to the experience of foreign countries with advanced economies.
In Canada, for example, payroll employment rose by 2.3 million during the 2000s, a 19 percent increase that largely kept pace with population growth (see Table 2). The overall employment-to-population ratio fell 1.6 percentage points during the 1990s (when the U.S. ratio was rising). During the most recent decade, however, the overall employment-to-population ratio rose 1.1 percentage points in Canada, while the U.S. rate dropped sharply. From 1989 through 2009, the overall Canadian employment-to-population ratio edged down 0.5 percentage point, as the U.S. ratio fell by more than 3.5 percentage points.
Canada's age distribution is very similar to that in the U.S., with a large post-war baby boom cohort. Like the U.S., Canada experienced a sharp increase in employment of older workers in the 2000s. Unlike the U.S., however, Canada also saw a rise in employment for younger workers. Thus, generational crowding – when older workers hold on to jobs longer and crowd out younger workers from the labor market – is an unlikely explanation for the lackluster job growth in the U.S. in the 2000s.
In the U.K., payroll employment also rose during the 2000s, as the U.K. added 1.3 million workers from 1999 to 2009, about a 5 percent increase (see Table 3). The overall employment-to-population ratio rose 0.6 percentage point during the 2000s, in contrast to the sharp decline in the U.S. Across age groups, the U.K. shows a pattern more similar to the U.S., with sharp declines in the ratio for younger workers and a large increase for older workers. In contrast to the U.S., however, the employment-to-population ratio rose for prime-aged workers during the 2000s, in spite of declines associated with the worldwide recession.
Figure 3 illustrates the change in the fraction of the population working in the U.S., Canada, U.K. and Eurozone in the 1990s and various periods of the 2000s. (Comparable data for the Eurozone are not available for the 1990s.) In contrast to the 1990s, it is clear that job growth was dramatically worse in the U.S. than in these other countries in the 2000s, both in the period before the recent recession and in the recent recession. A likely contributing source of the stronger job growth in Canada and the U.K. in the 2000s is that the education levels of their workforces increased more strongly than was the case in the U.S. Interestingly, while the U.S. job market produced fewer jobs (relative to the population) than in these other economically advanced countries in the 2000s, productivity growth was stronger in the U.S. and total GDP growth was roughly comparable over the decade in all three countries.
The international data carry an important implication: The United States' poor labor-market performance in the 2000s was not inevitable. Canada and the U.K. were subject to the same international trends, had access to the same technological advances and faced similar demographic shifts as the U.S., yet they managed to produce significant job increases during the first decade of the 2000s, while the U.S. lost jobs. Based on reviewing other evidence, Council of Economic Advisers Chair Christina Romer has concluded that "structural factors are not central" to the poor performance of the U.S. labor market. Thus, there is little evidence that fundamental structural shifts have taken place that accounted for the weak record of job growth in the last decade.
Job Market Dynamics by Establishment Size over the Business Cycle – New Findings
A variety of comparisons indicate that the U.S. labor market underperformed throughout most of the first decade of the 2000s. But the dominant feature in the jobs picture of the last decade was the acceleration of the pace of job losses during the financial crisis. The aggregate job statistics--a loss of 8.4 million jobs from December 2007 through December 2009--tell only part of the story. Fully 4.2 million private sector jobs were lost in the six months after the fall of Lehman Brothers in September 2008. Job losses in this period exceeded what one would predict from the sharp concurrent contraction in GDP by about 25 percent. The sharp loss in jobs around the time of the financial crisis resulted because the seizure of credit markets caused a sharp drop in economic activity, and because the panic that took hold of financial markets likely spread to employers in other sectors, causing them to react more than normally to a contraction in demand for their goods and services by shedding workers. Lingering uncertainty from the financial crises has also restrained hiring in recent months.
To better understand the dynamics behind the dramatic loss in employment that we have experienced in the past two years, we can examine data on job openings, hires, and separations. These data are collected by the BLS in a survey of business establishments called the Job Opening and Labor Turnover Survey (JOLTS), and published each month by industry group and by region.
Recently the BLS provided the Treasury Department with research data that include an unpublished, unofficial series of job openings, hires, and separations for establishments in multiple size classes. Analyzing employment trends among the different size businesses can help shed additional light on the mechanisms by which the financial crisis induced job losses, and can provide some clues as to policy actions that could be particularly effective in the current environment. Moreover, the research data provided by the BLS are available through February 2010, which makes them by far the most up-to-date data available on employment patterns in small and mid-size businesses.
We aggregated the JOLTS data by establishment size into three categories--establishments with fewer than 50 employees (representing about 40 percent of private sector employment); establishments with 50 to 249 employees (representing about a third of private sector employment); and establishments with at least 250 employees (representing about a quarter of private sector employment). The data on job openings shows that the number of job openings had been falling since early 2007, but openings fell precipitously around the time that the financial crisis moved into high gear, especially for larger businesses (Figure 4). The low job openings rate--defined as job openings as a share of employment plus job openings--reflects the continued difficulty that unemployed persons are having finding work, as there are relatively few job openings for them to apply for. Specifically, in the published February JOLTS data there were 5.5 unemployed persons for every job opening, as compared to an average of two unemployed per opening over the 2001-2007 period. As with the overall employment situation, the job openings rate stabilized last fall and has picked up in the past two months. The increase in job openings, however, is heavily concentrated among larger establishments.
Figures 5 through 7 plot the gross hires and the gross separations for small, mid-size, and large establishments. The difference between hires and separations equals net job gains or losses in the BLS establishment survey Shortly after the financial panic reached its peak in September 2008, a large number of workers were separated from small establishments (Figure 5). Most of the increase in separations was due to layoffs and business closings, as the number of quits was trending down during this period. (The Appendix Figure breaks down separations into layoffs/closings and quits.) The elevated level of layoffs by small establishments continued through February 2009, after which layoffs began to trend down, although they still remain somewhat high in the most recent months compared with the historical average. From the start of the recession to last fall, hiring by small businesses fell at a moderate but steady pace which did not accelerate during the financial crisis. Today the hiring rate by small businesses remains well below its pre-crisis levels.
The experiences of mid-size and large establishments around the time of the financial crisis were notably different. As mentioned, small establishments responded by quickly laying off a large number of workers. Mid-size establishments (Figure 6) and large establishments (Figure 7) responded by sharply cutting back on hiring in the months immediately after the crisis, and while they also increased layoffs, the increase was not as large as that seen by the small establishments. Of course, the net effect is that total employment contracted severely across establishments of all sizes in the months following the crisis.
The JOLTS data can be used to construct a rough summary measure of notional net labor demand, which is a measure of companies' desired change in employment. Specifically, I define notional net demand as the net job change (total hires minus total separations) plus the total number of job openings, relative to total employment. Results for each size category are displayed in Figure 8. It appears that notional labor demand increased steadily for large establishments throughout 2009. Notional labor demand is more volatile for mid-size and small establishments, but it appears to have increased at a more moderate pace than it has for large establishments.
The analysis of the JOLTS data highlights how the improvement in the labor market seen to date has been unevenly distributed across establishments of different sizes. On the positive side, labor demand has generally trended up at large private sector establishments since reaching a trough in February 2008. Moreover, large establishments have apparently increased employment in five of the six months since September 2009--a possible early sign of durable job growth. At the lower end of the size distribution, however, labor demand by small establishments has continued to be weak, with notably low rates of new hires. The challenges small businesses are facing remains a significant concern to policymakers within the Administration. The Administration has consistently supported efforts to assist small businesses through both numerous provisions in the Recovery Act as well as more recent proposals.
Consequences of a Low-Pressure Labor Market
The JOLTS data are consistent with a story in which many small businesses responded to the shock of the financial crisis by quickly laying off workers and shutting down operations, while the first line of response for larger companies was to freeze hiring. Large companies also increased layoffs over the ensuing months. This pattern is consistent with small employers having lower fixed costs associated with hiring and employment than large employers. It is also consistent with small companies being unable to access credit to maintain employment when demand for their products collapsed in late 2008. Larger companies, which also faced frozen credit markets and declining product market demand in the fall of 2008, eventually had access to corporate debt markets, which enabled them to reduce layoffs and expand employment as the financial markets improved in 2009. Small businesses, which are more dependent on bank financing which remains tight, however, are still facing severe challenges. The Administration's small business proposals, such as the proposals to create a $30 billion small business lending fund and raise the cap on SBA 7(a) loans to $5 million, are particularly well timed given the difficulties that small businesses continue to face in the aftermath of the financial crisis.
Arthur Okun characterized the 1960s as a high-pressure labor market. Lawrence Katz and I similarly described the 1990s as a high-pressure labor market in a 1999 Brookings Paper. I think it is fair to say that we have had what could be characterized as a low-pressure labor market so far in the 2000s, punctuated by a deep recession at the end of the decade that in turn featured excess job losses as the financial crisis infected the rest of the economy. We don't know definitively what the causes were for the low-pressure labor market so far in the 2000s. The deep recession that began in 2007 obviously didn't help job performance. Nevertheless, it is clear that the tax cuts that were intended to boost the economy in 2001 and 2003 did not result in better performance in the labor market than what was achieved in the 1990s, a period when government revenue increased and the deficit was reduced and eventually eliminated.
The consequences of a low-pressure labor market are obvious. Job growth that is not strong enough to accommodate a growing labor force results in higher unemployment. Unemployment carries severe personal and social costs, and can also reduce future economic performance as out-of-work individuals see their skills atrophy and their attachment to the labor market erode. But there are additional, more subtle consequences of a low-pressure labor market. When times are bad, workers are more likely to be forced to take dead-end employment, as opposed to having the opportunity to work more hours in better jobs with on-the-job training, career ladders and fringe benefits. A chronically weak labor market has also been found to raise income inequality and prevent families from leaving poverty. For all these reasons and more, the Administration is steadfastedly committed to working with Congress to enact policies that promote sustainable job growth and that lay the foundation for every American to enjoy the opportunity to share in the tremendous prosperity that our nation is capable of producing.
 See my July 2009 presentation to the American Academy of Actuaries for details of how excess job losses were calculated (available at www.ustreas.gov/offices/economic-policy/AK-Actuaries-07-20-2009.pdf ).
 This is the case over the year if one aggregates across all size classes. However, the data provided by BLS do not separately benchmark the hires and separations within each size class, so the difference between hires and separations may not equal the employment change within size classes, and even in the aggregate there can be small month-to-month deviations between hires less separations and the net employment change.
 Lawrence F. Katz and Alan B. Krueger, "The High-Pressure U.S. Labor Market of the 1990s." Brookings Papers on Economic Activity, 1:1999, pp. 1-87.
SEC Charges Spongetech and Senior Executives in Pump-and-Dump Scheme
Wed, 05 May 2010 10:30:27 -0500
The Securities and Exchange Commission today charged New York City-based Spongetech Delivery Systems Inc., an affiliate, and five people involved in a massive pump-and-dump scheme that deceived investors into believing they were buying stock in a highly successful company.
GovDelivery, Inc. sending on behalf of Securities and Exchange Commission · 100 F Street, NE · Washington DC 20549 · 202-942-8088 begin_of_the_skype_highlighting 202-942-8088
May 5, 2010
Real Clear Politics WednesdaySmoking Car to an Arrest in 53 Hours - Rashbaum & Baker, New York Times
Questions Raised About Holes in System - DeYoung & Kornblut, Wash Post
The Enemy We Can't Name - David Harsanyi, Denver Post
No Fooling Mother Nature - Thomas Friedman, New York Times
Keep the Lights On - Peter Ferrara, The American Spectator
Do Disasters Help Party Associated With Big Gov? - John Dickerson, Slate
Failure of Washington is Common Theme - Newt Gingrich, Human Events
Clueless on Immigration - Ruben Navarrette, San Diego Union-Tribune
Call Them What They Are: Illegal Aliens - Ed Koch, RealClearPolitics
When Other People's Money Runs Out - Daniel Akst, Los Angeles Times
Independents Leaning Toward GOP on the Issues - Ramesh Ponnuru, NRO
Which Mitt Will Show Up in 2012? - Scot Lehigh, Boston Globe
Britain Should Vote & Prepare for the Worst - Simon Heffer, The Telegraph
A Renewed Debate Over Suspect Rights - Peter Baker, New York Times
Submissive Attitude Invites More Terror - Ralph Peters, New York Post
Behind Mother Russia's Outrage Over Adoption Case - Cathy Young, RCP
Vitriolic Olbermann Embraced by MLB & NFL - S.E. Cupp, NY Daily News
RCP Blog: Rep. Obey (D-WI) to Retire | CO Sen: GOPers Lead Both Dems
WH Owes Answers on Handling of Terror Suspect - Washington Post
From Peshawar to Times Square - Wall Street Journal
The Hard Work on Financial Reform - New York Times
Political Chaos in Britain - San Francisco Chronicle
|Daily Stocks to Watch Wed May 5 09:02 2010|| |
Stocks To Watch
May 5, 2010 DuPont Fabros Looks Forward to Strong Q2, FY10 - Stocks to WatchData center operator DuPont Fabros Technology Inc.(DFT) expects funds from operations for the second quarter and fiscal 2010 to be ahead of the present estimates of Street analysts. The company also revealed adjusted funds from operations and revenue for the first quarter, which were higher than the expectations of the Street. For the second quarter, the company based in Washington, D.C. Full Article
May 5, 2010 Wabco's FY10 View Zips Past Estimates - Stocks to WatchCommercial-vehicle parts maker Wabco Holdings Inc. (WBC) said it expects fiscal 2010 earnings above the current estimates of Street analysts, driven by a 23-28% increase in sales. The company also reported first-quarter profit and revenue that handily beat analysts' estimates. For full year 2010, Wabco now expects an estimated increase in sales of 23% to 28% in local currencies, up from its earlier guidance for sales growth of 15-20%. Wabco also raised its earnings per share guidance to a range of $1.27 to $1.67 on a GAAP basis and from $1.40 to $1.80 on a performance basis, up $0.40 from previous guidance. Full Article
May 5, 2010 Introducing RTT Growth & Value StocksThe Growth & Value Stocks service is designed with a disciplined approach of extensive fundamental analysis to cater swing traders and investors. The service identifies growth stocks that are generally overlooked and value stocks that are usually undervalued by the market. The growth and value stocks we select have significantly outperformed the broader market indices. Full Article
|Morning Market Briefing Wed May 5 09:01 2010|| |
May 5, 2010 Stocks Set For Lower Open As Greek Unrest Weighs On Markets - U.S. Commentary After seeing substantial weakness in the previous session, stocks are likely to see further downside in early trading on Wednesday, as concerns over civil unrest in Greece have overshadowed today's upbeat U.S. private sector employment report. The major index futures are all in negative territory, with the Dow futures down by 63 points. Full Article
May 5, 2010 Europe To Grow Better Than Previously Thought: EU CommissionThe European Commission on Wednesday raised its economic outlook for the euro area and EU in light of the improved external environment and said growth is expected to regain ground more firmly by the end of 2010. Full Article
May 5, 2010 ADP Report Shows Increase Of 32,000 Jobs In April Private sector employment saw a modest increase in the month of April, according to a report released by payroll processor Automatic Data Processing, Inc. (ADP) on Wednesday, with upward revisions also resulting in job growth in each of the two previous months. Full Article
May 5, 2010 Eurozone Private Sector Recovery Gathers Pace In April Eurozone private sector activity recorded its strongest expansion since August 2007 with broadening recovery in both manufacturing and service sectors, a closely watched survey showed. Full Article
May 5, 2010 U.K. Shop Price Inflation Picks Up On Rising Fuel CostsShop price inflation in Britain picked up to its highest level since January in April, with rising fuel costs pushing up both food and non-food prices, a new survey showed on Wednesday. Full Article
May 5, 2010 Philippines Inflation Stays At 4.4% In April Philippine annual inflation remained stable in April at the highest level since December 2009, adding pressure on the central bank to act quickly. Full Article
May 5, 2010 Bank Indonesia Holds Key Rate At Record Low The Indonesian central bank on Wednesday maintained its key interest rate at a record low for the ninth consecutive month as inflation is likely to move comfortably within the target range this year. Full Article
May 5, 2010 News Corp. Q3 Profit Plunges 69%Tuesday, media conglomerate News Corp. (NWS, NWSA) reported a 69% dip in third-quarter profit, affected mainly by absence of one-time gains recorded a year ago. Revenues grew by 19%, driven by strong growth in all major business segments amid increase in consumer spending, and advertising, however fell short of analysts' numbers. Full Article
May 5, 2010 Chesapeake Energy Q1 Back In BlackTuesday, natural gas producer Chesapeake Energy Corp. (CHK) reported first-quarter profit versus loss last year, helped by revenue growth and the absence of hefty impairment charge realized a year before. Both revenue and adjusted earnings grew past Street view. At the same time, the company updated its production outlook for the full year 2010 and 2011. Full Article
May 5, 2010 Papa John's Q1 Earnings Fall; Tightens FY10 Earnings OutlookTuesday, pizza delivery and carryout restaurant operator Papa John's International, Inc. (PZZA) reported a decline in first-quarter profit, driven by higher expenses, notwithstanding a year-over-year growth in revenue. However, both earnings and revenues surpassed Wall Street projection. For fiscal 2010, the company narrowed the high end of adjusted earnings outlook range to match current market consensus. Full Article
May 5, 2010 Cephalon Q1 Profit Surges; Guides Q2, Updates FY10 ViewTuesday, Frazer, Pennsylvania-based drug maker Cephalon Inc. (CEPH) reported a surge in first-quarter profit, thanks to higher revenues from Oncology franchise as well as lower costs and expenses. Adjusted earnings were ahead of consensus, but revenues missed estimates. Cephalon also provided earnings forecast for the second quarter, while updating its full-year guidance. Full Article
May 5, 2010 Qwest Communications Q1 Profit DeclinesQwest Communications International Inc. (Q) reported a drop in first-quarter net income, hurt by a one-time charge related to employee health-care. Operating revenues also declined, yet managed to surpass consensus revenue estimate. Qwest expects to achieve full year 2010 adjusted EBITDA view. Full Article
May 5, 2010 Devon Energy Turns To Profit In Q1Wednesday, independent oil and gas company Devon Energy Corp. (DVN) posted first-quarter profit, as oil prices nearly doubled and said its board has authorized a repurchase of up to $3.5 billion of its common stock. Both adjusted earnings per share and revenues came in above expectation. Full Article
May 5, 2010 Time Warner Q1 Profit Up; Revises FY Adj. EPS ViewWednesday, media and entertainment giant Time Warner Inc. (TWX) reported strong first-quarter profitability, helped by an advertising recovery and home video sales of "The Blind Side" and "Sherlock Holmes." Both revenue and profit came in above Wall Street forecast. Looking ahead, the group sees full-year growth rate in adjusted income to be at least in the mid-teens, off a fiscal 2009 adjusted earnings. Full Article
May 5, 2010 PulteGroup Q1 Loss Narrows; Sees Full-year ProfitabilityWednesday, Bloomfield Hills, Michigan-based homebuilder PulteGroup, Inc. (PHM) reported narrower first-quarter loss, driven by continued gross margins expansion and a significant reduction in land-related charges. Loss per share was narrower than anticipated, but revenue missed view, despite a 75% growth year-over-year. If market conditions remain “ relatively stable” for the remainder of the year, the company expects to be profitable in 2010. Full Article
May 5, 2010 XTO Energy Q1 Profit DownWednesday, oil and gas company XTO Energy Inc. (XTO) reported lower first-quarter earnings, which on an adjusted basis topped consensus. Revenue dipped 7% year-over-year, yet managed to beat Street consensus. XTO Energy's average sales prices realized declined year-over-year offsetting a 6% growth in first-quarter production. Full Article
May 5, 2010 Bud Light Bags NFL Beer Sponsorship For 2011 SeasonTuesday, Belgium-based brewer Anheuser-Busch InBev (BUD)said that its Bud Light beer brand has entered into a multi-year sponsorship agreement with the National Football League or NFL to become the official and exclusive beer sponsor of the NFL beginning with the 2011 season. Full Article
May 5, 2010 Guess? Says Carlos Alberini Resigns As President And COOTuesday, Guess?, Inc. (GES) announced the resignation of its President and Chief Operating Officer, Carlos Alberini, effective June 1. However, Mr. Alberini accepted the position of Co-Chief Executive Officer of Restoration Hardware and continue to serve as a member of the Board. Full Article
May 5, 2010 Yum! Brands Promotes Sam Su As Chinese HeadYum! Brands, Inc. (YUM) said Tuesday that Sam Su has been promoted to Chairman and Chief Executive Officer for Yum! Brands China Division. He would also maintain his position as Vice Chairman of Yum! Brands' board. Sam Su was previously President of Yum! China Division. Full Article
Broker Ratings Changes
May 5, 2010 FBR Capital Markets Lowers Corinthian Colleges Inc (COCO) To Underperform From Market Perform With $13 Price Target
Todays WS Events
May 5, 2010 State Street Investor & Analyst Forum At 12:30 PM ET State Street Corp. (STT) CEO, Joseph L. Hooley, will host its Investor & Analyst Forum at 12:30 PM ET, May 5, 2010. To access the live webcast, log on at www.statestreet.com/stockholder To hear the live call, dial +1 (706 ) 679 - 5594 begin_of_the_skype_highlighting +1 (706 ) 679 - 5594 end_of_the_skype_highlighting (US) or +1 (888 ) 391-4233 begin_of_the_skype_highlighting +1 (888 ) 391-4233 end_of_the_skype_highlighting (International) with ID 69499889. A replay of the call can be heard by dialing +1 (706) 645-9291 begin_of_the_skype_highlighting +1 (706) 645-9291 end_of_the_skype_highlighting or +1(800) 642-1687 begin_of_the_skype_highlighting +1(800) 642-1687 end_of_the_skype_highlighting with ID 69499889.
May 5, 2010 Mastercard To Present At Morgan Stanley Payments Summit; Webcast At 4:00 PM ET Mastercard Incorporated (MA) will make a presentation at theMorgan Stanley Payments Summit in New York on May 5, 2010. The presentation is scheduled to begin at 4:00 PM ET. To listen to the live audio webcast, log on to http://investorrelations.mastercardintl.com/phoenix.zhtml?c=148835&p=irol-EventDetails&EventId=3037494
May 5, 2010 JDS Uniphase Q3 10 Earnings Conference Call At 5:00 PM ET JDS Uniphase Corp. (JDSU) will host a conference call at 5:00 PM ET, May 5, 2010, to discuss its Q3 10 earnings results. To access the live webcast, log on at www.jdsu.com/investors
May 5, 2010 Symantec Q4 10 Earnings Conference Call At 5:00 PM ET Symantec Corp (SYMC) will host a conference call at 5:00 PM ET, May 5, 2010, to discuss its Q4 10 earnings results. To listen to the live webcast, log on at www.symantec.com/invest
May 5, 2010 Monsanto To Present At UBS Global Agricultural Chemicals And Seed/Biotech Conference; Webcast At 9:0Monsanto Co. (MON) will make a presentation at the UBS Global Agricultural Chemicals and Seed/Biotech Conference. The event is scheduled to begin at 9:00 AM ET May 5, 2010. To access the live webcast, log on at www.monsanto.com/investors
May 5, 2010 Bristol-Myers Squibb To Present At Deutsch Bank 35th Annual Healthcare Conference; Webcast At 10:00 Bristol-Myers Squibb Co. (BMY) CFO, Charles Bancroft, will present at the Deutsche Bank 35th Annual Health Care Conference. The event is scheduled to begin at 10:00 AM ET, May 5, 2010. To listen to the live webcast, log on to http://investor.bms.com
May 5, 2010 PepsiCo Annual Shareholders Meeting At 10:00 AM ET PepsiCo, Inc. (PEP) will host its annual shareholders meeting on May 5,2010 in Plano, Texas. The event is scheduled to begin at 10:00 AM, ET. To access the live webcast, log on at www.pepsico.com/Investors.html
May 5, 2010 Pfizer To Present At 35th Annual Deutsche Bank Healthcare Conference ; Webcast At 11:20 AM ET Pfizer Inc. (PFE) CFO, Frank D''Amelio will make a presentation at the 35th Annual Deutsche Bank Healthcare Conference on May 5, 2010. The presentation is scheduled to begin at 11:20 AM ET. To listen to the webcast, log on to www.pfizer.com
May 5, 2010 King Pharmaceuticals Q1 10 Earnings Conference Call At 8:30 AM ET King Pharmaceuticals, Inc (KG) will host a conference call at 8:30 AM ET, May 5, 2010, to discuss its Q1 10 earnings results. To listen to the live webcast, log on at www.kingpharm.com/Investors/Webcasts.cfm To hear the live call, dial (888) 674-0224 begin_of_the_skype_highlighting (888) 674-0224 end_of_the_skype_highlighting (US) or (201) 604-0502 begin_of_the_skype_highlighting (201) 604-0502 end_of_the_skype_highlighting (International). A replay of the call can be heard by dialing 632-8973 (US) or 201-499-0429 begin_of_the_skype_highlighting 201-499-0429 end_of_the_skype_highlighting (International) with passcode 20648171 #.
May 5, 2010 NIKE Investor Meeting At 9:00 AM, ET NIKE, Inc. (NKE) will host an investor meeting on May 5, 2010 in New York City. The event is scheduled to begin at 9:00 AM, ET. To access the live webcast, log on at www.nikebiz.com/investors