10 spicy bits of economic news:
The number of Americans filing first-time claims for unemployment insurance climbed unexpectedly last week.
There were 473,000 initial jobless claims filed in the week ended Feb. 13, up 31,000 from the previous week’s upwardly revised 442,000, the Labor Department said on Thursday.
A consensus estimate of economists surveyed by Briefing.com expected claims to slide to 438,000.
Economists blame bad weather (“Snowmageddon”) for the increase, and remain optimistic.
2. Thus, Mortgage bankers become willing to give Main Street a break … kinda.
In order to address the growing number of people who are falling behind on their mortgage because they’ve lost their jobs, the Mortgage Bankers Association has proposed a forbearance program under which loan servicers would reduce eligible borrowers’ monthly payments to no more than 31% of their household income for up to nine months. The arrears would be tacked onto the end of the mortgage.
Most consumer advocates, however, do not think forbearance plans are an answer to the foreclosure crisis. Most delinquent borrowers need more help than just a temporary reduction of their payments.
Also, it’s unlikely that borrowers will find new jobs in nine months in this tough economy, said Kathleen Engel, a law professor at Suffolk University in Boston who specializes in foreclosures. She said the program would need to last at least two to three years to be effective. [Emphasis mine].
3. The Senate approves a jobs bill …
Vastly scaled-down from $85 billion to $15 billion, it exempts employers from paying social security taxes (robbing employee to pay employer), and provides incentives for capital and infrastructure expenditures.
4. …but fails to extend the federal extension of unemployment benefits or the Cobra health insurance subsidy.
1.2 million people will run out of benefits after Feb. 28 And millions more will run out of benefits, thereafter. Congress plans to pass a 15-day extension in the next 4 days (we will see if they do), and then work on a longer “fix” during the extension period.
Despite having only four days until expiration, “Lawmakers have yet to set a date to vote on the measure.”
The seasonally adjusted annual rate of new home sales plummeted 11.2% to 309,000 last month, compared with a revised rate of 348,000 in December, the Census Bureau said. That’s a decline 6.1% from January 2009.
It was the lowest rate since the government began keeping records in 1963 and comes after declines in November and December.
The drop surprised many industry analysts. A consensus of economists surveyed by Briefing.com had expected January sales to rise to an annual rate of 354,000.
“Some people were expecting a surge in demand because of the tax credit,” said Patrick Newport, an economist at IHS Global Insight. “But that surge isn’t materializing.”
6. …and FSRN’s Leigh Ann Caldwell reports a sour commercial real estate market could have devastating impacts on the economy.
H&R block blames weak economic conditions and “sustained, high levels of unemployment” for an 8.2% decline in the total number of retail tax returns.
Leading economists are upbeat about the U.S. recovery, forecasting steady growth over the next two years as businesses grow and jobs return, according to a survey released Monday.
We see a healthy expansion under way, although it will take time to reduce economic slack and repair damaged balance sheets,” said Lynn Reaser, president of the National Association for Business Economics, which conducted the survey of 48 top economic forecasters in late January and early February.
Bernanke notes that job market “has been hit especially hard” …
“The job market remains quite weak, with the unemployment rate near 10 percent and job openings scarce,” Bernanke said.
The Fed chairman said he’s particularly worried about the long-term impact on workers skills and wages and the increasing incidence of long-term unemployment.
“Indeed, more than 40 percent of the unemployed have been out of work six months or more, nearly double the share of a year ago,” he said.
10. But we should be happy, because the government and the banks just want to put this whole ugly mess behind them.
A few questions: What kind of drugs are the economists and federal government on, and where can I get some? Am I the only one who can see that, although it may be true that we are no longer hurtling downward off the cliff, we are now bouncing down the scree? If employment is in the toilet, and if it is going to stay there for the foreseeable future, from where will the expected recovery come? When will everybody wake up, and understand that we’ve all been the victims of the largest series of frauds ever perpetrated by bankers and Wall Street? When will the federal government start prosecuting the miscreants aka the banksters? When will Congress reinstated controls over these pirates? Or are we going to allow them to cheat us all over again?