Sunday, Mar. 07, 2010

Jobless rates to remain high

S.C. recovery likely long-range

GREENVILLE -- The misery of high unemployment could last at least two more years, and the pain might be deeper in South Carolina than in the nation as a whole.

Continuing job losses could make it difficult for job seekers to find work, with the national unemployment rate ranging between 8.5 percent and more than 9 percent, Clemson University economist Bruce Yandle said.

And the unemployment rate in South Carolina is likely to track two points higher than the national rate for at least part of the next two years, said Yandle, author of "The Economic Situation" and dean emeritus of Clemson University's College of Business and Behavior Science.

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  Unemployment fell in fewer states in July than in the previous three months, a sign that the pace of job growth has slowed.

  The jobless rate dropped in 18 states and Washington, D.C. last month, the Labor Department said Friday. It rose in 14 states and stayed the same in 18. That's a slowdown from the past three months when unemployment fell in more than 30 states.

  Nationwide, the unemployment rate remained stuck at 9.5 percent in July.

• Factory jobs ease pressure

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  Manufacturing job gains in the Midwest helped lower the nation's economic stress in April to its lowest point in five months, according to The Associated Press' monthly analysis of conditions around the country.

  Contributing to the improvement were lower foreclosure rates in two states with beaten-down housing markets: California and Florida.

  Economic stress levels dipped in every state except Louisiana and Nevada in April. They also declined in more than 90 percent of the nation's 3,141 counties, according to AP's Economic Stress Index.

• S.C. indicators offer glimmer of hope

  S.C. indicators offer glimmer of hope

  Glen Calder handed out pink slips three times since the economic crisis hit, but recently orders to the Taylors specialty paving equipment maker have been trickling in.

  Now Calder is a little behind on production, and he was planning to pay overtime last week for the first time since fall 2008.

  Business is not close to what it was before the recession, but "it's better than last year. That's for sure," he said.

• Spike in layoffs feeds fear of faltering recovery

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  Layoffs are back, and that's bad news for the fragile economic recovery.

  New applications for unemployment benefits hit a nine-month high last week - a spike that suggests private employers may shed jobs this month for the first time this year.

  Workers are losing construction jobs in Georgia and manufacturing jobs in Indiana. Some of the layoffs are coming as stimulus money dries up and public works projects come to a halt. Government employees are being let go, too, as states and cities grapple with budget crises.

• Analysts say recovery is here to stay

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  Rising factory output and a decline in the pace of layoffs are giving economists confidence that the recovery has staying power.

  The government is expected to report today that the economy added jobs in March for only the second time since December 2007.

  Still, job creation is likely to remain weak for years to come, in part because U.S. factories have become more efficient, producing more goods with fewer workers. On top of that, the sector's contribution to the overall economy has been shrinking for decades due to competition from China and other countries where factory workers are paid much less.

"Looking at the shape of the present recession recovery compared to the previous 10, it will be deeper and longer" than average, he said.

That's not what displaced workers like Jazmine Vincent, a Fountain Inn resident, want to hear.

The mother of a young daughter said she's been out of work for two years. She said she's done everything she can think of - coming to the Employment Security Commission's Greenville office, calling temporary agencies, looking online.

"I spend every day looking for a job," she said. "I really need one. It's real hard. I have a little girl almost a year old."

National data suggest that layoffs are no longer slowing as fast as they were in the second half of last year. Snow-related layoffs in the past few weeks contributed to higher first-time claims nationally for unemployment insurance.

"The fact that these snowstorms - as bad as they were - could have such an impact is more testimony to the fragility of the recovery," Diane Swonk, chief economist at Mesirow Financial, wrote in a note to clients. "The recovery is still on thin ice and lost momentum in the first quarter."

There are now many more people receiving extended unemployment benefits that aren't included in the continuing claims figures. Congress has provided up to 73 weeks of extra benefits, paid for by the federal government, for jobless workers who have used up the standard 26 weeks of benefits customarily provided by states.

Challenger, Gray & Christmas Inc., an outplacement consultant, said quality issues with Toyota's line of products might lead to layoffs because "the nation's parts manufacturers could find themselves under increased pressure amid falling prices." Auto manufacturers in Michigan, including Yazaki Corp. of Canton and Denso International America of Southfield, were included in an investigation of the problems, as was Tokai Rika Co. of Plymouth.

Last year, employers in the automotive sector announced 52,271 layoffs, and more than 4,000 layoffs were announced in the auto industry in January, the company reported.

Yandle said that in about 24 months, the United States could be back to the zero point - about the same level of job gains and losses as in December 2007, when the recession officially began. The country will have a higher number of jobs, he said, because of new entrants into the labor market. Typically, 75,000 to 100,000 people enter the labor market monthly.

"That translates to the high 8s or 9 on the national level," he said of the jobless rate. "Recovery means hiring folks, but the unemployment rate is likely to bounce up and down.

"As economist Larry Summers put it recently, we have a statistical recovery and a human recession."

The news on jobless rates is not quite as good for South Carolina, he said.

"South Carolina since 2001 got to a point where we got to be about two points above the national average," he said. "I expect that gap will begin to close over the next 24 months," although it is likely to remain above the national average.

He sees closing the gap - an important factor in South Carolina's overall economic picture - occurring because the state's ongoing manufacturing transition from high-labor, low-skilled, nondurable production to low-employment, high-skilled, durable production is closer to completion. The process began about 2001, he said.

"We will still have pockets of higher unemployment in areas still undergoing the transition process," Yandle said.

But the future is looking up, he said. "The Boeing plant construction will have a large effect. That will give a shot in the arm to construction," which has been devastated in South Carolina, he said. "New companies are moving in. The hiring may be small, but there are lots of them. Existing plants are beginning to recall employees, but not as many as they may have laid off." That smaller call-back is a result of increased productivity.

The diffusion index, which shows how many manufacturing sectors are adding and losing jobs, is at 46.8. An index of 50 means gaining and losing jobs is in equilibrium. When the recession began, the index was about 50. In January 2009 the index was below 20, meaning 80 percent of the manufacturing industries were losing jobs.

Right now, "we're just barely shrinking. We're getting close to the zero point," he said. Obviously, the goal is to hit 52 or 55 so the country's manufacturing is gaining jobs.

"Manufacturing is not the big sector in our [national] economy," Yandle said, but it's an important sector.

He also said a recent study of migration patterns of young and well-educated people show international movers still find the United States an attractive location. They are interested in economic and personal freedom and still see that here.

"There are a lot of people who have an ambition to come to the United States," Yandle said. That migration "represents one of the more vigorous components of our economy. For these immigrants, the American dream is still a reality. That is a spark that's very important to maintain."