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Entries in Economy (101)

Monday
Oct312011

October Is Still on Track to Be Strongest Month

Comstock/Thinkstock(NEW YORK) -- So far this month, the Standard and Poor’s 500 stock index has gained 13.6 percent. This means October is still on course to be the strongest month for the major averages in about 35 years.

Futures are down this morning, and the markets are expected to open lower.

But October has been anything but a scary month for investors. Europe’s debt deal helped raise investors’ hopes, despite many concerns about the details of the agreement. Earnings are also up: So far, 70 percent of large corporations that have reported have beaten third-quarter profit estimates.

Copyright 2011 ABC News Radio

Monday
Oct242011

Obama Offers Mortgage Relief Plan: ‘We Can’t Wait’ for Congress

JIM WATSON/AFP/Getty Images(LAS VEGAS) -- President Obama outlined his plan to offer hundreds of thousands of Americans mortgage relief Monday, test-driving a new campaign slogan and arguing that “We can’t wait” for Congress to act to jumpstart the economy.

“I’m here to say that we can’t wait for an increasingly dysfunctional Congress to do its job. Where they won’t act, I will,” Obama told the crowd gathered outside the house of Jose and Lissette Bonilla in Las Vegas. Nevada is the state hardest hit by the housing crisis.

Calling the housing bubble “the single greatest cause of the financial crisis and this brutal recession,” Obama promoted his administration’s plan to make it easier for homeowners to refinance their mortgages and avoid foreclosure.

“There are still millions of Americans who have worked hard and acted responsibly, paying their mortgage payments on time. But now that their homes are worth less than they owe on their mortgage, they can’t get refinancing,” Obama said.

The new rules, announced Monday morning by the Federal Housing Finance Agency, include removing caps for “underwater” borrowers and cutting the costs of refinancing. “If you meet certain requirements, you will have the chance to refinance at lower rates, which could save you hundreds of dollars a month, and thousands of dollars a year in mortgage payments,” Obama said.

With his jobs plan stalled in Congress, the president plans in the coming weeks to publicize a series of executive actions, such as this one, intended to boost economic growth that don’t need for congressional approval.

“These steps aren’t a substitute for the bold action we need to create jobs and grow the economy, but they’ll make a difference. I’ve told my administration to keep looking every day for actions we can take without waiting for Congress -- steps that can save consumers money, make government more efficient and responsive and help heal the economy,” Obama said, explaining his game plan going forward.

“There is no excuse for the games and gridlock we’ve seen in Washington....Where we don’t have to wait for Congress, we’re just going to go ahead and act on our own,” the president said.

Copyright 2011 ABC News Radio

Tuesday
Oct182011

Desperate Times: Older Workers Are Taking Kids' Temp Jobs 

Stockbyte/Thinkstock(PARAMUS, N.J.) -- Holiday retail jobs that used to go to high school kids are being snapped up by job-seekers in their 40s and 50s. Guys with master's degrees are selling rubber noses, and counting themselves lucky to be employed, says Paul Buccola, manager at a Party City store in Paramus, N.J.

Buccola says he has five such career people working for him now. How many did he have this time last year? "Zero." He calls it "a direct reflection of the economy."

Employers nationwide say they are seeing the same phenomenon: Older people, some of whom have been out of work for two years or more, are swallowing their pride and foraging any kind of jobs that they can get, part-time, seasonal or otherwise.

"It's a growing trend," says Bill Coleman, vice president of research for RetirementJobs.com, which he describes as a combination job-board and advocacy group for job seekers over 50. Interest in part-time work, he says, "goes up as the stock market goes down. People living off their 401(k)s see the balance drop and realize they have to do something. A little supplemental income is exactly what they need."

Estimates vary for how many temporary jobs will be added to the economy this holiday season, but most agree the pie will be about the same size as last year. The Bureau of Labor Statistics says it may shrink by 1 percent. That means every job taken by an older worker comes at some other job seeker's expense, including the young.

Should older workers feel guilty for shouldering aside the high school or college students? No, says Coleman, who dismisses this as an unproductive line of thought for older job seekers. He dismisses the suggestion that oldsters are taking bread out of youngsters' mouths, saying of the young, "Their parents will fill that void."

Carl van Horn, director of the John J. Heldrich Center for Workforce Development at Rutgers' Bloustein School of Planning and Public Policy, says, "One thing I can tell you: Workers in this climate don't agonize over who else's job they're taking. For one thing, they don't know. And for another, they just don't think about that. Why should they? It's the employer's decision."

He notes that the impact of the recession has been especially hard on people over 55, who have the lowest re-employment rate of any age group.

Older workers possess attributes employers value, especially when it comes to part-time retail jobs: They're highly reliable, says van Horn, and they tend to have a better work ethic than the young. The fact that a job is temporary lessens their resentment of the fact that it is paying them a fraction of what they earned before the recession hit.

Copyright 2011 ABC News Radio

Monday
Oct172011

Stocks Experience Biggest Drop in Two Weeks

Comstock/Thinkstock(NEW YORK) – The stock market was coming off its best week in more than two years, but U.S. stocks experienced their biggest drop in two weeks as investors give up on the notion of a quick solution to Europe’s debt crisis.

The Dow Jones Industrial Average lost 247.49 points, or 2.13%, to 11397.00, closing near the session's lows and wiping out all of Friday's gains. The Standard & Poor's 500-stock index lost 23.72 points, or 1.94%, to 1200.86 and the S&P lost 24 points, to 1200.86.

Citigroup says earnings rose 74% in its latest quarter on lower losses from bad loads. Wells Fargo posted lower than expected revenue for the third quarter, while profit jumped 21 percent as deposits grew.

Factory output rose for a third straight month in September, a sign the economy is growing slowly as plants made more planes, trucks and homes electronics to meet rising demand.

Copyright 2011 ABC News Radio

Tuesday
Oct112011

Economist Group Says Second Recession Is Here, If Not Close

Comstock Images/Thinkstock(NEW YORK) -- The doom and gloom crowd is predicting that the U.S. economy is heading toward another recession, perhaps worse than the one that began in late 2007.

But the Manhattan-based Economic Cycle Research Institute is doing the naysayers one better: it says the second recession is already here.

Lakshman Achuthan, the institute’s CEO, claims that if that particular prognostication is wrong, it merely means another recession is right around the corner.

The Economic Cycle Research Institute has had a pretty good record in forecasting economic downturns, having been right over the past 15 years.  A recession is typically characterized by two or more quarters of declining gross domestic product.

Meanwhile, Achuthan says that if Americans think the unemployment situation is intolerable at the moment, they're in for a rude awakening.  He believes the jobless rate will reach double digits, resulting in more misery for the millions who've been out of work for months and years and new hardships for many still working.

Copyright 2011 ABC News Radio

Friday
Sep302011

Scary Economy Doesn’t Deter Halloween 2011 Revelers

Jupiterimages/Thinkstock(BELLEVUE, Wash.) -- Just one month left for shopping before Halloween. The economy might be scary nowadays, but a new survey reveals the average family is expected to spend some $300 on Halloween costumes, décor and celebrations this year.

A Halloween Shopping Survey released by thrift retailer Savers Inc., shows 90 percent of adults are planning to create a brand new look this season rather than repurpose old costumes.  Another 81 percent will purchase new decorations for their home.

Additional findings from the Halloween Shopping Survey:

-- Fifty-four percent of respondents planning to dress up this year will either combine new and secondhand items or make their costume by hand in order to find value.
-- On average, people dressing up for Halloween spend 61 days planning and preparing their costumes.
-- Thirteen percent of respondents plan for Halloween a year or more in advance while 20 percent wait until the last minute to decide on their costume.
-- Pet owners will spend $59 on average dressing up their pets for Halloween
-- Parents on average will spend $32 on a child’s costume.

The Halloween Shopping Survey involved 1,000 adults.

Copyright 2011 ABC News Radio

Thursday
Sep292011

When Asked About the Economy Biden Says, 'We're in Charge'

ABC/Donna Svennevik(MIAMI) -- Vice President Joe Biden told a South Florida radio station Thursday that he and President Obama take responsibility for the state of the U.S. economy, knowing full well that the 2012 election appears to be a referendum on the issue.

“There’s a lot of people in Florida that have good reason to be upset because they’ve lost jobs. Even though 50 some percent of the American people think the economy tanked because of the last administration, that’s not relevant,” Biden told WLRN’s Phil Latzman.

“What’s relevant is, we’re in charge. And right now, we are the ones in charge, and it’s gotten better but it hasn’t gotten good enough. And in states like Florida it’s even been more stagnant because of the real estate market. I don’t blame them for being mad. We’re in charge, and they’re angry.”

Later, Biden acknowledged the president’s reelection bid was “understandably” shaping up to be a referendum on the administration’s handling of the economy. But, he added, “it’s soon going to be a choice,” referring to an eventual Republican nominee.

Biden stressed the importance of Florida to Obama’s reelection bid but said the battle to keep the state blue would be tougher than in 2008 because of an influx of pro-Republican independent groups expected to spend millions in the coming campaign.

While the administration has previously been critical of such widespread, moneyed outside influence, Biden Thursday called it “totally legitimate.”

“We run the risk of being drown out in Florida,” he said. “Because unlike the last campaign, it is likely our friends on the other side are going to spend more money with these sort of independent PACs -- by the way, totally legitimate. I’m not criticizing it. You have the Rove PAC spending millions of dollars, tens of millions of dollars, etc.”

Copyright 2011 ABC News Radio

Thursday
Sep292011

TaskRabbit: Putting Americans Back to Work, One Odd Job at a Time

PRNewsFoto/TaskRabbit(SAN FRANCISCO) -- They could be anybody: lawyers, doctors, police officers. What do they all have in common? They're all TaskRabbits.

TaskRabbit, based in San Francisco, is a sort of an eBay for odd jobs. Here's how it works: You have an errand you need to run but you don't have time to do it, so you go on TaskRabbit.com, post the task and post the amount you'd be willing to pay for it. Once it's up there, a band of carefully vetted TaskRabbits bid on the task.

Generally, the lowest bidder wins. TaskRabbit gets a cut of the transaction, but the bidder gets that extra bit of cash in his or her pocket.

In this economy, those little tasks can go a long way.
Since its inception in 2008, at the start of the recession, there have been more than 2,000 TaskRabbit "runners." Since then they have expanded to six different cities: New York City, Boston, Los Angeles, the San Francisco Bay Area, Chicago, and Orange County in California.

At the height of the recession, 70 percent of the runners were mostly unemployed or underemployed. By the company's estimates, TaskRabbits have altogether earned $10.5 million in the past three years.
The company makes people undergo a rigorous process to become a TaskRabbit, including a video interview, federal background check, Social Security number trace and, lastly, a test to see if applicants have what it takes.

CEO Leah Busque said, "We have folks who are making this their full-time jobs, almost their second career. We have people that cash out up to almost $5,000 a month, just from doing TaskRabbit tasks."

No one company can rescue America from its economic woes, but TaskRabbit aims to help people take back their lives, be their own boss, help people out, make some money and just feel good again.

"I know how to make them happy, and I like making them happy," TaskRabbit Hohen said. "It's a win-win situation."

Copyright 2011 ABC News Radio

Wednesday
Sep282011

Fed Chairman Ben Bernanke: US Can Learn from Emerging Economies

Alex Wong/Getty Images(CLEVELAND) -- Federal Reserve Chairman Ben Bernanke, one of the most-watched figures in the financial world, said the United States could learn a lot from the world’s emerging economies before opening the floor to questions at an event Wednesday evening in Cleveland.

Bernanke said advanced economies like the United States “would do well to re-learn some of the lessons from the experiences of the emerging market economies,” including the “importance of disciplined fiscal policies, the benefits of open trade, the need to encourage private capital formation while undertaking necessary public investments, the high returns to education and to promoting technological advances, and the importance of a regulatory framework that encourages entrepreneurship and innovation while maintaining financial stability.”

During the Q&A session, Bernanke answered questions including from a high school student asking why he became an economist and his thoughts about the future of health care.

Bernanke said the U.S. health care system had unequal access and quality and said the country needed improved productivity such that the U.S. could deliver “more care for less money.”

His remarks came just as the Department of Justice asked the Supreme Court to review a lower court decision that struck down a key provision of the health care law.

Bernanke’s event was his first public appearance since the Federal Reserve announced one week ago it will do a debt swap, selling $400 billion of long-term securities for an equal amount of shorter-term instruments. The Fed’s Open Markets Committee’s new stimulus measure, dubbed Operation Twist, and its gloomy assessment of the economy was received coolly on Wall Street.

The move fueled previous criticism by Republican politicians that Bernanke and the Fed were meddling too much in the U.S. economy. Bernanke did not address the criticism or the Fed’s recent efforts to drive interest rates lower than their already-low levels.

Bernanke’s speech Wednesday before a packed audience at the Cleveland Clinic Ideas for Tomorrow event, entitled Emerging Market Economies on the Sources of Sustained Growth, laid out the status and challenges of emerging economies in Africa, Asia and Latin America.

Bernanke compared economist John Williamson’s views on growth in emerging economies from two decades ago, which were dubbed the Washington Consensus, to today’s prevailing views on the subject.

In his speech, Bernanke said there was “little controversy” in policies aimed at increasing macroeconomic stability.

“Abundant evidence has linked fiscal discipline, low inflation and a stable macroeconomic policy environment to stronger, longer-term growth in both emerging and advanced economies,” he said.

That remark came in contrast to what many Republican leaders in the House and Senate have said in criticism against the Federal Reserve.

Republican leaders sent Bernanke a letter last week urging the Fed not to implement further stimulus, an unusual move because the Federal Reserve is an independent agency.

Last week, the Fed said there are “significant” downside risks to the U.S. economy and repeated that economic conditions warrant “exceptionally low” interest rates through mid-2013, with inflation moderating slightly from earlier in the year. The Fed also expects some pickup in growth in the coming quarters and that the unemployment rate will decline only gradually.

Copyright 2011 ABC News Radio

Wednesday
Sep282011

Are Americans Being Too Gloomy on Economy?

Comstock Images/Thinkstock(NEW YORK) -- As the stagnant economy slogs on, unemployment lingers, and Wall Street jitters continue, it's no surprise that consumer confidence is still low.  The latest survey from the Conference Board shows it fell flat in September -- up only 0.2 points from August -- as Americans continued to give negative ratings on the economy and business conditions.

But, some experts say consumers may be being too gloomy in how they view the country's economic standing.

Brian Hamilton, the CEO of the financial information firm Sageworks, says most American businesses are in better shape today than 18 months ago.

"We are finding that demand is higher, sales are higher," he says.

Despite the improvement, Hamilton says consumers still have a very negative view of the economy and so do the media.

"There's a lag in confidence media coverage against data," he notes.  "Data is getting better but yet the coverage and the mood of people tends to be sort of flat."

Copyright 2011 ABC News Radio

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