Print Comment Teachers continue to get pummeled as state and local governments digest budget cuts for fiscal 2012, which began in July in most states. School districts didn't have the funds to hire back as many employees as in past years. The loss of government jobs continues to weigh heavily on the nation's economy. While the private sector has gained 1.3 million positions this year, the public has lost 267,000. State governments, which had been downsizing most of the year, added 2,000 jobs in September. But state education workers did not fare as well, losing 1,400 positions. 0:00 / 3:47 The great government job purge State and local governments shed 90,000 jobs in the most recent quarter, the third largest loss on record. The sector has downsized for 27 of the past 33 months, according to IHS Global Insight. However, it had been looking even more bleak, but Friday's report showed that July and and August weren't as dire as originally thought. The sector only lost 23,000 jobs those months, not 81,000. The quarter had been on track to be the worst job loss ever for state and local government workers. In September, the federal government lost 1,000 jobs, brought down by a loss of 5,300 postal service slots. The weakness in the public sector is putting increased pressure on President Obama and Congress to funnel more aid to states. One reason job losses are mounting is because the 2009 stimulus funds to states has essentially dried up. This money kept many teachers and public workers on the payroll during the depths of the Great Recession. All that's left now are some funds from last summer's $10 billion in funding to keep teachers and first responders off the unemployment lines. That money, which was estimated to have saved 100,000 positions, will be gone by the end of the fiscal year. U.S. manufacturing slowdown: 4 cities at most risk Obama is looking to send more assistance to cash-strapped states. In his jobs proposal, unveiled last month, he included $30 million to stem the crush of teacher layoffs. The White House estimates its current proposal will prevent up to 280,000 educators from being downsized. But even if Congress sends more money to the states -- which isn't looking likely at this point -- the bleeding isn't expected to stop. The weakening national economy has prompted several states to lower their revenue forecasts, which means more budget reductions could be on the way. Education will likely continue to bear the brunt of the cuts, especially since school districts make up 60% of local payrolls. "That's the sector where there's the most meat to cut," said Greg Daco, principal U.S. economist for IHS Global Insight. "It's at all levels, from kindergarten to university."
Saturday, October 8, 2011
Local government jobs evaporate
Teachers are losing their positions as local government jobs disappear. NEW YORK (CNNMoney) -- The kids are back in school, but the teachers aren't. Educators and other local government workers are not celebrating the rosier-than-expected jobs report released Friday. While the nation added 103,000 jobs last month, public schools lost 24,400 positions -- the most of any category. Local government in total shed 35,000 jobs.
Print Comment Teachers continue to get pummeled as state and local governments digest budget cuts for fiscal 2012, which began in July in most states. School districts didn't have the funds to hire back as many employees as in past years. The loss of government jobs continues to weigh heavily on the nation's economy. While the private sector has gained 1.3 million positions this year, the public has lost 267,000. State governments, which had been downsizing most of the year, added 2,000 jobs in September. But state education workers did not fare as well, losing 1,400 positions. 0:00 / 3:47 The great government job purge State and local governments shed 90,000 jobs in the most recent quarter, the third largest loss on record. The sector has downsized for 27 of the past 33 months, according to IHS Global Insight. However, it had been looking even more bleak, but Friday's report showed that July and and August weren't as dire as originally thought. The sector only lost 23,000 jobs those months, not 81,000. The quarter had been on track to be the worst job loss ever for state and local government workers. In September, the federal government lost 1,000 jobs, brought down by a loss of 5,300 postal service slots. The weakness in the public sector is putting increased pressure on President Obama and Congress to funnel more aid to states. One reason job losses are mounting is because the 2009 stimulus funds to states has essentially dried up. This money kept many teachers and public workers on the payroll during the depths of the Great Recession. All that's left now are some funds from last summer's $10 billion in funding to keep teachers and first responders off the unemployment lines. That money, which was estimated to have saved 100,000 positions, will be gone by the end of the fiscal year. U.S. manufacturing slowdown: 4 cities at most risk Obama is looking to send more assistance to cash-strapped states. In his jobs proposal, unveiled last month, he included $30 million to stem the crush of teacher layoffs. The White House estimates its current proposal will prevent up to 280,000 educators from being downsized. But even if Congress sends more money to the states -- which isn't looking likely at this point -- the bleeding isn't expected to stop. The weakening national economy has prompted several states to lower their revenue forecasts, which means more budget reductions could be on the way. Education will likely continue to bear the brunt of the cuts, especially since school districts make up 60% of local payrolls. "That's the sector where there's the most meat to cut," said Greg Daco, principal U.S. economist for IHS Global Insight. "It's at all levels, from kindergarten to university."
Print Comment Teachers continue to get pummeled as state and local governments digest budget cuts for fiscal 2012, which began in July in most states. School districts didn't have the funds to hire back as many employees as in past years. The loss of government jobs continues to weigh heavily on the nation's economy. While the private sector has gained 1.3 million positions this year, the public has lost 267,000. State governments, which had been downsizing most of the year, added 2,000 jobs in September. But state education workers did not fare as well, losing 1,400 positions. 0:00 / 3:47 The great government job purge State and local governments shed 90,000 jobs in the most recent quarter, the third largest loss on record. The sector has downsized for 27 of the past 33 months, according to IHS Global Insight. However, it had been looking even more bleak, but Friday's report showed that July and and August weren't as dire as originally thought. The sector only lost 23,000 jobs those months, not 81,000. The quarter had been on track to be the worst job loss ever for state and local government workers. In September, the federal government lost 1,000 jobs, brought down by a loss of 5,300 postal service slots. The weakness in the public sector is putting increased pressure on President Obama and Congress to funnel more aid to states. One reason job losses are mounting is because the 2009 stimulus funds to states has essentially dried up. This money kept many teachers and public workers on the payroll during the depths of the Great Recession. All that's left now are some funds from last summer's $10 billion in funding to keep teachers and first responders off the unemployment lines. That money, which was estimated to have saved 100,000 positions, will be gone by the end of the fiscal year. U.S. manufacturing slowdown: 4 cities at most risk Obama is looking to send more assistance to cash-strapped states. In his jobs proposal, unveiled last month, he included $30 million to stem the crush of teacher layoffs. The White House estimates its current proposal will prevent up to 280,000 educators from being downsized. But even if Congress sends more money to the states -- which isn't looking likely at this point -- the bleeding isn't expected to stop. The weakening national economy has prompted several states to lower their revenue forecasts, which means more budget reductions could be on the way. Education will likely continue to bear the brunt of the cuts, especially since school districts make up 60% of local payrolls. "That's the sector where there's the most meat to cut," said Greg Daco, principal U.S. economist for IHS Global Insight. "It's at all levels, from kindergarten to university."
Friday, October 7, 2011
Not a recession. But who cares?
Even though the economy is growing again, the percentage of people out of work or without a full-time job is only slightly below the peak levels from the recession. NEW YORK (CNNMoney) -- Summer may be over but it's still time to fire up the grill. I've been referring to the tepid state of the economy as the barbecue recovery for more than a year now. It's going to be low and slow. (Should have trademarked it!) Friday's jobs report did nothing to change that outlook.
Print Comment Yes, the good news from Friday's jobs report is that more jobs were added than expected in September. In addition, jobs growth figures for July and August were revised higher. Some feared that there could be a loss of jobs after the government originally reported that no jobs were added in August. "Hopeful means not horrible," said Bill Seyfried, professor of economics at Rollins College in Winter Park, Fla.."We've lowered our expectations. The good news is simply that we're not losing jobs." But the addition of 103,000 jobs in September is meager. It wasn't enough to make a dent in the unemployment rate, which remained 9.1%. That's not a good number. What's more, the percentage of so-called "underemployed" workers rose from 16.2% in August to 16.5% last month. That's the highest it's been this year. Then there's the issue of stagnant wages. The government said Friday that hourly earnings were up just 1.9% over the past 12 months. But according to the government's most recent readings on inflation, overall consumer prices were up 3.8% over the past year. Even if you want to play the silly economist game of pretending that people are robots who don't need to eat or drive and strip out "volatile" food and energy costs, the so-called core inflation rate was still 2%. That means that people are not making enough to keep up with rising prices. Unemployed risk a permanent pay cut And as long as the unemployment and underemployment rates remain as high as they are, wages are unlikely to move up. Hirers hold all the cards in the job market right now. If you have a job, you are likely to cling to it for dear life even if you're not happy about your salary. And if you're looking for work -- and have been for some time -- you're more likely to take a job that comes with a smaller paycheck. "Salaries are flat at best. That's not indicative of a strong recovery," said Cam Albright, director of economic research with Wilmington Trust in Wilmington. Del. "With high employment, there is no pressure for companies to increase wages and that's very much a problem. I think that's going to continue," Albright added. 0:00 / 3:47 The great government job purge That's what is so troublesome. Even if the economy doesn't technically double dip and head back into recession, it still feels as if the last recession never really ended. "Some people are referring to this as a 'growth recession.' But if you are unemployed, it doesn't make a difference what this is being called," Rollins said. Albright said he expects the economy to grow at a less-than-2% annualized pace in the second half of this year and only in the mid-2% range in 2012. That's just not enough to make Americans feel better about the economy. Nobody may like to hear this. But no matter what the White House, Congress and regulators do or don't do about taxes, stimulus, the deficit, interest rates or what have you, the sad reality is that the only real solution for this economic malaise is time. The bad news in the good jobs numbers It took decades of wanton spending by consumers and governments and reckless risk-taking by banks and other corporations before the economy finally seized up and stopped functioning normally. It will take years to get back to anything resembling a real recovery. The consumer is still slowly "deleveraging" and the federal government is attempting to do the same. And while the only major bright spot in this economy is that many large corporations have repaired their balance sheets and are now reporting healthy profits, the notable laggard is the financial sector. If banks continue to languish, they are not going to lend as much to small businesses that may be deemed risky borrowers. And that's going to mean more months of low and slow jobs gains. "Growth is elusive. We are still dealing with the residual effects of the financial crisis. That will stay with us for awhile," Albright said. Reader comment of the week. The biggest story of the week was obviously about Jobs with a capital J. The death of Apple co-founder Steve Jobs affected us all. And at a time when most Americans are still worried about their own jobs, one reader said that more companies should follow the lead of Apple. "Let's focus on Jobs and learn from him maybe that's the solution to the jobs situation #learning," tweeted Ashley Garcia. Great point. Considering that Apple had only about 8,400 workers when Jobs was renamed CEO of Apple in 1997 and now employs more than 46,000 people worldwide, I do think many companies can learn a lot from Apple. The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, and Abbott Laboratories, La Monica does not own positions in any individual stocks.
Print Comment Yes, the good news from Friday's jobs report is that more jobs were added than expected in September. In addition, jobs growth figures for July and August were revised higher. Some feared that there could be a loss of jobs after the government originally reported that no jobs were added in August. "Hopeful means not horrible," said Bill Seyfried, professor of economics at Rollins College in Winter Park, Fla.."We've lowered our expectations. The good news is simply that we're not losing jobs." But the addition of 103,000 jobs in September is meager. It wasn't enough to make a dent in the unemployment rate, which remained 9.1%. That's not a good number. What's more, the percentage of so-called "underemployed" workers rose from 16.2% in August to 16.5% last month. That's the highest it's been this year. Then there's the issue of stagnant wages. The government said Friday that hourly earnings were up just 1.9% over the past 12 months. But according to the government's most recent readings on inflation, overall consumer prices were up 3.8% over the past year. Even if you want to play the silly economist game of pretending that people are robots who don't need to eat or drive and strip out "volatile" food and energy costs, the so-called core inflation rate was still 2%. That means that people are not making enough to keep up with rising prices. Unemployed risk a permanent pay cut And as long as the unemployment and underemployment rates remain as high as they are, wages are unlikely to move up. Hirers hold all the cards in the job market right now. If you have a job, you are likely to cling to it for dear life even if you're not happy about your salary. And if you're looking for work -- and have been for some time -- you're more likely to take a job that comes with a smaller paycheck. "Salaries are flat at best. That's not indicative of a strong recovery," said Cam Albright, director of economic research with Wilmington Trust in Wilmington. Del. "With high employment, there is no pressure for companies to increase wages and that's very much a problem. I think that's going to continue," Albright added. 0:00 / 3:47 The great government job purge That's what is so troublesome. Even if the economy doesn't technically double dip and head back into recession, it still feels as if the last recession never really ended. "Some people are referring to this as a 'growth recession.' But if you are unemployed, it doesn't make a difference what this is being called," Rollins said. Albright said he expects the economy to grow at a less-than-2% annualized pace in the second half of this year and only in the mid-2% range in 2012. That's just not enough to make Americans feel better about the economy. Nobody may like to hear this. But no matter what the White House, Congress and regulators do or don't do about taxes, stimulus, the deficit, interest rates or what have you, the sad reality is that the only real solution for this economic malaise is time. The bad news in the good jobs numbers It took decades of wanton spending by consumers and governments and reckless risk-taking by banks and other corporations before the economy finally seized up and stopped functioning normally. It will take years to get back to anything resembling a real recovery. The consumer is still slowly "deleveraging" and the federal government is attempting to do the same. And while the only major bright spot in this economy is that many large corporations have repaired their balance sheets and are now reporting healthy profits, the notable laggard is the financial sector. If banks continue to languish, they are not going to lend as much to small businesses that may be deemed risky borrowers. And that's going to mean more months of low and slow jobs gains. "Growth is elusive. We are still dealing with the residual effects of the financial crisis. That will stay with us for awhile," Albright said. Reader comment of the week. The biggest story of the week was obviously about Jobs with a capital J. The death of Apple co-founder Steve Jobs affected us all. And at a time when most Americans are still worried about their own jobs, one reader said that more companies should follow the lead of Apple. "Let's focus on Jobs and learn from him maybe that's the solution to the jobs situation #learning," tweeted Ashley Garcia. Great point. Considering that Apple had only about 8,400 workers when Jobs was renamed CEO of Apple in 1997 and now employs more than 46,000 people worldwide, I do think many companies can learn a lot from Apple. The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, and Abbott Laboratories, La Monica does not own positions in any individual stocks.
Thursday, October 6, 2011
Holiday hiring expected to be ho-hum this year
NEW YORK (CNNMoney) -- The holiday season is barely underway, and retailers are already expressing a ho-hum attitude towards hiring. Retailers are expected to hire just 480,000 to 500,000 seasonal workers this year, according to a report released Thursday by the National Retail Federation. That's in line with the 495,000 seasonal employees they hired last year, but still far from pre-recession highs. Print Comment A separate report by outplacement firm Challenger, Gray & Christmas also predicted that seasonal hiring will be about the same or lower than a year ago, when employment grew by 627,600 from October through December. "It would be surprising if holiday hiring exceeded last year's level," said John Challenger, the firm's chief executive officer.
"Consumers are just tapped out." Toys R Us expands layaway program Holiday retail sales are expected to increase by 2.8% to $465.6 billion, the NRF also said. While it's a step in the right direction, that growth is far lower than the 5.2% increase retailers experienced last year. With consumers still reluctant to splurge -- even on gifts at the holidays --retailers will be playing it safe, added Robert Brusca, a chief economist at Fact and Opinion Economics. "They're keeping it pretty close to the vest," he said. 0:00 / 10:49 Bill Clinton: How to create jobs now During the 2007 holiday season -- right before the recession began -- retailers hired 720,000 workers. But just one year later, as the recession took hold, holiday hiring hit a 26-year low and only 324,000 temporary workers were hired. Double your salary in the middle of nowhere North Dakota Retailers seem split on bulking up their workforces this year. Last month, Best Buy ( BBY , Fortune 500) announced that it will only be hiring a fraction of the holiday workers that it took on last year and Toys "R" Us said that this year's holiday hiring will be in line with the previous year. Meanwhile, Macy's said it plans to hire even more temporary workers this holiday season. Although a majority of the retail hiring will take place in the weeks ahead, a portion of those positions have already been filled, the NRF said. Since August, the retail industry has added nearly 100,000 jobs.
"Consumers are just tapped out." Toys R Us expands layaway program Holiday retail sales are expected to increase by 2.8% to $465.6 billion, the NRF also said. While it's a step in the right direction, that growth is far lower than the 5.2% increase retailers experienced last year. With consumers still reluctant to splurge -- even on gifts at the holidays --retailers will be playing it safe, added Robert Brusca, a chief economist at Fact and Opinion Economics. "They're keeping it pretty close to the vest," he said. 0:00 / 10:49 Bill Clinton: How to create jobs now During the 2007 holiday season -- right before the recession began -- retailers hired 720,000 workers. But just one year later, as the recession took hold, holiday hiring hit a 26-year low and only 324,000 temporary workers were hired. Double your salary in the middle of nowhere North Dakota Retailers seem split on bulking up their workforces this year. Last month, Best Buy ( BBY , Fortune 500) announced that it will only be hiring a fraction of the holiday workers that it took on last year and Toys "R" Us said that this year's holiday hiring will be in line with the previous year. Meanwhile, Macy's said it plans to hire even more temporary workers this holiday season. Although a majority of the retail hiring will take place in the weeks ahead, a portion of those positions have already been filled, the NRF said. Since August, the retail industry has added nearly 100,000 jobs.
Wednesday, October 5, 2011
Bernanke: More sluggish growth ahead
NEW YORK (CNNMoney) -- Fed chief Ben Bernanke told a panel of Congress on Tuesday that the central bank expects growth in the second half of the year to be "more rapid" than the first half of the year, but says the economy still faces headwinds. During a hearing before the Joint Economic Committee, the Federal Reserve Board chairman also said that the Fed expects a slower pace of economic growth in coming quarters than it had previously forecast back in June, pointing out that sluggish job growth and dour consumer confidence continue to "restrain the pace of recovery." Print Comment "Overall, the recovery from the crisis has been much less robust than we had hoped," Bernanke said. Bernanke reiterated that the Fed is prepared to take action if necessary. However, when asked about the chances that the Federal Reserve would consider a third round of major stimulus, Bernanke said the Fed has "no immediate plans to do anything like that." Can the Fed really get banks to lend? At its most recent meeting in September, the Federal Reserve announced a plan to shift its balance sheet in an effort to lower long-tem interest rates.
Bernanke said he didn't think so-called "operation twist" would do much to stimulate the economy but added it should "help somewhat." The move, he said, should push interest rates down by 0.2 percentage points. Bernanke also gave recommendations to Congress' new super committee that's tasked with cutting $1.5 trillion from federal deficits by the end of next month, saying they need to consider long-term budget constraints but not at the detriment of short-term economic growth. Bernanke also warned policymakers that they need to step up, saying "fostering healthy growth and job creation is a shared responsibility of all economic policymakers." "Monetary policy can be a powerful tool, but it is not a panacea for the problems currently faced by the U.S. economy," Bernanke said. Bernanke: A Greek default could hurt us When asked about China's continued policy to hold down the value of the yuan, Bernanke acknowledged that the Chinese policy is hindering the global economic recovery. However, Bernanke stopped short of endorsing a Senate bill that would slap new tariffs on Chinese imports in retaliation for their policy of devaluing their currency. The Fed chairman also gave his thoughts on the spate of protests on Wall Street, saying he thinks the protests show that "people are quite unhappy with the state of the economy." "They blame, with some justification, the problems of the financial sector," he said. He added the protesters are "dissatisfied with the policy response here in Washington. On some level, I can't blame them."
Bernanke said he didn't think so-called "operation twist" would do much to stimulate the economy but added it should "help somewhat." The move, he said, should push interest rates down by 0.2 percentage points. Bernanke also gave recommendations to Congress' new super committee that's tasked with cutting $1.5 trillion from federal deficits by the end of next month, saying they need to consider long-term budget constraints but not at the detriment of short-term economic growth. Bernanke also warned policymakers that they need to step up, saying "fostering healthy growth and job creation is a shared responsibility of all economic policymakers." "Monetary policy can be a powerful tool, but it is not a panacea for the problems currently faced by the U.S. economy," Bernanke said. Bernanke: A Greek default could hurt us When asked about China's continued policy to hold down the value of the yuan, Bernanke acknowledged that the Chinese policy is hindering the global economic recovery. However, Bernanke stopped short of endorsing a Senate bill that would slap new tariffs on Chinese imports in retaliation for their policy of devaluing their currency. The Fed chairman also gave his thoughts on the spate of protests on Wall Street, saying he thinks the protests show that "people are quite unhappy with the state of the economy." "They blame, with some justification, the problems of the financial sector," he said. He added the protesters are "dissatisfied with the policy response here in Washington. On some level, I can't blame them."
Tuesday, October 4, 2011
Home Prices
NEW YORK (CNNMoney) -- Home prices in July climbed for the fourth month in a row, but are still down from a year ago. According to the latest S&P/Case-Shiller home price index of 120 major cities, prices rose 0.9% in July compared with June, but they're still 4.1% lower than 12 months ago. Print Comment "We are far from a sustained recovery" said S&P spokesman David Blitzer. "Continued increases in home prices through the end of the year. . . must materialize before we can confirm a housing market recovery," Adjusted for seasonal differences, the 20-city index was flat month-over-month.
But a handful of cities have shown surprising strength recently. In Detroit for example, prices jumped 3.8% month-over-month, after spiking 5.8% in June. Minneapolis prices increased 2.6% and Washington recorded a 2.4% rise. Weakness continued in Las Vegas, which was down 0.2% month-over-month and in Phoenix, which edged 0.1% lower. 0:00 / 1:12 No housing slump for Toll Bros. Blitzer cited some positive signs for the struggling housing market. Existing home sales were up 20% in August compared with 12 months earlier. Foreclosures have dropped most of the year. On the negative side, however, housing starts are near historic lows and consumer confidence remains depressed. "These combined statistics indicate the market is still bottoming and has not turned around," he said. Stan Humphries, chief economist for the real estate website Zillow, is not optimistic about the outlook for housing. "I still believe that the continued fears about a Greek default, weak employment growth and low consumer confidence will ultimately translate into weaker housing performance in the back half of this year," he said. "Looking ahead, expect fading monthly momentum in Case-Shiller." Complicating things is that a quarter of homeowners are underwater on their mortgages, owing more than their homes are worth, making it difficult to refinance into low interest mortgages. Underwater borrowers are also more likely to go into foreclosure since there's no home equity to tap should they run into a rough financial patch. Even though most analysts can't work up much enthusiasm for the upward price trend, it's still welcome news, according to Anthony Sanders, a professor of real estate at George Mason University. "Four months of price increases is a pretty good sign that the market has stabilized," he said. A more stable market could mean that lenders will loosen up purse strings a bit, making it easier for potential homebuyers to get mortgages, which could pump up demand for homes. That could happen, according to Sanders, but he expects some bad price trend news this fall as a weaker selling season begins.
But a handful of cities have shown surprising strength recently. In Detroit for example, prices jumped 3.8% month-over-month, after spiking 5.8% in June. Minneapolis prices increased 2.6% and Washington recorded a 2.4% rise. Weakness continued in Las Vegas, which was down 0.2% month-over-month and in Phoenix, which edged 0.1% lower. 0:00 / 1:12 No housing slump for Toll Bros. Blitzer cited some positive signs for the struggling housing market. Existing home sales were up 20% in August compared with 12 months earlier. Foreclosures have dropped most of the year. On the negative side, however, housing starts are near historic lows and consumer confidence remains depressed. "These combined statistics indicate the market is still bottoming and has not turned around," he said. Stan Humphries, chief economist for the real estate website Zillow, is not optimistic about the outlook for housing. "I still believe that the continued fears about a Greek default, weak employment growth and low consumer confidence will ultimately translate into weaker housing performance in the back half of this year," he said. "Looking ahead, expect fading monthly momentum in Case-Shiller." Complicating things is that a quarter of homeowners are underwater on their mortgages, owing more than their homes are worth, making it difficult to refinance into low interest mortgages. Underwater borrowers are also more likely to go into foreclosure since there's no home equity to tap should they run into a rough financial patch. Even though most analysts can't work up much enthusiasm for the upward price trend, it's still welcome news, according to Anthony Sanders, a professor of real estate at George Mason University. "Four months of price increases is a pretty good sign that the market has stabilized," he said. A more stable market could mean that lenders will loosen up purse strings a bit, making it easier for potential homebuyers to get mortgages, which could pump up demand for homes. That could happen, according to Sanders, but he expects some bad price trend news this fall as a weaker selling season begins.
Monday, October 3, 2011
Mortgage help for unemployed disappears
A federal mortgage program to help the unemployed is ending. NEW YORK (CNNMoney) -- The federal government can't even give money away to help the unemployed pay their mortgage. A $1 billion program to assist the jobless will likely end up spending only half the funds, at most, because so few people met the strict criteria. Print Comment The Housing Department, which had to approve the applications for the Emergency Homeowners' Loan Program by Friday, expects that only 10,000 to 15,000 people will qualify. That's only a small sliver of the roughly 100,000 who applied.
"No one could have anticipated how difficult the statutory requirements make it to reach homeowners," said Lemar Wooley, a HUD spokesman. Those who make the cut are expected to receive between $35,000 and $45,000 in aid, he said. Many had high hopes for the loan program because it was targeting a segment of delinquent homeowners not being helped by other federal initiatives, such as mortgage modifications. Passed last year as part of the Dodd-Frank Wall Street reform bill, it was modeled after a very successful program in Pennsylvania that has helped tens of thousands of residents since 1983. The federal effort offered interest-free, forgivable loans to homeowners who lost at least 15% of their income because of the economy or their own medical condition. Applicants had to be at least 90 days delinquent, facing foreclosure and show that they could resume payments if they found a new job. 10 dirt-cheap housing markets If they qualified, they could receive up to $50,000 or 24 months of assistance, whichever came first. The initiative quickly became a quagmire of delays and requirements, however. The rollout was postponed for months, finally launching in late June. HUD originally gave people less than six weeks to apply, but then pushed back the deadline to mid-September. But it was the income and delinquency guidelines that prevented many seemingly eligible people from getting assistance, housing counselors say. HUD used a complicated formula that took into account monthly payments, income and arrears. Only 34 of the 174 homeowners who came to Tierra del Sol Housing Corp. in Las Cruces, N.M., met the criteria, said Rose Garcia, the agency's executive director. Some people were turned away because they were already too far behind in their payments or because their income fell because of a family member's illness. "This program could have made a difference to save people from being homeless," she said. "But it doesn't meet people's needs." 0:00 / 2:33 'The bank owns my town!' In Philadelphia, Michelle Lewis is waiting to see how many of the 400 applications her Northwest Counseling Service received will be approved. She fears it will be few. One problem she ran into was that many applicants lost their jobs more than a year ago. Under HUD's rules, the circumstance that caused the delinquency had to have occurred within the past 12 months. The Pennsylvania loan program, which ended in June because of state budget cuts, allowed for many more hardship conditions so it was able to reach more people than the federal effort, she said. "The [HUD] guidelines were so restrictive that it knocked out a lot of otherwise eligible and worthy consumers," said Lewis, the agency's chief executive.
"No one could have anticipated how difficult the statutory requirements make it to reach homeowners," said Lemar Wooley, a HUD spokesman. Those who make the cut are expected to receive between $35,000 and $45,000 in aid, he said. Many had high hopes for the loan program because it was targeting a segment of delinquent homeowners not being helped by other federal initiatives, such as mortgage modifications. Passed last year as part of the Dodd-Frank Wall Street reform bill, it was modeled after a very successful program in Pennsylvania that has helped tens of thousands of residents since 1983. The federal effort offered interest-free, forgivable loans to homeowners who lost at least 15% of their income because of the economy or their own medical condition. Applicants had to be at least 90 days delinquent, facing foreclosure and show that they could resume payments if they found a new job. 10 dirt-cheap housing markets If they qualified, they could receive up to $50,000 or 24 months of assistance, whichever came first. The initiative quickly became a quagmire of delays and requirements, however. The rollout was postponed for months, finally launching in late June. HUD originally gave people less than six weeks to apply, but then pushed back the deadline to mid-September. But it was the income and delinquency guidelines that prevented many seemingly eligible people from getting assistance, housing counselors say. HUD used a complicated formula that took into account monthly payments, income and arrears. Only 34 of the 174 homeowners who came to Tierra del Sol Housing Corp. in Las Cruces, N.M., met the criteria, said Rose Garcia, the agency's executive director. Some people were turned away because they were already too far behind in their payments or because their income fell because of a family member's illness. "This program could have made a difference to save people from being homeless," she said. "But it doesn't meet people's needs." 0:00 / 2:33 'The bank owns my town!' In Philadelphia, Michelle Lewis is waiting to see how many of the 400 applications her Northwest Counseling Service received will be approved. She fears it will be few. One problem she ran into was that many applicants lost their jobs more than a year ago. Under HUD's rules, the circumstance that caused the delinquency had to have occurred within the past 12 months. The Pennsylvania loan program, which ended in June because of state budget cuts, allowed for many more hardship conditions so it was able to reach more people than the federal effort, she said. "The [HUD] guidelines were so restrictive that it knocked out a lot of otherwise eligible and worthy consumers," said Lewis, the agency's chief executive.
Sunday, October 2, 2011
Greece budget deficits miss bailout targets
Public sector employees carry a banner, reading: "No Layoffs," as they demonstrate outside the Greek Parliament last month. NEW YORK (CNNMoney) -- The Greek cabinet announced late Sunday that it adopted a draft budget for 2012, but the debt-ridden nation will miss key deficit targets for this year and next. According to this preliminary budget, Greece's budget deficit will be 18.69 billion euros, or 8.5% of gross domestic product, in 2011. Greece had originally agreed to a deficit of 17.1 billion euros, or 7.8% of GDP, with the International Monetary Fund, European Commission and the European Central Bank. Print Comment That group, commonly referred to as the troika, has been in discussions over the past few weeks about whether or not to provide Greece with the next round of funding as part of a previously agreed to bailout.
Without this emergency injection, Greece is widely expected to run out of money later this month and could default. The troika is in Athens again this week and is supposed to make a final decision on the next bailout tranche by mid-October. The Greek cabinet said in a statement that the main reason it would miss the deficit target is due to a deeper-than-expected recession. 5 things you need to know about Europe's debt crisis The Greek economy is now expected to contract by 5.5% this year, according to the statement. That's worse than projections of a 3.8% decline in May. The government also hinted that the deficit could be even higher in 2011 if it is unable to successfully implement more austerity measures. 0:00 / 2:21 Euro bailout explained ... with beer pints Greece has already slashed spending, reduced wages and raised taxes in an attempt to bring its debt under control and convince the troika that it should receive all future installments from its bailout package. "We are forced to take decisions much faster than we would wish," said Prime Minister George Papandreou in an opening address to the cabinet, "due to the enormous deficit figure. That then creates recessionary problems." Papandreou said that Greece plans to stick to every detail of its bailout agreement, however unpopular. As part of the budget, Greece said it agreed to 6.6 billion euros more in deficit cutting measures for this year and 2012. However, the cabinet also said that the budget deficit in 2012 was likely to be 6.8% of GDP, higher than the troika's target of 6.5%. CNN's John Psaropoulos, Sarah Aarthun and Per Nyberg contributed to this report.
Without this emergency injection, Greece is widely expected to run out of money later this month and could default. The troika is in Athens again this week and is supposed to make a final decision on the next bailout tranche by mid-October. The Greek cabinet said in a statement that the main reason it would miss the deficit target is due to a deeper-than-expected recession. 5 things you need to know about Europe's debt crisis The Greek economy is now expected to contract by 5.5% this year, according to the statement. That's worse than projections of a 3.8% decline in May. The government also hinted that the deficit could be even higher in 2011 if it is unable to successfully implement more austerity measures. 0:00 / 2:21 Euro bailout explained ... with beer pints Greece has already slashed spending, reduced wages and raised taxes in an attempt to bring its debt under control and convince the troika that it should receive all future installments from its bailout package. "We are forced to take decisions much faster than we would wish," said Prime Minister George Papandreou in an opening address to the cabinet, "due to the enormous deficit figure. That then creates recessionary problems." Papandreou said that Greece plans to stick to every detail of its bailout agreement, however unpopular. As part of the budget, Greece said it agreed to 6.6 billion euros more in deficit cutting measures for this year and 2012. However, the cabinet also said that the budget deficit in 2012 was likely to be 6.8% of GDP, higher than the troika's target of 6.5%. CNN's John Psaropoulos, Sarah Aarthun and Per Nyberg contributed to this report.
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