20% Unemployment

[i_am_the_swammi]

...or so it would have been in Philly had the stimulus funds not been deployed. This from the right-wing rag in the city, quoting the Keystone Research Center.

 

Lots of worries about what happens in 2012 now that those funds have dried up....many, and I tend to agree, believe it those funds may have just delayed the inevitable. The hope was that the economy would have recovered sufficiently to carry itself once the stim funds dried up...doesn't appear thats going to be the case. Factor in the banking issues that still need to be resolved in the coming year or two, and we have some major hurdles ahead of us.

 

Not a pretty picture here, and likely elsewhere, heading into the new year:

 

Can we survive without stimulus funds?

 

This report was prepared by Daily News staff writer Catherine Lucey and Ben Waxman of "It's Our Money," a joint project between the Daily News and WHYY that is funded by the William Penn Foundation.

 

OVER THE past two years, more than a billion dollars from the federal stimulus program has poured into Philadelphia to help pave roads, hire cops, renovate SEPTA stations, rehab public housing and prevent teacher layoffs. But time is running out on that money. Starting next year, many of the grants given to local government agencies, universities and nonprofits expire. A substantial amount of money used to prop up the state government will also sunset.

 

And looking ahead to life after the stimulus isn't pretty.

 

Without that money, the city government, the school district and other agencies will have less money for contracts and capital projects. Combined with expected budget cuts from the fiscally challenged state government, the impact on Philadelphia could be grim, said Mark Muro, director of policy for the nonpartisan Brookings Institution.

 

"It will lead to a steady increase in layoffs, less contracting, canceled vendor relationships, outsourcing," said Muro. "Let's note that localities, transit systems and other government entities are not just part of the government, they are part of the economy. We could have an anti-stimulus kicking in."

 

The $787 billion stimulus act, approved by Congress in February 2009, was President Obama's attempt to kick-start the failing economy through tax cuts, expanded social services and substantial money for infrastructure projects, education and scientific research.

 

Some of the money went to state governments, which then distributed it. Some was awarded directly to agencies that traditionally get federal money, and other funds were handed out through a competitive bidding process.

 

While debate continues to rage about whether the stimulus program was worth the money, Muro said Philadelphia was certainly better off with it than without it.

 

"The econometric analysis suggests that clearly this was valuable on balance, it somewhat mitigated an economic collapse," Muro said. "Does that mean it was efficient? Does that mean it was properly structured? Not necessarily."

 

The federal reporting rules make an exact stimulus-created jobs figure for city residents very difficult to calculate, but a conservative estimate would be in the thousands. A recent report from the Keystone Research Center estimates that Philadelphia's unemployment rate would have shot to 20 percent without the stimulus. Instead, the rate at the end of October was 11.5 percent.

 

"It would have gotten a lot worse without it. That's really not controversial among economists," said Stephen Herzenberg, an economist with the Keystone Research Center.

 

Still, from a city-government standpoint, the stimulus program has been a mixed blessing. While the money helped accelerate capital projects like street paving and provided job training and loans to small businesses, no dollars were given to the cash-strapped Nutter administration to help prevent service cuts or to shore up the city's ravaged pension fund.

 

"The money has been fantastic, and we've been grateful for it and made it work," said Maari Porter, the city's recovery officer, who oversees the stimulus funding. "I guess we would have wanted a little more thought from the federal government about what cities need."

 

The city got off to a slow start spending the money. By Sept. 30, officials had spent or committed only $106 million of the $251 million awarded directly to the city. Porter stressed that spending picked up this year and noted that many of the city's biggest grants had only recently been awarded, leaving little time to get money out the door.

 

"It does take time to do public works," Porter said.

 

Also, because the program focused primarily on state governments, much of the money went to Harrisburg, rather than directly to Philadelphia.

 

"Stimulus was structured in a way that was emphatically not creative for the most part," said Muro. "It was about accelerated business as usual. And it was about a federal system in which states had a lot of sway and regions and localities [had] less."

 

However, because stimulus dollars were very restricted, the city has not come to rely on them to pay salaries or keep the lights on, which is a good thing for the future. And some of the grants will have a lasting regional impact - like money for green jobs training and dollars helping to transform the Navy Yard into an "energy innovation hub," creating thousands of jobs. The program was a boon for Philadelphia's academic-research institutions - like the University of Pennsylvania and Temple University - where academics got big grants for studies.

 

It also helped public agencies like SEPTA, PennDOT and the Philadelphia Housing Authority, which received money for capital projects that were already in the works. Officials from those agencies said they directed the money to specific projects, because it was a one-time infusion of cash. The funding future now, they said, is uncertain."We knew we would go from a wild peak to a starvation diet, which is where we are now," said Jeff Knueppel, SEPTA's assistant general manager and chief engineer. "We tried to plan around that assumption."

 

Knueppel said that in addition to the end of stimulus money, the agency is anticipating a reduction in state funding, which could mean SEPTA will have to rely on borrowing to fund capital improvements.

 

Rich Kirkpatrick, chief spokesman for PennDOT, said the agency also is staring at a grim future, given its reliance on state and federal funds.

 

"The funding future is murky at the moment," he said. "Washington has not yet given us the next six-year authorization, which gives a sense of how much money will be available."

 

The School District of Philadelphia is in the most dire straits, with an estimated budget shortfall of between $234 million and $500 million for the next financial year. The district received $503 million in stimulus dollars, although some of that money was used to make up for reduced state funding.

 

Michael Masch, the district's chief financial officer, said it does not look as if state and local tax revenue will be enough to offset the lost stimulus dollars.

 

"It now appears, although we are officially out of recession, we are not going to be in September 2011 where the Congress thought we would be in February 2009," said Masch. "The state and local revenue has not returned to a sufficient level."

 

In addition to a lean future at City Hall and local public agencies, another key concern as the stimulus money runs out is what will happen at the state level. Gov.-elect Tom Corbett will face a budget gap of more than $3 billion next year, most of which is due to the expiration of stimulus funds.

 

Economist Herzenberg stressed that if cutting is the main tool used to balance the budget, there could be a major impact on employment and long-term recovery.

 

"It is helpful just to remind people that if we do nothing more in Washington and Harrisburg on the jobs front, while the Recovery Act money goes away, then we are running the risk of the economy stalling again," Herzenberg said. "We need to have a pragmatic conversation about how to strengthen the economy."

[bushwacked]

ASHINGTON, Dec. 31 (UPI) -- Three prominent U.S. economic forecasters have pegged growth for the gross domestic product in 2011 at higher rates than 2010.

 

Moody's Analytics, which estimated growth for 2010 at 2.7 percent, forecasts growth next year at 3.9 percent. Goldman Sachs predicts a 3.4 percent rise in the GDP next year. Macroeconomic Advisers has an even rosier prediction, estimating growth at 4.4 percent for 2011, The Washington Post reported Friday.

 

An increasing number of economists are saying the recovery, which wobbled in the middle of 2010, is now on stronger legs. "We're making a transition to a broader, more durable recovery," said PNC Financial Services Group senior economist Robert Dye.

 

Stock markets edged into higher ground in 2010, the Dow Jones industrial average rising about 11 percent, while the Standard & Poor's 500 rose close to 13 percent. The Nasdaq composite index of tech-dominated stock did better, rising nearly 17 percent.

 

In the last weekly report of 2010, the Labor Department said first-time unemployment benefit claims fell to 388,000 in the week ending Dec. 24.

 

In November, pending home sales rose 3.5 percent, the National Association of Realtors said.

 

Economists are also pointing to two stimulus programs that have yet to take effect. In 2011, the extended George W. Bush era tax breaks will include a 2 percent payroll tax cut, putting more in workers' pockets each week. Long-term unemployment benefits were also extended for 13 months and effects of the Federal Reserve's $600 billion bond purchasing program announced in November will begin to be felt.

 

In the fourth quarter, lending to businesses began to improve for the first time in two years and consumers, for two years, have worked hard paying down debt.

 

"Americans have been de-leveraging for the past two years, and as a result households are much better positioned for the future," said Bernard Baumohl, chief global economist with the Economic Outlook Group.

 

 

http://www.upi.com/Business_News/2010/12/3...74751293811928/

[Perchoutofwater]

Things appear to be getting a little better in general, but my industry is still suffering, particularly the larger work which just isn't being done. This is somewhat to be expected as the larger projects typically lag about 18 months behind the economy. We are looking at an across the board wage cut of 25% for all our employees. Even doing this I'll still have the worst year I've ever had financially next year, barring a bunch of large projects letting go that I don't know about which isn't very likely.

[Ursa Majoris]

Things appear to be getting a little better in general, but my industry is still suffering, particularly the larger work which just isn't being done. This is somewhat to be expected as the larger projects typically lag about 18 months behind the economy. We are looking at an across the board wage cut of 25% for all our employees. Even doing this I'll still have the worst year I've ever had financially next year, barring a bunch of large projects letting go that I don't know about which isn't very likely.

The construction outlook for 2010 was pretty grim but we had far more projects in 2010 than any year preceding. The overall value of projects was down a bit, though. We are doing raises yet again, though very small, it's way better than what many are getting. We haven't missed a raise yet, which is nice but I do think most of us would be fine with a pay freeze year.

 

Our outlook beyond July isn't very nice at all but we seem to keep on picking up enough work to keep the number of employees flat for the moment.

[redrumjuice]

Can we survive without stimulus funds?

 

There is no money.

[bushwacked]

There is no money.

 

The Republican Iraqi welfare program sucked a Mother Load.

Edited January 1, 2011 by bushwacked

[Perchoutofwater]

The construction outlook for 2010 was pretty grim but we had far more projects in 2010 than any year preceding. The overall value of projects was down a bit, though. We are doing raises yet again, though very small, it's way better than what many are getting. We haven't missed a raise yet, which is nice but I do think most of us would be fine with a pay freeze year.

 

Our outlook beyond July isn't very nice at all but we seem to keep on picking up enough work to keep the number of employees flat for the moment.

 

We had a profitable 2010, but right now have very, very little backlog, and there just aren't any projects out there in our typical target range. We can't be competitive on the smaller work. Y'all are considerably larger than us so the projects that you do are larger as well, which if I had to guess means the lag between you and the general economy will be larger than it is with us.

[gilthorp]

We had a profitable 2010, but right now have very, very little backlog, and there just aren't any projects out there in our typical target range. We can't be competitive on the smaller work. Y'all are considerably larger than us so the projects that you do are larger as well, which if I had to guess means the lag between you and the general economy will be larger than it is with us.

 

Looks like you'll need to waste less time on the internet and apply yourself in more productive ways. Good luck.

[Perchoutofwater]

Looks like you'll need to waste less time on the internet and apply yourself in more productive ways. Good luck.

 

Looks like you have no idea about my business or what you are talking about, but thanks.

[isleseeya]

There is no money.

 

 

we need to print more ...a whole lot more

[WaterMan]

The Republican Iraqi welfare program sucked a Mother Load.

 

Follow up question. Which would cost the US more: not having all those Iraqi welfare jobs or not getting our billions of dollars of equipment blown up by IEDs and AA missles?

Edited January 4, 2011 by WaterMan

[Avernus]

we need to print more ...a whole lot more

 

 

this would be horrible...

[Ursa Majoris]

We had a profitable 2010, but right now have very, very little backlog, and there just aren't any projects out there in our typical target range. We can't be competitive on the smaller work. Y'all are considerably larger than us so the projects that you do are larger as well, which if I had to guess means the lag between you and the general economy will be larger than it is with us.

Here's some good news, though it doesn't differentiate between residential and commercial.

 

WASHINGTON (MarketWatch) -- Outlays for U.S. construction projects rose for the third straight month in November, the Commerce Department reported Monday. Construction spending rose 0.4%, slightly higher than economists' expectations of about a 0.2% gain. Spending on public-sector and private projects increased in November. Outlays are still down 6% compared with a year earlier.

[Perchoutofwater]

Here's some good news, though it doesn't differentiate between residential and commercial.

 

I see it turning around for the commercial sector in our area in the 3rd or 4th quarter of this year, which should mean we should start turning a profit again in the 2nd or 3rd quarter of next year. At least I'm banking on it doing that. This year is going to really suck for me, as I'm looking at losing at least $500,000. If there is a silver lining, it is that if I don't lose anymore than that my bonding capacity should not be affected and I should be in a very good position to get a lot of work as I believe two of my four main competitors will probably be going out of business. I'm basically hoping to manage my loses this year have a minimally profitable 2012, and hoping that it is back to high profits in 2013.

[isleseeya]

this would be horrible...

 

not if you had the printer and materials to do it yourself

[Scooby's Hubby]

PA has a new natural gas discovery in the Marcellous Shale with hundreds of millions of new dollars of tax revenue and lots of jobs for the state. Yet, they are still having financial problems? Where is all the money going?

[Yukon Cornelius]

PA has a new natural gas discovery in the Marcellous Shale with hundreds of millions of new dollars of tax revenue and lots of jobs for the state. Yet, they are still having financial problems? Where is all the money going?

over seas

[westvirginia]

So we pissed away a trillion dollars on a stimulus that only delayed the inevitable? Where have we heard that before...

[SEC=UGA]

I see it turning around for the commercial sector in our area in the 3rd or 4th quarter of this year, which should mean we should start turning a profit again in the 2nd or 3rd quarter of next year. At least I'm banking on it doing that. This year is going to really suck for me, as I'm looking at losing at least $500,000. If there is a silver lining, it is that if I don't lose anymore than that my bonding capacity should not be affected and I should be in a very good position to get a lot of work as I believe two of my four main competitors will probably be going out of business. I'm basically hoping to manage my loses this year have a minimally profitable 2012, and hoping that it is back to high profits in 2013.

 

We lost quite a few pesos in 2010. So far this year, yes, from saturday to today, we have signed up more dollars worth of projects than we built all of last year... Things are looking a little bit better.

 

But, now steel prices are expected to rise by roughly 17% through February and who knows how much after that.... Sooo, with the increasing interest rates and the increasing steel prices things could contract in our industry very quickly.

[TimC]

But, now steel prices are expected to rise by roughly 17% through February and who knows how much after that....

 

What? You mean after China diluted the U.S. steel market with their cheap inferior steel driving out the competition, they are now raising prices?

 

We'd better get used to that on all fronts from the Asians.

[SEC=UGA]

What? You mean after China diluted the U.S. steel market with their cheap inferior steel driving out the competition, they are now raising prices?

 

We'd better get used to that on all fronts from the Asians.

 

There was also a bunch of cheap Indian steel here... It was interesting, buildings that, for the steel structure, were running in the $8.50 - $9.00 per SF range were selling for $6.90 to about $7.45 per SF. But, due to the tight lending market very little was being built (that and the fact that you could buy existing facilities, with cash flow in place, for below replacement cost, $6 - $7 per SF.)

[i_am_the_swammi]

So we pissed away a trillion dollars on a stimulus that only delayed the inevitable? Where have we heard that before...

 

Not sure it was inevitable...those that thought it was are going to gloat that they were right, but really, the hope/plan was that the economy would have sufficiently recovered enough to support itself in the time it took to deploy those funds. It was a gamble...the chances of it paying off look slimmer now, but it aint over just yet.

 

I do know I am glad as hell for myself and friends in my area that Philly unemployment didn't hit 20% last year...we'll see how far it climbs as we move forward, but I doubt we touch the mid-teens, which is a hell of a lot better than 20%

[westvirginia]

Dude, I was quoting your OP. Now, instead of the pain of no jobs/no funds, we have the additional interest on the lefty wet-dream spending projects. How was this even CLOSE to worth it?

 

Not sure it was inevitable...those that thought it was are going to gloat that they were right, but really, the hope/plan was that the economy would have sufficiently recovered enough to support itself in the time it took to deploy those funds. It was a gamble...the chances of it paying off look slimmer now, but it aint over just yet.

 

I do know I am glad as hell for myself and friends in my area that Philly unemployment didn't hit 20% last year...we'll see how far it climbs as we move forward, but I doubt we touch the mid-teens, which is a hell of a lot better than 20%

[Savage Beatings]

There is only one answer: more stimulus

[WaterMan]

There is only one answer: more stimulus

 

I vote more communism. China is owning us.