bank run blog

With no easy credit and many US workers unemployed, vacationers are becoming stay-cationers in foreclosureland leaving America’s getaway spots in dire straights. This segment from CBS focuses on how the economic downturn has even dimmed the lights in America’s favorite bingo hall, Las Vegas.

“The Folies Bergere opened at the Tropicana in 1959…the Tropicana’s owners, battling bankruptcy, announced they are closing the Folies for good.” CBS News

“Like nearly 60 percent of the people in Las Vegas with a mortgage, (Tanya Rucker) owes more than her house is worth.” CBS News

In this segment Al Jazeera reports from Danville, Va, where the unemployment rate is 16.8 percent. The town of 45,000 relies upon manufaturing to employ its workforce but, “The business closures just keep on coming.”

“The effects of the economic meltdown can be seen in places like this, God’s Storehouse, a food kitchen on the outskirts of Danville…The director told us that the number of people coming through the doors has increased by 45 percent since 2004. People who used to make donations are now lining up for help.” Cath Turner, Al Jazeera

Although a recurring feature of the modern US economy, Bloomberg reports that, “unexpectedly”, the number of workers in America with no work rose again last week;

“Initial jobless claims swelled by 12,000 to 669,000 in the week ended March 28, topping 600,000 for a ninth straight time, after a revised 657,000 the prior week, the Labor Department said today in Washington. The number of people staying on benefit rolls soared in the prior week to 5.73 million.”

Bloomberg further reports that the number of jobless workers in the US has risen to the highest rate in a quarter century;

“Another Labor Department report tomorrow may show the jobless rate in March rose to the highest in more than 25 years, reinforcing concerns that the economy will continue to bleed jobs as companies reduce output. Less employment and slowing incomes may thwart a rebound in consumer spending, setting back prospects for an economic turnaround in the second half of 2009.”

and;

“The four-week moving average of initial claims, a less volatile measure, rose to 656,750 from 650,250, today’s report showed. Continuing claims were the highest since records began in 1967, rising from 5.57 million…

Twenty-four states and territories reported an increase in new claims for the week ended March 21, while 29 reported a decrease…

Companies cut an estimated 742,000 workers in March, the most since records began in 2001, according to figures released yesterday by ADP Employer Services.”

Quite expectedly, the rise in joblessness is old news with the Labor Department reporting that nine states have double digit unemployment rates and every major city reporting job losses in February.

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Bloomberg : U.S. Initial Jobless Claims Rose by 12,000 to 669,000
US Department of Labor unemployment statistics

Married couples who work in the same companies are facing the daunting prospect of company lay-offs where both spouses could lose their jobs simultaneously. The Associated Press reports;

“As layoffs mount across the country and in all sectors, couples who are co-workers are increasingly vulnerable to losing their families’ twin sources of income at once. The lack of variety in job skills can also make it difficult to bounce back, especially in a struggling industry.”

Demographics have changed over the past decades, and the vast majority of families with children have two full time working parents. Although both parents are full time workers in most modern American families, having two incomes has not been too great a buffer from stagnant wages and increased cost for necessities such as health care. These factors and Americans’ lust for consumption has led to a situation where two income families are simply making ends meet. The AP writes;

“Before the 1970s, families weathered economic downturns by sending the non-working spouse, typically wives, into the work force. But today roughly 53 percent of all married couples, and 64 percent of married couples with children under age 18, rely on two incomes, according to the U.S. Census Bureau…

In theory that should have increased financial security. Instead, couples often use the extra income to buy bigger homes, nicer cars and other luxuries, said Rick Harper, director of the University of West Florida’s Haas Center for Business Research.

‘In the 1980s, both spouses worked and the savings rate for families went from 12 and 14 percent to essentially zero,” Harper said. “In this decade, households smoothed over the rough spots by taking equity out of their homes. Now there is no equity left to take.’”

The AP adds;

“There are no statistics on the number of couples who have both lost jobs. Nearly 3 million jobs were eliminated last year alone. On Friday, the Labor Department said 11.6 million were unemployed in January.”

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Associated Press : More co-worker couples losing both incomes at once

The legion of unemployed Americans grew again this past week with record numbers of citizens now seeking unemployment insurance benefits. The Associated Press reports;

“The Labor Department reported that the number of Americans continuing to claim unemployment insurance for the week ending Jan. 17 was a seasonally adjusted 4.78 million, the highest on records dating back to 1967.

A department analyst said that as a proportion of the work force, the tally of unemployment recipients is the highest since August 1983.

The total released by the department doesn’t include about 1.7 million people receiving benefits under an extended unemployment compensation program authorized by Congress last summer. That means the total number of recipients is actually closer to 6.5 million people.”

Last week the number of workers who filed for unemployment compensation was 588,000. That number was slightly less than the record number of applicants who filed claims in the last week of December when 589,000 workers applied for benefits (a 26 year high).

The Associated Press calculates that more than 125,000 layoffs have been announced by US companies since the begining of this year.

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Associated Press : Americans receiving jobless benefits hits record