Economy Watch: Personal Income Fell in ’09; Freddie Mac Seeks $1.8B
- Aug 10, 2010
The U.S. Census Bureau reported on Monday that among the 52 metropolitan areas in the United States with more than one million inhabitants, only three saw an increase in personal incomes in 2009: Washington, D.C., San Antonio and Virginia Beach, Va. All three benefited from the presence of the federal government, whether civilian–in the obvious case of the national capital–or military, in both San Antonio and Virginia Beach.
Drilling down further, the Census Bureau also disclosed findings for metropolitan statistical areas with populations of at least 50,000. At least on paper, the results seem slightly more encouraging than they are for the larger metro areas. Personal income declined in 223 of the 366 MSAs studied. But income also rose in another 134 areas and broke even in nine.
The largest drops among the MSAs were, unsurprisingly, in Nevada, Florida and Arizona. Parts of the Midwest also suffered steep declines in personal income, as the vagaries of manufacturing caught up with a number of cities and towns. Elkhart, Ind., for example, saw a 6.5 percent per capita income drop in 2009. Elkhart was known as the RV capital of the nation, until the recession caused demand for the vehicles to crater almost as deeply as the Las Vegas real estate market.
Conference Board Employment Trends Index Inches Up
The Conference Board Employment Trends Index increased in July for the 14th month in a row, the organization has reported. The index now stands at 97.0, up from June’s figure of 96.7. The index is up 9.8 percent from the same period last year.
Is this good news? Yes and no. “The growth rate of the Employment Trends Index slowed sharply in the past three months, suggesting that employment growth will remain too weak to keep up with the increase in the working age population,” said Gad Levanon, associate director for macroeconomic research at the Conference Board, in a statement on Monday. “The disappointing employment numbers may indicate that the low levels of household spending and confidence are making businesses more cautious when it comes to hiring.”
July’s increase in the Employment Trends Index was driven by positive contributions from six out of the eight components. The improving indicators were initial claims for unemployment insurance; percentage of firms with positions they are unable to fill right now; part-time workers for economic reasons; job openings; industrial production; and real manufacturing and trade sales. Two other indicators showed no improvement for July: the percentage of respondents who say they find jobs ‘hard to get,’ and the number of employees hired by the temporary-help industry.
Now, It’s Freddie Mac’s Turn
Last week, it was Fannie Mae asking for help from the Treasury. This week, it is Freddie Mac’s turn to plead for a cash infusion–$1.8 billion, to be precise. The government-sponsored entity said it needs the money to bring its reserves into line after a net loss of $4.7 billion during 2Q10. And once again, the GSE is going to get it.
Is this merely throwing more good money after bad? That’s for policymakers to decide, with proposed reforms now apparently on the back burner until after the mid-term elections. GSE abolitionists are unlikely to have their way, but they are making noise about the vast cost of the bailouts so far: about $160 billion and counting. For the sake of comparison, that is roughly equal to the GDP of Romania or the Philippines. If the GSE bailout were its own country, it would have the 47th largest economy in the world, as measured by the CIA World Factbook.
Wall Street managed to start the week off positively, ahead of the Federal Reserve’s Open Market Committee meeting on Tuesday, with the Dow Jones Industrial Average gaining 45.19 points, or 0.42 percent. The S&P 500 was up 0.55 percent and the Nasdaq advanced 0.75 percent.