Some Optimism From the Employment Trends Index
- Feb 09, 2010
February 9, 2010
By Dees Stribling, Contributing Editor
The Conference Board Employment Trends Index rose again in January, for the fifth month in a row. the index now stands at 93.2, up 1 percent from December, but down 0.7 percent compared with January a year ago.
Six of the eight components of the index moved upward in January: Percentage of Respondents Who Say They Find “Jobs Hard to Get”; Number of Temporary Employees; Part-Time Workers for Economic Reasons; Job Openings; Industrial Production; and Real Manufacturing and Trade Sales. Even the other two components, Claims for Unemployment Insurance and the mouth-full Percentage of Firms With Positions Not Able to Fill Right Now, didn’t move negatively all that much.
“The continued rise in the ETI makes us more optimistic that job growth will resume in the first quarter of 2010,” Gad Levanon, associate director of macroeconomic research at the Conference Board, said in a rather cheerful statement. “In particular, [the] large decline in the number of involuntary part-time workers was the first time this component showed a strong signal of improvement.”
Big Banks OK With CRE Loans, But Smaller Ones…
Moody’s Investors Service estimates that Moody’s-rated U.S. banks will lose a grand total of at least $120 billion from bubble-era commercial real estate loans gone bad through 2011, or about 17 percent of their loan balances at the end of 2007. So far about $43 billion of that total has been written down already. If nonrated banks are included as well, the total CRE loan loss might be as much as $150 billion.
And what will Moody’s do to bank ratings in light of these coming losses? Nothing much, certainly no rating downgrades, since the rated banks have already set aside funds to cover the losses for the most part.
Smaller banks that Moody’s doesn’t rate are another matter. The commercial real estate bad-debt vortex is still fearsome enough to drag a good many of them down in the coming months and years, it seems.
Simon Posts Decent Quarter
The nation’s largest retail landlord, Simon Property Group, beat Wall Street expectations with its fourth quarter 2009 numbers, but then again Wall Street didn’t seem to be expecting that much from retail landlords these days. Though better than expected, Simon’s 4Q09 profit declined 41 percent compared with last year because of various write-downs and lower occupancies in its vast shopping center portfolio.
Simon reported a profit of $115.9 million, or 32 cents a share, compared with $196.4 million, or 64 cents a share, a year earlier. Funds from operations (FFO) for the quarter, an important REIT metric, was $1.66 a share, and comp-store sales sales declined 7.9 percent at the REIT’s malls and 1.8 percent at its outlets.
Like many other REITs, Simon has beefed up its balance sheet lately. As of the end of 2009, the company had $4.3 billion in cash on hand, up from $4 billion in 3Q09.
Wall Street looked upward much of Monday, but declined by the end of the day. The Dow Jones Industrial Average was down 103.84 points, or 1.04 percent, while the S&P 500 lost 0.89 percent and the Nasdaq gave up 0.7 percent.