US – Odessa Joins U.S. Cities Boosted By Energy As Others Lag

July 24, 2012

Odessa, Texas, driven by a resurgent oil industry, will grow fastest this year among U.S. cities, followed by energy boomtowns Lafayette, Louisiana, and Bismarck, North Dakota, a new study shows.

Most cities will trail the nation’s 2 percent economic expansion projected for this year, according to the study by IHS Inc. for the U.S. Conference of Mayors in Washington. The report also warned of growing traffic congestion and its costs.

“Lafayette, Odessa and Bismarck will each see robust activity in natural resources,” according to the IHS Global Insight report, with energy industries fueling job growth in the Louisiana city and oil production helping in West Texas and North Dakota. Gains in manufacturing as the national economy recovers are forecast to boost Rust Belt cities led by the Elkhart-Goshen area of northern Indiana.

While growth is projected to continue nationwide, the outlook for most cities varies, with faster expansion in those with economies rooted in professional, business, health and education services, according to IHS. The average rate will be 1.8 percent for the 363 cities studied, with 70 percent expanding 2 percent or less this year. Contractions are forecast in dozens of cities from Reno, Nevada to Dalton, Georgia.

New oil- and gas-extraction techniques such as hydraulic fracturing, or fracking, have revivedoutput in Texas, which produces the most crude of any U.S. state. It is also fueling a boom in North Dakota, where the Bakken shale-oil formation that reaches into Canada may contain 4 billion barrels of reserves.

Growth is projected at 9.7 percent this year in Odessa, a city of about 100,000 where employment is expected to rise 7.2 percent this year. Expansion is forecast at 7.5 percent in Lafayette and 7.3 percent in Bismarck, according to the study. The Elkhart-Goshen economy will increase 7.3 percent.

Expansion will test transportation facilities particularly in the top 15 metro areas by population, according to IHS. The New York region, leading the list with an economy larger than Mexico’s, will grow 1.8 percent this year and add more than 900,000 jobs during this decade, the study shows. Employment in second-largest Los Angeles, where the economy will expand 1.7 percent in 2012, is forecast to increase by 500,000 by 2020.

“Congestion costs,” measured in time and fuel, for each commuter exceeded $1,000 a year in the largest metro areas.

The Chicago area, with the highest congestion costs of $1,568 per commuter, is forecast to experience a 16 percent population increase to 11 million by 2042. The study projects the fastest rates of population growth, which will add to clogged traffic, in cities in the South and Southwest, such as OrlandoFlorida, and Phoenix.

Increased investment in transportation infrastructure will help cities continue to lead the nation’s growth, according to a group of mayors who briefed reporters on the report today in Philadelphia. U.S. metro areas accounted for 84 percent of the nation’s job gains since the bottom of the recession, according to the study.

“When you invest in cities, you invest in the recovery of America and put Americans back to work,” said Philadelphia Mayor Michael Nutter, president of the conference.

Source: Bloomberg


US Energy, Manufacturing Fuel Cities’ Economic Growth: Study

July 24, 2012

(Reuters) – Cities will be leading contributors to U.S. economic expansion over the next year, and much of their growth will depend on energy and manufacturing, according to a study released by the U.S. Conference of Mayors on Thursday.
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Sales Drop Unexpectedly on Weak U.S. Job Growth: Economy

July 24, 2012

Retail sales in the U.S. unexpectedly fell for a third month in June as limited employment gains took a toll on consumers. The 0.5 percent drop followed a 0.2 percent decrease in May, Commerce Department figures showed today in Washington. The decline exceeded the most pessimistic forecast in a Bloomberg News survey that called for a median 0.2 percent gain in sales. Other reports today showed manufacturing in the New York region picked up this month and U.S. inventories increased in May.

The retail figures prompted economists at Morgan Stanley, Goldman Sachs Group Inc. and Credit Suisse to lower their forecasts for economic growth in the second quarter. A cooling job market is sapping the household spending that makes up 70 percent of the economy, curbing sales at retailers such as Target Corp. and Macy’s Inc.

“Weak spending growth and weak employment are reinforcing one another in a disconcerting negative feedback loop,” said Jay F U.S. economics at Credit Suisse in New York, who cut his tracking estimate for second-quarter economic growth to 1.6 percent from 2 percent.

Stocks trimmed losses as a rally in crude oil prices boosted shares of energy producers. The Standard & Poor’s 500 Index fell 0.2 percent to 1,353.64 at the close in New York. The yield on the 10-year Treasury note slid to 1.47 percent from 1.49 percent late on July 13.

Retail sales estimates in the Bloomberg survey of 81 economists ranged from a decrease of 0.4 percent to a gain of 0.5 percent. Purchases last fell for three months or longer in July through December 2008.

 

‘Anemic’ Growth

“The economy in North America continues to be fragile as consumer confidence lags and job growth remains anemic,” Vernon Nagel, chairman and chief executive of Acuity Brands Inc., a lighting-fixture maker, said during a July 2 earnings call. “We expect the macroeconomic environment for the balance of 2012 to continue to be influenced by external concerns, including fiscal and monetary policy in U.S and the European debt crisis.”

The International Monetary Fund today cut its 2013 global growth forecast as Europe’s crisis prolongs Spain’s recession and slows expansions in emerging markets from China to India. Growth worldwide will be 3.9 percent next year, less than the 4.1 percent estimate in April, the fund predicted in an update of its World Economic Outlook.

Nine of 13 major retail sales categories showed a decline last month, led by a 1.8 percent slump at gas stations that reflected declining fuel costs. Regular fuel in June averaged $3.49 a gallon, or 22 cents less than in May, according to AAA, the nation’s biggest motoring organization.

 

Department Stores

Spending decreased 0.7 percent at department stores, 0.8 percent at furniture outlets and 0.6 percent at motor vehicle and parts dealers. The drop in sales of furniture was the biggest in a year. Demand at building-material stores fell 1.6 percent.

Industry figures show retailers’ same-store sales slumped in June. Purchases at the more than 20 companies tracked by Retail Metrics Inc. increased 0.3 percent in June from the same time last year following a 4 percent gain in May.

Demand at Target rose 2.1 percent last month, falling short of the average projection for a 2.8 percent gain from analysts surveyed by Retail Metrics. Macy’s, the second-biggest U.S. department-store chain, posted a 1.2 percent increase compared with a 2.3 percent estimate.

Today’s figure on auto dealer sales contrasts with data from Ward’s Automotive Group, which reported that cars and light trucks sold at a 14.1 million annual rate in June, up from the 13.7 million pace in May that was weakest this year.

 

Consumer Spending

Consumer spending climbed at a 2.5 percent rate in the first quarter, according to Commerce Department data. Economists surveyed earlier this month before today’s data forecast it increased at a 1.9 percent rate from April to June while the economy as a whole expanded at a 1.8 percent pace.

A less optimistic consumer will probably restrain demand. The Thomson Reuters/University of Michigan preliminary sentiment index for July dropped to the lowest level this year as Americans grew more pessimistic about their finances, a report showed last week.

“People are just pulling back, and you’re not likely to see a significant pickup from here,” said Michael Carey, chief economist for North America at Credit Agricole CIB in New York. “This was certainly a slowdown from the first quarter.”

American employers added fewer workers to payrolls than forecast in June and the jobless rate stayed at 8.2 percent, a report from the Labor Department showed on July 6.

 

June Employment

The 80,000 gain in employment followed a 77,000 increase in May. Economists projected a 100,000 rise, according to the median estimate in a Bloomberg survey. Growth in private payrolls was the weakest in 10 months.

Some Federal Reserve policy makers said the central bank will probably need to take more action to boost the labor market and achieve its inflation goal, according to minutes of their June meeting.

“A few members expressed the view that further policy stimulus likely would be necessary to promote satisfactory growth in employment and to ensure that the inflation rate would be at the Committee’s goal,” according to the record of the Federal Open Market Committee’s June 19-20 gathering released July 11 in Washington.

Fed Chairman Ben S. Bernanke will address the outlook for the economy when he delivers his semi-annual monetary policy report to Congress tomorrow and July 18. He may hint at steps that can be taken to revive the expansion.

 

Excluding Vehicles

Purchases excluding autos decreased 0.4 percent, today’s retail sales report showed. They were projected to be unchanged, the survey median showed.

Sales excluding automobiles and service stations fell 0.2 percent, compared with a projected gain of 0.2 percent in the survey.

The retail sales category used to calculate gross domestic product, which excludes purchases at auto dealers, building material stores and service stations, decreased 0.1 percent after no change in the previous month.

Manufacturing may maintain its role as a bright spot for the economy. The Federal Reserve Bank of New York’s general economic index rose to 7.4 this month from 2.3 in June. The median forecast of 51 economists surveyed by Bloomberg called for an increase to 4.0. Readings greater than zero signal expansion in the so-called Empire State Index that covers New York, northern New Jersey and southern Connecticut.

Inventories increased 0.3 percent for a third month in May, Commerce Department data showed. The median forecast in a Bloomberg survey projected a 0.2 percent gain. Sales fell 0.1 percent in May for a second month.

Businesses had enough goods on hand to last 1.27 months at the current sales pace in May, up from 1.26 months in April and the highest in a year.

Source: SFGate


US – Top 5 Cities With the Lowest Unemployment Rat

July 24, 2012

In May, Bismarck, North Dakota had the lowest unemployment rate for any major metropolitan area in the country at 2.5 percent (compared to the national rate at 8.2 percent) according to the Bureau of Labor Statistics.

Bismarck’s energy, medical and technical service industries are booming, and its supply of rental housing is low, according to Justin Hammer, director of residential property management for Minot, N.D.-based IRET Properties.
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US – June Job Picture – Recession Worry

July 24, 2012

The economy added only 80,000 jobs in June—much less than what is needed to keep up with natural population growth. The unemployment rate was steady at 8.2 percent, largely because another 34,000 unemployed Americans chose not to look for work.

Growth slowed to 1.9 percent in the first quarter from 3 percent the previous period, and was largely sustained by consumers taking on more car and student loans, business investments in equipment and software, and residential construction. The housing market is improving and that should lift construction a bit more but overall, the economy and jobs growth should remain too slow to genuinely dent unemployment.

The June jobs report indicates growth may be even slower in the second quarter, and the economy is dangerously close to stalling and falling into recession.

Manufacturing added 11,000 jobs. Other big gainers included health care, professional services, leisure and hospitality, wholesale trade, and local governments.

Construction gained only 2,000 jobs, and big losers were retail trade, transportation and warehousing, information and communications, and federal governments.

Gains in manufacturing production have not instigated stronger improvements in employment largely, because so much of the growth is focused in high-value activity. Assembly work, outside the auto patch, remains handicapped by the exchange rate situation with the Chinese yuan.

Recent moves by China to further weaken its currency and to close its markets to stimulate its own flagging demand indicate matters will get worse without a substantive response from Washington. Also, concerns about health insurance costs, once Obama Care is fully implemented, are discouraging employers.

The financial crisis in Europe and mounting problems in China’s housing and banking sectors continue to instigate worries among U.S. businesses about a second major recession, and those discourage new hiring. The U.S. economy continues to expand at a torturously slow pace, and is quite vulnerable to shock waves from crises in Europe and Asia.

Factoring in those discouraged adults and others working part time for lack of full time opportunities, the unemployment rate is 14.9 percent.

Prospects for substantially lowering the headline unemployment rate are slim, because so many folks who left the labor force would likely return if economic conditions improved.

Even through the recovery, household wealth remains well below its recession levels, and households once accustomed to two incomes, now getting along on one, will be increasingly challenged. Stagnant wages and stock market valuations have frustrated households efforts to increase savings and rebuild assets in the face of declining real estate values, and to adjust family budgets to fewer employed adults.

Were growth to pick up and the job market improved, given the state of household finances, the percentage of adults seeking employment could easily rise to prerecession levels.

The economy would have to add about 13 million jobs over the next three years—about 360,000 each month—to bring unemployment down to 6 percent. Growth in the range of 4 to 5 percent is necessary to accomplish that.

Growth is weak and jobs are in jeopardy, because temporary tax cuts, stimulus spending, large federal deficits, expensive but ineffective business regulations, and costly health care mandates do not address structural problems holding back dynamic growth and jobs creation—the huge trade deficit and dysfunctional energy policies.

Oil and trade with China account for nearly the entire $600 billion trade deficit. Dollars sent abroad that do not return to purchase U.S. exports, are lost purchasing power. Consequently, the U.S. economy is expanding at 2 percent a year instead of the 5 percent pace that is possible after emerging from a deep recession and with such high unemployment.

Without prompt efforts to produce more domestic oil, redress the trade imbalance with China, relax burdensome business regulations, and curb health care mandates and costs, the U.S. economy cannot grow and create enough jobs.

Peter Morici is an economist and professor at the Smith School of Business, University of Maryland School, and a widely published columnist.

Source: Statesman Journal


Saskatoon posts strong house price increases in second quarter

July 24, 2012

Saskatoon standard two-storey homes posted the largest gain of 7.3 per cent, selling for a second quarter average of $379,500, over the same quarter in 2011.  Detached bungalows saw a 6.0 percent increase over the same quarter last year, selling for an average of $351,125. Standard condominiums sold for an average price of $255,667, a 5.6 per cent year-over-year increase.

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US – Hiring in June Confirmed Weak 2Q12 Economic Recovery

July 24, 2012

Bureau of Labor Statistics posted its preliminary June employment numbers by metropolitan area.  At the national level, monthly nonfarm payrolls increased by an anemic 80,000 jobs in June, and the unemployment rate remained unchanged at 8.2 percent.  Employment growth averaged 75,000 per month in the second quarter of the year, compared with an average monthly increase of 226,000 in the first quarter.

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