Summary: Jobless Claims In The United States
Jobless Claims in U.S. Drop to Three-Year Low
Introduction
The United States entered into recession in December 2007 when job losses began. The financial crisis is linked to reckless lending practices by financial institutions and the growing trend of securitization of real estate mortgages in the United States. The US mortgage-backed securities, which had risks that were hard to assess, were marketed around the world. A more broad based credit boom fed a global speculative bubble in real estate and equities, which served to reinforce the risky lending practices. The doubtful financial situation was made more difficult by a sharp increase in oil and food prices. The emergence of Sub-prime loan losses in 2007 began the crisis and exposed …show more content…
other risky loans and over-inflated asset prices. With loan losses mounting and the fall of Lehman Brothers on September 15, 2008, a major panic broke out on the inter-bank loan market. As share and housing prices declined, many large and well established investment and commercial banks in the United States and Europe suffered huge losses and even faced bankruptcy, resulting in massive public financial assistance. (http://www.nytimes.com/2009/01/09/business/worldbusiness/09iht-jobs.4.19232394.html, [31 Dec 2011])
Due to the sharp downward turn in September 2008 has affected the U.S. economy. The U.S. economy has now lost 4.4 million jobs since the start of 2008. The survey of households found 12.5 million people are now unemployed, the most since records started being kept in 1940.The U.S. economy continued to drain jobs in February, bringing total job losses over the last six months to more than 3.3 million, and taking the unemployment rate to its highest level in 25 years. The government reported that employers slashed 651,000 jobs in February 2009, down from a revised loss of 655,000 jobs in January 2009. By December 2010, the official U.S. unemployment rate had increased to 9.8%. Even at the peak of the recession, the unemployment rate never reached levels of the early 80's recession. (http://www.bloomberg.com/news/2011-12-15/jobless-claims-in-u-s-unexpectedly-decline-to-three-year-low-of-366-000.html, [29 Dec 2011])
Long-Term Regulatory
The Federal Reserve, Treasury, and Securities and Exchange Commission took several steps on September 2009 to intervene in the crisis.
In order to stop the potential run on money market mutual funds. The Securities and Exchange Commission announced termination of short-selling of 799 financial stocks, as well as action against naked short selling, as part of its reaction to the mortgage crisis. (Mark, 1998)
Various agencies, regulators and financial institution began to take additional as more comprehensive steps to handle the crisis to address consumer protection, executive pay, bank financial cushions or capital requirements, derivatives and apply appropriate checks and balances to enhanced authority for the Federal Reserve. New or reinstated rules designed help stabilize the financial system over the long-run to mitigate or prevent future crises. Solutions focused on support for ailing financial institutions and economies to increase the demand and improve on investor confidence. (Stuart, 2004)
Lower interest …show more content…
rates
The Federal Reserve allows reduction of taxable income for both business and some non-business, expenditures, called deductions. Businesses selling goods reduce gross income directly by the cost of goods sold. In addition, businesses may deduct most types of expenses incurred in the business. Some of these deductions are subject to limitations. In addition to business expenses, individuals may reduce income by an allowance for personal exemptions and either a fixed standard deduction or itemized deductions. One personal exemption is allowed per taxpayer, and additional such deductions are allowed for each child or certain other individuals supported by the taxpayer. The standard deduction amount varies by taxpayer filing status. Items deductions by individuals include home mortgage interest, property taxes and other taxes. Lower interest rates can lead to demand-driven inflation once the economy is growing again. Maintaining interest rates at a low level also discourages saving while encouraging spending. The Federal Reserve will increase the amount of loans that private banks can make to consumers and businesses. As banks compete for customers for these new loans, short term interest rates will tend to fall toward the Fed Fund goal. With credit readily which is available at low interest, consumers will tend to take out more loans for high-end goods such as homes and cars, and businesses will invest more in facilities and employ more workers to meet the demand. The increase in money supply is essentially borrowed into existence through the private banking system. (Bloomberg Press, 2003)
Expansionary Fiscal Policy
President Barack Obama’s plan to cut payroll taxes may strengthen the U.S. economy which provides benefits to almost 55 million Americans and is funded by the payroll taxes. Republicans in the U.S. Senate want to cover the cost of extending a payroll tax cut by freezing federal workers’ pay through 2015 and reducing the federal civilian workforce by 10%, putting them at odds with Democrats over how to pay for the $119.6 billion tax break. The proposal counters efforts by President Barack Obama and Democrats to expand the payroll tax cut and pay for it by imposing 3.25% surcharge on income exceeding $1 million. The immediate effects of a tax cut are a decrease in the real income of the government and an increase in the real income of those whose tax rate has been lowered. Calling for tax cuts in the belief that a lower rate will provide an incentive to investors to sell old stocks and invest in new stocks which the supply side maintain and encourages the creation of new jobs, reduces unemployment, and has the complicated effect of increasing tax revenues more or less immediately. (Greg, Russell and Nick, 2004)
Conclusion
After The Federal Reserve and Governments implement new long term regulatory and lower of interest rate, Governments have increased spending or cut taxes to offset declines in consumer spending and business investment. This is the first-time that the claims for unemployment benefits dropped to a three-year low which is showing the labour market is improving. The number of applications for jobless insurance dropped by 19,000 to 366,000 in the week ended of Dec 2010, the fewest since May 2008.The Governments should also invest in skills training for the unemployed and they should first focus on long-term economic recovery by creating jobs even though they are under pressure to cut on spending. The government can help mismatch of the skills of the unemployed and able to send them for skills training for at least some of the positions that are becoming available. Therefore I believe that with the governments’ long term regulations and assistance will improve the employment rate in the long run.
(Bloomberg Press, 2003)
House Speaker John Boehner and Senate Majority Leader Harry Reid kept up the pressure on each other today while showing no intention of making concessions on a tax-cut extension that would break the logjam.
President Barack Obama insisted yesterday that the only way to avert a payroll tax increase for workers in January is for the House to send him a two-month deal the Senate passed Dec. 17.
Boehner and the Republican-controlled House voted 229-193 yesterday, with no Democratic support, to reject the two-month bipartisan Senate measure and call for a yearlong extension of the tax cut.
Reference
(http://www.nytimes.com/2009/01/09/business/worldbusiness/09iht-jobs.4.19232394.html, [31 Dec 2011])
(http://www.bloomberg.com/news/2011-12-15/jobless-claims-in-u-s-unexpectedly-decline-to-three-year-low-of-366-000.html, [29 Dec 2011])
R. Mark Rogers, 1998, Handbook of Key Economic Indicators, 2nd ed, New York, United States.
John Stuart Mill, 2004, Principles of Political Economy, New York, United States.
Bloomberg Press, 2003, Guide to Economic Indicators, 5th ed, New Jersey, United States.
Greg J. Bamber, Russell D. Lansbury and Nick Wailes, 2004, Internation And Comparative Employment Relations. 4th ed, London,
UK.
Introduction
The United States entered into recession in December 2007 when job losses began. The financial crisis is linked to reckless lending practices by financial institutions and the growing trend of securitization of real estate mortgages in the United States. The US mortgage-backed securities, which had risks that were hard to assess, were marketed around the world. A more broad based credit boom fed a global speculative bubble in real estate and equities, which served to reinforce the risky lending practices. The doubtful financial situation was made more difficult by a sharp increase in oil and food prices. The emergence of Sub-prime loan losses in 2007 began the crisis and exposed …show more content…
other risky loans and over-inflated asset prices. With loan losses mounting and the fall of Lehman Brothers on September 15, 2008, a major panic broke out on the inter-bank loan market. As share and housing prices declined, many large and well established investment and commercial banks in the United States and Europe suffered huge losses and even faced bankruptcy, resulting in massive public financial assistance. (http://www.nytimes.com/2009/01/09/business/worldbusiness/09iht-jobs.4.19232394.html, [31 Dec 2011])
Due to the sharp downward turn in September 2008 has affected the U.S. economy. The U.S. economy has now lost 4.4 million jobs since the start of 2008. The survey of households found 12.5 million people are now unemployed, the most since records started being kept in 1940.The U.S. economy continued to drain jobs in February, bringing total job losses over the last six months to more than 3.3 million, and taking the unemployment rate to its highest level in 25 years. The government reported that employers slashed 651,000 jobs in February 2009, down from a revised loss of 655,000 jobs in January 2009. By December 2010, the official U.S. unemployment rate had increased to 9.8%. Even at the peak of the recession, the unemployment rate never reached levels of the early 80's recession. (http://www.bloomberg.com/news/2011-12-15/jobless-claims-in-u-s-unexpectedly-decline-to-three-year-low-of-366-000.html, [29 Dec 2011])
Long-Term Regulatory
The Federal Reserve, Treasury, and Securities and Exchange Commission took several steps on September 2009 to intervene in the crisis.
In order to stop the potential run on money market mutual funds. The Securities and Exchange Commission announced termination of short-selling of 799 financial stocks, as well as action against naked short selling, as part of its reaction to the mortgage crisis. (Mark, 1998)
Various agencies, regulators and financial institution began to take additional as more comprehensive steps to handle the crisis to address consumer protection, executive pay, bank financial cushions or capital requirements, derivatives and apply appropriate checks and balances to enhanced authority for the Federal Reserve. New or reinstated rules designed help stabilize the financial system over the long-run to mitigate or prevent future crises. Solutions focused on support for ailing financial institutions and economies to increase the demand and improve on investor confidence. (Stuart, 2004)
Lower interest …show more content…
rates
The Federal Reserve allows reduction of taxable income for both business and some non-business, expenditures, called deductions. Businesses selling goods reduce gross income directly by the cost of goods sold. In addition, businesses may deduct most types of expenses incurred in the business. Some of these deductions are subject to limitations. In addition to business expenses, individuals may reduce income by an allowance for personal exemptions and either a fixed standard deduction or itemized deductions. One personal exemption is allowed per taxpayer, and additional such deductions are allowed for each child or certain other individuals supported by the taxpayer. The standard deduction amount varies by taxpayer filing status. Items deductions by individuals include home mortgage interest, property taxes and other taxes. Lower interest rates can lead to demand-driven inflation once the economy is growing again. Maintaining interest rates at a low level also discourages saving while encouraging spending. The Federal Reserve will increase the amount of loans that private banks can make to consumers and businesses. As banks compete for customers for these new loans, short term interest rates will tend to fall toward the Fed Fund goal. With credit readily which is available at low interest, consumers will tend to take out more loans for high-end goods such as homes and cars, and businesses will invest more in facilities and employ more workers to meet the demand. The increase in money supply is essentially borrowed into existence through the private banking system. (Bloomberg Press, 2003)
Expansionary Fiscal Policy
President Barack Obama’s plan to cut payroll taxes may strengthen the U.S. economy which provides benefits to almost 55 million Americans and is funded by the payroll taxes. Republicans in the U.S. Senate want to cover the cost of extending a payroll tax cut by freezing federal workers’ pay through 2015 and reducing the federal civilian workforce by 10%, putting them at odds with Democrats over how to pay for the $119.6 billion tax break. The proposal counters efforts by President Barack Obama and Democrats to expand the payroll tax cut and pay for it by imposing 3.25% surcharge on income exceeding $1 million. The immediate effects of a tax cut are a decrease in the real income of the government and an increase in the real income of those whose tax rate has been lowered. Calling for tax cuts in the belief that a lower rate will provide an incentive to investors to sell old stocks and invest in new stocks which the supply side maintain and encourages the creation of new jobs, reduces unemployment, and has the complicated effect of increasing tax revenues more or less immediately. (Greg, Russell and Nick, 2004)
Conclusion
After The Federal Reserve and Governments implement new long term regulatory and lower of interest rate, Governments have increased spending or cut taxes to offset declines in consumer spending and business investment. This is the first-time that the claims for unemployment benefits dropped to a three-year low which is showing the labour market is improving. The number of applications for jobless insurance dropped by 19,000 to 366,000 in the week ended of Dec 2010, the fewest since May 2008.The Governments should also invest in skills training for the unemployed and they should first focus on long-term economic recovery by creating jobs even though they are under pressure to cut on spending. The government can help mismatch of the skills of the unemployed and able to send them for skills training for at least some of the positions that are becoming available. Therefore I believe that with the governments’ long term regulations and assistance will improve the employment rate in the long run.
(Bloomberg Press, 2003)
House Speaker John Boehner and Senate Majority Leader Harry Reid kept up the pressure on each other today while showing no intention of making concessions on a tax-cut extension that would break the logjam.
President Barack Obama insisted yesterday that the only way to avert a payroll tax increase for workers in January is for the House to send him a two-month deal the Senate passed Dec. 17.
Boehner and the Republican-controlled House voted 229-193 yesterday, with no Democratic support, to reject the two-month bipartisan Senate measure and call for a yearlong extension of the tax cut.
Reference
(http://www.nytimes.com/2009/01/09/business/worldbusiness/09iht-jobs.4.19232394.html, [31 Dec 2011])
(http://www.bloomberg.com/news/2011-12-15/jobless-claims-in-u-s-unexpectedly-decline-to-three-year-low-of-366-000.html, [29 Dec 2011])
R. Mark Rogers, 1998, Handbook of Key Economic Indicators, 2nd ed, New York, United States.
John Stuart Mill, 2004, Principles of Political Economy, New York, United States.
Bloomberg Press, 2003, Guide to Economic Indicators, 5th ed, New Jersey, United States.
Greg J. Bamber, Russell D. Lansbury and Nick Wailes, 2004, Internation And Comparative Employment Relations. 4th ed, London,
UK.