DataPoints

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The recession might be technically over, but unemployment is rising month after month even in most of the nation's strongest job markets.

A full-fledged job recovery seems to be a long way away. But some metros are poised for significant job growth by the first quarter of next year. BusinessWeek.com teamed up with Moody's Economy.com to identify America's 25 next recovering job markets. These metros were ranked based on Economy.com's projected job growth in the first three months of 2010.

FollowingMark Z., outlines the future of the beleaguered U.S. housing market at the client conference.

Mark Z. is giving his semi-annual presentation to clients this morning at the Penn State Great Valley center. Some of his key slides:

I wasn't going to bring this up again, but it seems to be on a lot of minds already. The most-emailed article at the WSJ's online site, in fact:

Yankees World Series Victories Boost Economic Growth

If the Yankees win the World Series the economy will have a nice bounce back in 2010 but if the Phillies prevail it will be a long slog to recovery, according to a Real Time Economics analysis of gross domestic product following Yankees and Phillies World Series victories since 1930 (which is as far back as the Commerce Department’s GDP numbers go). Okay, so it’s a stupid calculation, but just for fun let’s take a look at the numbers.*

The Phillies’ connection to economic turmoil has been documented, but the Yankees ties to robust growth is less well known. Since 1930, the Yankees — who would clinch their 27th World Series trophy with a win tonight — have been a harbinger of an average of 5% GDP growth in years following a series victory, healthy by any measure. In years in which the Yankees didn’t win the World Series (either they lost or didn’t make it) U.S. output expanded at an unspectacular 2.9%.

So what does this say about we diehard fans of the Fightin' Phils? Are we being exuberantly irrational? Au contraire. Rooting for the Phillies is the logical—nay, the only—way to hedge against simultaneous moral and economic collapse.

As Mark Z. wrote in the New York Times the other day, small businesses could be the key to reviving job growth in the U.S. Now Mike Zielenziger reports from the field that there's hope in the air:

Rockford, an automotive and manufacturing center in northern Illinois, is typical of the many communities around the country that have been hard hit. Unemployment tops 15 percent, and the larger firms that once were the economic bedrock have been undermined by global competition. Despite a diversified base of agribusiness and machine tool manufacturers, very few large companies are hiring.

As in other parts of America, bankers and economic development officials in this city of about 157,000 are hoping that a revival of small business can boost the region’s employment and economic prospects.

So a proposal announced by the Obama administration last week to boost the capital available to make small-business loans and to raise the maximum loan ceiling is being warmly welcomed by bankers and employment counselors here...

Note the angle here for the AARP: A favorable climate for small-business is important for folks over 50, since many of them(us) will be starting or joining small firms as they(we) phase out of Corporate America. Interesting...

The administration endorsed legislation that would in part:

• Expand from $2 million to $5 million the maximum size of 7(a) loans, which help businesses invest in machinery, equipment, land and buildings.

• Increase the maximum loan for building expansion or modernization—a 504 loan—from $2 million to $5 million for most borrowers, and from $4 million to $5.5 million for manufacturers.

• Offer more funds, at lower rates, to community banks with less than $1 billion in assets. Funds would be offered to the banks at 3 percent, rather than the current 5 percent.

The funds would come from the $700 billion Troubled Asset Relief Program. TARP was originally intended to assist the nation’s largest banks. Small businesses shed 2.4 million jobs from the middle of 2007 through the end of 2008.

While Joe Brusuelas waits for Wednesday's FOMC statement, he talks to Bloomberg about the Fed's dilemma.

On today's New York Times op-ed page, Mark Z. argues that helping small business is vital to the recovery.

...Small businesses are especially vital to job growth. Establishments with fewer than 20 employees account for 25 percent of all jobs, but these same-sized companies generated 40 percent of the job growth in the last economic expansion, from 2003 to 2007. In their recent efforts to recharge the economy, policy makers have all but forgotten small business, finding it both easier and more visible to help large multinational firms. Unfortunately, though, big business can’t provide the jobs needed to power the economy forward...

Small firms are now struggling to obtain credit; their principal lenders, small banks, are under intense pressure, and hundreds more are set to be taken over by the Federal Deposit Insurance Corporation. Credit card lenders, another key source of loans to small business, have aggressively raised their underwriting standards. Policy makers could offer quick relief by empowering the Small Business Administration to provide more credit.

The Small Business Administration guarantees bank loans to small businesses, but banks aren’t making very many because the loan’s interest rates are capped at less than 6 percent — not enough to compensate for their risks at a time when business bankruptcies are high and rising. Creditworthy small firms would gladly pay somewhat higher rates to obtain credit. Increasing the maximum size of an S.B.A. loan and temporarily raising the percentage of the loan guarantees to as high as 97.5 percent, from 90 percent, would also prompt much more lending.

To help small companies with cash flow, policy makers should also extend provisions in the current stimulus bill that allow money-losing firms to receive refunds of taxes paid on profits earned in previous years. (In return, they agree to pay higher taxes in the future.) Rules permitting such refunds are scheduled to expire at the end of this year; an extension through next year would provide quick cash for many firms that might otherwise be forced to close. Given the tens of thousands of bankruptcies in the works by businesses of all sizes, expanding this tax benefit to bigger firms than are now permitted in the stimulus package would be a plus. Allowing companies with as many as 250 employees to take advantage of the benefit could potentially help well more than a quarter-million firms.

Finally, the government could help minimize the number of new job losses by promoting work-share programs. Nothing damages morale at a company more than layoffs; the experience not only is crushing for those who lose their jobs, but also weighs on those who remain, including managers. Layoffs are also costly, given severance expenses and the costs of rehiring or training new employees when business picks up again. Seventeen states offer effective work-share programs. Under these arrangements, employers cut workers’ hours — not their jobs — and states make up a portion of workers’ lost wages with unemployment insurance payments. Congress should provide financing to expand such programs nationwide.

Read the whole thing...