South By North Strategies, Ltd.

NC Unemployment Claims: Week of 2/6

For the benefit week ending on February 6th, 23,874 North Carolinians filed initial claims for state unemployment insurance benefits, and 214,529 individuals applied for state-funded continuing benefits. Compared to the prior week, there were fewer initial and continuing claims. These figures come from data released today by the U.S. Department of Labor.

Averaging new and continuing claims over a four-week period — a process that helps adjust for seasonal fluctuations and better illustrates trends — shows that an average of 19,438 initial claims were filed over the last four weeks, along with an average of 208,237 claims. Compared to the previous four-week period, both initial and continuing claims were lower.
One year ago, the four-week average for initial claims stood at 28,783 and the four-week average of continuing claims equaled 204,888.

The graph (right) shows the changes in unemployment insurance claims (as a share of covered employment) in North Carolina since the recession’s start in December 2007.

Although new and continuing claims appear to have peaked for this business cycle, the claims levels remain elevated and point to a labor market that remains extremely weak. Especially troubling is the high level of continuing claims, which suggests that unemployed individuals are finding it extremely difficult to find new positions.

Housing Markets

From the latest issue of the Center for Economic and Policy Research’s Housing Market Monitor:

Going forward, there continues to be substantial grounds for questioning whether this price recovery will be sustained. The Federal Reserve Board appears likely to go through with plans to end its purchase program for mortgage-backed securities at the end of March. This will almost certainly cause the 30-year mortgage rate to rise to at least 5.5 percent by the end of the year.
—
More importantly, the renewal of the expanded first-time buyers tax credit is scheduled to expire at the end of April. Given the surge in sales in September and October, there can be little doubt that the initial credit boosted demand, which is also reflected in the sharper price increases in the bottom tier of the housing market in most cities. (The credit is larger relative to house prices in the bottom tier and these houses are also more likely to be bought by first-time buyers, so it would be expected that the largest impact shows up in this segment of the market.)  The paring back of loans guaranteed by the Federal Housing Authority will also be a factor reducing demand in 2010, especially at the bottom portion of the market.
—
Interestingly, demand for new mortgage applications has continued to be extremely low following the expiration of the original tax credit. It has been consistently running below the very depressed 2009 levels through January and into February. This is consistent with many buyers having moved their purchases forward to take advantage of the initial tax credit that was expected to expire at the end of November. The implication would be that demand will be especially weak in 2010 and therefore that prices are likely to soon resume their decline.

Around the Dial – Feb. 25

Economic policy reports, blog postings, and media stories of interest:

• Martin Wolf isn’t optimistic about the global economy.
• The Economic Policy Institute calls for aggressive job policies.
• CBPP looks at trends among the nation’s 400 richest taxpayers.
• The Tax Policy Center analyzes the president’s budget proposal.

Financial Reform

At The Baseline Scenario, Simon Johnson handicaps the prospects for meaningful financial reform:

With the broader financial picture unchanged – major banks will make lots of money, while unemployment remains sickeningly high – legitimate concerns about the practices of Big Finance continue to build.  Small and medium-sized banks find themselves increasingly hit by commercial real estate woes.  The alliance that has held back reform begins to crack.
…
Very few people now claim that serious reform is only proposed by people carrying pitchforks; that myth is long gone.  The middle of the consensus has started to move, against mega-banks and against dangerous overborrowing by the financial sector.  This will be a long hard slog, but we are finally heading in the right direction

Measuring Broadband Access

A new report from the Brookings Institution compares broadband access in the United States to conditions found in other countries. The author also proposes several goals for the United States to adopt:

The United States should have three goals: 1) raising the household broadband adoption rate to 90 percent by 2020, 2) aiming for 100 Mbps of speed (similar to Australia and Finland) in order to facilitate new applications in education, health care, smart energy grids, public safety, video streaming and high definition television, games, video conferencing, civic engagement, and electronic government, and 3) improving data collection on broadband speeds and availability so consumers know what speeds they are paying for and policymakers have better adoption and availability information on which to base policy decisions.