Economy

Unemployment Surges In July

Adam Doster — Thu, 14 Aug 2008 12:17:34 -0700

Illinois continues to shed jobs at a furious pace. According to state officials, Illinois' unemployment rate jumped from 6.8 percent to 7.3 percent in July -- the state's highest jobless level in almost 15 years and well above the national average of 5.6 percent. The Tribune has more:

The number of people without a job surged to 491,300, IDES said. In the three months beginning in May, the number of unemployed workers in Illinois has soared by 121,900. During that period the state's unemployment rate, which has been moving up faster than the national rate, rose a total of 1.9 percentage points. Just a year ago, Illinois unemployment stood at 5.1 percent.

That capital bill couldn't come at a better time.

Foreclosure Watch: Illinois Rate Jumps 16 Percent In 2Q

Josh Kalven — Mon, 28 Jul 2008 07:51:32 -0700

RealtyTrac, Inc. released its second quarter foreclosure figures on Friday. Like elsewhere in the country, the findings out of Illinois and Chicago were disconcerting to say the least:

Illinois’ foreclosure rate ranked it No. 10 in the country, with one foreclosure for every 193 households in the state. That marked a 16 percent increase from the previous quarter and a 58 percent jump from second-quarter 2007.

Chicago ranked 35 among the top 100 metro areas with 21,488 properties with foreclosure filings for a rate of one for every 144 households. That was up 22 percent from last quarter and 58 percent from second-quarter 2007.

Metro Areas Hit Hardest By Unemployment

Adam Doster — Fri, 25 Jul 2008 09:38:41 -0700

Unemployment woes aren't only effecting teens. In May, the Prairie State jobless rate jumped to 6.4 percent, followed by another boost to 6.8 percent in June. And according to new data from the Illinois Department of Employment Security, it's workers in Illinois' 12 metropolitan areas that are really feeling the crunch:

Officials say the unemployment rate is up in all the state's 12 metropolitan areas.

Rockford has the highest unemployment rate at 8.6%. The northern Illinois city also had the biggest unemployment jump, a 2.7% increase from June 2007.

Second-highest was Danville, in east-central Illinois, with 8.4%, followed by Kankakee-Bradley with 8.2%.

As WBEZ reports, Cook County's unemployment rate rose to 7.6 percent in June -- jump of almost one percentage point in just one month. Four other areas recorded their highest unemployment rates since 1990, including Champaign-Urbana, Springfield, Bloomington-Normal, and Lake County. But who needs extended unemployment insurance, right?

Researchers Predict Illinois Will Lose Billions To Global Warming

Mose Buchele — Fri, 25 Jul 2008 08:24:43 -0700

As some observers noted during the severe Midwestern flooding last month, global warming carries a high price tag for certain regions of the country. A groups of studies out this week from the University of Maryland backs up this assertion, predicting that climate change will in the long term cost the state of Illinois billions of dollars. Most of the cost will come in the form of damage to the state's water systems. Experts predict that increased warming will simultaneously cause flooding in much of the state and slowly lower water levels in the Great Lakes. This seemingly paradoxical trend spells trouble for numerous local industries:

These climatic changes will likely undermine an important shipping route for the economically critical manufacturing sector. Infrastructure damages will likely amplify from more frequent flooding, which will likely impact the public highway system, as well. The agricultural sector is projected to face increased costs from greater soil erosion and runoff, as well as the growing need for expensive irrigation. Water supplies throughout the state may be exposed to more contaminants requiring greater water treatment costs. Human health impacts are also expected.

Illinois was one of eight states in which researchers examind the potential economic effects of global warming. You can find all the reports here and download the full study here (PDF).

Image courtesy of NOAA.

Youth Employment At 60-Year Low

Adam Doster — Wed, 23 Jul 2008 13:14:14 -0700

Back in May, the Tribune cited a study by the Center for Labor Market Studies at Northeastern University which predicted some troubling trends in teen summer employment. Now the Center has analyzed recent Bureau of Labor Statistics data and determined that their unsettling employment forecast has come true. From a press release put out yesterday by the Alternative Schools Network:

- Between 2000 and 2008, the national summer teen employment rate for 16-19 year olds fell from 51.4% to 37.1%, a drop of almost 30% -- a Depression-era reduction in job opportunities for American youth and the lowest youth employment rate in 60 years.

- Only one in every five Black 16-19 year olds worked during June 2008.

- Low-income teens fare worst in the labor market. During summer 2007, only 30% of 16-19 year olds from households with annual incomes below $20,000 worked and only 15% of low-income Black youth held a job, versus an employment rate of 50% for teens in households with annual incomes between $75,000 and $100,000.

Unfortunately, little has been done to ease the pain at the federal level, where the report's authors say youth joblessness could really be tackled. Bills in both chambers to set up for a summer jobs programs were left out of the 2008 fiscal stimulus package.

You can download the entire report here.

(H/T Newstips)

As Foreclosures Climb In Illinois, Federal Assistance Ambles Closer

Josh Kalven — Fri, 11 Jul 2008 09:25:19 -0700

While Illinois foreclosures were down in June as compared to May, they were still 42 percent higher than at the same point last year. Realty Trac Inc. found that one out of every 484 households in the Chicagoland area was foreclosed upon during June. Not surprisingly, home sales are also way down in the state, as compared to the previous year. And as the AP reported last weekend, "foreclosures will keep rising next year no matter who is elected president in November."

Meanwhile, in Washington, a bill providing assistance to cash-strapped homeowners has been moving along at a "glacial pace," thanks to GOP lawmakers who oppose it. Here are the details:

The centerpiece of the housing package is a plan to rescue as many as 400,000 families by helping them trade exotic loans with rapidly rising monthly payments for more affordable mortgages backed by the federal government. Under the proposal, the Federal Housing Administration would be authorized to insure up to $300 billion in new loans for families whose lenders agree to write down their debt to no more than 87 percent of their homes' current, reduced value. [...]

The package also contains a long-sought overhaul of the FHA and housing-related tax breaks worth $14.5 billion, including a credit of up to $8,000 for first-time home buyers. And it would offer local communities $3.9 billion in emergency funds to purchase foreclosed properties in hopes of halting or preventing the spread of blight.

The bill cleared a procedural hurdle in the Senate yesterday and is headed back to the House, where it's expected to undergo further changes (those emergency funds will likely be nixed) before facing another vote in both chambers. Democratic leaders hope to get it to the president's desk by the end of the month.

Mortgage Crisis Nails Renters

Adam Doster — Wed, 09 Jul 2008 10:49:12 -0700

We know foreclosures in Illinois have jumped 25 percent since the subprime housing market collapsed last year, affecting homeowners all across the state. But what about people who choose to rent? Are they insulated from the mortgage meltdown? Kelly Virella of The Chicago Reporter says many aren't:

Since the nation’s worst housing foreclosure crisis began two years ago, the octopus-like tentacles of the global home mortgage industry have orchestrated the repossession of thousands of small apartment buildings in Cook County, affecting thousands of renters who live there.

In many cases, the evictions have been legal. In others they’re not because mortgagees — a bank or company that collects mortgage payments — fail to give tenants ample notice or an opportunity to contest the eviction in court. In some cases, like Tabitha’s, the evictions are illegal because there is no court order against the tenants themselves.

Although it's unclear exactly how many people have been impacted in Chicago -- 3,551 two- to six-unit apartment buildings were foreclosed upon in Cook County during 2006 and 2007, two-thirds of which were located in majority-black neighborhoods -- it's a problem in communities across the nation.

In New York City, for example, the Furman Center for Real Estate and Urban Policy at New York University estimated that at least 38,000 people facing a foreclosure in 2007 were renters. And even though renters have no control over their building's finances, they are directly impacted in a variety of ways:

These evictions mar a tenant’s rental history. Tenants in foreclosed buildings don’t usually get their security deposits back, said Bartlett, the executive director of the Chicagobased Metropolitan Tenants Organization, an advocacy group that organizes tenants around housing affordability and availability issues. In some cases, the renter has little time to find new housing and ends up homeless or having to share housing with relatives or another family.

For more information on renter rights, swing by the website of the Metropolitan Tenants Organization, an advocacy group that organizes tenants around housing affordability and availability issues.

Image used under a Creative Commons license by Flickr user crowbert.

Durbin On McCain's Economic Plan: "It's Voodoo Two"

Josh Kalven — Tue, 08 Jul 2008 13:29:18 -0700

On MSNBC this afternoon, The New York Times' John Harwood noted that John McCain vowed yesterday to "balance the budget by the end of his first term," and asked Sen. Dick Durbin: "You don't believe him?" Durbin responded, "It's voodoo two," referring to the term "voodoo economics," which former President George H.W. Bush used to deride former President Reagan's supply-side tax policies.

Durbin continued: "It's a rerun of what we've heard before -- that if you just keep cutting taxes, everything is going to work out." Watch it:

For more on McCain's empty promises to balance the budget, read Adam's post on today's Tribune editorial.

The Trib Hearts McCain's So-Called Economic "Plan"

Adam Doster — Tue, 08 Jul 2008 10:40:28 -0700

Yesterday, John McCain came out and proposed to balance the federal budget by the end of his first term. Today, the Chicago Tribune editorial board lapped it up:

Since winning the nomination, Obama reportedly has been moving toward the middle of the political spectrum. But on the budget, he still sounds left of center, with no interest in eliminating deficit spending.

So it was heartening to hear that at least John McCain is determined to restore fiscal discipline—and not in eight years, as he had previously suggested, but in four. On Monday, he released a plan that explains how he will manage the economy and says flatly, "John McCain will balance the budget by the end of his first term."

The board tempers their excitement with the acknowledgment that McCain has laid out virtually no plan for how to reach this budgetary bliss. Perhaps that's because it's politically unfeasible, a rather important point the Tribune considers only after heralding McCain's announcement.

In a post we highlighted in the Early Bird, the Center for American Progress' Wonk Room suggests that McCain will face a deficit of $700 billion, thanks to his extension and augmentation of Bush's expiring tax cuts. A "generous estimate" of the savings from McCain’s proposed spending freeze would be $50 billion, leaving a budget hole of $650 billion, a whopping total that could not even be erased by eliminating 10 whole cabinet agencies (Agriculture, Commerce, Education, Energy, HUD, Interior, DOJ, Labor, Transportation, Treasury and the EPA).

That leaves only two options: ending the wars in Iraq and Afghanistan, which he won't do and can't say how much the savings will be anyway, or gutting Social Security, one of the most popular social programs in American history. McCain's proposal-- without saying as much -- amounts to a privatizion of the program. But a Democratic Congress will never allow it. So where to get the money? Ezra Klein says it's time the press asks the right questions:

If you are going to balance the budget by doing something to entitlement programs, you are going to do one of two things: Raise the payroll tax, or cut the programs. In other words, the accurate headline for this piece would read "McCain Promises to Cut Social Security And Medicare Or Drastically Raise The Payroll Tax." If enough pieces like that were written, McCain would have to explain which of those he intends to do. As of yet, he's been able to dodge the question, saying repeatedly that he'll "talk" to Congress. But Congress won't cut Social Security or Medicare. So is McCain promising a massive payroll tax increase? Or is he just spouting platitudes?

It's likely the latter, which makes the Tribune's excitement over nothing -- and their criticism of Barack Obama for not promising a balanced budget -- so silly. If the Tribune is worried about "fiscal irresponsibility," maybe they could stop championing a war that costs this country $12 billion per month.

Obama Takes Aim At The 2005 Bankruptcy Bill

Adam Doster — Tue, 08 Jul 2008 09:35:50 -0700

As mortgage and medical costs skyrocket, unemployment rises, and wages stagnate, it's not surprising that more families are falling into the debt trap. In 2007, personal bankruptcy filings in the United States jumped 40 percent and in the first six months of this year, they rose 30 percent as compared to the same period in 2007.

In an economic speech this morning, Barack Obama laid out a plan to help ease the financial strain on struggling families by promising to push for amendments to the 2005 bankruptcy bill. That measure made it tougher for people facing personal bankruptcy to discharge debt by mandating an income test to measure a debtor's ability to repay obligations. The changes proposed by Obama include offering relief to families who defaulted because of high medical costs (which account for about half of all personal bankruptcies), making it easier for the elderly to keep their homes if they are facing bankruptcy, and creating a "fast-track" bankruptcy process for military families that get behind on expenses because of long deployments, repeated moves, or predatory lenders.

It's about time the Democrats attacked John McCain and his party for the lobbyist-penned travesty that was the 2005 bill. A pet project of credit card companies and other consumer lenders, banks claimed hundreds of thousands of debtors were frivolously filing for bankruptcy -- thus discharging the debts they owed to the banks -- when they had the means to cover the unpaid sum. In reality, the purported crisis was entirely invented by the banks. The nonpartisan American Bankruptcy Institute estimates that only three percent of filers were able to discharge debts they could actually afford to pay off. The vast majority were stuck in an endless cycle of debt and high interest.

Politically, this is a great move by the Obama camp. Sensible reform is needed now more than ever and McCain provides a clear contrast, having consistently sided with the banks throughout the 2005 debate (a good rundown of each senator's voting record on the issue can be found here). And as Ed Kilgore writes at Salon, this could help ease tensions with Obama's new critics in the netroots:

I doubt Obama deliberately timed this speech to coincide with the beginning of Senate consideration of the FISA reauthorization, where his position supporting ultimate passage, even with telecomm immunity, has hung fire in the progressive blogosphere. But depending on the details of his bankruptcy proposal, it might give some pause to all the "move to the right" talk about the current phase of his campaign.