Unemployment At 34-Year HighThe U.S. economy suffered another blow when the Labor Department released its January employment report, showing U.S. employers cut a total of 598,000 jobs last month, pushing the unemployment rate to 7.6 percent. The latest job report is the worst since December 1974, and total jobs losses are 1.8 million. More than 3.6 million jobs have been lost in the last year.
The latest job losses top the forecast made earlier by economists surveyed by Briefing.com. The unemployment rate is now at the highest level since September 1992. This report also shows that people are having trouble finding work. The report says that 2.6 million have been out of work for more than six months, the most long-term unemployed since 1983. This report only includes those who are continuing to seek work. The underemployment rate, the number that includes those who have given up looking and those only working part-time who want full time positions, jumped to 13.9 percent from 13.5 percent in December.
January job losses were across the board, with the manufacturing industry laying off 207,000 jobs, construction dropping 111,000 jobs, and business and professional services cutting 121,000 positions. Big companies including Microsoft (MSFT) , Boeing, (BA) Caterpillar (CAT), Home Depot (HD) and Starbucks (SBUX) all slashed jobs.
Retailers also cut 45,000 workers, with Macy's announcing it was slashing 7,000 positions. Leisure and hospitality sector saw 28,000 cut. The only areas that saw minor increases were education, health services and government positions.
Executive Pay Caps Set forTARP-Funded Banks
President Barack Obama has imposed $500,000 caps on senior executive pay for the most distressed financial institutions receiving federal investment money. Obama made the announcement saying Americans are upset with executives being rewarded for failure.
The President's executive pay limits are only the first of many changes that will come next week to the bailout plan, along with Treasury Secretary Timothy Geithner's sweeping new framework that will change how the rest of the $700 billion financial industry funding is spent.
The executive pay caps come after the huge public outcry over news of Wall Street firms paying out more than $18 billion in bonuses in 2008, despite many of their firms losing billions and laying off thousands of workers -- and some of those firms accepting federal bailout money.
The pay cap applies to institutions that negotiate agreements with the Treasury Department for exceptional assistance in the future. The restriction would not apply to such firms as American International Group, Bank of America, and Citigroup that already have received federal funds.
Firms that want to pay executives above the $500,000 threshold would have to use stock that could not be sold or liquidated until they pay back the government funds.
Overpriced Stocks, Assets in TARP
The Congressional Oversight Panel says the federal government overpaid for stocks and other assets when aiding financial institutions last year during the government bank bailout. Elizabeth Warren, chair of the panel told the Senate Banking Committee on Thursday that Treasury paid $254 billion and only got assets worth about $176 billion.
These numbers were determined after studying 10 government transactions, comparing the price paid by Treasury and the value of the asset at the time it was sold. The panel's full report is being released today.
There were some positives in the panel's report. Banks that have received federal money are expected to pay more than $1.5 billion in dividends by the end of February. Even with this news watchdogs and lawmakers continue to be chagrined at the implementation of the Troubled Asset Relief Program (TARP) and are criticizing spending decisions by the Bush administration and former Treasury Secretary Henry Paulson.
New Treasury Secretary Timothy Geithner will put the Obama administration's plans on the remaining money in the bailout plan next week with a framework for helping banks, loosening credit and moving to reduce foreclosures. The plan will also include accountability measures and more transparency to show where the taxpayer money is being spent and how effective it is on improving the state of the financial systems and the economy.