plus 4, Poor, minorities struggle to access banks, FDIC says - StJoenews.net

Poor, minorities struggle to access banks, FDIC says - StJoenews.net
FDIC: Over 16 percent in Mississippi can't access banks - Hattiesburg American
5.1% of Pennsylvania residents lack access to banking - Pittsburgh Business Times
S&P cuts Dubai company ratings - Associated Press
Friday's job's report: Unemployment to stay above 10 percent in 2010 - Statesman Journal

Poor, minorities struggle to access banks, FDIC says - StJoenews.net

Posted: 03 Dec 2009 01:53 PM PST

WASHINGTON — More than a million American households lost access to basic banking services like savings accounts last year, bank regulators say.

Those families are among 30 million households that have little or no access to such services, according to a survey released Wednesday by the Federal Deposit Insurance Corp. Poor, minority and immigrant families are especially hard-hit.

In all, 25.6 percent of U.S. households either lack bank accounts or use payday loans, check-cashing services and other costly alternatives to traditional banks, according to the survey.

The report is part of an FDIC effort to bring the so-called "unbanked" into the financial mainstream.

FDIC Chairman Sheila Bair said access to a bank account gives households "an important first step toward achieving financial security." Vulnerable families need the ability to save for emergencies and borrow on affordable terms, she said in a statement.

"By better understanding this group — who they are and their reasons for being unbanked or underbanked — we will be better positioned to help them take that first step," Bair said.

Households are considered "unbanked" if they report that no member has a checking or savings account. "Underbanked" households have bank accounts but still rely on costly, lightly regulated services like payday loans, check-cashing services and pawn shops.

The survey found that black, Hispanic and Native American families are more likely to fall into these categories. Seventy-one percent of unbanked households earn less than $30,000 a year, it found.

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FDIC: Over 16 percent in Mississippi can't access banks - Hattiesburg American

Posted: 03 Dec 2009 12:34 PM PST

JACKSON — Federal banking regulators say 16.4 percent of Mississippi households — 184,000 households — don't have a bank account or access to banking services.

Mississippi's 16.4 percent "unbanked" figure is double the national average of 7.7 percent in the report released Wednesday by the Federal Deposit Insurance Corp.

A total of 282,000 households, or 25.2 percent, are considered "underbanked," meaning they have a bank account of some sort but also use payday loans, check-cashing services and other costly alternatives to traditional banks. That compares to about 18 percent nationally.

The FDIC says black residents, non-homeowners and households that earn less than $30,000 annually are more unlikely to have a checking or savings account in Mississippi.

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5.1% of Pennsylvania residents lack access to banking - Pittsburgh Business Times

Posted: 03 Dec 2009 09:28 AM PST

The overall number of Pennsylvanians with limited or no access to banking services was below national rates, according to a survey by the Federal Deposit Insurance Corp. and the U.S. Census Bureau.

Some 251,000 Keystone State residents, or 5.1 percent of all state households, are "unbanked." The states with the highest percentage of unbanked households were Mississippi at 16.4 percent, Georgia at 12.2 percent and Kentucky at 11.9 percent. The least unbanked state was Utah at 1.7 percent.

About 874,000, or 17.6 percent of Pennsylvania households, are underbanked, according to the data. The states with the highest rate of under-banked households are Alaska, Mississippi and South Carolina, at 25.5 percent, 25.2 percent and 24.2 percent, respectively. Minnesota's 11.1 percent rate of under-banked residents was the lowest in the nation.

Pennsylvania's percentages of unbanked and underbanked residents compares favorably to the national average of about 26 percent who are unbanked or under-banked.

The January survey with 47,000 responses considers households unbanked if they don't have a checking or savings account. Under-banked households have accounts, but they primarily use alternative financial services such as non-bank check cashing, payday loans and pawn shop loans. These services often are more expensive than dealing with banks.

In Pennsylvania, 17.1 percent of Hispanic households were unbanked and another 35.7 percent were under-banked, compared to national averages of 19.3 percent and 24 percent, respectively.

About 19 percent of black households in Pennsylvania were unbanked, compared to the 21.7 percent national average. Blacks were more likely to be under-banked in Pennsylvania, with a 32.5 percent rate, compared to the 31.6 percent rate for black households nationwide.

"Access to an account at a federally insured institution provides households with an important first step toward achieving financial security — the opportunity to conduct basic financial transactions, save for emergency and long-term security needs, and access credit on affordable terms," FDIC Chairman Sheila Bair said in a press release. "By better understanding the households that make up this group — who they are and their reasons for being unbanked or under-banked, we will be better positioned to help them take that first step."

Click here to read the full report.

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S&P cuts Dubai company ratings - Associated Press

Posted: 03 Dec 2009 08:34 PM PST

WASHINGTON (AP) -- Every step forward in this economic recovery seems to be followed by a step back.

Thursday's good news was that new unemployment claims fell for a fifth straight week, boosting expectations that fewer jobs were lost in November. That raises the possibility that the nation's unemployment rate to be announced Friday will hold steady at 10.2 percent - still a 26-year high, but the first time since July it hasn't gone up.

At the same time, though, there were more signs that the rebound will be slower and bumpier than those that followed previous recessions. Both retail sales and activity in the service sector unexpectedly shrank last month as consumers remained anxious about their jobs and hesitant to spend.

The surprise dip in the service sector was worrisome, because this area accounts for nearly 80 percent of the nation's economic activity. It includes such diverse industries as health care, retail, financial services and transportation.

Productivity gains in the third quarter also showed that employers are managing to squeeze more work out of fewer people. That's a potentially ominous sign for the nearly 16 million unemployed Americans.

Nigel Gault, chief U.S. economist at IHS Global Insight, said the reports depicted an economy growing but only sluggishly.

"We have got a recovery, but it is going to remain pretty slow and well below what you would normally see coming out of this deep of a recession," Gault said.

Most worrisome for the economy, perhaps, is that consumers - who drive 70 percent of the economy - continue to limit their spending.

The latest evidence was the miserable November the nation's big chain retail stores reported Thursday. After posting two monthly gains after more than a year of declines, the stores said sales dipped last month - a critical decline because it meant the holiday shopping season got off to a lackluster start.

The more positive news Thursday was the Labor Department's report that the number of newly laid-off workers filing for unemployment benefits fell for a fifth consecutive week. It dropped to a seasonally adjusted 457,000 last week. That's the lowest total since the week of Sept. 6, 2008.

The government is expected to report Friday that employers shed 130,000 jobs in November, fewer than the 190,000 jobs lost in October. But forecasters think the unemployment rate will remain at 10.2 percent, a 26-year high.

President Barack Obama kicked off a White House jobs forum Thursday, saying he was "open to every demonstrably good idea" to reverse the rising tide of job losses. But with limited government resources, the private sector ultimately will have to lead.

"We have to be surgical, and we're going to have to be creative," Obama said.

Companies have been laying off fewer workers. But they have yet to ramp up hiring, and the jobless rate is expected to keep climbing, probably hitting 10.5 percent or higher by the middle of next year.

The government's productivity report said output per hour of work shot up at an annual rate of 8.1 percent in the July-September period. It was the sharpest quarterly increase in six years. For now, that means companies can get by without hiring more workers.

The question is how long they can do so. Nigel Gault, an economist at IHS Global Insight, said companies are reaching the limits of their ability to boost output with scaled-down work forces.

Gault expects employers to begin rehiring in coming months to meet customer demand. That would help sustain the recovery, because it would bolster incomes and encourage more consumers to spend. Many analysts say the economy should begin seeing net job growth sometime early next year.

For now, shoppers are being held back not only by job anxiety but by low wages. Over the 12 months that ended in October, wages and salaries - the most vital component of incomes - fell 2.9 percent, the Commerce Department said last week.

Partly because of that, Gault forecast that the overall economy, as measured by the gross domestic product, will limp along at subpar rates of about 2.5 percent through mid-2010. High unemployment, which has depressed wages and consumers' ability to spend, will continue to restrain the economy, he said.

On Wall Street, a late-day slide pulled stocks lower ahead of the jobs report Friday. The Dow Jones industrial average fell 86.53, or 0.8 percent. Other stock averages also dropped.

The productivity report showed that unit labor costs, a measure of employers' wage and benefit costs, fell at a 2.5 percent rate in the third quarter. The decline followed a flat reading in the spring and a 5 percent plunge in the first quarter. Lower wage costs have allowed companies to bolster their profits even in a weak economy.

The Institute for Supply Management's service sector index dropped to 48.7 in November from 50.6 in October. It disappointed economists who had expected it to remain in positive territory. Any reading below 50 signals the service sector is contracting.

"There's no sugarcoating this report -it's grim," said Sal Guatieri, senior economist at BMO Capital Markets. "While it's unlikely that the economy will backslide into recession, at a minimum this suggests that the economy's underlying momentum is very weak."

Federal Reserve Chairman Ben Bernanke, testifying at his Senate confirmation hearing, gave a sober assessment of the economy.

"Our task is far from complete," he told the Senate Banking Committee. "Far too many Americans are without jobs, and unemployment could remain high for some time even if, as we anticipate, moderate economic growth continues."

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AP Business Writer Tali Arbel and AP Retail Writer Anne D'Innocenzio in New York, and AP Economics Writers Christopher S. Rugaber and Jeannine Aversa in Washington contributed to this report.

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Friday's job's report: Unemployment to stay above 10 percent in 2010 - Statesman Journal

Posted: 03 Dec 2009 08:26 PM PST

(4 of 4)

The jobs summit will deliver more band aids. Ordinary working Americans and the unemployed will get little of lasting value until the trade deficit, in particular imports of oil and from China, are addressed.

Numbers to Watch in Friday's Release

Jobs Creation. November 6, the Labor Department reported the economy lost 190,000 payroll jobs in October. The federal government sector added 16,000 jobs, while local government shed the same number of employees.

With a slow economic expansion, job losses will continue for several more months, and total losses will exceed 8 million before the hemorrhaging ends.

Unemployment. In October, the unemployment rate, as computed by the Labor Department, was 10.2 percent, and is expected to stay at that level in November. According to my forecast, unemployment will peak at 10.6 percent late in 2010, and then stay there unless the economy heads down again.

Since 2001, more adults have chosen not to seek employment owing to worsening labor market conditions. If labor force participation today were at the same level as when President Bush took the helm, the unemployment rate would be about 13 percent. The difference is discouraged workers that have quit looking for work that the Labor Department does not count when computing the unemployment rate. Add in part-time workers who would prefer full-time employment, and the hidden unemployment rate is above 19 percent.

Construction. In October, construction lost 62,000 jobs. Since construction employment peaked in September 2006, the sector has lost 1.7 million jobs.

Retailing. Retail trade has shed 949,000 jobs since November 2007, and lost 40,000 jobs in October.

Finance and Insurance. During the economic expansion finance and insurance, along with technology sectors offered some of the best new job opportunities, outside of health care and technology-related activities. Since December 2007, finance and insurance has shed 364,000 jobs, and 6,000 in October alone.

Manufacturing. In October, manufacturing lost 61,000 jobs, and over the last 115 months manufacturing it has lost 5.6 million jobs. The dollar remains overvalued against the Chinese yuan and other Asian currencies, and the large trade deficit with China and other Asian exporters is a key factor pushing down U.S. manufacturing employment.

Peter Morici is a Professor at the Smith School of Business, University of Maryland, and former Chief Economist at the United States International Trade Commission.

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