Month by month, the U.S. job market is regaining its health.
So many jobs are being added that the unemployment rate has dropped for five straight months. At 8.3 percent, it’s at a three-year low.
Whether the job market actually feels stronger, though, depends on your perspective.
The headline numbers mask vast disparities _ from the New Yorker thrilled to have found a catering job to the Indianapolis truck driver forced to take a 40 percent pay cut to work again.
Even where hiring has picked up, scars from the Great Recession remain. In Fort Madison, Iowa, Pinnacle Foods Group is expanding a canned-meat plant and adding 65 jobs. Yet that same work used to be done at a company plant in Tacoma, Wash., that once employed 160 but has since closed.
A government report Friday that employers added a surprising 243,000 jobs in January ignited cheers for the job market, which had been slow to recover in the 2 1/2 years since the recession officially ended. Many economists see signs of a self-fulfilling “virtuous cycle,” in which more jobs fuel more consumer spending, which sparks further hiring and spending and more jobs.
The presidential election is sure to be determined, in part, by how Americans interpret the shifts in the job market.
Here’s how things look to employers, job seekers and analysts with varying views of the job market:
_ THE RELIEVED AND THE HOPEFUL
Robb Stiffler landed a job two weeks ago at Crown College, a liberal arts college in St. Bonifacius, Minn. He makes sure rooms are available and set up for school events. Stiffler used to run his own company selling paint sprayers. But the housing bust put him out of business.
Then, in nine months in real estate, he sold one house. At first, he lived off his credit cards. Then it was unemployment benefits.
He was elated to get the Crown job, his first to provide a retirement plan. Unemployment, he says, “was agony.”
Vaughan-Bassett Furniture Co. is opening a plant in Galax, Va., near the North Carolina border. It expects to hire 50 workers by July and perhaps 65 more over the next year or two.
January’s buoyant national job numbers “play right into what we have already sensed and begun to act on,” says Doug Bassett, the chief operating officer.
The company’s revenue has risen 20 percent in the past two months compared with the same period a year earlier. Vaughan-Bassett credits an improving economy, rising interest in U.S.-made products and higher prices on Chinese imports it competes with.
Across the country, Ancestry.com, which helps track family lineage, expects to add 150 employees this year _ if it can find them.
The company, based in Provo, Utah, must compete with technology firms for engineers with expertise in artificial intelligence and in handling mountains of data (30 million family trees in Ancestry’s case).
“It’s only gotten harder” to find qualified applicants as the job market has improved, says Eric Shoup, senior vice president. “The likes of Google, Zynga, Facebook and others are also growing. They are soaking these people up.”
James Paulsen, chief investment strategist at Wells Capital Management, says the stock market’s celebration of Friday’s jobs report was another step in reversing Americans’ economic pessimism.
“For me, the takeaway isn’t so much about the healing of the job market as it is about the beginning of an attitude adjustment for this country,” Paulsen said.
Michael Biggers of Brooklyn, N.Y., was happy to land a job recently at a catering company.
The job hunt took four months. Unemployment benefits helped pay the bills. And his four kids, ages 3 to 12, loved having him home. Biggers, 32, just wishes he didn’t have to apply for jobs online.
“I feel like I would have found something faster if I met with a person face to face,” Biggers says. “I’m just confident about me.”
Perhaps no one has more reason to applaud the improving job numbers than President Barack Obama. His re-election hopes rest heavily on whether most voters will agree that the economy has improved on his watch.
“The recovery is speeding up,” Obama said after the January employment report was released.
_ THE CAUTIOUS AND THE SKEPTICAL
In a few weeks, entrepreneur Joe Wong will open a restaurant overseeing the Sacramento River in Redding, Calif. The eatery, View 202, will employ 100.
But Wong, president of J&A Food Service, isn’t convinced the economy is improving. He knows he’ll have to keep menu prices down to attract the budget-conscious. Unemployment still exceeds 11 percent in Redding.
“We’ll probably have 1,000 apply” for jobs, Wong says. The January jobs report is “going to get everybody excited. But we’ve heard it before. It just comes back down.”
Farther south, the economy is only starting to improve in California’s Riverside and San Bernardino counties, an area that was clobbered when housing prices plunged.
“We still have large numbers of foreclosures on the books, and property values and sales taxes are also lagging behind projections,” says Tom Freeman, a Riverside County commissioner.
At least, Freeman says, businesses that sell goods overseas have been a bright spot.
In downtown Indianapolis, Windsor Jewelry hired a part-time worker for the holidays, then made him full-time as demand held up. Owner Greg Bires says he might hire another person this year. Business is a little steadier now.
Still, rising gold prices have pinched the company.
“That’s been the biggest problem _ just not knowing what tomorrow was going to bring,” Bires says. “So we’ve been kind of afraid to make any major changes.”
Among the highest-profile skeptics of an improving job market is Mitt Romney, the Republican front-runner in the presidential race.
On Friday, Romney blamed Obama’s policies for slowing the recovery, hurting families and making it harder for businesses to rebound.
“And for that,” Romney said at a campaign stop in Nevada, “the president deserves the blame that he’ll receive in this campaign.”
_ THE DISCOURAGED
Job seekers still face tough odds. There are still more than four unemployed Americans, on average, for every job opening. In a healthy economy, by contrast, that ratio would be roughly 2-to-1.
Sara Pereda, an executive assistant in New York City’s entertainment industry, has applied for several job openings and received no responses, even though she’s sure she was qualified. The same for many of her friends. Pereda, 30, has been seeking a job with more opportunity for advancement.
“You can send out 10 resumes and get one _ and that’s a maybe,” Pereda says.
In Buffalo, N.Y., Rosanne DiPizio, vice president of her family’s DiPizio Construction, says there isn’t enough work for her company to justify hiring right now. It relies mostly on government road-construction contracts. And governments have been cutting back.
DiPizio also runs a concrete plant that would normally employ 100. It’s down to 85.
“We will employ more if we have more work,” she says. “It’s that simple.”
Jeff Searcy says fewer people are showing up at a support group he runs for job hunters at a church in Charlotte, N.C. Searcy isn’t sure why. The area is suffering from 9.9 percent unemployment, far above the national average.
“We know it’s not because everyone has found a job,” Searcy says.
His theory?
“After you’ve been to 10 lectures on networking, how much more can you learn?”
Aaron Cruz of Indianapolis says that while hiring has picked up, there’s a catch: Landing a job can mean accepting part-time work or a pay cut. Cruz lost his job as a truck driver in December 2008. He didn’t find full-time work again until last June.
His old job paid $23 an hour; his new one, $14.
“The money I’m making now at this new job … I made in my mid-20s,” he says. “I’m 42 now.”
He doesn’t put much stock in better employment numbers. People forced to take part-time jobs once they exhaust their unemployment aid, Cruz notes, aren’t counted as unemployed. Yet they still struggle.
“Every time I hear them, I doubt the numbers,” he says.
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Dow Chemical Co. said Thursday it posted a loss in the fourth-quarter because of a one-time charge that caused it to pay higher taxes at its Brazilian operations.
Shares fell nearly 3 percent in trading before the opening bell.
The Midland, Mich. company, the nation’s largest chemical maker, reported a loss of $20 million, or 2 cents per share, compared with a year-ago profit of $426 million, or 37 cents per share. Excluding a charge of 27 cents per share, Dow would have earned 25 cents per share in the quarter.
Revenue rose 2 percent to $14.1 billion.
Results were below Wall Street’s expectations. Analysts polled by FactSet expected a profit, excluding items, of 31 cents per share on revenue of $14 Business Card Holders.18 billion.
Volume fell 3 percent in the quarter. Demand slipped as customers in North America, Europe and other regions worked through existing inventory instead of replenishing their stockpiles. Dow says it saw global economic “deterioration” in the period, with “considerable weakness” in Western Europe. Europe accounts for a quarter of the company’s sales.
Prices rose 5 percent, offsetting higher feedstock and energy costs.
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A report showing the government will run a budget deficit of more than $1 trillion for the fourth consecutive year inflamed a debate over the federal shortfall that
The world
President Barack Obama is considering nominating Lawrence Summers, his former National Economic Council director, to lead the World Bank when Robert Zoellick
European Central Bank Governing Council member Ewald Nowotny said Standard & Poor
A Qatar-owned company says it has taken over the famous Raffles Hotel Singapore and an affiliated luxury hotel in Paris in the latest high-profile acquisitions by the energy-rich Gulf state.
The Qatar National Hotels Co. said Saturday that it recently took ownership of the 125-year-old Raffles Hotel Singapore and Le Royal Monceau Raffles hotel in Paris.
It did not disclose financial terms in the deal with Toronto-based Fairmont Raffles Hotels International, which had owned both hotels one hour payday loan.
State-owned Qatari companies have been snapping up investments at a brisk pace in recent months, including stakes in European energy companies, Germany’s largest builder Hochtief AG and majority ownership in the French football team Paris Saint-Germain.
American employers stepped up their hiring in December, bringing the unemployment rate down again.
The economy added 200,000 jobs in the month, the Labor Department reported Friday, closing out the year with 1.6 million jobs gained in 2011. Only 940,000 jobs were added the year before.
Meanwhile, the unemployment rate fell to 8.5%, its lowest level since February 2009.
"This is a good solid report, and the big message here is that 2011 was much better than 2010," said Scot Melland, CEO of Dice Holdings, a provider of career websites. "We’re headed in the right direction."
The encouraging news was coupled with revisions to the Labor Department’s data going back five years, which showed the unemployment rate has fallen for four consecutive months.
While private businesses have been adding jobs consistently since March 2010, the government has been slashing payrolls. In December, private employers added 212,000 jobs, and the public sector cut 12,000 jobs.
Young workers getting hired again
The manufacturing, health care and education industries were all bright spots in December, each adding more than 20,000 jobs cheap business cards. Even the construction industry, which had been bleeding jobs the two prior months, hired another 17,000 workers.
Jobs in retail and the food services were also on the rise, as were positions for couriers and messengers. In spite of the Labor Department’s seasonal adjustments, some analysts caution that these positions could be related to holiday hiring.
Still, more than 13 million people remain unemployed in the United States, and 42.5% of them have been so for six months or more.
Overall, the job market has a long way to go to fully recover from the financial crisis. The economy still needs to add about 6 million jobs to get back to 2008 employment levels.
Were you falling out of the middle class even before the Great Recession hit? Are you better or worse off than your parents? Do you have a job but still feel you aren’t upwardly mobile? Email realstories@cnnmoney.com with your name and phone number, and you could be featured in an upcoming story on CNNMoney.
Volatile markets and shaky economic times have made Americans hungrier than ever for financial advice, and Larry Swedroe is happy to oblige.
It may not be the advice they expect, however. Rather than telling you how to react to the latest news out of Europe or Washington, Swedroe wants you to tune it out. Especially, he says, you should ignore the experts who predict that the news will be good or bad for the stock market.
He’s just published his 11th book on investing, but Swedroe is no market guru. If anything, he’s an anti-guru. By the time you read about an event, he says, its implications are already reflected in the price of everything from stocks to bonds to crude oil. No one prognosticator can know more than millions of market participants.
“When they’re right, they attribute it to their genius,” Swedroe says. “When they’re wrong, they blame bad luck. There are no clear crystal balls, only cloudy ones.”
In the new book, “Investment Mistakes Even Smart Investors Make,” Swedroe lists 77 common errors, several of which are especially dangerous during turbulent times. Being swayed by popular opinion is mistake No. 6, and paying attention to the experts is No. 10. If you try to time the market in any way, you’re guilty of No. 49.
Swedroe’s advice is so simple that it’s difficult for most people to follow. You should invest in low-cost index funds, diversify across asset classes and be cognizant of tax considerations.
“It’s not just buy and hold,” he explains. “It’s buy and hold, tax-manage, rebalance and if anything happens like a birth or death in the family or an inheritance, then revisit your investment plan. People think buy and hold means do nothing, and it’s more than that.”
Swedroe criticizes brokerage firms, mutual funds, hedge funds and even the financial media because he thinks they prey on investors’ weaknesses. Mistake No. 29, for example, is believing that actively managed funds can beat the market, and No personal loans for bad credit. 53 is working with a commission-based adviser.
Swedroe is research director at Clayton-based Buckingham Asset Management, which works on a fee-only basis and puts its clients’ $3.5 billion of assets into index-like funds.
The firm had just $11 million of assets when Swedroe joined in 1994, and his books have helped Buckingham grow. He insists, though, that they’re written to educate, not market a service.
Indeed, there’s no hard sell here. Swedroe says he’s happy if a do-it-yourself investor follows his methods, or even if a reader chooses a competing firm that embraces the same principles.
Swedroe’s books do get repetitive; “Rational Investing in Irrational Times,” published in 2002, was also organized as a collection of common mistakes. (Back then, he tallied only 52 errors.)
Each volume, though, adds new research and examples, and Swedroe says he’ll keep evangelizing as long as he can think of new ways to spread his message. He had thought “Investment Mistakes” might be his last book, but he’s now working on a shorter, breezier primer for people with brief attention spans.
Swedroe figures that his books have sold almost 200,000 copies combined, a respectable but not huge following.
What’s most rewarding, he says, is hearing from readers such as a doctor who used to day-trade and obsess over his investments. His wife was threatening to leave because he had little time for her or their small child. Reading a Swedroe book saved his marriage.
That’s why this anti-guru is so passionate about his message. It’s not just about money, he says, it’s about life.
The so-called January effect, in which small-cap stocks have tended to outperform large-cap stocks at the start of each year, is not evoking the same bold confidence that it has during more predictable market periods.
“Small-cap stocks do tend to benefit from the increased attention that investors pay to their stock portfolios at the beginning of each year,” acknowledged Tom Jacobs, lead adviser for Motley Fool Special Ops (a special situations and opportunistic value service) in Marfa, Texas. “Having said that, however, a number of factors such as Europe’s problems are really freaking out investors right now.”
For example, his current favorite small-cap stock, Canadian-based Primero Mining Corp. (PPP), is actually a play on precious metals. That company owns Mexico’s highly productive San Dimas gold and silver mine; its cash flow equals its market capitalization; it carries little debt; and it has stated its intention to expand its metals assets in the Americas.
Investor nervousness about stocks of all sizes has encouraged the managers of some of the better-performing small-cap portfolios to aggressively seek out stocks they consider currently undervalued.
“Investors should remember that, in an improving economic environment, small caps tend to outperform large-cap stocks,” said Matthew Hart, portfolio manager of the $1.1 billion Invesco Van Kampen Small Cap Growth Fund A (VASCX), which has a three-year annualized return of 13 percent.
But while small caps are capable of supplying high growth and high returns, the economic sensitivity of these companies can never be disregarded, Hart cautioned.
“Small-cap stocks still look good and their valuations are reasonable when compared to large-cap stocks,” said William McVail, portfolio manager of the Turner Small Cap Growth Fund (TSCEX), which has a three-year annualized return of 21 percent. “We like the energy sector and especially the natural gas plays.”
The small-cap choices they prefer feature unique characteristics.
One example owned by both Hart and McVail is Clean Harbors Inc. (CLH), one of the nation’s largest providers of environmental services. As the largest operator of non-nuclear hazardous waste disposal in North America, Clean Harbors serves more than 50,000 customers.
Strong financially with modest debt, Clean Harbors has the assets, facilities and expertise that are difficult for competitors to match. McVail considers Clean Harbors especially well-positioned to profit from hydraulic fracturing — the method by which natural gas is released from shale rock. That practice has evoked controversy as its environmental, health and safety impacts are debated.
Insight Capital Research and Management Inc. in Walnut Creek, Calif., also recommends Clean Harbors. Insight Capital’s CEO and CIO Jim Collins, a longtime small-cap expert, predicts that “2012 will be a stock picker’s market,” requiring “discipline and patience.” Health care, technology and energy are Collins’ favored small-cap themes for the year.
Collins’ two other favorite small-caps are unique: Questcor Pharmaceuticals (QCOR), which develops medications for central nervous system disorders such as epilepsy and multiple sclerosis, and Silicon Motion Technology Corp. (SIMO), which manufactures graphics, video and audio applications for products ranging from handheld devices to LCD products and whose clients include the likes of Hewlett-Packard and Intel.
“I see the employment picture improving in 2012, and I believe we’re in the sixth or seventh inning of the bad housing environment,” said McVail of Turner Small Cap Growth. “For example, we have a portfolio holding in TrueBlue Inc. (TBI), a blue-collar staffing company in Tacoma, Wash., and any turn in the economy is going to be reflected in a company like this.”
TrueBlue, with most of its branch offices located in the U.S., primarily sends manual-labor temps to small and midsize businesses. With strong finances, no debt and plenty of cash, its business model and brand are well-respected.
The top portfolio holdings of Turner Small Cap Growth were recently Healthspring Inc., Taleo Corp. A, Genesee & Wyoming Inc., The Finish Line Inc., Clean Harbors Inc., Questcor Pharmaceuticals, SuccessFactors Inc., Cubist Pharmaceuticals, Northern Oil & Gas Inc. and WellCare Health Plans. This “no-load” (no sales charge) fund requires a $2,500 minimum initial investment.
While an economic upturn is still not a certainty, it would make a positive difference for small-cap stocks in 2012.
“The U.S. consumer is gradually improving, and the employment picture, while not great, is at least stabilizing,” says Hart of Invesco Van Kampen Small Cap Growth. “What we haven’t seen on the consumer side is wage growth and, once we start to see that, I think the picture will improve even more.”
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