State Unemployment Borrowing

Arizona and Delaware given credit allotment and added to the unemployment borrowing list for March.  New Hampshire managed to make it through February without tapping their line of credit while Kansas, Maryland, Massachusetts, and Vermont began borrowing in February.  California is now over $7.5 billion followed by Michigan, New York, Pennsylvania, and Ohio for the top spots.  All together....over $33.6 billion in borrowing as of March 1st 2010 that is accruing 5% interest and doesn't show up in the state budgets as it will be taxed directly via employers.  Thus curbing future job growth for years to come.

http://www.treasurydirect.gov/govt/reports/tfmp/tfmp_advactivitiessched.htm

Here are some statistics on unemployment....

The National Employment Law Project (NELP) released a new report last week showing that
1.2 million jobless workers will become ineligible for federal unemployment benefits in March unless Congress extends the unemployment safety net programs from the American Recovery and Reinvestment Act (ARRA). By June, this number will swell to nearly 5 million unemployed workers nationally who will be left without any jobless benefits.
...
Currently, 5.6 million people are accessing one of the federal extensions (34-53 weeks of Emergency Unemployment Compensation; 13-20 weeks of Extended Benefits, a program normally funded 50 percent by the states).

According to the BLS, there are a record 6.31 million workers who have been unemployed for more than 26 weeks (and still want a job). This is a record 4.1% of the civilian workforce. (note: records started in 1948).

http://www.calculatedriskblog.com/2010/02/five-million-workers-to-exhaust.html
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The nation's employment picture continues to remain bleak.

The U-S unemployment rate fell from 10 to 9.7 percent in January, but a Gallup poll out yesterday found that nearly one out of every five members of the country's workforce is underemployed. That's about 30 million Americans who are without jobs or unable to find full-time work.

"Underemployed people spent 36 percent less on household purchases than their fully employed neighbors in January, while six out of 10 were not hopeful about their chances of finding adequate work in the coming month, the poll said…
The poll comes at a time when voter anger over the slow economic recovery is running high and President Barack Obama's hopes of boosting employment through government programs have been frustrated by partisan rancor in Congress."

The poll also found that underemployed Americans have a more favorable view of the president than those with full-time work.

There are increasing worries that the 6.3 million Americans who have been unemployed for six months or longer will continue to be out of work, possibly for years to come. The 6.3 million is a record number more than double what it was in the early 1980s.

The NY Times dubs them the "new poor," people who once enjoyed a middle-class life but since the recession have been forced to rely on public assistance for the first time.

Millions could soon face having to do without an unemployment check over the next few months, unless Congress approves an extension. And that's for those lucky enough to be getting any assistance in the first place, as many have no real social safety net to speak of and "are landing in this netherworld," as one expert puts it.

Economists think that the highly educated and those with specific skills are likely to bounce back, but the ability to eke out a middle-class existence with only a high school education and no specialized skills might largely be relegated to history books. Even if the economy begins to recover, it's going to take a long time to get the more than 15 million people who are officially jobless back into the work force, particularly since the speed with which jobs come back after downturns has been on a downward cycle over the past 50 years, according to The Times.

To make matters worse, it's difficult to be optimistic about the three sectors that have traditionally helped the country get out of a recession: the auto industry, home building, and banking.

If you are unemployed or underemployed, what are you doing to make ends meet?

For those of you who are employed, there is this sobering thought to consider: Since health insurance, and other fringe benefits, are routinely based on full-time employment, many of these under-employed Americans do not qualify for these benefits. It means that many more millions of Americans who, when they get sick, will be treated by hospitals, which will pass that cost onto states systems (those that have them) or, more likely, insurance companies. Couple that with rising health care costs in the medical field and the insurance industry and fewer and fewer businesses will be able to afford health benefits for their employees --or they'll lay off more people. Or close their doors.
Either way, a smaller and smaller pool of insured will remain, increasing the risk pool for private insurers who will then be forced to raise their rates --on you, and on group plans. This was precisely the reasoning Anthem Blue Cross in California used to justify their rate increase proposal of 39 percent this year and 41 percent last year (though they've now been found by the state to have committed over 700 violation, including late payment of claims and misrepresenting facts or insurance policies to consumers).
Bottom line: The unemployment picture is another aspect of health reform seldom discussed and another strong argument for single-payer national health insurance. If you want to argue that you don't want to pay for other people's health care, guess what: You already are, and under the current system, you will pay more.

 http://www.examiner.com/x-15870-Populist-Examiner~y2010m2d23-Poll-One-in-five-Americans-underemployed
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California saw 834,329 unemployment claims filed in January, a 34% increase over the 621,468 in January of 2009 when the financial meltdown escalated and employers started slashing payrolls, reports the state Employment Development Department.

The cost of unemployment in California also has soared as more people collect benefits for a longer period.

EDD reported the state paid out $2.44 billion in benefits this January up from $1.34 billion in January 2009, an 82% increase. That equates to about $81 million a day in pay outs.

http://economy.freedomblogging.com/2010/02/23/calif-sees-jobless-claims-jump-in-january/27613/

To put that in perspective, from my own research - average daily revenue for California for the current fiscal year ( July 1st 2009 through Dec 31st 2009) is $220 million per day.  That puts average daily unemployment expenses at over 36% of average daily revenue.....which is clearly unsustainable.  To top it off, unemployment expenses are rising while revenue is declining.  Average daily borrowing from the Fed for unemployment was $32.1 billion.

Five states will be added to the list (currently 30 states) in the next six months:

Arizona will begin borrowing from the Fed by the end of March - first of April.  Delaware will begin end of April - first of May.  Hawaii will start in June.  New Hampshire by mid March.  Tennessee in August.

The Trust Fund balances of the remaining states, that aren't borrowing from the Federal Government yet, have been declining at just under 10% per month since June 2009.  At this rate all but two states will be borrowing from the Federal Government by the end of 2012....and that is if the trend doesn't accelerate....which in all likelihood...will!

If global markets ever get tired of fretting over the debt situation in Europe there's certainly no shortage of cash-strapped government entities in the United States that give cause for concern. Setting aside the exploding federal deficit situation, ABCNews.com set out to take a close look at the 50 states from a variety of economic and demographic factors, including total population, projected 2010 budget deficits, credit ratings, foreclosure rates, energy costs, total outstanding debt and unemployment.

Here are the five states spiraling most dangerously toward insolvency:

California Reaming

With a fiscal year 2010 budget gap of nearly $52 billion, or 56 percent of its total general budget, California is hands down the poster child of fiscally imperiled states. It also enjoys the dubious distinction of having the single worst credit rating (A-) of any of the 50 states, as measured by Standard & Poor's.

Ill in Illinois

By most measures, Illinois has a troubling financial outlook. It has a $14.3 billion budget deficit, which amounts to 41 percent of its total budget, as well as double-digit unemployment. Illinois also has the second lowest S&P credit rating behind California.

Earlier this year a group of Chicago-based civic leaders created a Web site, Illinoisisbroke.com, to raise awareness and keep a running tally on the state's total debt which is expected to reach $130 billion by July. The state, according to the site, spends $3 for every $2 it takes in. Much of the debt is related to pension and health care benefits for state retirees.

Florida, Foreclosed

No state with a population as large as Florida's (at 18.5 million people) has a foreclosure rate as high as the Sunshine State. At 2.7 percent, it is twice the national average, according to the Mortgage Bankers Association's National Delinquency Survey.

New York State of Bind

The Empire State faces a $21 billion budget deficit this fiscal year which ends in April. To put that in perspective, that is 38 percent of New York's total budget. Only California has a higher absolute dollar deficit figure weighing it down, and only four states (California, Arizona, Nevada and Illinois) have larger gaps when measured as a percentage of total budget. The state has historically relied heavily upon revenues from taxes on bonuses paid out by Wall Street firms, in some years accounting for nearly one-fifth of the total budget. The collapse of several Wall Street firms, along with a backlash against financial industry pay in general, is expected to put the state in a severe bind. As state legislatures go, Albany gives Sacramento a run for its (ability to mismanage) money.

Michigan's Mess

Detroit's auto woes have pushed Michigan's unemployment level to 14.6 percent, the highest in the country. The eighth most populated state, Michigan has been forced to partially shut down state government functions twice in the past two years as lawmakers failed to agree on a budget, according to the Pew's study. It currently faces a $2.8 billion budget gap.

When the federal Bureau of Economic Analysis releases finalized 2009 data, Michigan is expected to be among the 10 poorest states, according to Donald Grimes, a senior research specialist at the University of Michigan.

 http://abcnews.go.com/Business/california-illinois-florida-york-michigan-states-dire-financial/story?id=9856552 

Side note on banking...

The Federal Deposit Insurance Corp. said Tuesday that its deposit-insurance fund fell to $20.9 billion at the end of 2009, a $12.6 billion drop in the final three months of the year, as bank failures continued at a pace not seen since the savings and loan crisis. The fund's reserve ratio was -0.39% at the end of the quarter, the lowest on record for the combined bank and thrift fund.

The deposit insurance fund is unlikely to soon see a respite from a decline in the number of failing banks: The FDIC said the number of banks on its "problem" list climbed to 702 at the end of 2009 from 552 at the end of September and 252 at the end of 2008. The number of banks on the list, which have combined assets of $402.8 billion, is the highest since June 1993.

"The continued rise in loan losses and troubled assets points to further pressure on earnings," FDIC Chairman Sheila Bair said in a statement. "The growth in the numbers and assets of institutions on our 'Problem List' points to a likely rise in the number of failures."

Industry indicators deteriorated nearly across the board. The FDIC said loan losses for U.S. banks climbed for the 12th straight quarter, while the total loan balances for U.S. banks continued to fall. The agency said the quarterly net charge-off rate and the total number of loans at least three months past due both were at the highest level ever recorded in the 26 years the data have been collected.

Net charge-offs of troubled loans occurred across all major loan categories, led by a $3.3 billion increase in residential mortgage loans. The FDIC said U.S. banks' coverage ratio--reserves divided by the amount of noncurrent loans--fell to 58.1% in the fourth quarter from 60.1% in the third quarter.

http://www.zerohedge.com/article/fdic-hits-record-default-levels-deposit-insurance-fund-plunges-127-billion-negative-209-bill
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