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Economists Predict Job Losses Will Stop In Early 2010

by The Huffington Post News Team on November 23, 2009

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Economists expect the joblessness that has weighed down the nation’s economic recovery will start to slowly abate in 2010, but they predict consumers will continue to keep a tight rein on spending, according to a new survey. While signs have pointed to the end of the recession, joblessness remains rampant. The national unemployment rate jumped to 10.2 percent in October, the highest in 26 years. About 9 million people currently receive unemployment benefits. The November outlook by the National Association for Business Economics, which is set to be released Monday, shows economists expect net employment losses to bottom out in the first quarter of next year. Employers are seen starting to add to their payrolls after that. “While the recovery has been jobless so far, that should soon change,” said Lynn Reaser, NABE’s president and chief economist at Point Loma Nazarene University. “Within the next few months, companies should be adding instead of cutting jobs.” But even if companies do start restaffing next spring, they aren’t expected to ramp up hiring very quickly. Some 7.3 million jobs have been lost since December 2007, according to NABE. Of the 48 panelists surveyed, 61 percent do not expect a complete recovery of those lost jobs until 2012. And they expect the unemployment rate will remain “stubbornly high,” averaging 9.6 percent in the fourth quarter of 2010. Panelists ranked high unemployment as their second biggest concern over the next five years, expressing “extreme concern” first and foremost about the federal deficit. Those surveyed expect inflation will remain low and the dollar to remain weak, though they see it strengthening against the euro and continuing to be a major reserve currency. The economy grew at a 3.5 percent pace in the third quarter, the Commerce Department announced last month, a strong signal that the economy is entering a recovery phase from the worst recession since the Great Depression. But the pace of the recovery is expected to be slow because of high unemployment and tight credit. The latest survey by NABE notes that sluggish consumer spending will continue to weigh on the economy. But it predicts rebounds in housing, growth from business spending as more companies restock lean inventories, and a rise in stock prices. Economists polled in the survey predict 3 percent real GDP growth in the 2009 fourth quarter, and 3.2 percent growth for all of 2010. For the two years combined, the projected growth is half a percentage point higher than the forecast NABE gave in October. “Real GDP growth should also be enough to recover losses from the recession and return output to an all-time high by the end of 2010,” NABE forecasters predict. Those surveyed say the housing recovery will gather momentum, helped by low interest rates, with housing starts expected to jump 36 percent and residential investment climbing 9 percent next year. Such results would make 2010 the first year since 2005 that the housing sector contributes to overall growth. Economists expect home prices to gain 2 percent next year, after bottoming out in 2009. Consumer spending gains are expected to be “lackluster,” as workers continue to worry about jobs and investments. Panelists also expect to see a “persistently elevated sense of thrift” as consumers save more. They expect the personal savings rate to average 4 percent in 2010, the highest level since 1998. Businesses, though, will increase their spending. The survey said the inventory liquidation of the past year will bottom out and companies will restock in 2010, while also spending more on equipment and software because of higher profits. Corporate profits are expected to gain 12.4 percent in 2010, which the survey said was average for the first year of an economic recovery. All survey respondents expect the stock market to grow in 2010, with the S&P 500 Index seen rising 9.5 percent next year. The NABE survey of 48 professional forecasters was taken Oct. 24-Nov. 5.

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Economists Predict Job Losses Will Stop In Early 2010

Dubai Ruler Says Bond Will Be `Well Received,’ Tells Critics to `Shut Up’

by on November 9, 2009

Bloomberg:

By Arif Sharif and Maher Chmaytelli Nov. 9 (Bloomberg) — Dubai’s second half of a $20 billion bond program will be “well received,” and those who doubt the unity of Dubai and Abu Dhabi should “shut up,” the emirate’s ruler Sheikh Mohammed Bin Rashid Al-Maktoum said. “The second tranche of the bond program will be well received, it will be widely subscribed and will be used directly to meet Dubai’s obligations in the next few years,” Sheikh Mohammed told an investors conference organized by Bank of America Merrill Lynch in Dubai today. Dubai, the second-biggest of seven states that make up the United Arab Emirates, raised $1.93 billion last month from the biggest sale of Islamic bonds in the Gulf Arab region this year. The $1.25 billion dollar-denominated portion of the bond traded at a yield of 6.42 percent today, compared with a 3.85 percent yield investors are seeking for a five-year Abu Dhabi bond. The sheikhdom set up the $20 billion support fund after the global credit crunch hurt its property, finance and tourism industries, leaving companies unable to raise debt as credit markets froze. The first $10 billion was raised by selling five- year bonds to the U.A.E. central bank in February, and some of the money went to property developers like Nakheel PJSC, which is building palm tree-shaped islands off Dubai’s coast. Dubai, Abu Dhabi The second half of Dubai’s bond program would attract “majority government and minority private sector in my opinion,” said Mohammed Alabbar , chairman of Emaar Properties PJSC, and a member of the Dubai Executive Council in an interview with CNN on Oct. 9. The bond may be issued in November, he said. Central Bank Governor Sultan bin Nasser al-Suwaidi said on July 15 that the U.A.E. may buy part of Dubai’s second bond offering. “Meaningful participation by the private sector would be a strong signal for Dubai that investor sentiment has improved,” said Tristan Cooper , a Dubai-based Middle East sovereign analyst at Moody’s Investors Service. “This provides a motivation for the Dubai government to get private investors involved even if it costs more than selling it all to the federal government.” Dubai allowed foreigners to buy property in some parts of the emirate in 2002, sparking a five-year building frenzy. The boom ended after the credit crisis crimped mortgage lending, forcing the emirate to look to Abu Dhabi, the U.A.E.’s capital and holder of 8 percent of global oil reserves, for support. “I assure you that we will be there for each other when we need it,” Sheikh Mohammed said, referring to the relationship between Dubai and Abu Dhabi. “I want to tell these people who nag about Dubai and Abu Dhabi to shut up.” Stocks Gain Dubai stocks extended gains after the ruler’s comments, climbing to the highest in a week. The DFM General Index added 1.4 percent, while Abu Dhabi’s measure rose 0.2 percent. Sheikh Mohammed’s statement “reiterates the strong link between Dubai, a non-oil state, and the important oil state of Abu Dhabi,” said Luis Costa , an emerging market debt strategist at Commerzbank AG in London. “Most investors are raising their expectations of net issuance out of the Middle East in 2010.” Dubai’s government borrowed $10 billion until last year and its state-related companies $70 billion to help diversify its economy. The emirate built a business park for financial service companies – which is home to the regional offices of Goldman Sachs Group Inc., Standard Chartered Plc, and HSBC Holdings Plc – as well as started a stocks, derivatives and energy exchange. The sheikhdom and its state-owned companies have to repay $15.8 billion of bonds and loans maturing this year, $9.2 billion in 2010, $19.8 billion in 2011 and $17.3 billion in the following year, according to a Deutsche Bank AG report in August. The government said yesterday it repaid a $1 billion civil aviation sukuk due Nov. 4. The seizure of credit markets sparked fears Dubai may not be able to refinance debt. Helps Sentiment The ruler’s comments “will help sentiment,” said Fadi Al Said , head of equities at ING Investment Management (Dubai) Ltd. “These strong statements coming from him directly are a clear message based on the success of the last sukuk issue. I think there will be a substantial portion that might get picked up by investors.” Dubai World, the state-owned holding company, is in talks with banks to reschedule at least $12 billion of debt, a person close to the talks said Sept. 14, speaking anonymously because the negotiations are private. Dubai World unit Nakheel must repay a $3.5 billion Islamic bond due at year-end. “Some may believe that Dubai could have acted faster in combating the impact” of the credit crisis, Sheikh Mohammed said. “We preferred to wait rather than rushing because we are keen to ensure strengthening our major enterprises and restructure them in a way that will have the momentum and the strength to cope with the realties of the new economy.” To contact the reporters on this story: Arif Sharif in Dubai at asharif2@bloomberg.net Maher Chmaytelli in Dubai at mchmaytelli@bloomberg.net or

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Dubai Ruler Says Bond Will Be `Well Received,’ Tells Critics to `Shut Up’