Pro Publica is reporting Two Dozen States’ Unemployment Funds in the Red, Nine More Within Six Months
The unemployment insurance system is in crisis. A record 20 million Americans collected unemployment benefits last year, and so far 25 states have run out of funds and been forced to borrow from the federal government, raise taxes or cut benefits. Using near real-time data on states’ revenues and the benefits they pay out, we’ve estimated how long their trust funds will hold up.
And while states’ poor fiscal planning is a serious topic on its own, our unemployment insurance tracker also follows the increasing human toll: so far businesses in 36 states face tax increases this year, ranging from a few dollars per worker to more than a thousand. Six states have moved to cut, freeze or otherwise restrict benefits, a number that is likely to increase. (See our breakdown of states’ projected increase in taxes and cuts in benefits.)
Some states have focused the pain, like Virginia, where unemployed seniors who also receive Social Security face steep benefit cuts. Other states, like Pennsylvania, have taken a broader approach: all unemployment beneficiaries will receive 2.4 percent smaller checks starting this month.
|Red – Bankrupt and Borrowing: The state’s unemployment fund is currently bankrupt and the state is borrowing from the federal government.|
|Red – In Trouble: The state’s unemployment fund will likely be depleted in six months or less.|
|Grey – In the Clear: The state’s unemployment fund is solvent.|
The above interactive chart courtesy of Pro Publica. There is much more in the links above that show the amount of current borrowing by each state and actual projections six months ahead.
Credit Card Defaults Hit Near-Record Levels
With unemployment at 10%, and the economy losing jobs 24 consecutive months it is not surprising to see Fitch reporting U.S. Retail Credit Card Defaults Hit Near-Record Levels with No Relief in Sight.
U.S. consumers defaulted on store-branded credit cards at near-record levels during the holiday shopping season, with 2010 likely to bring more of the same trend, according to Fitch Ratings.
Fitch’s December Retail Credit Card Index results show that more than one in every eight dollars of receivables was written off as uncollectable during the November collection period on an annualized basis. Taken with the recent delinquency trends and Fitch’s expectation for unemployment, Fitch expects retail card chargeoffs to remain elevated throughout first half-2010.
“We do not foresee any meaningful improvement in the retail card credit quality in the coming months,” said Managing Director Michael Dean. “U.S. consumers remain under stress on a number of fronts, most notably on the employment front, and retail card chargeoffs will continue to reflect those pressures.”
High unemployment and ongoing household deleveraging will continue to limit demand for consumer credit in 2010. Consumer confidence as measured by the Conference Board remains historically low despite rising in the most recent period and unemployment is expected to remain elevated averaging 10.2% in 2010. ‘Households will remain cautious with their spending and further curtail their use of retail cards in 2010,’ said Dean.
This does not bode well for prospects of a robust rebound in retail sales or credit usage in 2010 as the employment situation and economic environment overall continues to weigh on consumers’ spending decisions. The latest Fed figures show revolving credit usage decreased at an annual rate of 18.5% in November – the largest dollar-value drop since 1968 and the 14th consecutive decline since October 2008As long as the employment and income growth remain weak, demand for consumer credit – especially retail credit – will be limited.
Look On The Bright Side
Hey! Look on the bright side.
The recession is over (if you happen to work at Goldman Sachs).
A Question Of Ability
Inquiring minds are reading Fed’s Dudley: Opposes Move In Congress To Audit Rate Policy.
“My principal concern is the damage that could potentially result to the Fed’s ability to achieve its mandate of price stability and maximum sustainable employment.”
Excuse me for asking but ….
What ability is that?
Moreover, no one is asking for an audit of the Fed’s Rate Policy. People are asking for an audit of the Fed’s books. Dudley Do-Wrong looks like a dunce.
Mike “Mish” Shedlock
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