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More foreclosures coming as job outlook weakest since 1962

According to a report by employment services company Manpower Inc., employers will keep staff levels stable for the rest of the year, but U.S. hiring expectations are among the lowest around the world. The report surveyed 28,000 employers in 200 metropolitan areas, and found that almost 70% of U.S. companies surveyed expect no change in their fourth-quarter hiring plans. 12% said they expect to increase workers in the fourth quarter, 14% predicted a decrease, and the remaining 5% were undecided. After seasonal adjustment, those responses resulted in a 3% decrease in the overall employment outlook. That’s the weakest level since the report started in 1962 and certainly signals that more foreclosures are on the horizon. Companies in the mining, information, financial activities and “other services” sectors expect hiring to stay relatively stable compared with the third quarter; manufacturing, wholesale/retail trade and government employers expected a slight decrease in hiring; transportation/utilities and professional/business services predicted a moderate decline; and construction and leisure/hospitality industries reported “considerably weaker” hiring plans. Education/health services was the only sector to report a “modest increase” in fourth quarter hiring.

Small business sentiment improves in August

The National Federation of Independent Business (NFIB) said its U.S. small business sentiment index improved by 2.1 points to 88.6 in August, thanks to improved expectations for future business and real sales volume. August’s level was 7.6 points higher than the recent trough in March, which was the second-lowest reading since the series began in 1973. The all-time low was notched in 1979. The survey, based on 882 respondents, showed that jobs were still hard to find, with small business owners reporting a decline in average employment per firm of 0.80 worker during the prior three months. This was a big improvement from the record decline of 1.26 workers notched in May 2009, but still very weak compared with the average over the survey’s 35 year history. “The ‘job generating machine’ is still in reverse,” NFIB Chief Economist William Dunkelberg said.

FHA in trouble?

The Federal Housing Administration (FHA) increased its exposure as it tried to help shore up the ailing housing market during the past year, particularly to mortgages in high-cost states that have also seen some of the sharpest price declines. The FHA insures loans secured with down payments as low as 3.5%. According to the Wall Street Journal, concerns are mounting that the agency — and the U.S. taxpayer — may have to pay the price. But values in many markets in which it has been increasing its activity have fallen far more than that in the past year. The result: A growing number of homeowners with FHA-backed loans owe more than their homes are worth and are more likely to default. Officials are worried that the resulting losses will help push the FHA’s reserves below the level required by Congress. The value of those reserves will be revealed in the agency’s annual review due Sept. 30, and if they have fallen below the minimum, it could prompt a new round of questions about the role government should play in stabilizing the housing market.

Holiday spending prospects better

According to the survey by Information Resources Inc (IRI), a market research firm, U.S. holiday shoppers are more willing to spend in 2009, but still intend to hunt for discounts. About 77 percent of respondents said they were willing to splurge on a gift for the 2009 holidays even if times are tough. For retailers, the 2008 holiday season was the toughest in nearly four decades, as consumers faced a financial market crisis and housing downturn. But as shoppers move toward this year’s holidays, employment fears remain top of mind, with 78 percent of respondents expressing worry over job stability, just 1 percent less than a year earlier, the survey found. For retailers, the 2008 holiday season was the toughest in nearly four decades, as consumers faced a financial market crisis and housing downturn.

Gold tops $1000

Spot gold and U.S. futures topped $1,000 an ounce for the first time in six months on Tuesday as the dollar’s weakness and concerns about the sustainability of the global economic recovery underpinned sentiment. “Gold’s rising price is due to uncertainty all the way from personal investors right through to institutions,” said Sandra Close, an analyst for gold research group Surbiton Associates. Others said buying momentum could wane to push prices back towards $950 before consolidating, given weak physical demand and a tendency by big Asian consumers to sell when prices rise. “I don’t know if it will stay there for a particularly long [period]. My view is that by the end of the year the gold price will be lower, probably down to around $950 an ounce,” said David Moore, a commodities strategist at Commonwealth Bank of Australia. Futures have topped $1,000 nine times — three times this year and six last year, including a record $1,033.90. Spot gold has risen above $1,000 just five times — on Tuesday, in February, and three times in March 2008, when it hit a record $1,030.80. “There are questions out there over the health of economies, where interest rates are going. All of that encourages gold hoarding. There’s potential to see the price go even higher.”

US now in second place in competitiveness

The United States has lost its place as the world’s most competitive economy, mainly because of the financial crisis and accumulated fiscal deficits, according to a survey released Tuesday by the Geneva-based World Economic Forum. The U.S. came in second, behind Switzerland, in a poll of over 13,000 business leaders. Singapore is third and Sweden comes forth. “Given that the financial crisis originated in large part in the United States, it is hardly surprising that there has been a weakening of the assessment of its financial market sophistication,” the survey said. “The country’s greatest weakness continues to be related to its macroeconomic stability.” Switzerland has overtaken the U.S. because its economic performance has been “relatively stable,” the survey said, allowing that Swiss financial markets have “weakened somewhat.” It made no mention of Swiss banking secrecy, which has started to crumble under U.S. pressure to hand over client names of American taxpayers suspected of setting up secret offshore accounts with Swiss bank UBS AG.

Now on to our real estate education section…

The Most Important Financial Survival Strategies You Need to Implement Today

Need an easy to understand, affordable and hassle free way to keep your books in the black? Keep reading to discover the most important financial survival strategies you need to begin putting into practice today.

Step back and plan for the short term and the long term. Like the old adage – failure to plan is akin to planning to fail. During tough economic times it isn’t merely enough to have a ten year goal in place, you must have objectionable and actionable short and long term goals. Failure to see the big picture leaves you wandering aimlessly while failure to account for short term details increases the risk of ruin due to insufficient cash-flow, liquidity or other problems.
Don’t ignore bad news. Yes, there are more than enough nay-sayers that will tell you the sky is falling rather than teaching you how to profit from one of the greatest transfers of wealth to take place in a generation. On the other hand, don’t automatically write-off all bad news…it often contains the information you need to know in order to make informed decisions about your future…or to take advantage of the financial wreckage coming down the pipelines.
Control your cash flow. One reason the current financial crisis has hit so hard is an over-reliance upon credit to meet short term obligations. Both consumers and small business owners are at the “mercy” of banks, credit cards and other lenders who can (and will) change credit terms and adjust lines of credit on a moment’s notice.
Minimize liability. Aside from cash flow issues, one of the other major risk factors impacting most investors is liability risk. One slip and fall accident by an uninsured worker on a short sale property could negate a lot of earnings. Likewise, while cash is king it also requires a much greater personal level of responsibility for the average investor. Stay smart and learn how to minimize liability both in terms of financial risk and more routine forms of liability by properly insuring and structuring holdings.
Focus on profits. Novice short sale investors with more time than money may need to begin small but should move up to more profitable investment as soon as feasible. Always focus on profits and eliminate the bottom 10 percent of all performers in your portfolio. Follow this one simple strategy to increase profits each and every year.
Identify your customers. Short sales are a strange business..do you really know who your clients or customers are? Is it the seller? Lender? New buyer? Know your customers and don’t waste money on ineffective marketing. Make everything count.
Don’t work too much. We’ve said it before and will say it again; earned income is expensive. Many people work themselves into an early grave only to watch more and more of their earnings go to paying ever rising taxes, health insurance premiums and medical bills. Outsource what you are able and switch the source of income to take advantage of favorable taxes.
Work with – not against – your competitors. In reality, there isn’t any such thing as a real competitor, only someone more suitable versus someone less suitable. When you find a deal that doesn’t really work for you…pass it along to someone better able to make it work and ask for them to do the same for you. Create a win-win for all involved in order to secure better profits with less work.

See you at the top!
Chris McLaughlin

http://www.shortsalesriches.com

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Real Estate News & Commentary by Chris McLaughlin, September 8, 2009