Is the job market really turning around?

According to some recent headlines, conditions are finally starting to improve for the unemployed.

Some indicators are showing positive signs in the job market for the first time since the credit crisis caused job losses to soar last fall. But for the growing number of unemployed workers in the U.S., macroeconomic statistics aren't worth much.

After peaking in January, the pace of job losses has slowed dramatically, according to the Labor Department. Employers cut 345,000 jobs from their payrolls in May -- 32% fewer than the previous month. And the number of Americans filing for continuing claims for unemployment insurance fell last week for the first time since early January.

But for those unemployed workers pounding the pavement, jobs are still hard to come by.

That's because even though job cuts have slowed, employers have not started hiring just yet. According to the Job Openings and Labor Turnover Survey from the Bureau of Labor Statistics, the number of new hires remains near an all-time low.

"In general, companies have been in a wait-and-see posture," explained Dr. Jane Goldner, a human resources expert and author of "Driven To Success: A 10-Point Checkup for Achieving High Performance in Business." "There's some level of confidence coming back," but in terms of hiring, "I don't think we're there yet," she said.

Many unemployed workers agree.

Ann Fry made a good living as professional speaker and executive coach in New York until last fall. Now the companies that hired her in the past have cut back and individual clients signed off.

"I completely rely on whether conferences are happening and whether they are hiring speakers," she explained. "What I notice is that companies are reluctant to pay for 'extras' like corporate training and coaching," she said. "Also, the professional associations I speak for nationally are cutting their budgets way back."

With fewer clients and fewer gigs this year, Fry, 63, has had to tap into her savings in recent months to make ends meet. As a self-employed professional, there is no safety net such as unemployment insurance to fall back on, but she's hopeful that business will pick up again.

"I think we're already seeing some signs of improvement," Fry says of the economic environment. "Do I see it turning around yet?" she asked of her own employment status, "no, not yet."

"For the job seeker it's probably not necessarily obvious right now that things are improving," said Jennifer Schramm, the manager of workplace trends and forecasting for The Society for Human Resource Management.

Although anecdotal evidence suggest that hiring expectations will improve in the second half of the year, "we have to wait a few months to see if this is a trend," she said.

Once companies stop decreasing headcount, it could still take time before hiring plans take hold, and even longer for there to be a noticeable change in workers' attitudes.

Chuck Jentlie has been through this before. His career as a recruiter for the tech industry was rocked by the dot-com bust earlier in the decade. Since then the 52-year-old went back to college at Arizona State University to get a degree in architecture.

But once a growing industry, architectural services has steadily lost jobs since the beginning of the year. Now a large percentage of architects are out of work, including recent graduate Jentlie.

"None of us can find a job," he said of his classmates.

Although the industry as a whole could bounce back quickly once the economy improves, "a lot of the reports seem like wishful thinking," Jentlie said.

"I'm definitely not seeing [employers] saying 'yeah we're looking for workers,'" he said. "Realistically I think we're probably looking at another year."

Stocks dip on inflation woes

Stocks cut losses, but still ended lower Wednesday, as spiking Treasury yields and rising commodity prices added to worries that inflation could limit any recovery effort.

The Dow Jones industrial average (INDU) lost 24 points, or 0.3%, according to early tallies. The S&P 500 (SPX) index lost almost 3 points, or 0.4%. The Nasdaq composite (COMP) lost 7 points, or 0.4%.

Treasury prices slumped, boosting the corresponding yields. The benchmark 10-year note fell 22/32 and its yield rose to 3.94% from 3.86% Tuesday. The yield had risen as high as 4%.

Although the momentum is still with the bulls, new worries have surfaced over the last few days, said John Wilson, chief technical strategist at Morgan Keegan.

"The concern has been that the bond market is worried about inflation and the rise in commodity prices is adding to that," Wilson said. "There's a little bit of a worry that this will dampen what is hopefully the start of a recovery."

The concerns about pricing pressure overshadowed any relief Wednesday about Chrysler's completed deal with Fiat and Home Depot's improved forecast.

U.S. light crude oil prices climbed as high as $71.79 a barrel, rising along with the price of gold and other commodities.

Commodity prices have been rallying lately, due to the weak dollar and bets that the economic recovery will drive demand for so-called hard assets. But the rise in commodity prices also added to worries over inflation.

Concerns that rising borrowing costs could derail a tentative economic recovery have dragged on sentiment over the last few sessions.

Chrysler: Italian automaker Fiat has closed a deal to buy the good assets of the bankrupt automaker, after the Supreme Court cleared the way for the deal late Tuesday.

Fiat will take a 20% stake in the company to start with, but that holding can increase to 35% if the company reaches certain goals. The new company -- called the Chrysler Group -- will be majority owned by the United Auto Workers union. The U.S. and Canadian governments will also own stakes.

Chrysler is expected to start operating immediately.
0:00 /2:47Mortgage rates tick back up

Banks: On Tuesday, the government said 10 of the biggest banks were well-enough capitalized to pay back a collective $68 billion in loans received last fall at the height of the financial crisis.

The list included American Express (AXP, Fortune 500), JPMorgan Chase (JPM, Fortune 500) and Goldman Sachs (GS, Fortune 500).

The Obama administration dropped its plan to limit salaries at firms that have taken bailout money, and will instead propose legislation that gives shareholders a bigger say in executive pay. Washington attorney Kenneth Feinberg was named the new "pay czar" later Wednesday.

Retail: Home improvement retailer Home Depot (HD, Fortune 500) said it now expects full-year earnings in a range of flat to down 7%, versus its earlier guidance for a decline of 7%. Shares were little changed.

Economy: The Fed released its periodic "beige book" reading of the economy in its 12 districts. The report showed the economy remained weak or got weaker between mid-April and early May, although five of the districts said there are signs the pace of the recession is slowing.

Another report showed the U.S. fiscal year deficit is now near $1 trillion after a $189.7 billion shortfall in May.

The April trade balance widened to $29.2 billion from a revised $28.5 billion in March, the Census Bureau reported. Economists surveyed by Briefing.com thought it would widen to $28.7 billion.

Other markets: In global trading, Asian and European stocks ended higher.

In currency trading, the dollar gained versus the euro and the yen.

U.S. light crude oil for July delivery rose $1.32 to settle at $71.33 a barrel on the New York Mercantile Exchange, building on earlier gains after the government's weekly inventory report showed a surprise plunge in crude supplies.

COMEX gold for August delivery settled at $954.70 an ounce, unchanged from Tuesday.

Leading indicators suggest pickup in late '09

A forward-looking measure of the U.S. economy in April posted its first rise since June 2008, a private research firm said Thursday, suggesting a pickup in growth awaits the economy in the second half of 2009.

The index of leading indicators, which is supposed to forecast economic trends six to nine months ahead, rose 1% in April after a revised 0.2% fall the previous month, the New York-based Conference Board said.

"The leading indicators suggest that while the recession will continue in the near term, the declines will be less intense," said Ken Goldstein, a Conference Board economist.

"If the indicators continue on the current track, that point might be reached in the second half of the year," Goldstein said.

Wall Street economists had forecast a rise of 0.8% after an initial 0.3% March drop.

Citigroup puts more TARP $ to work

Citigroup said Tuesday it authorized $8.2 billion in lending to U.S. consumers and businesses so far this year backed by taxpayer funding.

In its latest update on how it is spending government bailout money, the troubled financial giant said it made a number of loan commitments during the quarter, including a $5 billion direct loan program to state and local governments and $1 billion to help homeowners refinance their mortgages.

Citigroup (C, Fortune 500) and other large banks have been under intense scrutiny about their lending practices since taking in billion of dollars in taxpayer funds from the government's Troubled Asset Relief Program, or TARP, last fall.

Citigroup has been one of the biggest recipients of government aid to date, taking in approximately $45 billion in TARP funds.
0:00 /3:44Roubini: Stress tests too weak

"We are using this capital to expand personal and business lending in the United States, consistent with Citi's prudent lending standards, and will continue to explore every opportunity to put it to work in a disciplined, transparent and responsible fashion," Citigroup CEO Vikram Pandit said in Tuesday's report.

The bank said it also earmarked $2 billion in TARP money for purchasing small and medium-sized business debt and is making $250 million in new automobile loans to consumers via dealerships around the country.

Since first taking hold of government funds last fall, Citigroup has authorized $44.75 billion in loans and other commitments backed by TARP, the company said Tuesday.

That amount however, does not necessarily suggest that nearly all of the taxpayer aid has been spent. Experts have indicated that capital injected into banks tends to have a multiplier effect. So for every dollar of government capital, banks are able to make $10 in loans.

Tuesday's news comes just days after federal regulators revealed that Citigroup faced a $5.5 billion capital shortfall as a result of the so-called "stress tests" on the nation's 19 largest institutions.

Stocks wrestle with jobs and banks

Stocks turn mixed Wednesday, giving up some gains, as investors welcomed a pair of not-as-bad-as-expected jobs reports but were cautious after the recent rally.

The employment reports distracted investors from reports that banks might need billions more in capital to meet the requirements of the regulators conducting so-called stress tests.

The Dow Jones industrial average (INDU) gained 18 points, or 0.2%, roughly 90 minutes into the session. The S&P 500 (SPX) index climbed 3 points, or 0.3%. The Nasdaq composite (COMP) fell 15 points, or 0.9%.

Stocks drifted lower Tuesday as investors retreated after a roughly 8-week advance that saw the S&P 500 jump 34%. The rally followed a rout that left the broad stock index at a more than 12-year low.

Since then, investors have been moving back into the market on indications that the economy is starting to find its footing. Wednesday's two job market reports continued that trend.

Employment: A pair of reports released before the open showed that the pace of unemployment is starting to slow.

Employers in the private sector pared 491,000 jobs from their payrolls in April, after cutting 708,000 jobs in March, according to payroll services firm ADP. Economists surveyed by Briefing.com expected a decline of 645,000.

The number of job cuts announced in April decreased for the third month in a row, according to outplacement firm Challenger, Gray & Christmas Inc. U.S. employers announced 132,590 cuts in April, the lowest number since October, but still 47% more than in the same month a year ago.

The reports raised bets that Friday's bigger non-farm payrolls report from the government will show a slower pace of job losses too. Employers are expected to have cut 620,000 jobs from their payrolls after cutting 663,000 in March. The unemployment rate, generated by a separate survey, is expected to have risen to 8.9% from 8.5% in March.

Stress tests: Investors are gearing up for the release of the government's review of the 19 biggest U.S. banks, expected Thursday afternoon. More than half the banks may have to raise additional capital, according to reports this week.

The government is testing to see that the banks have enough money on hand to withstand a potential bigger downturn in the economy. Bank of America (BAC, Fortune 500) may need to raise an additional $34 billion in order to meet regulators' standard.

Earlier reports said that the Dow component would need to raise around $10 billion. Citigroup (C, Fortune 500) and Wells Fargo (WFC, Fortune 500) have also reportedly been told that they will need to raise more money.

Nonetheless, bank shares rallied, with the KBW Bank (BKX) sector index adding over 5%.

Corporate news: Walt Disney (DIS, Fortune 500) issued quarterly results late Tuesday. The Dow component reported weaker earnings that topped estimates on weaker revenue that missed estimates. Shares jumped more than 9% Wednesday.

Bonds: Treasury prices slipped, raising the yield on the benchmark 10-year note up to 3.16% from 3.15% Tuesday. Treasury prices and yields move in opposite directions.

Borrowing costs continued to improve. The 3-month Libor rate fell to an all-time low of 0.97% from 0.99% Tuesday, according to Bloomberg.com. The overnight Libor held steady at 0.24%. Libor is a bank lending rate.
0:00 /5:27Buffett: Behind the scenes

Other markets: In global trading, most Asian markets ended higher. Japanese markets have been closed all week for a holiday. European markets rose in afternoon trading.

In currency trading, the dollar gained versus the euro and fell against the yen.

U.S. light crude oil for June delivery rose $1.51 to $55.35 a barrel on the New York Mercantile Exchange.

COMEX gold for June delivery rose $6.20 to $910.50 an ounce.

Obama's success: It's all about 2010

President Obama has said if the economy doesn't turn around on his watch, voters won't give him a second term.

"If I don't have this done in three years, then there's going to be a one-term proposition," he said in an NBC interview in February.

Policy experts agree Obama's presidency will be rated on the speed and depth of the economic recovery. But they think he may only have until mid-2010 to get the economy moving in the right direction before Americans start blaming him for what ails them.

"If we get back to an upward economy in 2010, it'll be good. But if we're in it [longer] ... people's opinions will be formed. That's as much patience as Americans will have," said Gary Clyde Hufbauer, Reginald Jones senior fellow of the Peterson Institute.

And voters could take it out on Democrats in the November 2010 midterm congressional elections.

"Republicans could cut into Democratic majorities," said American University Professor Allan Lichtman, a political historian and presidential election expert.

What specifically needs to happen by mid-2010? There needs to be clear evidence of a recovery, with unemployment back down around 8%, production up, foreclosures on the decline, and stocks higher. "Take your headlines today and flip the verbs," Hufbauer said.
0:00 /3:57Mixed grade on economic agenda

The economy has worsened since Obama took office. Indeed, he has said many times that things would get worse before they get better.

Economists are in two camps: those who are cautiously optimistic that the economy is poised for near-term recovery, and those who may concede the economy could be touching bottom but aren't convinced a bounce-back will occur soon.

Lakshman Achuthan, managing director of the Economic Cycle Research Institute, is in the optimists' camp for two reasons.

For one thing, despite a very sour economy, Obama has helped to boost confidence, which is an intangible necessity for recovery, Achuthan said. Second, the leading indicators he analyzes suggest the country may be at or very near a bottom -- and that could mean an economic recovery could begin over the next four months, he said.

Brian Bethune, chief U.S. financial economist of Global Insight, said he is also seeing data that suggest a trough may be near, but he is less certain a recovery is in the offing.

"You get a sense there's a breadth of things improving although not a depth," Bethune. "There's not enough to say there's a definite trough or beyond that a recovery."
Beyond economic recovery

While the pace of economic recovery may make or break Obama's chances for another term, his presidency will also be assessed on his ability to foster reform in terms of health care, Medicare, Social Security and energy.

Particularly when it comes to entitlement programs, the onus on Obama is "not to solve them but to turn the corner. That's all landmark stuff," Hufbauer said.

Administration officials and others make the case that the country's long-term debt problem will only be resolved once health care costs are brought under control. And the president wants to earmark $634 billion as a down payment on the cost of health care reform. He's also calling for that fund to be deficit neutral, meaning lawmakers will have to come up with ways to pay for it.

Budget hawks applaud his deficit-neutral stance on issues like health care reform and his vow to reduce the annual deficit by 2013. But they're not happy with the fact that his budget would start running it up again by 2019, under even optimistic economic forecasts.

"He's been saying a lot of the right things," said Marc Goldwein, policy director at the Committee for a Responsible Federal Budget. "[But] the numbers in his 2010 budget assume the economy recovers very quickly and the deficits in the out years are still very bad."

Last year, the public debt -- the sum of all annual deficits to date plus interest -- was 41% of GDP. Under Obama's budget it would jump to 67% by 2019, according to administration estimates, which may be revised this summer. The Congressional Budget Office, using different assumptions than the White House, estimates the president's budget will push public debt to 82%.

Those levels are considered unsustainable by some, but there is no hard-and-fast limit that defines sustainable.

Generally speaking, the more debt the government issues over time, the more likely it is to crowd out private investment in corporate bonds, slowing economic growth. And there's a greater the risk that the interest the government owes on its debt would grow at a faster rate than the economy.

"If we're permanently spending significantly more than we're raising that should be cause for concern," Goldwein said.

Of course, Obama is betting his presidency that running up debt to reform energy and health care now may be less expensive in the long run than not reforming them.

Stocks struggle higher

Stocks erased losses, mustering small gains early Tuesday after a stronger-than-expected consumer confidence report countered fears about the viability of U.S. banks and the potential economic impact of swine flu.

The Dow Jones industrial average (INDU) gained 20 points, or 0.3%, over an hour into the session. The S&P 500 (SPX) index gained 2 points, or 0.2%. The Nasdaq composite (COMP) gained 5 points, or 0.3%.

The April consumer confidence index rose to 39.2 from a revised 26.9 in the previous month. Economists surveyed by Briefing.com thought it would improve to 29.7.

Stocks had tumbled in the first minutes of trade, extending the previous session's selloff, as investors stepped back after the recent run. Stocks rallied for six straight weeks on bets that the worst for the economy has already happened, then seesawed last week as quarterly results began to pour.

This week investors have been keeping an eye on the banks and the latest reports on the swine flu outbreak.

Bank sector: Bank of America (BAC, Fortune 500) and Citigroup (C, Fortune 500) will need to raise more capital, according to initial government "stress tests," the Wall Street Journal reported. Regulators reportedly told the banks that they need to boost their reserves to prepare for a potential worsening of the economy.

Results of Treasury's tests of the largest U.S. banks aren't due until next week.

Bank of America shares fell 5%, Citi dropped 4% and the KBW Bank (BKX) sector index fell 1%..

Swine flu: Concerns about the economic impact of the swine flu outbreak remained in place Tuesday as health officials have confirmed at least 90 cases of the disease worldwide and 50 in the United States.

Economists are concerned that should the outbreak become a large-scale pandemic, it would throw off a global economic recovery attempt and even intensify the recession.

Economy: The S&P/Case Shiller 20-city home price index fell 18.6% in February from a year ago, extending the losing streak to 31 months. But it was the first time since October 2007 that the index didn't hit a record low in its year-over-year drop.

Bonds: Treasury prices slipped, raising the yield on the benchmark 10-year note to 2.93% from 2.92% Monday. Treasury prices and yields move in opposite directions.

Lending rates were mixed. The 3-month Libor rate fell to 1.04% from 1.05% Monday, according to Bloomberg.com. The overnight Libor rate was unchanged at 0.21%. Libor is a bank-to-bank lending rate.