Only 16 of 384 areas show employment growth in latest Adversity Index

The recovery remains jobless for most of the nation, with only 16 of 384 metro areas showing job gains in the past year, according to new Adversity Index data for February from Moody’s Economy.com and msnbc.com.

Of the nation’s 384 metro areas, 205 had begun to recover, or 53 percent, according to the February Adversity Index. That’s up from 185 metro areas in January, or 48 percent.

But the gains have been confined to manufacturing and housing, not employment.

Moreover, the only areas showing jobs growth are low-population areas. Here is a list of the 16 areas (only 4 percent of the total) showing job gains in the three-month period ending February 2010 compared with the same period a year earlier. They’re ranked by annualized growth in jobs:

The largest of those areas — Killeen, Yakima and Barnstable — each have only about 300,000 people.

The 20 largest metro areas all showed jobs loss from a year earlier. Listed by size of metro area:

Although the economy is starting to expand, businesses are squeezing additional work out of the workers they have, not hiring more.

“Businesses cut back very severely in the recession, trimming payroll size and slashing remaining workers’ hours,” explained economist Andrew Gledhill of Moody’s Economy.com. “The worst of this has passed, but what this means is that in the early stages of recovery, businesses can simply increase workers’ hours to meet modest upticks in economic activity.”

The good news is that the March employment report from the Bureau of Labor Statistics showed the largest net job gain since March 2007, before the recession had begun.

“Improvement will be slow in the near term,” Gledhill said, “and it will not be until perhaps late this and next year that job growth is strong enough to start bringing about a more significant labor market recovery.

U.S. consumer sentiment took a surprise negative turn in early April due to a persistently grim outlook on income and jobs, a private survey released Friday showed. A slip in economic expectations to its lowest in a year likely stemmed from consumers hearing negative information on government programs and a perception that the recovery is too slow, according to Thomson Reuters/University of Michigan’s Surveys of Consumers.

“While consumers think the overall economy will continue to improve, they still hold quite negative views on their own income and job prospects,” Richard Curtin, Director of the surveys, said in a statement.

Consumer sentiment is seen as a proxy for consumer spending, which fuels about 70 percent of the U.S. economy. The surveys’ overall index on consumer sentiments slipped to 69.5 in early April — the lowest in five months. This was below the 73.6 reading seen at the end of March and the 75.0 median forecast of analysts polled by Reuters. The survey’s gauge of current economic conditions slipped to 80.7 in early April, the lowest since December. This was below the 82.4 in late March and the 84.0 forecast by analysts. The survey’s barometer of consumer expectations fell to 62.3 in early April, the lowest since March 2009. This was below the 67.9 seen at the end of March and fell short of the 68.7 predicted by analysts.

More than one in five consumers said they had heard negative information about government programs when asked to identify news of recent economic developments, about twice as high as a month or a year ago, the latest data showed.

Asked to evaluate federal economic policies, including healthcare reform, 45 percent rated them unfavorably, up from 40 percent in March.
Consumers’ weaker expectations came despite recent data showing the biggest payroll gain in three years in March and a hefty 1.6 percent rise in retail sales last month.

“Although confidence in economic policies and legislation showed signs of weakening, it is too soon to determine if the reaction will be temporary or a more lasting concern,” Curtin said.

The index of consumers’ 12-month economic outlook fell to 71 from 78 in March but was up from 54 a year earlier.

Consumers polled in early April expected near-term inflation to accelerate.

The U.S. trade deficit widened in February as a gain in exports to the highest level in 16 months was offset by a bigger jump in imports, reflecting increased demand for consumer goods and a slowly rebounding economy. The Commerce Department reported that the deficit for February increased 7.4% to $39.7 billion. Exports edged up 0.2% to $143.2 billion while imports jumped 1.7% to $182.9 billion. In the first two months of this year, the deficit is running at an annual rate of $459.9 billion, up 21.5% from the $378.6 billion imbalance recorded in 2009. The 2009 deficit was the smallest trade gap in eight years, reflecting the severe U.S. recession that depressed demand for imports.

The politically sensitive deficit with China fell to $16.5 billion in February, the lowest level in 11 months, but was still the biggest trade imbalance the U.S. has with any country. Pressure has been building for the Obama administration to take a tougher stance with China and impose trade sanctions on Chinese products unless the Chinese government allows its currency to rise in value against the dollar which would increase the competitiveness of American products.

The economic recovery will move fitfully and at a sluggish pace over the next two years because the two pillars of financial security – jobs and home prices – will remain shaky, an Associated Press survey of economists found. As a result, the Federal Reserve will be forced to keep interest rates near zero until at least the final quarter of this year, three-fourths of the economists said. Economists surveyed believe the unemployment rate will remain high the next two years. It will inch down to 9.3% by the end of this year and fall to 8.4% by the end of 2011, according to the survey. The rate has been 9.7% since January. When the recession started in December 2007, unemployment was 5%.

Economists also expect home prices to remain almost flat for the next two years, even after plunging an average 30% nationally since their peak in 2006. The economists forecast no rise this year and a 2.3% gain next year. They expect sales of existing homes to increase this year and next, but part of the reason for this is high foreclosure activity, which will keep prices down. Moreover, they expect the economy will grow 3% this year, which is less than usual during the early phase of a recovery and the reason unemployment will stay high.

Consumer borrowing fell in February, the 12th drop in the last 13 months, reflecting weakness in credit card spending and auto loans. The results put a damper on hopes that consumers are feeling more confident about spending. The Federal Reserve said borrowing declined by $11.5 billion, or 5.6%, in February, as consumers remained frugal amid a fragile economy and high unemployment. In January, borrowing rose by $10.6 billion, or 5.2%, which broke a record 11 consecutive declines. The February results reflected a huge 13.6% drop in revolving loans, the category that includes credit card debt, and a smaller 1.6% dip in non-revolving loans, the category that covers auto loans. Some economists note that consumer borrowing will stabilize in coming months and begin to pick back up, although they caution that the rebound will be restrained by tighter credit restrictions imposed by many banks in the wake of the recession.

The Labor Department said consumer prices grew a modest 0.1% in March, as a fragile economy kept prices in check. Core inflation, which excludes the volatile food and energy sectors, was flat last month. Over the past 12 months, core inflation is up by just 1.1%, the lowest 12-month showing since a similar 1.1% rise for the year ending in January 2004. With inflation in check, the Federal Reserve is under little pressure to raise interest rates any time soon. But, despite the good inflation news, household budgets remained under pressure. In a separate report, the Labor Department said that average hourly earnings dipped 0.1% in March and dipped 0.2% after adjusting for the small rise in inflation. Over the past year, hourly earnings, after adjusting for inflation, are down 0.6%, evidence of how severely the recession has depressed wages.

Retail sales advanced for the third straight month in March, due to milder weather, an early Easter season and incentives by automakers to buy vehicles. The Commerce Department reported that sales climbed 1.6% last month, after an upwardly revised 0.5% gain in February. Compared to March 2009, sales surged 7.6%. Total sales for the January through March period were up 5.5% from the same period last year. Auto sales jumped 6.7% in March from February, the highest gain since October 2009. However, retail sales excluding autos still grew 0.6% as gains were reported across many sectors. The news indicates that consumers are emerging from their spending hibernation, despite a weak job market and tight credit.

Sales of building material & garden stores climbed 3.1% in March, sales at apparel chains jumped 2.3%, furniture and home furnishing store sales advanced 1.5%, department store sales grew 1% and sales of general merchandise chains – that include Walmart and Target – increased 0.6%. Other sectors posting gains included food and beverage (0.2%), health and personal care (0.2%), sporting goods, book and music chains (1%) and restaurants (0.3%). The few sectors posting declines included electronics and appliance stores (-1.3%) and gasoline stations (-0.4%).