Posts for January 19, 2010

January 19, 2010 -- Dave Huether, Chief Economist, National Association of Manufacturers

January 19, 2010

As with the prior week, last week's economic reports were generally positive. Of the eight major economic indicators, five improved and three declined (To see all of last week's indicators, see the Latest Economic Reports section below.)

Some important caveats need to be made with respect to several of the indicators. First, a deterioration in the November trade deficit was mainly due to an increase in oil prices and solid domestic consumer spending during the month as well as a drop in aircraft exports, which are volatile from month to month. Adjusting for inflation, exports grew faster than imports during the three months ending in November, which is positive news.

Second, while industrial production rose in December, the increase was driven by unseasonably cold weather, which boosted utility output to its largest monthly gain in 20 years. Manufacturing production was flat last month, with 11 of the 19 major manufacturing industries posting declines in production.

Due to a large gain in November, manufacturing production followed a 9.5-percent annualized gain in the third quarter with a 6.1-percent gain in the fourth quarter (see final two green bars in the chart above). Still, even with these increases, the current level of manufacturing production is slightly below the level of the second quarter of 2002 (see black line in the chart above).

If the manufacturing sector were to grow at a 4-percent pace going forward, pre-recession levels of production would not be reached until the end of 2011. However, this expectation is unlikely.

According to the 4th Quarter NAM/Industry Week Manufacturing Index released last Friday, NAM members anticipate their sales will increase by just 1.6 percent over the coming year. While optimism did improve modestly in the fourth quarter, with 60 percent having a positive business outlook, roughly half of the survey respondents do not expect their company's production to bottom out until the second half of this year at the earliest. Therefore, it seems unlikely that a robust recovery is in the cards for 2010. The full results of the 4th Quarter NAM/Industry Week Manufacturing Index are posted at:
4th Quarter NAM/IndustryWeek Manufacturing Index

UTAH GAS PRICES DROP

Utah Bucking National Trend: Only Colorado, Missouri, Oklahoma and Wyoming have Lower Prices

January 19, 2010 -- AAA’s Fuel Gauge Report

SALT LAKE CITY – Utah seems to be bucking the national trend when it comes to gas prices. Utah is the only state to show a month to month decrease in price, according to the latest report from AAA Utah, which tracks gas prices as a service to consumers.

“Utah is really an anomaly right now as gas prices in the rest of the country have followed the price of oil rather than the fundamental supply and demand forces,” said Utah spokesperson Rolayne Fairclough. “The price of oil has risen roughly 20 percent over the course of this past month and gasoline prices have followed, even with the seasonal low demand and continuing robust supplies.”

AAA Utah, which tracks gas prices as a service to consumers, reports the average price in Utah for a gallon of regular unleaded is $2.60. This is 1 cent lower than last month’s survey on December 8, but 98 cents higher than a year ago. Only four states, Colorado, Missouri, Oklahoma and Wyoming have prices lower than those in Utah.

The price of oil recently reached 15 month highs. This high price can be explained as investors look to physical goods or commodities when the dollar is weak. But other factors could be at play to explain this marked increase in oil prices. For example, signs of economic recovery in 2010 could signal an upcoming increased demand and the bitterly cold temperatures across the country might force an increase in the use of heating oil.

The current national average price for a gallon of gas is $2.75. This is 12 cents higher than last month’s report and 96 cents higher than a year ago. Alaska, at $3.38, reports the highest average price in the country. California has the highest price, $3.06, in the lower 48 states. Wyoming’s average price, $2.51, is the lowest in the country.

With few exceptions, the prices in the Utah cities surveyed dropped since last month’s report. The largest drop was felt by motorists in Moab, who enjoyed a 5 cent savings at the pump since last month. The current price in Moab is $2.64. Provo’s average price, $2.56, is 3 cents lower than December’s report. Salt Lake City’s price dropped 2 cents to $2.54 a gallon. Logan saw a decrease of 1 cent to $2.55. The average price in Vernal, $.264, is the same as last month’s average. St. George saw a 1 cent increase to $2.74. Ogden’s motorists experienced a 3 cent increase to $2.53.

Prices increased in all of the surrounding states this past month. Idaho’s motorists saw a 3 cent jump to the current average of $2.67. Montana’s price increased 5 cents to $2.67. Even though Wyoming has the lowest price in the country, the price increased since last month’s survey. Wyoming’s current price, $2.51, is 2 cents higher than a month ago. Colorado’s price increased 3 cents to $2.55. New Mexico’s price increased 5 cents to $2.72. Nevada’s motorists saw a whopping 12 cent increase this past month. The current price in Nevada is $2.85.
Gasoline prices in regional destination cities are: Los Angeles, $3.07; San Diego, $3.07; San Francisco, $3.14; Las Vegas, $2.80; Reno, $2.93; Phoenix, $2.63; Boise, $2.69; and Denver, $2.49.

AAA’s Fuel Gauge Report includes over 100,000 self-serve stations surveyed everyday nationally. Data is provided in cooperation with OPIS Energy Group and Wright Express LLC.v

SMALL BUSINESSES TO BENEFIT FROM ... ... STRONGER U.S. ECONOMIC GROWTH

By Jeff Thredgold in the Mainstreet Journal

HIGHLIGHTS

• Washington County payrolls declined by 1,700 jobs (-3.4%) in the past year. The unemployment rate was 8.2% in the latest month, up from 5.6% one year ago
  
• The Zions Bank Small Business Index for Utah was 80.2 in December 2009, up from a revised 79.0 in November 2009
  
• Utah’s unemployment rate was estimated at 6.3% in the latest month, down from the 6.5% rate of the prior month. Total Utah employment fell an estimated 38,800 jobs during the past 12 months
  
• Utah’s small business sector will benefit from stronger U.S. economic growth during 2010, as the Great Recession has run its course
  
• The U.S. economy lost an estimated 85,000 net jobs in December, worse than the flat number largely expected. In addition, the initially reported loss of 11,000 jobs during November was revised to a gain of 4,000 jobs, the first monthly employment rise in two years. The U.S. unemployment rate remained at 10.0% in December
  

STRONGER U.S. ECONOMIC GROWTH

The Great Recession is over!(?) The U.S. economy grew at a 2.2% real (after inflation) annual growth pace during 2009’s third quarter. Moreover, most forecasting economists see growth in the October-December quarter at a 4.0%-5.0% real annual pace, with numerous forecasts seeing even stronger growth. Most forecasts for 2010’s first half are near 2.8%-3.0%, again with various forecasts for both stronger and weaker growth.

The Great Recession “officially” started in December 2007, according to the National Bureau of Economic Research Business Cycle Dating Committee. This group is likely to make a determination around mid-year 2010 that the recession “officially” ended near mid-year 2009.

With a formal end date as expected, the Great Recession will have run 18-21 months, making it the longest, deepest, most painful, and most pervasive since the Great Depression. By comparison, the two prior recessions in 1990-91 and in 2001 each ran eight months.

All fifty states are currently in recession, with employment change during the most recent 12-month period as the measure. A return of U.S. economic growth, combined with a faster-than-expected return of global economic growth, meets two critical preconditions for a return of Utah and regional growth in later 2010, as well as a return to modest growth for most other states by the end of the year.

U.S. economic performance and global economic performance are each components of the Utah Small Business Index, with stronger performance by either a positive contributor to the Index.

The Zions Bank Small Business Index for Utah was 80.2 during December 2009, up from a revised 79.0 during November 2009. The Index measures business conditions from the viewpoint of the Utah small business owner or manager.

A higher Index number is associated with more favorable business conditions for Utah’s small businesses. The Index uses 100.0 for calendar year 1997 as its base year. The Index includes revisions to various historical and new forecast components as they become available.

UTAH EMPLOYMENT

The Utah unemployment rate—the most heavily weighted component of the Zions Bank Small Business Index for Utah—was estimated at 6.3% in the latest month, down from 6.5% during the prior month. The 6.3% rate compares to a 3.8% rate during the same month one year ago. A higher Utah unemployment rate is a positive contributor to the Index as it implies increased access to Utah labor.

Utah’s unemployment rate averaged 3.4% during 2008, 2.7% in 2007, 3.0% in 2006, 4.1% in 2005, and 4.9% during the 2000-2004 period. These rates compare to an average Utah unemployment rate of 3.5% between 1995 and 1999. Average 2009 unemployment has not yet been released.

Total Utah employment fell by an estimated 38,800 jobs (down 3.1%) over the past 12 months. This decrease compares to a revised loss of 42,000 jobs in the prior year-over-year period. Utah added 1,900 jobs in 2008, 49,600 jobs in 2007, 55,700 jobs in 2006, 43,700 jobs in 2005, and 30,200 jobs in 2004.

These totals compare to gains averaging 38,000 new jobs annually during the 1994-2000 period and a net loss of 1,300 jobs in 2001 through 2003. More recently, job losses, leading to lesser income creation and softer retail spending, have a negative impact upon Utah’s small businesses…and therefore, the Index.

LOCAL PERFORMANCE

• Washington County payrolls declined by 1,700 jobs (-3.4%) in the past year. The unemployment rate was 8.2% in the latest month, up from 5.6% one year ago.
  
• Salt Lake County employment fell by 21,600 jobs (-3.6%) over the year. The county’s unemployment rate was 6.2% in the latest month, up from 3.7% last year.
  
• Utah County employment declined by 6,400 jobs (-3.5%) over the last 12 months. The area’s jobless rate was 5.9%, up from the 3.7% rate of one year ago.
  
• Weber County experienced a decrease of 5,300 jobs (-5.5%) from a year ago. Joblessness registered 7.2%, up from the 4.6% unemployment rate one year ago.
  
• Davis County payrolls declined by 2,200 jobs (-2.1%) in the past year. The unemployment rate was 5.8% in the latest month, up from 3.7% one year ago.
  
• Cache County employment decreased by 2,100 jobs (-4.2%) in the latest 12-month period. The area’s jobless rate was 4.2%, up from the 2.8% rate of one year ago.
  

NATIONAL EMPLOYMENT

The U.S. Department of Labor reported a net loss of 85,000 jobs in December 2009, worse than the largely unchanged number expected. However, the previously reported loss of 11,000 jobs during November was revised to a gain of 4,000 jobs, the first monthly employment rise in two years.

The U.S. unemployment rate was unchanged at 10.0% in December, versus a 26-year high of a revised 10.1% in October. The current 10.0% jobless rate compares to the 7.4% rate of one year ago and is double the 5.0% rate of December 2007. The average hourly wage rose 0.2% (three cents) to $18.80 hourly, a rise of 2.2% during the past 12 months.

Goods-producing employment continued to decline in December, with a net loss of 81,000 jobs. Manufacturing employment fell by 27,000 positions, while construction lost another 53,000 jobs.

Service-providing employment declined in December by 4,000 positions. The professional & business services sector gained 50,000 jobs (mostly “temp” jobs), while the retail trade sector lost 10,000 jobs in December. Government employment fell by 21,000 jobs, while the education & health services sector added 35,000 positions in December.

The net decline of 3.1 million jobs during 2008 was the worst year since 1945. The loss of 4.1 million jobs during 2009 surpassed the 2008 total. The net decline of 7.2 million jobs is a painful contrast to the average gain of 1.9 million net new jobs annually during 2005 to 2007. Modest job gains and occasional losses could be reported in coming months as the U.S. economy continues to emerge from the worst recession in the post-Depression period.

The January 2010 Zions Bank Small Business Index for Utah will be released on February 9, 2010. Zions Bank is Utah’s oldest financial institution and is the only local bank with a statewide distribution of branches, operating 103 full-service branches throughout Utah. Zions Bank also operates 25 full-service branches in Idaho. In addition to offering a wide range of traditional banking services, Zions Bank is also a leader in small business lending and has ranked as the No. 1 lender of U.S. Small Business Administration 7(a) loans in Utah for the past 15 consecutive years. Founded in 1873, Zions has been serving the communities of Utah for 135 years. Additional information is available atwww.zionsbank.com.

McCollum, Edmondson, Health Care:

Florida Attorney General McCollum has become a leading critic of the constitutionality of the “individual mandate” in the Congressional health care legislation. NPR.org has a good article on the issues, “Opponents Threaten Court Battle on Health Mandate.” On a separate constitutional point, Oklahoma Attorney General Drew Edmondson has become the first Democrat to join an AG challenge against the break Nebraska got in the Senate health care deal. From AP: “Edmondson and South Carolina Attorney General Henry McMaster are leading a delegation of attorneys general in asking Congress to strike the provision in the Senate version of the bill. The provision involves language requiring the federal government to bear the cost of Nebraska Medicaid enrollees deemed newly eligible under the pending bill's new Medicaid mandates.” Edmondson protested that no other state got the “windfall,” which places a financial burden on all other states. Edmondson is running for the Democratic nomination for governor. (Latest poll.) We’ve taken note of him previously as an opponent of the state’s tort reform legislation and for suing out-of-state poultry producers for polluting Oklahoma’s aquifers. (See below.) See also Daily Oklahoman, “Challenge to health bill provision gaining steam,” and The Hill, “State AGs request Reid, Pelosi drop Nebraska Medicaid funds from health bill,” with a copy of the letter.

DSC Receives Approval for Three New Degrees

January 19, 2010 -- By Steve Johnson Mainstreet Journal

ST. GEORGE, UTAH - The Utah State Board of Regents this past Friday gave Dixie State College of Utah the nod to offer three new degree programs, including the institution’s 13th baccalaureate degree, at its meeting held at Salt Lake Community College. The degree approvals continue the College’s progression toward fulfilling its mission to offer core, foundational and high demand educational opportunities.

Starting this fall, DSC will begin instruction in its new four-year degree in Psychology, which will be offered as a Bachelor’s of Arts (BA) or Bachelor’s of Science (BS) degree, along with a pair of two-year Associate of Applied Science (AAS) degrees in Clinical Laboratory Science and in Operations Management.

The new psychology degree will provide students a common core of courses in three main topical areas representing a broad spectrum of modern Psychology, including Social/Developmental, Behavioral Neuroscience/Cognitive, and Clinical Counseling/Applied.

The program is intended to develop graduates who have the knowledge and skills required to enter the workforce upon graduation. Students will also have the opportunity to pursue advanced study in psychology or a closely related behavioral science discipline, pursue degrees in law, medicine, business, or numerous other professional fields at the postgraduate level.

“This is an exceptionally happy day for Dixie State College,” said Dr. Don Hinton, DSC dean of arts and letters. “A four year degree in psychology is a core degree that we have needed and for which many students have been waiting. Now we can put in place the last details and begin accepting candidates for this degree.”

Dixie State’s AAS degree in clinical laboratory science is designed to prepare medical laboratory technicians to provide service and research in clinical laboratory science and related areas in rapidly changing and dynamic healthcare delivery systems. Upon completion of the program, these professionals will have the ability to perform, develop, evaluate, correlate and assure accuracy and validity of laboratory information, direct and supervise clinical laboratory resources and operations, and collaborate in the diagnosis and treatment of patients.

“This program is essential for the southern Utah community,” says Dr. Carole Grady, DSC Associate Dean of Nursing and Allied Health. “It is the latest in a growing repertoire of health sciences programs offered by Dixie State College to meet community needs for well-trained healthcare professionals.”

The main purpose of the new AAS degree in operations management at DSC is to respond to the needs and demands of Washington County businesses, particularly in the manufacturing and service industries, to obtain or develop qualified operations managers. The degree program was designed by DSC to build upon a manufacturing technology (MT) certificate that is currently being offered by the Dixie Applied Technology College (DXATC).

A number of manufacturing programs in the Washington County area have chosen employees to attend the MT program at DXATC in order to gain additional skills. Students completing the MT program would then have the opportunity to complete an AAS degree in operations management at DSC. In addition, Dixie State has a proposal awaiting Regent approval for an operations management emphasis in DSC’s four-year Integrated Studies degree program.

The operations management program is designed to provide students with a strong applied foundation in the management of activities and processes directly associated with the conversion of inputs (materials, labor and energy) into outputs (goods and services). The program focuses on carefully managing the processes that produce and distribute products and services, including strategy planning, new product or service development, production, distribution, work design, supply chain management, recycling and sustainability, customer service, storage, transportation and logistics.

In 2000, Dixie State College was granted license to begin offering bachelor’s degrees in high demand areas, which initially included business administration and computer & information technology.

Several other degrees have since followed, including elementary education (2002), nursing (2004), English (2006), biology (2006), dental hygiene (2007), accounting (2007), aviation management (2007), communication (2007), integrated studies (2008) and music (2009).
In addition, DSC was recently given the green light by the Regents to offer a secondary education teaching (SET) licensure program in three emphases; biology, English education and integrated science, along with additional emphases in accounting, finance and visual technology in Dixie’s business administration program.

In 2005, the Board of Regents approved a change in mission for Dixie State College, allowing the college to begin offering bachelor’s degrees in “core” or “foundational” areas consistent with four-year colleges. Dixie State College also continues to function as a comprehensive community college as well, offering associate degree and certificate programs to its students.

The overall strategic goal for Dixie State College is to offer core and high demand educational opportunities at both the associate and baccalaureate levels that are consistent with and responsive to the needs of the community. Future programs for Dixie State College will likely center in three primary strategic clusters, which include business & technology, health care & public safety, and education.

SOCIAL SECURITY & MEDICARE BENEFITS FOR RETIREES - 2010 UPDATE

Copyright 2010 The Employers Council

Employers are often involoved in helping employees transition into retirement. It is important to educate employees approaching retirement age about beneftis available to them after they retire. This information, in addition to information on employer-provided retirement benefits, will help employees make retirement decisions. There is no mandatory retirement age, so do not pressure employees into retirement.

SOCIAL SECURITY BENEFITS

Full Benefit Retirement Ages: Changes to teh Social Security Act, as amended in 1983, affect those born in 1938 and later. In 2010, full retirement age is 66. No matter the full retirement age as reflected below, individuals can begin claiming reduced benefits starting at age 62.

If you were born in: Full Retirement Age: If you were born in: Full Retirement Age:

1938 65 and 2 months 1955 66 and 2 months

1939 65 and 4 months 1956 66 and 4 months

1940 65 and 6 months 1957 66 and 6 months

1941 65 and 8 months 1958 66 and 8 months

1942 65 and 10 months 1959 66 and 10 months

1943-1954 66 1960+ 67

Cost-of-living adjustment: In 2010, current retirees will not receive a cost of living increase. The average monthly benefit for all retired workers is expected to remain the same at $1,153. The government bases the cost-of-living adjustment on the change in the Consumer Price Index (CPI-W) from the third quarter of the prior year through the third quarter of the most recent year. Because there was no increase in the CPI-W from the third quarter of 2008 to the third quarter in 2009, there will be no increase in monthly benefit.

Maximum allowable earnings: Social Security benefit recipients under full retirement afe can earn up to $14,160 without loss of benefits. For income greater than $14,160, $1 is deducted from the benefits for each $2 earned. The year an individual reaches full retirement age; the individual can earn $37,680 without loss of benefits. For income greater than $37, 680, $1 is deducted from benefits for each $3 earned. This limit applies only to earning for the months prior to reaching full retirement age. There is no limit on earnings beginning the month a person attains full retirement age (65 if born in 1943-1954).

Maximum monthly benefits: For those retiring at full retirement age in January 2010, the maximum monthly benefit is $2,323. Employees can retire between 62 and full retirement age, but receive benefits reduced a fraction of a percent for each month before full retirement age. Retirees should obtain benefit details for each individual situation directly from Social Security.

MEDICARE BENEFITS

Hospital Insurance - Part A: The deductible for inpatient hospital services is $1,100 in 2010. There is no daily co-payment for the first 60 days of hospitiliation. The daily co-payment is $275 for the 61st - 90th day and $550 per day for the 91st - 150th day. The daily co-payment for post-hospital care in a skilled nursing home is $137.50 for the 21st - 100th day in each benefit period.

Medical Insurance - Part B: For most beneficiaries, the monthly premium will remain at $96.40. The monthly premium may be higher for incomes above $85,000 (sngle) or $170,000 (married). The deductible for 2010 will increase to $155. The co-payment reamins at 20 percent.

Medicare Advantage - Part C: An individual with Mediare Part A and Part B may join a Medicare Advantage Plan. Cost will vary depending on the plan chosen.

Prescription Drug Coverage - Part D: Coverage is available to everyone with Medicare. Individuals may sign up on becoming eligible for Medicare (three months before the month in which and indiviual turns age 65 until three months after turning age 65). Monthly premiums and cost-sharing vary depending on the plan chosen. Those with limited resources may qualify for extra help paying costs. Individuals who delay signing up when forst eligible may pay a penalty.

For more information on Social Security and Medicare, contact the Social Security Administration by phone (800-772-1213) or visit their website www.ssa.gov.