Qualifying for unemployment

To thousands of out-of-work Americans, living from paycheck to paycheck sounds like a luxury.

And for many jobless, even living off unemployment benefits would be a welcome blessing.

Typically, only about one-third of jobless receive unemployment insurance checks, but in recessionary times, the percentage pushes higher, to about one-half, notes Wayne Vroman, economist at the Urban Institute.

Whether the unfortunate jobless are fortunate enough to receive unemployment benefits depends on the rules in their state -- and whether they even pursue the checks.

No more unemployment lines?
Being jobless isn't pleasant, and neither is trudging down to the unemployment office to claim benefits.

Many states, however, now let you apply online or by phone, making it easier to file an unemployment insurance claim.

A 2005 study showed that half of people who don't apply for benefits didn't because they thought they were ineligible, says Vroman.

But if you're unsure if you'll qualify, it can't hurt to apply, notes Paula Brantner, executive director of Workplace Fairness.

Who qualifies?
If you quit, worked part time, were fired for misconduct or didn't earn enough during a defined period before your job ended, your state may deny benefits.

Qualifying rules vary somewhat from state to state, however.

For instance, "If you're working part time by choice, you probably don't qualify, but in some states (you qualify) if you've been part time because that is all the hours your employer could give you," says Andrew Stettner, deputy director of the National Employment Law Project.

Moreover, if you simply quit, you can't collect, but some states make exceptions for workers forced to leave their jobs to care of ill family members, he adds.

Recessionary rush
During recessions, there are not only more jobless, but people who are more apt to qualify for benefits because they are part of mass layoffs.

In many cases, those initially laid-off temporarily can qualify if the layoff subsequently becomes permanent. "A lot of people don't file because they think it's just a couple of weeks (layoff)," says Vroman. "But if the situation turns permanent, you can still file, although the length of time allowed (between making a claim and the initial layoff date) varies betweens states."

Do it yourself
States don't charge for jobless residents to apply for benefits.

Still, services exist that charge consumers for filing on their behalf. "They can't get you the benefits any faster," says Brantner.

Indeed, most states operate under performance guidelines that mandate that the jobless receive a response to their application and start to receive benefits within three weeks, adds Brantner.

www.bankrate.com

u.s:Three regional banks fail

FDIC says local banks in Maryland, Florida and Utah were closed by financial regulators Friday.

Three regional banks were closed Friday, bringing the total number of failed banks this month to six, as the financial crisis continues to take a toll on small banks nationwide.

Suburban Federal Savings Bank in Crofton, Md., was closed by the Office of Thrift Supervision. The FDIC said the failed bank's seven offices will reopen on Saturday as branches of Tappahannock, Va.-based Bank of Essex.

The FDIC said it entered a "loss-share" agreement with Bank of Essex, whereby the purchasing bank will share some of the losses associated with certain of the failed bank's "asset pools." The arrangement is intended to maximize returns on the assets by keeping them in the private sector, according to the FDIC.

In Florida, the Office of the Comptroller of the Currency shuttered the four locations of Ocala National Bank and entered into a purchase agreement with CenterState Bank in Winter Haven, Fla.

Ocala National Bank had total assets of $223.5 million and total deposits of $205.2 million, while Suburban Federal had total assets of approximately $360 million and total deposits of $302 million.

Taken together, the two failures will cost the FDIC an estimated $225 million.

Separately, the FDIC said it was unable to find another financial institution to take over the banking operations of Salt Lake City-based MagnetBank, which regulators also closed on Friday. As a result, it expects to mail checks to retail depositors for their insured funds Monday morning.

MagnetBank, which is estimated to have no uninsured deposits, had total assets of $292.9 million and total deposits of $282.8 million as of last month, according to the FDIC. It was the first bank to fail in Utah since 2004.

The FDIC said it conducted "an extensive marketing process" to seek a buyer for MagnetBank's assets, but it found no takers.

David Barr, an FDIC spokesman, said MagnetBank had only one branch and did not have the "franchise value" or the "core assets" that would have made it attractive to other banks.

So far this year, bank failures are averaging more than one per week. Last year, 25 banks were closed nationwide, which was the highest annual total since 1993, when 42 banks went under.

Economists expect the number of failed banks to continue rising this year as the financial crisis plays out and the economic outlook remains dark.


money.cnn.com

Even worse than it looks

America's economy shrank sharply in the fourth quarter. There are few reasons for optimism.

IT IS a measure of the prevailing gloom that the worst economic performance in 26 years could still be described as better than expected. Real gross domestic product fell at an annual rate of 3.8% in the fourth quarter, below the decline of 5% or more that many economists had anticipated.

However, there is precious little reason for optimism. Almost all the unexpected growth came from a small rise in business inventories. This is almost certainly because firms did not reduce production quickly enough to keep pace with slumping orders. To get inventories back in line, more production cuts in the current quarter are likely. Morgan Stanley had expected GDP to fall by 4.5% in the current quarter, but now thinks it will fall by 5.5%.

Other details are no less grim. Consumer spending sank at a 3.5% annual rate, similar to its third-quarter drop, despite a big rise in real after-tax income, thanks to the huge drop in petrol prices. Spending and incomes went in opposite directions because once-profligate consumers are now trying to save more. They put aside 2.9% of their income (after tax) in the fourth quarter, the highest rate since the beginning of 2002. They are doing so either by choice, because retirement savings have been devastated and they fear losing their jobs, or by necessity, because it has become so difficult to borrow.

Businesses are cutting back more savagely. Their investment sank by 19%, worse than any quarter in the 2001 recession which was, after all, a business investment-led slump. And that was despite some firms boosting spending to exploit a temporary tax benefit that expired at the end of the year.

Both exports and imports fell sharply, leaving no net impact on GDP (lower imports raise the calculation of GDP, while lower exports reduce it). Matters are likely to get worse. The dollar has strengthened in recent months and much of the rest of the world is in worse shape than America. According to JPMorgan, the economy in Britain probably shrank at an annual rate of 5.9% in the fourth quarter, the euro-area by 5%, and Japan by a heart-stopping 9%, in a country with no housing bubble or banking crisis.

If there is any silver lining, it is that while the recession was a year old in December, its first half was not especially deep: net GDP actually rose in the first half, and the downturn is actually a bit milder than the median post-war recession after 12 months. But the typical post-war recession was over (or close to it) by this point; this one is getting worse. Claims for unemployment insurance were high in January, sales of new homes slumped in December, and several big companies, most recently Starbucks, Boeing and Sprint Nextel, have announced thousands of job cuts.

Faint though it is, there is a glimmer of hope in financial markets: interest rates on short-term loans between banks and on longer-term corporate debt have fallen notably since the autumn, and there has been a flood of new bond issues. But that may simply be evidence that investors no longer expect a catastrophic wave of bankruptcies. It does not mean that either companies or consumers are about to open their wallets.

What could turn this around? Most recessions end as companies clear excess inventories and as households, with a boost from lower interest rates, release pent-up demand for cars and houses. This time is different. Tightened credit severely limits the ability of consumers and companies to spend even if they were so inclined.

More than usual, an end to this recession will depend on policy. Enormous hopes are riding on Barack Obama’s $819 billion stimulus package, which has passed the House of Representatives and is now being debated in the Senate. Of that sum, just $170 billion will find its way into the economy before this fiscal year ends on September 30th, largely in the form of expanded unemployment insurance benefits and reduced income tax which will make their mark within months. But most of the impact will be next year because infrastructure funds, even once the money is available, takes a long time to be spent as federal, state and local governments secure the necessary approvals and seek bids for the work. “Even ‘shovel ready’ projects will not need shovels for some time,” notes Economics from Washington, a consultancy.

Still, the package will help. The Congressional Budget Office thinks that GDP by the end of 2009 will be between 1.3% and 3.6% higher than it otherwise would have been, thanks to the stimulus. It had thought that the unemployment rate would rise from 7.2% in December to 9% by the end of this year; with the stimulus in place, it thinks it will only rise to between 7.9% and 8.6%.

But more must be done. “The real problem is a feedback loop from the economy to credit losses,” says Richard Berner of Morgan Stanley. The fiscal stimulus will achieve little until that is fixed. Thus the administration’s real work lies ahead: coming up with a bigger and more comprehensive plan for recapitalising banks and relieving them of bad loans.

www.economist.com