Michigan puts 4-year limit on welfare

iVillage Member
Registered: 04-22-2005
Michigan puts 4-year limit on welfare
6
Thu, 07-14-2011 - 2:38pm

Michigan has put a 48-month limit on welfare benefits.





iVillage Member
Registered: 11-27-2009
Thu, 07-14-2011 - 3:15pm
Considering this economy limiting welfare does raise eyebrows. It will probably force residents to relocate to states where they can still receive assistance.

Growing the economy really needs to become the focus. The housing crisis has not ended and will continue to put a drain on the nation. I just read an article that the Illinois Reality Association has been inflating it's numbers. People were buying homes because they were being told that house prices not only stabilized, but were actually increasing. It was false. The result is that there are more people with homes worth less than they were when they bought them.
Gary Schilling is predicting another recession next year. Pretty scaring since he also claims that we are 2 years out of the last one!
By Howard Gold

A previous version misstated figures for new-home sales. It is housing starts that are running at about one-third of their average.

NEW YORK (MarketWatch) — Rough patch or double dip?

That’s the debate going on these days from executive offices to the local malls. Business owners, workers and, yes, even economists are trying to decide whether the U.S. economy has hit a speed bump or is heading for a collision.

We all know growth is tepid, unemployment is a bear and housing, well, stinks. That’s why major Wall Street firms, the International Monetary Fund and, on Wednesday, the Federal Reserve all slashed their estimates for U.S. GDP growth this year.
Click to Play
Fed cuts growth forecast

Federal Reserve Chairman Ben Bernanke says the U.S. economy is recovering more slowly than expected, but central bank officials gave no indication they intend to take new steps. Jon Hilsenrath explains.

Housing remains critical, so I looked up one of the few people who saw the housing bust and financial crisis coming years before they happened: Gary Shilling, economist and author of “The Age of Deleveraging.” While his steadfast bearishness didn’t surprise me, his blunt assessment did.

“I’m predicting another recession next year,” he told me.

Not a double dip, he emphasized, because we’re already two years from the end of the last recession and 3 ½ years from the business cycle’s previous peak, in December 2007. Historically, he said, economic expansions last about three years, especially in long down cycles of the kind he thinks we’ve been in since 2000.

So, he’s looking for a brand new cyclical recession beginning in 2012.

Many Americans will be forgiven if they can’t see the difference between that and the recovery we’ve been experiencing.

That’s Shilling’s point. Usually, deep recessions like the one we just lived through are followed by strong snapbacks, like a growth slingshot.

This time, however, the recovery has been “distinctly subpar,” in his words. “As of the first quarter, ..real GDP is barely above its peak in the fourth quarter of 2007, whereas earlier recoveries were well above their previous tops 13 quarters later,” he wrote in a recent edition of his newsletter, Insight.

Translation: More than three years after the peak, we’re still not back to where we were.
Sputtering economy

There are good reasons for that, beyond the particularly tough toll financial crises take on growth.

The economy, he says, is like a four-cylinder engine, and a recovery usually requires all four to be firing. They are consumer spending, employment, housing and the reversal of the inventory cycle.
Gary Shilling

Shilling thinks only the last is really recovering — i.e., companies that brutally liquidated inventories during the recession have had to rebuild them through boosting production and some additional hiring as demand bounced off its lows.

But consumer spending has made only a partial comeback, concentrated among more-affluent buyers. Everyone else has been weighed down by weak job and income growth and the continued housing catastrophe.

We have seen some improvement in employment, albeit slow of late, and it’s nowhere near what we’ve had in past recoveries. Mostly employers have just stopped laying people off, and when they hire, it’s often on a part-time or temporary basis. And then there’s housing.

Year after year, many have predicted the bottom of the housing market (and for the record, I was one of them in 2011), and year after year housing prices have kept falling. Read 10 sure-fire predications for 2011.

Shilling, of course, isn’t one of the optimists. He’s actually looking for another 20% drop in housing prices before we hit bottom in 2013.

Read more about Gary Shilling’s views on housing at MoneyShow.com.

Since housing prices nationally already have fallen by a third from their peak, that means that, if he’s right, they’ll end up a stomach-churning 45% off their early 2006 highs. Yale Prof. Robert Shiller, co-creator of the Standard & Poor’s/Case-Shiller Home Price index, has a similar prediction.
Too many homes for sale

For Shilling, it’s all about inventories: He estimates there are upwards of two million homes on the market that people want to sell but can’t. That’s deflated housing starts, which now stand at about a third of their normal 1.5 million a year.

From a high 6.3% of GDP in the fourth quarter of 2005, residential construction now represents only 2.2% of GDP. Not only is that a half-a-trillion-dollar gap; housing’s volatility makes it an important force in a cyclical recovery, said Shilling, and the paucity of home building has clearly taken a toll on this one.

A further 20% decline in home prices would raise the percentage of homes worth less than the value of their mortgages to a stunning 40%, from the mid-20% range now. Shilling estimated it would also cut homeowners’ equity to a mere 8% of total home values, from 19% now and 50% in the early 1980s.

Lenders have foreclosed on 3.5 million American homes since 2007; Shilling expects millions of more foreclosures in the years ahead.

If this happens, “you know what that will do to consumer spending,” said Shilling. “That’s a recession — an easy forecast.”

And once housing markets hit bottom, it can take a decade for them to recover, as in Texas after the oil bust or Southern California after the end of the Cold War. That could mean subpar growth — average annual GDP gains of 2% — for years to come, he predicted.

The government and the Federal Reserve have thrown everything at the economy, with minimal results. The Fed’s quantitative easing programs did little except boost commodities prices and stimulate the stock market, he said, and he thinks the commodities mini-bubble already has burst.

The Obama administration’s own attempt to “fix” the housing market — the Home Affordable Modification Program (HAMP) — was, in Shilling’s words, “a miserable failure.”

Read Howard’s report card on President Obama’s economic policies on The Independent Agenda.
What’s ahead

But slow growth will get politicians of both parties antsy to “do something” in an election year. “If the economy is still weak going into next year, we could have fiscal stimulus,” he told me. Politicians do not “want to face voters with a weak economy,” he said.

As for investing, Shilling has returned to an old favorite: the 30-year Treasury bond, which is currently yielding around 4.21%. “I think they’re going to 3%,” he said. “I think [the 10-year is] going to 2%.” The 10-year Treasury note was yielding near 3% Wednesday. Take that, Bill Gross!

Naturally, Shilling’s not looking for much from equities, and he recommends only blue-chip dividend-paying stocks.

Shilling’s not infallible, of course. He has been predicting deflation since the late 1980s and in earnest since 1998. We’ve had two potentially deflationary episodes, in 2002 and after the financial crisis, but the Fed was able to dispatch them.

He also was very bearish on stocks, expecting new lows in early 2009 and pretty much missed the recent bull market. So, he’s not the guy who’s going to call bottoms or identify bullish inflection points.

And I think we’ll probably get by with slower growth but without a new recession, based on strong overseas business and spending by affluent consumers here. Recent strong reports from companies like FedEx and CarMax show the economy may not be nearly as bad as Shilling thinks it is.

Read Howard Gold’s commentary on whether we’ve seen a top in the market on MoneyShow.com.

But I hesitate to second guess him on housing, where his track record has been stellar. That’s why his predictions should be sobering indeed for homeowners, investors and policymakers alike.

http://www.marketwatch.com/story/new-recession-begins-next-year-shilling-says-2011-06-24?pagenumber=1
iVillage Member
Registered: 03-30-2007
Thu, 07-14-2011 - 5:54pm

We've had limits on Welfare here for about 10 years.

iVillage Member
Registered: 11-27-2009
Thu, 07-14-2011 - 6:20pm

Yes, that was part of the welfare reform of 1996.
Not all states imposed time limits; with this economy it is a bad time to initiate such a policy. Reforms like this are better done in more prosperous times.

Avatar for xxxs
Community Leader
Registered: 01-25-2010
Thu, 07-14-2011 - 9:54pm

The bottom line economic problem problem is we are very overpopulated.

chaika

iVillage Member
Registered: 07-13-2011
Fri, 07-15-2011 - 3:34pm

Do you honestly think someone, who's educated and trained, and "earnestly job-searched" for four years can't find anything better than a minimum wage job?

iVillage Member
Registered: 04-22-2005
Fri, 07-15-2011 - 9:09pm

It depends on what they were educated and trained in.