After all, just consider that:

• The U.S. unemployment rate just spiked to 9.4% for May, up from 8.6% in April, meaning the nation’s jobless rate is now at its highest level in more than 25 years.
• Throw in the fact that the current jobless rate does not include people who have taken part-time jobs below their skill levels to make ends meet (a little-referred-to situation calledunderemployment), and the “real” unemployment rate soars to a staggering 16.4%.
• More than 6 million workers have lost their jobs since the recession started in December 2007, meaning one in 20 jobs has disappeared – many of them forever.
• A total of 14.5 million Americans are now unemployed. The number of long-term unemployed (those without jobs for 27 weeks or more) recently increased by 268,000 to 3.9 million and has tripled since the start of the recession.

But that’s not the worst of it. Experts are projecting an economic rebound that will take hold late this year – early next year at the latest. At the same time, however, economists are starting to whisper about a “jobless recovery,” an upturn in which the economy and corporate profits advance, but virtually no new jobs are created to overcome the years of layoffs that preceded the rebound. In fact, the U.S. Federal Reserve said the U.S. economy might not return to its “normalized” unemployment rate of roughly 5% until 2013, Argus Research Chief Economist Richard Yamarone wrote in a recent report.

So while there appears to be some light at the end of the tunnel for the economy in general, the outlook is somewhat more challenging for those who are unemployed, underemployed, or who are currently working but who still harbor dreams of “career advancement.” As bleak as this all may sound, jobseekers (both employed and unemployed) shouldn’t be deterred: With a sound strategy, and four simple secrets, it’s still possible to survive – and even thrive – in a jobless recovery. We’ve labeled them as the “Four P’s” – Plan, Pinpoint, Pounce and Persevere.

Planning to Win

It’s a well-worn adage, but it’s also a truism: Those who fail to plan are essentially just planning to fail. Have a plan to keep your life on track while you see that new career opportunity.

When “joblessness” strikes, it usually does so in one of two ways.  It either catches you completely off guard – often with a hastily called series of employee meetings, or that Friday afternoon summons to the boss’ office – or you’ve seen the handwriting on the wall (or in your company’s financial statements), and so you knew it was only a matter of time. Either way, if you let the search for a new job consume 100% of your life, you may end up losing more than just a regular paycheck.

By far, the largest consequence when you lose a job is the loss of regular income. Having a plan to deal with this change is just as important as getting a new job.

To create this plan, start by asking this question:  Do you have enough cash on hand, or can you access the needed funds, to pay all your bills, while you’re looking for a job?

If your answer is “yes,” congratulations.  You’re much better off than the majority of people losing jobs right now.  For the purposes of this article, go ahead and skip to the second “P” – Pinpoint.

But if you’re like most unemployed Americans, you depend on a regular paycheck to meet your financial needs.  Once that income stops, you’re going to have to make some difficult choices based on your financial situation.  Waste no time in taking the steps to address these issues head-on by:

• Contact your creditors:  With such liabilities as a credit card, credit line, or outstanding medical bills, if the creditor in question doesn’t have a program in place to suspend your account for a couple of months while you track down that new job, then they likely have a program to reduce the interest rate and modify your payments.  Believe it or not, they’ll work with you, especially right now.  The last thing they want is for you to default on the loan.  The earlier you contact them, the better off you’ll be – especially in the long run.

• Micro-budget yourself:  Figure out what you can and cannot do without.  The longer your job search lasts, the easier it becomes to do without cable television, dry-cleaned clothes, making that weekly sojourn to your local restaurant, or stopping every day for that morning muffin and coffee. Scrutinize your bank statement. Consumers are often surprised how often they’ve accumulated automated payments or account debits – which they’ve forgotten about. Look closely: If you’re still making regular payments to magazines, dating services, TV-based services, or even mutual funds, look at those you can stop.  You’ll be surprised at what you can eliminate from your monthly expenses once you know what’s actually being paid for.

• Seek Alternative Income: Do this immediately. Access other income sources as soon as you can.  If you’re eligible, apply for Unemployment Compensation; sometimes it can take weeks for this to kick in, so the sooner you apply, the sooner you can begin to collect an income.  If needed, find another source of income – you’ll be surprised how many opportunities are out there for people who are willing to take on shifts outside of the 9 to 5 norm.

As you work through these necessary tasks, make time to jumpstart your job-hunt, as well. Unless you’re forced to take the first real offer that comes your way, don’t be afraid to make the most out of this situation by including your dream job in process. The worst that can happen is that you don’t land that particular job.

But you just might do it.

Just as with the “Plan” phase of your job search, you’ll create the best chance for success in the job-hunting phase if you “Pinpoint” exactly what you’re looking for.

Pinpointing Success

By pinpointing your objectives, you have to understand just where you want to be. But you also need to pinpoint just how you intend to get there, and to be realistic about what you’re up against. It’s the last of those three that’s often the toughest to see and understand. So let’s take a closer look.

Understanding the Challenges: As we noted just moments ago, it’s not too difficult these days to get a pretty good idea of the overall unemployment scene: The official unemployment rate was last this high in 1983, and it’s going to get higher before it hits its apex and heads lower. But you also need to understand just what the hiring situation is in the specific industry you wish to work in – as well as the specific geographic market where you hope to work.

On an industry-wide level, The U.S. Bureau of Labor Statistics Web Site (www.bls.gov) is a good place to start.  By checking out their monthly Economic Statistics reports, you can get a clear picture of industry-specific performance in the U.S.

For example, in the Employment Situation Summary for May 2009, we can see that both the education/health services and leisure/hospitalitysubsets of the service-providing industry added jobs last month: 44,000 and 3,000 jobs, respectively.

Whereas, the goods-producing, manufacturing, and service- providing sectors were down 225,000, 156,000 and 120,000 jobs for the month, respectively.
By combining industry-wide knowledge with more specific resources available for your cities and states on Web sites provided by local newspapers (in my local area, that would be The Baltimore Sun or The Washington Post, for example), social media networks (like Craig’s List or Facebook) and jobs sites (such as Monster.com orCareerbuilder.com), you’ll gain a much better idea of the job market available to you right now.

Define Your Goal: This is the point most people start at when job hunting because they think it’s the easiest to knock out.  Well, in part, they’re right.  There’s no better authority than you when it comes to knowing what you can do or want to do.

But there’s a mistake most jobseekers make – a mistake you need to avoid at all costs: Don’t sell yourself short, and don’t “pigeon-hole” yourself by thinking that your skills will only allow you to do a very narrowly defined job. Granted, for certain specific trades – such asHVAC installation and service, plumbing, or auto repair – you may be looking for highly specialized work.

In Corporate America, however, people who’ve worked in the divisions or departments essential to business – such as marketing, sales, human resources, logistics, or operations – jobseekers often don’t see those additional possibilities. If someone has spent the last 11 years working in HR for an accounting firm, they may not realize that they have the skills or experience needed to do a similar job within a school system, a hospital or health-care center, or a startup technology firm. And they could end up missing out on some good-paying and career-rejuvenating opportunities in the process.

That’s when the marriage between knowing what you’re up against and know what you want to do becomes critical.  Once you’ve identified which industries are the go-to segments for employment, you just have to look for the companies within that industry that offer positions in which you’ve had all of that experience.  Sometimes, though, you may need to persuade the decision-maker for the position in question that your experience in one industry lends itself to the other.

And finally, understanding of the challenges you face may also give you an entrée into the industry that houses your dream job.

Of course, you need to be somewhat realistic, even as you act with enthusiasm and aggressiveness. For example, if you always wanted to be a major league relief pitcher, but are now 34 years old with eight years of accounting experience to your credit, the chances are pretty good that the New York Yankees aren’t going to be phoning you to offer a mound tryout. However, the Bronx Bombers – like any other business – do have an accounting division, and your experience may be a perfect fit for what they’re looking for.

Remember that your sudden joblessness may give you the opportunity to get into an industry that you’ve always wanted to be in.  Now, though, you have the requisite experience within one of the departments common to every company, that makes you a much more attractive candidate for that position.

Now, you just have to be able to seize an opportunity, once you’ve identified it.  And that brings us to the third “P” – Pounce.

Pounce on That Possibility

Too many job seekers begin their search in an all-out desperation mode – thinking they have to find a job as soon as possible.  Even if that’s true in your case, if you’re not prepared to make the most out of every job-seeking situation you enter, you may end up blowing the best chance – at the best job – that you’ll ever see.

So, take a page from the Boy Scouts: Be prepared – to pounce.  That is, prepare for the best possible scenario, as if you’re going to hit the job-seeking jackpot.  For example, what happens if the first company you contact asks you to send your resume and references right away, so the chief executive and the head of HR can look them over this morning and then have you in that afternoon? If you aren’t prepared, you can’t pounce on the prospects that may come your way.

Well, if your answer to that request is “I can e-mail whatever you’d like right now.  What time this afternoon would you like to meet?” you’re on your way.  But if the last time you looked at your resume was six years ago, during your last job search, or you last spoke to your best prospective reference three years ago (and don’t even know where they’re working today), chances are you’ll still be job hunting long after someone else is happily seated (and working) behind the desk that should have been yours.

So even before making that first call or typing in that first word for an online search, make sure that you have the following information updated, available, and ready to be sent at the drop of a hat:

1. Resume: More than just having it updated, make sure that you know it backwards and forewords.  Be able to explain gaps in your employment history, or why you’ve recently jumped from job to job.  The best plan: Have a general template that you can individualize or customize in order to pounce on a specific job opening.
2. Cover Letter: In many cases, the cover letter is just as important as your resume.  It should be your Sports Centerhighlight reel, but it should also be concise. Like you have with your resume, prepare a cover letter template, so that you can customize information for different openings, catering your comments to specific requirements or requests.
3. References: At a minimum, you should have the names and contact information (phone and e-mail) for three business and personal references.  For businesspeople, include their titles and company names.
4. Samples of work: For positions in such “creative” fields as copywriting, graphic arts, architecture, or industrial design, to name a few, you’ll be asked to submit samples of your work.  Make hardcopies and electronic files of whatever you can, so that you can submit them in multiple formats.  Never give away originals, thinking that they’ll be returned – chances are, you’ll never see them again.

In addition to having the documents and materials above ready to go with a moment’s notice, you should also have the following information and materials readily available:

1. Your schedule for the week:  If you’re asked when you’re free later in the week, you need to be able to answer that question immediately.  The worst thing you can do tell someone that you’re meeting with at that moment, or that you’re talking with on the phone, that you’ll get back to them with that information.  You may not be able to connect later, for a variety of reasons.  Then when you do re-connect, you window of opportunity may have closed.
2. Clothes for an interview: Some laugh at this suggestion as oh-so-obvious, but you’d be surprised how many times people will tell us that they were called in for an interview – only to realize that their best suit was still rumpled from their last interview, three weeks ago. You don’t have to go out and purchase a new suit for every interview opportunity, but if you’re asked to come in to talk that day, and you don’t have time to wash, iron or otherwise clean appropriate clothing, you run the risk of making a bad impression – and losing the job.

Don’t Give Up

It goes without saying that this is one of the toughest and most-challenging periods U.S. job seekers have faced. But it also goes without saying that you can’t give up. That’s why the fourth of our four insights – the “Four P’s” is perseverance. Hope for the best, but don’t be discouraged if no job offer is immediately forthcoming. Prepare for the long haul by following the game plan we’ve identified, and use that as a survival kit that will get you through to the long run, where those who persevere usually win.

Source: The Four Secrets to Career Success in a Jobless Recovery

[Editor's Note: The first in an occasional series that looks at unique strategies for navigating the jobless recovery.]

On an individual level, the benefit will come from the mix of tax benefits that are part of the package.

On Feb.17, U.S. President Barack Obama signed into law a massive $787 billion stimulus package aimed at jump-starting the domestic economy. While the jury is still out on its future success, average Americans are left to ask: What’s the best way to benefit?

“In general, lower-income folks are more likely to see the most actual benefits from these provisions,’” said Gregory Horning, co-founder and director of SC&H Group Inc., the largest locally based management-consulting and CPA firm in Baltimore.

However, Horning believes that for the economy to really rebound, families must repair and reposition their individual financial positions.

“For years, folks have lived on no savings and counted on equity in their homes as a source of spending,’” Horning said.  “Now, home valuations are down and they need to change their lifestyles and cut their monthly spending to repair their personal balance sheets.  While a couple of hundred dollars from a stimulus package may help in the short-run, we must deal with the root of the problem, which requires a new mindset for the American people.  There are no simple fixes; no good answers.’”

Home Buyer Credit

Even so, Horning sees a few provisions within the stimulus package that could prove beneficial to certain individuals.  In particular, he points to the temporary credit for first-time homebuyers as one area that could help.

Under this provision, first-time homebuyers may be eligible for a credit of as much as $8,000 credit on the purchase of their house (or 10% of the purchase price).  The credit is subject to income limitations ($75,000 for single filers/$150,000 for joint) and can be taken for homes purchased between Jan.1, 2009 and Dec.1, 2009.  Because the collapse of the housing sector has been a major contributor to the economic downturn of the past few years, the government is hoping that this credit will encourage renewed housing activity.

“For first time homebuyers who qualify, this provision may accelerate their decision to pursue home ownership and live the American Dream,’” Horning said. “Essentially, the government is subsidizing $8,000 toward the purchase of a home. Coupled with the current lower property valuations, home ownership has become more attractive for this limited group of individuals.’”

Because of the income restrictions and the fact that buyers could not be prior homeowners, Horning acknowledges that the impact on housing and the overall economy will be fairly limited.

Bill Hickl is managing director leader of the Private Client Services Group for UHY Advisors, one of the 15 largest professional-services firms in the country. Though his client base is primarily high-net-worth individuals who would not qualify for this homebuyer credit, he has been fielding a number of calls about this provision.

“Just last week, I spoke with a CEO of a local business who called to talk about his daughter, who was considering becoming a first-time homeowner,’” Hickl said. “He was thinking about helping out with her down-payment and wanted to get some of the specifics.  I let him know that the purchase could be treated as if it occurred in 2008 for tax purposes as the government is allowing for acceleration of the use of this credit by making an election.  By extending her tax-return filing to Oct. 15, his daughter will have several months to complete the transaction and still be eligible for the credit on the 2008 return.’”

Car Buyer Deduction

Another provision aimed at stimulating additional retail activity is a temporary deduction for car buyers. Under this bill, individuals who purchase a car, recreational vehicle, or even a motorcycle in 2009 may be eligible to deduct the state and local sales taxes, as well as excise tax, on the vehicle.  Again, an income limitation applies, so not every car buyer is eligible, but the higher limits ($125,000 single/$250,000 joint filers) increase the potential for more individuals to take advantage.

“This deduction is ‘above the line,’ meaning that taxpayers don’t have to itemize to be able to reap the benefit,’” SC&H Group’s Horning said.  “They will be able to take a full deduction of the sales tax for cars costing up to $49,500; however, should they buy a more expensive vehicle, they will only be eligible for the deduction up to that amount.’”

Horning believe this provision could have some impact on auto-sales activity as individuals who might be considering a new-car purchase in the next few years could push that decision up to 2009 to take advantage of the deduction.

“It probably doesn’t mean people will be buying more cars [overall] than they [otherwise] would have,’” said Horning.  “This just moves up the timing of that next potential purchase.’”

Qualified 529 Plans

UHY Advisors’ Hickl believes that the expanded definition of qualified higher education expenses may also prove helpful for individuals with 529 plans and children attending college in 2009 and 2010.  Under the stimulus package, computers and related technology will qualify as expenses for tax-advantaged savings plans for the next two years.

“I have a son in college now, so we can personally take advantage of this provision,’” Hickl said “Historically, only direct college costs like tuition and housing were ‘qualified’ expenses.  Now, folks can buy their kids computers and use the college-savings account to pay for them.  Most of our clients set up 529 plans and we are speaking to all of them with college age children about this potential benefit.’”

Home Energy Credit

The stimulus bill also increases (from 10% to 30%) the eligible credit for energy-efficiency purchases made in the home.  SC&H Group’s Horning believes that homeowners who have been planning to replace furnaces or water heaters – or to install new energy-efficient doors and windows – should look into such opportunities this year and next.

“For many, these moves make sense even absent the tax credit,’” Horning said. “Such purchases help homeowners to counter higher utility costs and the credit effectively reduces the payback period of the new equipment purchases.’”

Make Work Pay

The single-largest tax provision within the stimulus package is the “Making Work Pay Credit‘” that provides a $400 credit ($800 if filing jointly) to employees who make less than $75,000 ($150,000 if filing jointly) in compensation.  The estimated cost of the provision is $116 billion over a 10-year period.

Even low-income families who don’t make enough income to owe taxes are still eligible for this credit.

Unlike the 2008 Bush tax rebates, which were distributed directly to eligible taxpayers, the government will not be sending any checks this time.  Instead, the credit can be claimed on the 2009 tax return or received each pay period through deductions on the employees’ paycheck.

Horning points out that the recipients of this credit do not need to take any action in order to participate.  In fact, the Internal Revenue Service has issued new withholding tables that employers must begin to use no later than April 1, 2009.  The tables are designed to promptly and automatically deliver the benefit of the credit to employees so that these dollars get put back into the economy more quickly.  Horning believes that – while the afore-mentioned $116 billion outlay represents a significant cost – the amount per individual, on a case-by-case basis, is not substantial.

Ron Martin, a managing director and tax-department head with the Houston office of UHY Advisors, agrees that the provision will have limited impact on stimulating growth.

“Last year, individuals received $600 or so in the form of a tax rebate and could take that money directly to the Best Buy (BBY) and purchase a new TV,’” Martin said.  “This year, they will not receive a lump-sum payment and instead will recognize something like a $10 windfall on each paycheck.  Since they will not be receiving a significant amount of actual cash in hand, this provision, most likely, will not provide much stimulus.’”

The government will be providing a one-time payment of $250 to non-working individuals: retirees, disabled individuals, as well as recipients of Supplemental Security Income (SSI), railroad retirement and certain veteran benefits.  SC&H Group’s Horning believes it will be hard to pinpoint how much this will help jump-start the economy, noting that such payments won’t solve major issues or eradicate the challenges many of the recipients already face.

Alternative Minimum Tax

The one provision designed to actually impact upper-middle class and more-high-net-worth taxpayers is the increase in the exemption amount ($70,950) for Alternative Minimum Tax (AMT) calculations.  Established in 1969 to close certain loopholes that well-to-do taxpayers were using to reduce their tax liabilities, AMT has begun impacting more middle-income earners because the calculation has not been adjusted for inflation over the years.

SC&H Group’s Horning states that the government has been applying a “patch’” each year in the form of an exemption increase, so the provision in the stimulus bill accounts for nothing more than the enhancement most taxpayers were already expecting. 

On a related note, interest on tax-exempt private-activity bonds issued in 2009-2010 will now be excluded from AMT calculations and Horning believes more investors may consider these municipal securities that are issued to fund stadiums, theaters, and other private-user projects.

“Because of the flight-to-quality and dramatic increase in demand for [U.S.] Treasuries, related yields have declined so much and investors may begin seeing some significant opportunities in other fixed-income securities,’” Horning said.  “While private-activity bonds may find a new class of investor for the next few years – due to the AMT exclusion – I believe that general obligation bonds and revenue bonds that are supported by necessities like utilities may be worth a look, as well.’”

Horning also fears that inflation will rear its ugly head in the years to come as the government struggles to raise revenue to retire the newly issued debt.  He believes that Treasury Inflated Protected Securities, or TIPS, commodities, and other hard assets could serve as a hedge against inflation when allocated within the context of a diversified portfolio.

The Obama Budget

UHY Advisors’ Martin has been talking to clients more about the recently proposed Obama administration budget than the stimulus package.  He sees several moves individuals should be considering now in anticipation of its passage.

“The [Obama] administration has been mindful of the need to get the economy growing again and chose not to override the Bush tax cuts or take other fiscal measures that could hinder any chance of recovery,’” Martin said. It seems that to “recognize the delicate balance between economy, budget, and doing the right thing.  The proposed budget is set to take effect in 2011, so we have the opportunity to visit with clients about moves we should be taking over the next two years.’”

UHY Advisors’ Hickl claims it is not a shocking revelation that taxes will increase on the highest-income earners and is mindful of ways to accelerate his clients’ income levels and other revenue streams into 2009 and 2010, particularly for individuals like athletes with long-term contracts [that include] deferred compensation.

Within the proposed budget, Hickl sees the provision to cap mortgage-interest deductibility at 28% as bad policy.

“Limiting this deduction is actually a disguised income tax increase, in my opinion,’” Hickl said. “Say an individual has a $1 million loan at a 7% interest rate.  The difference between a deduction at the 35% tax rate and one at 28% is $4,900 in additional taxes due.  And that is quite a significant amount.’”

According to SC&H Group’s Horning, some homeowners with cash in hand may choose to pay down their mortgages before 2011, particularly as their investments are declining.

UHY Advisors’ Martin also mentions the proposed change on charitable deductions as an area his clients should focus on prior to 2011.  Like the mortgage interest deductions, under the Obama budget, individuals will only be able to deduct 28% of their qualified donations as opposed to the 35% allowed today.

Since high-income earners make the majority of these contributions, Martin anticipates that charities will be hurt and face a reduction on donations in the years to come.  He does see some ways that careful planning can help alleviate the burden on charities.

“If taxpayers have multi-year commitments through something like capital campaigns, they may consider taking the opportunity to accelerate funding of that commitment to make sure they remain fully deductible before the new rules come into play,’” Martin said.  “Such a move could serve as win-win as the donor gets the full tax advantage of the deduction, while the charity gets its money sooner and can begin putting the much-needed funds to good use.’”

Editor’s Note: Ron Brounes, CPA, is a regular contributor to Money Morning

Source: Seven Ways to Get an Income-Tax Boost From the Obama Recovery Plan

Unfortunately, the data does not support this conclusion. The bloated service sector added 178,000 jobs, while manufacturing shed another 12,000 jobs. What this means is that 178,000 more workers will be consuming goods while 12,000 fewer will be making them. The result will be larger trade deficits that merely compound already stretched global imbalances and exacerbate America’s inevitable day of reckoning.

A service sector can only exist so long as it is supported by a vibrant manufacturing sector. The reason is simple. People employed in the service sector consume goods but do not actually produce any of them. Therefore they must rely on others, who presumably benefit from their services, to produce goods in their stead.

As an example, suppose that ten castaways were marooned on an island. What if on the day they washed up on shore they all decided to assume the following jobs; lawyer, accountant, banker, economist, actor, philosopher, astrologer, beautician, teacher, and nurse. How long do you suppose they would all remain alive without food, water, or shelter? Someone has to provide those things or everyone will perish.

In modern America, the goods shortfall is being made up by foreigner producers, who only derive a marginal benefit from the American service sector. In December, 43,000 new jobs were added in the education and health care sectors and 50,000 were added in business and professional services. What are all of these people going to export in order to pay for all the imported goods their paychecks will permit them to consume? Is there really that big a demand for American legal services in China? Do the Japanese really need our accounting advice? Do Saudi Arabian children benefit from pre-schools in America? How many sick Germans will seek treatment in American hospitals?

The fact that the U.S dollar rose in response to today’s jobs data is further evidence of how widespread this misunderstanding has become. Currency traders bid up the dollar because they assume a stronger jobs market will engender higher interest rates, which is perceived as dollar bullish. However, they ignore the longer term implications of the larger trade deficits that those service jobs will ultimately produce, which is decisively dollar bearish.

For now, all these excess dollars are being absorbed by foreign central banks precisely because foreign private consumers have little use for them. Today’s jobs data means that the resolve of foreign governments to continue accumulating additional dollar reserves will be that much harder to maintain.

Source: More Consumption Less Production