Sales pace of new homes in July grew 2.4%, due to a large downward revision in sales from the previous month. Unadjusted monthly sales fall to 13-year low.
The government offered more discouraging news about the housing sector on Tuesday, reporting that new home sales rose slightly in July only after revising the previous month's number sharply lower.
Sales for July came in at a seasonally adjusted annual rate of 515,000, up 2.4% from 503,000 in the previous month, the Census Bureau reported. Last month, Census had put the June figure at 530,000.
The change marks the fourth of the past five reports that Census has slashed the previous month's number. The trend worries economists who say a hoped-for stabilization of the housing market remains elusive.
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Wednesday, August 27, 2008
Read his lips: Don't bank on bailouts, Bernanke warns
The great Wall Street bailout of 2008 keeps growing. For Bear Stearns, $30-billion (U.S.). Perhaps as much as $100-billion for Fannie Mae and Freddie Mac. Tens of billions of dollars in discounted short-term loans to investment banks. And lower interest rates for everyone.
So where will it all end? In a dark hole of moral hazard, unless the United States overhauls and strengthens its financial system, and that's according to one of the key architects of the bailout.
U.S. Federal Reserve Board chairman Ben Bernanke warned last week that the government's safety net for brokers, banks and mortgage lenders won't necessarily be there in the future. The rescue of Bear Stearns earlier this year was the exception, not the rule, he said, offering his fullest explanation yet of its year-long campaign to ease the credit crisis.
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So where will it all end? In a dark hole of moral hazard, unless the United States overhauls and strengthens its financial system, and that's according to one of the key architects of the bailout.
U.S. Federal Reserve Board chairman Ben Bernanke warned last week that the government's safety net for brokers, banks and mortgage lenders won't necessarily be there in the future. The rescue of Bear Stearns earlier this year was the exception, not the rule, he said, offering his fullest explanation yet of its year-long campaign to ease the credit crisis.
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Regulators step up action on U.S. banks: report
Federal regulators have raised the number of struggling U.S. banks they have effectively put on probation, forcing them to fix their problems to avoid potential failures, the Wall Street Journal said on Monday.
The two main U.S. bank regulators -- the Federal Reserve and the Office of the Comptroller of the Currency -- have issued more memorandums of understanding this year than they did for all of 2007, the Journal said, citing data obtained from regulators under Freedom of Information Act requests.
Banks don't have to disclose the memorandums, which are an early-warning system about troubled banks but are not meant to imply a bank is at risk of failing, the Journal said. They are often a precursor to more severe, publicly disclosed enforcement actions if conditions do not improve.
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The two main U.S. bank regulators -- the Federal Reserve and the Office of the Comptroller of the Currency -- have issued more memorandums of understanding this year than they did for all of 2007, the Journal said, citing data obtained from regulators under Freedom of Information Act requests.
Banks don't have to disclose the memorandums, which are an early-warning system about troubled banks but are not meant to imply a bank is at risk of failing, the Journal said. They are often a precursor to more severe, publicly disclosed enforcement actions if conditions do not improve.
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Japan Goes on Buying Spree, Shrugging Off '80s Bubble
Japanese companies are increasing overseas acquisitions, using their cash-hoards to snap up assets beaten down by the global credit crisis and economic slowdown.
The value of foreign purchases by Japanese companies this year has already topped 2007's total by 91 percent, according to data compiled by Bloomberg. That's the biggest gain among the world's 10 largest markets and contrasts with fewer deals in the U.S. and U.K., where credit is drying up after the subprime rout.
Takeovers by companies including TDK Corp. and Daiichi Sankyo Co. are putting Japan on course for its biggest buying spree since the 1980s bubble, when Japanese buyers overpaid for assets like New York City's Rockefeller Center and California's Pebble Beach Golf Links.
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The value of foreign purchases by Japanese companies this year has already topped 2007's total by 91 percent, according to data compiled by Bloomberg. That's the biggest gain among the world's 10 largest markets and contrasts with fewer deals in the U.S. and U.K., where credit is drying up after the subprime rout.
Takeovers by companies including TDK Corp. and Daiichi Sankyo Co. are putting Japan on course for its biggest buying spree since the 1980s bubble, when Japanese buyers overpaid for assets like New York City's Rockefeller Center and California's Pebble Beach Golf Links.
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Tuesday, August 19, 2008
Home building at 17-year low
Housing starts and permits both fall sharply in July to levels not seen since 1991 recession.
Home building fell sharply in July to a 17-year low, according to government readings released Tuesday that offered fresh signs that the battered real estate market has yet to hit bottom.
Housing starts plunged 11% to an annual rate of 965,000 from a revised 1.084 million pace in June, according to the Census Bureau report. Economists surveyed by Briefing.com had forecast starts would fall to a rate of 960,000.
Permits - often seen as a sign of builders' confidence in the housing market - tumbled 17% to an annual rate of 937,000 from a revised 1.138 million in June. Economists had forecast that permits would come in at 959,000.
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Home building fell sharply in July to a 17-year low, according to government readings released Tuesday that offered fresh signs that the battered real estate market has yet to hit bottom.
Housing starts plunged 11% to an annual rate of 965,000 from a revised 1.084 million pace in June, according to the Census Bureau report. Economists surveyed by Briefing.com had forecast starts would fall to a rate of 960,000.
Permits - often seen as a sign of builders' confidence in the housing market - tumbled 17% to an annual rate of 937,000 from a revised 1.138 million in June. Economists had forecast that permits would come in at 959,000.
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Stagflation? Or just stagnation?
The inflation figures for July were ugly. But oil prices have fallen and the dollar has strengthened in August. Too bad a global slowdown is the reason.
Two key reports in the past week show that inflation was running high in July. But August is offering relief.
Oil has fallen to about $112 a barrel, nearly 25% from its mid-July record high. Gas prices have declined for 33 consecutive days. After flirting with $1,000 an ounce last month, the price of gold is now below $800.
And the dollar? It's gained more than 8% against the euro in the past few weeks.
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Two key reports in the past week show that inflation was running high in July. But August is offering relief.
Oil has fallen to about $112 a barrel, nearly 25% from its mid-July record high. Gas prices have declined for 33 consecutive days. After flirting with $1,000 an ounce last month, the price of gold is now below $800.
And the dollar? It's gained more than 8% against the euro in the past few weeks.
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Wholesale prices rising at fastest pace since 1981
Wholesale inflation surged in July, leaving prices for the past year rising at the fastest pace in 27 years, according to government data released Tuesday.
The Labor Department reported that wholesale prices shot up 1.2 percent in July, pushed higher by rising costs for energy, motor vehicles and other products. The increase was more than twice the 0.5 percent gain that economists expected.
Core prices, which exclude food and energy, rose 0.7 percent. That increase was the biggest since November 2006 and more than triple the 0.2 percent rise in core prices that had been expected.
In other economic news, the Commerce Department reported that housing construction fell in July to the lowest pace in more than 17 years. Builders broke ground on 965,000 housing units at a seasonally adjusted annual rate last month — the weakest showing since March 1991 — as the housing industry continues to struggle with falling sales and rising mortgage foreclosures.
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The Labor Department reported that wholesale prices shot up 1.2 percent in July, pushed higher by rising costs for energy, motor vehicles and other products. The increase was more than twice the 0.5 percent gain that economists expected.
Core prices, which exclude food and energy, rose 0.7 percent. That increase was the biggest since November 2006 and more than triple the 0.2 percent rise in core prices that had been expected.
In other economic news, the Commerce Department reported that housing construction fell in July to the lowest pace in more than 17 years. Builders broke ground on 965,000 housing units at a seasonally adjusted annual rate last month — the weakest showing since March 1991 — as the housing industry continues to struggle with falling sales and rising mortgage foreclosures.
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Monday, August 11, 2008
Dollar Gain Signals Pain; Rally Prompts Exit
Just because the dollar posted its biggest gain against the euro in almost eight years doesn't mean the U.S. currency won't continue to be plagued by the nation's slowing economy, widening budget and trade deficits and negative inflation-adjusted interest rates.
The 4 percent surge against the single European currency this month was enough to prompt Bank of America Corp. to tell its customers to exit trades betting on more gains. Morgan Stanley still forecasts the greenback will approach a record low by October as the U.S. housing slump and credit-market losses keep the Federal Reserve from raising interest rates this year.
Barclays Plc in London and New York-based Merrill Lynch & Co. said trading patterns suggest the dollar's 5.1 percent gain in the past three weeks measured by an index of six major trading partners can't be sustained.
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The 4 percent surge against the single European currency this month was enough to prompt Bank of America Corp. to tell its customers to exit trades betting on more gains. Morgan Stanley still forecasts the greenback will approach a record low by October as the U.S. housing slump and credit-market losses keep the Federal Reserve from raising interest rates this year.
Barclays Plc in London and New York-based Merrill Lynch & Co. said trading patterns suggest the dollar's 5.1 percent gain in the past three weeks measured by an index of six major trading partners can't be sustained.
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FDIC Fund Strained by Bank Failures May Have to Raise Premiums
The failure of IndyMac Bancorp Inc. and seven other banks this year may erase as much as 17 percent of a government insurance fund and raise premiums for all banks, from Franklin National of Minneapolis to Bank of America Corp.
The closing of IndyMac in July, the third-biggest U.S. bank failure, may cost the fund $4 billion to $8 billion, in addition to an estimated $1.16 billion for seven closures through Aug. 1. Premiums for deposit insurance will likely rise, FDIC Chairman Sheila Bair said in a July 30 interview. A decision on the increase is due by the fourth quarter.
``It's going to be a bloody, expensive mess for the banking industry,'' said Bert Ely, president of Ely & Co. Inc., a bank consulting firm based in Alexandria, Virginia. ``Healthy banks are paying for the mistakes made by failed banks.''
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The closing of IndyMac in July, the third-biggest U.S. bank failure, may cost the fund $4 billion to $8 billion, in addition to an estimated $1.16 billion for seven closures through Aug. 1. Premiums for deposit insurance will likely rise, FDIC Chairman Sheila Bair said in a July 30 interview. A decision on the increase is due by the fourth quarter.
``It's going to be a bloody, expensive mess for the banking industry,'' said Bert Ely, president of Ely & Co. Inc., a bank consulting firm based in Alexandria, Virginia. ``Healthy banks are paying for the mistakes made by failed banks.''
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US Appeals against WTO Verdict
The United States has appealed a World Trade Organization decision upholding Indian import taxes on wine and spirits citing that its findings were based on erroneous findings on issues of law when it rejected in February the US complaint over extra duties applied by India.
The U.S. appeal was filed last week and has been posted on the WTO's Web site. US had made it clear at the time of rejection of its claim that it would appeal the decision. At the time the original complaint was filed, the issue related only to the Additional Duties.
The verdict was not a total loss for the United States because India did waive Additional duties in July 2007 buckling under heavy pressure from the US and Europe. On 24 May 2007, the United States had requested the establishment of a panel which was composed on 3 July 2007. Next day, the government had announced eliminating the Additional Duties.
EU had dropped its complaint as a result. However, Washington continued to press its case, numbered DS360R. Its complaint was rejected by WTO in February this year.
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The U.S. appeal was filed last week and has been posted on the WTO's Web site. US had made it clear at the time of rejection of its claim that it would appeal the decision. At the time the original complaint was filed, the issue related only to the Additional Duties.
The verdict was not a total loss for the United States because India did waive Additional duties in July 2007 buckling under heavy pressure from the US and Europe. On 24 May 2007, the United States had requested the establishment of a panel which was composed on 3 July 2007. Next day, the government had announced eliminating the Additional Duties.
EU had dropped its complaint as a result. However, Washington continued to press its case, numbered DS360R. Its complaint was rejected by WTO in February this year.
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Slump in U.S. to Worsen as Consumers Get `Squeezed'
The U.S. economic slump will extend into 2009 as the longest expansion in consumer spending on record comes to an end, according to a Bloomberg News survey.
The world's largest economy will grow at an average 0.7 percent annual pace from July through December, half the gain in the first six months of the year, according to the median forecast of 50 economists surveyed from Aug. 1 to Aug. 8.
Household spending, which has grown every quarter since 1992, is projected to stall in the last three months of the year as the impact of tax rebates fades, wages fail to keep up with inflation and property values fall. The jobless rate, now at 5.7 percent, will reach a five-year high of 6 percent in early 2009.
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The world's largest economy will grow at an average 0.7 percent annual pace from July through December, half the gain in the first six months of the year, according to the median forecast of 50 economists surveyed from Aug. 1 to Aug. 8.
Household spending, which has grown every quarter since 1992, is projected to stall in the last three months of the year as the impact of tax rebates fades, wages fail to keep up with inflation and property values fall. The jobless rate, now at 5.7 percent, will reach a five-year high of 6 percent in early 2009.
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Thursday, August 7, 2008
Foreclosure crisis: The $4 billion fix
Washington will give funds to states and cities to rehab houses. Proponents say it will help stabilize neighborhoods, but others say it's too little to do much good.
City officials and community activists can't wait to get their hands on nearly $4 billion the federal government is about to inject into blighted neighborhoods suffering from record foreclosures.
Opponents of the measure say the paltry sum won't do much good considering the number of vacant homes on the market - one million families are expected to lose their homes this year - and will more likely turn into a political boondoggle.
It remains to be seen which side is right. But the program - part of the massive housing rescue bill Bush enacted last month despite his own misgivings - will serve as one test of Washington's ability to mitigate the foreclosure crisis.
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City officials and community activists can't wait to get their hands on nearly $4 billion the federal government is about to inject into blighted neighborhoods suffering from record foreclosures.
Opponents of the measure say the paltry sum won't do much good considering the number of vacant homes on the market - one million families are expected to lose their homes this year - and will more likely turn into a political boondoggle.
It remains to be seen which side is right. But the program - part of the massive housing rescue bill Bush enacted last month despite his own misgivings - will serve as one test of Washington's ability to mitigate the foreclosure crisis.
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July retail sales weaken as tax rebates dry up
Retailers, including Wal-Mart Stores Inc and Target Corp, posted disappointing July sales results on Thursday as shoppers ran out of extra tax rebate cash, diminishing the outlook for the current back-to-school shopping season.
The sales results, along with cautious outlooks for August, left little hope that there would be a lasting boost from tax rebate checks to prop up consumers headed into the back half of the year and the all-important December holiday season.
"The stimulus (checks) really had a marginal effect at best and it has run its course and there's no carry-through," said Retail Metrics President Ken Perkins. "It's difficult to see where some sort of boost in spending is going to come from."
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The sales results, along with cautious outlooks for August, left little hope that there would be a lasting boost from tax rebate checks to prop up consumers headed into the back half of the year and the all-important December holiday season.
"The stimulus (checks) really had a marginal effect at best and it has run its course and there's no carry-through," said Retail Metrics President Ken Perkins. "It's difficult to see where some sort of boost in spending is going to come from."
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U.S. weekly initial jobless claims rise to 455,000
Claims stay unusually high as more workers take advantage of benefits
First-time claims for jobless benefits remained unusually high in the latest week as more workers took advantage of states' efforts to sign them up for unemployment insurance, the Labor Department said Thursday.
Claims for the week ended Aug. 2 rose to 455,000, a gain of 7,000 from the prior week. The figure was the highest in more than six years.
Many economists see claims above 400,000 as a sign of recession.
Investors reacted negatively to the uptick in unemployment claims. See Market Snapshot.
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First-time claims for jobless benefits remained unusually high in the latest week as more workers took advantage of states' efforts to sign them up for unemployment insurance, the Labor Department said Thursday.
Claims for the week ended Aug. 2 rose to 455,000, a gain of 7,000 from the prior week. The figure was the highest in more than six years.
Many economists see claims above 400,000 as a sign of recession.
Investors reacted negatively to the uptick in unemployment claims. See Market Snapshot.
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Wind Power Is Poised To Support U.S. Jobs
The U.S. Department of Energy contends that wind power can provide 20 percent of the nation’s electricity by 2030.
(NAPSI)- In 2007, wind was already one of the fastest-growing sources of electricity in U.S. households, and the U.S. Department of Energy contends that wind power can provide 20 percent of the nation’s electricity by 2030 and be a critical part of the solution to global warming.
Some say achieving a 20 percent wind contribution to U.S. electricity supply would:
• Reduce carbon dioxide emissions from electricity generation by 25 percent by 2030;
• Reduce natural gas use by 11 percent;
• Reduce water consumption associated with electricity generation by 4 trillion gallons by 2030.
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(NAPSI)- In 2007, wind was already one of the fastest-growing sources of electricity in U.S. households, and the U.S. Department of Energy contends that wind power can provide 20 percent of the nation’s electricity by 2030 and be a critical part of the solution to global warming.
Some say achieving a 20 percent wind contribution to U.S. electricity supply would:
• Reduce carbon dioxide emissions from electricity generation by 25 percent by 2030;
• Reduce natural gas use by 11 percent;
• Reduce water consumption associated with electricity generation by 4 trillion gallons by 2030.
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Tuesday, August 5, 2008
Putting Obama's energy plan to the test
Obama's proposed release of 70 million barrels of oil from the strategic reserve could lower crude prices, experts say. But the impact of his broader overhaul is less clear.
Democratic presidential candidate Barack Obama said Monday that he feels Americans' pain from rising energy costs and laid out his plan to break the country's "addiction" to oil.
Much of Obama's energy plan had been outlined before. But some of his ideas - such as tapping the Strategic Petroleum Reserve and allowing a "limited amount" of offshore drilling - were new to his campaign.
Overall, analysts welcomed Obama's plan, which included both short-term and long-term proposals. But they stressed that for the plan would need bipartisan support to succeed.
Obama said a short-term proposal, like selling crude oil from the Strategic Petroleum Reserve, "has lowered gas prices within two weeks" in the past.
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Democratic presidential candidate Barack Obama said Monday that he feels Americans' pain from rising energy costs and laid out his plan to break the country's "addiction" to oil.
Much of Obama's energy plan had been outlined before. But some of his ideas - such as tapping the Strategic Petroleum Reserve and allowing a "limited amount" of offshore drilling - were new to his campaign.
Overall, analysts welcomed Obama's plan, which included both short-term and long-term proposals. But they stressed that for the plan would need bipartisan support to succeed.
Obama said a short-term proposal, like selling crude oil from the Strategic Petroleum Reserve, "has lowered gas prices within two weeks" in the past.
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Oil falls as low as $118 on demand concerns
Oil prices kept falling Tuesday, sinking as low as $118 a barrel on growing concerns that a U.S. economic slowdown and high energy costs are curbing consumer demand for gasoline and other petroleum products.
Crude's decline is giving Americans more relief at the pump. A gallon of regular gasoline on average fell another penny overnight to $3.871, according to auto club AAA, the Oil Price Information Service and Wright Express. Gas prices have fallen four straight weeks for the first time in December; prices are off 5.9 percent from their July high as U.S. motorists cut back on their driving to save money.
A day after plunging as much as $5 a barrel in a dramatic sell-off, crude continued its downward trend Tuesday as traders sold oil contracts on the belief that prices are still too high in relation to demand and have further room to fall.
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Crude's decline is giving Americans more relief at the pump. A gallon of regular gasoline on average fell another penny overnight to $3.871, according to auto club AAA, the Oil Price Information Service and Wright Express. Gas prices have fallen four straight weeks for the first time in December; prices are off 5.9 percent from their July high as U.S. motorists cut back on their driving to save money.
A day after plunging as much as $5 a barrel in a dramatic sell-off, crude continued its downward trend Tuesday as traders sold oil contracts on the belief that prices are still too high in relation to demand and have further room to fall.
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No change expected in Fed interest rates
The Federal Reserve, caught between mounting job losses and rising inflation, is likely to sit tight and hope that the interest rate cuts it has already provided will be enough to heal a sick economy.
The central bank started Tuesday's meeting with a new member. Elizabeth Duke, formerly an officer at a Virginia-based community bank, was sworn in by Fed Chairman Ben Bernanke before the closed-door deliberations got under way.
Private economists believe that when the central bank will decide during the discussions Tuesday to leave its target for the federal funds rate, the interest that banks charge each other, at 2 percent.
Bernanke and his colleagues are being forced to navigate treacherous waters, trying to keep the economy from plunging into a deep recession while worrying about keeping interest rates so low that they could trigger a dangerous inflation spiral.
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The central bank started Tuesday's meeting with a new member. Elizabeth Duke, formerly an officer at a Virginia-based community bank, was sworn in by Fed Chairman Ben Bernanke before the closed-door deliberations got under way.
Private economists believe that when the central bank will decide during the discussions Tuesday to leave its target for the federal funds rate, the interest that banks charge each other, at 2 percent.
Bernanke and his colleagues are being forced to navigate treacherous waters, trying to keep the economy from plunging into a deep recession while worrying about keeping interest rates so low that they could trigger a dangerous inflation spiral.
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Monday, August 4, 2008
A second, far larger wave of U.S. mortgage defaults is building
The first wave of Americans to default on their home mortgages appears to be cresting, but a second, far larger one is building with alarming speed.
After two years of upward spiraling defaults, the problems with mortgages made to people with weak, or subprime, credit are showing the first, tentative signs of leveling off.
But with the U.S. economy struggling, homeowners with better credit are now falling behind on their payments in growing numbers. The percentage of mortgages in arrears in the category of loans one rung above subprime, so-called alternative-A, or alt-A, mortgages, quadrupled to 12 percent in April from a year earlier. Delinquencies among prime loans, which account for most of the $12 trillion market, doubled to 2.7 percent in that time.
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After two years of upward spiraling defaults, the problems with mortgages made to people with weak, or subprime, credit are showing the first, tentative signs of leveling off.
But with the U.S. economy struggling, homeowners with better credit are now falling behind on their payments in growing numbers. The percentage of mortgages in arrears in the category of loans one rung above subprime, so-called alternative-A, or alt-A, mortgages, quadrupled to 12 percent in April from a year earlier. Delinquencies among prime loans, which account for most of the $12 trillion market, doubled to 2.7 percent in that time.
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In a shift, Obama says tap oil reserves
Barack Obama proposed on Monday tapping the strategic oil reserve to help lower gas prices, a reversal of an earlier stance, and called rival John McCain a tool of big oil companies as rising energy costs took center stage in the U.S. presidential campaign.
Obama, celebrating his 47th birthday, released a new ad hitting McCain's contributions from big oil firms. In a Michigan speech, he proposed releasing 70 million barrels of light oil, easier to refine into gasoline, from the emergency U.S. stockpile.
The Democratic senator from Illinois, who also proposed a series of steps to reduce long-term dependence on foreign oil, said the light oil could be replaced later with heavier crude in a swap designed to bring quick relief from high gasoline prices.
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Obama, celebrating his 47th birthday, released a new ad hitting McCain's contributions from big oil firms. In a Michigan speech, he proposed releasing 70 million barrels of light oil, easier to refine into gasoline, from the emergency U.S. stockpile.
The Democratic senator from Illinois, who also proposed a series of steps to reduce long-term dependence on foreign oil, said the light oil could be replaced later with heavier crude in a swap designed to bring quick relief from high gasoline prices.
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Oil prices drop about $4 after storm threat eases
Oil prices plunged in a massive sell-off Monday, falling below $120 a barrel for the first time since early May after Tropical Storm Edouard appeared unlikely to threaten oil and natural gas facilities in the Gulf of Mexico.
Also weighing on prices was a report by the Commerce Department that consumer spending fell in June as shoppers dealt with higher prices for gasoline, food and other items. That fed investors' beliefs that a U.S. economic slowdown is forcing Americans to cut back on energy use.
Light, sweet crude for September delivery fell more than $5 at one point to $119.50 a barrel on the New York Mercantile Exchange, its lowest level since May 6. The contract later recovered slightly, trading $3.92 lower, or 3.13 percent, at $121.18 a barrel. Crude has now fallen in six of the last nine sessions and has shaved 18 percent off its trading record of $147.27 reached July 11.
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Also weighing on prices was a report by the Commerce Department that consumer spending fell in June as shoppers dealt with higher prices for gasoline, food and other items. That fed investors' beliefs that a U.S. economic slowdown is forcing Americans to cut back on energy use.
Light, sweet crude for September delivery fell more than $5 at one point to $119.50 a barrel on the New York Mercantile Exchange, its lowest level since May 6. The contract later recovered slightly, trading $3.92 lower, or 3.13 percent, at $121.18 a barrel. Crude has now fallen in six of the last nine sessions and has shaved 18 percent off its trading record of $147.27 reached July 11.
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U.S. Spending Rises; Prices Jump the Most Since 2005
The biggest increase in prices in almost three years eroded consumers' buying power in June, diminishing the boost from the government's tax rebates.
Consumer inflation climbed 0.8 percent, the most since September 2005, the Commerce Department said today in Washington. Spending increased 0.6 percent after a 0.8 percent gain in May.
The tax rebates from the government's stimulus plan will provide only a temporary boost for Americans in the face of $4-a- gallon gasoline, tumbling home prices and mounting job losses. The Federal Reserve is projected to hold interest rates unchanged tomorrow as the risks of both faster inflation and slower growth mount.
``There is a bit more inflation pressure than many people anticipated,'' said Kevin Logan, a senior market economist at Dresdner Kleinwort in New York, who correctly forecast the gain in spending. ``Inflation pressure is more widespread and that has to be some concern for the Fed. The tax cuts have helped maintain spending, but it's likely to drop off pretty dramatically in the fourth quarter.''
Read Complete StoryDollar falls on weak economic reports
Greenback retreats after a worse-than-expected GDP report and a jump in unemployment claims.
The dollar lost ground against major currencies Thursday, after a report showed the economy grew less that expected over the past several months, and jobless claims reached the highest levels since 2003.
The euro traded at $1.5598, up from $1.5574 the night before in New York trading. The dollar also fell to ¥107.84, down from ¥108.04 a day earlier.
GDP: The U.S. Commerce Department said the gross domestic product rose at an annual rate of 1.9% through the second quarter, a significant jump over the first quarter, but less than predicted. Analysts polled by Briefing.com had expected an increase of 2.3%.
The government also revised economic growth through the last three months of 2007 downward, showing the economy retracted by a 0.2% annual rate during the period.
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The dollar lost ground against major currencies Thursday, after a report showed the economy grew less that expected over the past several months, and jobless claims reached the highest levels since 2003.
The euro traded at $1.5598, up from $1.5574 the night before in New York trading. The dollar also fell to ¥107.84, down from ¥108.04 a day earlier.
GDP: The U.S. Commerce Department said the gross domestic product rose at an annual rate of 1.9% through the second quarter, a significant jump over the first quarter, but less than predicted. Analysts polled by Briefing.com had expected an increase of 2.3%.
The government also revised economic growth through the last three months of 2007 downward, showing the economy retracted by a 0.2% annual rate during the period.
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Looming job cuts march on - report
The number of job cuts announced in July jumps 26%. Airlines and financial firms top the list, according to a monthly study.
The nation's employers continue to put jobs on the chopping block at a steep rate as the economy struggles, according to a new report.
Challenger, Gray & Christmas, an outplacement consultancy firm, said Monday that planned job cuts announced by employers in July jumped 26% to 103,312 from 81,755 announced in June.
That's up 141% from a year ago, when employers announced planned job cuts totaling 42,897.
The July figure marks the second-highest number of planned job cuts this year, rivaling the May reading that showed 103,522.
"We have seen job cuts increase in the majority of industries that we track," John Challenger, chief executive of Challenger, Gray & Christmas, said in a statement.
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The nation's employers continue to put jobs on the chopping block at a steep rate as the economy struggles, according to a new report.
Challenger, Gray & Christmas, an outplacement consultancy firm, said Monday that planned job cuts announced by employers in July jumped 26% to 103,312 from 81,755 announced in June.
That's up 141% from a year ago, when employers announced planned job cuts totaling 42,897.
The July figure marks the second-highest number of planned job cuts this year, rivaling the May reading that showed 103,522.
"We have seen job cuts increase in the majority of industries that we track," John Challenger, chief executive of Challenger, Gray & Christmas, said in a statement.
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Friday, August 1, 2008
Manufacturing flat in July as exports keep growing
U.S. manufacturers' business was flat in July, as higher prices and tight credit kept them from expanding, but exports propped them up.
The Institute for Supply Management said its reading of activity from the country's producers of cars, airplanes, appliances and food hit 50, down from 50.2 in June.
That beat economists' prediction of a reading of 49.2, according to the consensus estimate of Wall Street economists surveyed by Thomson Financial/IFR. A reading above 50 signals growth.
The report has been hovering near 50, which economists call "the boom-bust line," for the last 12 months.
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The Institute for Supply Management said its reading of activity from the country's producers of cars, airplanes, appliances and food hit 50, down from 50.2 in June.
That beat economists' prediction of a reading of 49.2, according to the consensus estimate of Wall Street economists surveyed by Thomson Financial/IFR. A reading above 50 signals growth.
The report has been hovering near 50, which economists call "the boom-bust line," for the last 12 months.
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Jobless rate rises to 4-year high of 5.7 percent
The nation's unemployment rate climbed to a four-year high of 5.7 percent in July as employers cut 51,000 jobs, dashing the hopes of an influx of young people looking for summer work.
Payroll cuts weren't as deep as the 72,000 predicted by economists, however. And, job losses for both May and June were smaller than previously reported.
July's reductions marked the seventh straight month where employers eliminated jobs. The economy has lost a total of 463,00 jobs so far this year.
The latest snapshot, released by the Labor Department on Friday, showed a lack of credit has stunted employers' expansion plans and willingness to hire. Fallout from the housing slump and high energy prices also are weighing on employers.
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Payroll cuts weren't as deep as the 72,000 predicted by economists, however. And, job losses for both May and June were smaller than previously reported.
July's reductions marked the seventh straight month where employers eliminated jobs. The economy has lost a total of 463,00 jobs so far this year.
The latest snapshot, released by the Labor Department on Friday, showed a lack of credit has stunted employers' expansion plans and willingness to hire. Fallout from the housing slump and high energy prices also are weighing on employers.
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U.S. Economy: Growth Rate Falls Short of Forecasts
The U.S. economy shrank at the end of 2007 and grew less than forecast in this year's second quarter, signaling that the country is in worse shape than investors had anticipated.
``We're in a recession,'' Allen Sinai, chief economist at Decision Economics Inc. in New York, said in a Bloomberg Television interview. ``It's going to widen, it's going to deepen.''
The last time the economy contracted was in 2001. It may weaken further as the temporary boost from tax rebates, which aided a pick-up in gross domestic product last quarter from the previous three months, fades. Stocks dropped, Treasuries rallied and traders reduced bets that the Federal Reserve will raise interest rates this year.
``This confirms the general picture of weakness, but it is surprising that GDP declined,'' said Martin Feldstein, who headed the National Bureau of Economic Research until June and serves on the group's recession-dating panel. He added that today's figures underscored his estimate that a downturn began in December or January. ``I don't see a recovery'' on the horizon, he said.
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``We're in a recession,'' Allen Sinai, chief economist at Decision Economics Inc. in New York, said in a Bloomberg Television interview. ``It's going to widen, it's going to deepen.''
The last time the economy contracted was in 2001. It may weaken further as the temporary boost from tax rebates, which aided a pick-up in gross domestic product last quarter from the previous three months, fades. Stocks dropped, Treasuries rallied and traders reduced bets that the Federal Reserve will raise interest rates this year.
``This confirms the general picture of weakness, but it is surprising that GDP declined,'' said Martin Feldstein, who headed the National Bureau of Economic Research until June and serves on the group's recession-dating panel. He added that today's figures underscored his estimate that a downturn began in December or January. ``I don't see a recovery'' on the horizon, he said.
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Thursday, July 31, 2008
Oil falls $2 a barrel on weak US economic data
Oil prices pulled back Thursday, retreating from the previous day's big rally, as disappointing data on the U.S. economy signaled further cutbacks in energy demand for the world's thirstiest oil consumer.
Light, sweet crude for September delivery fell $2.81 to $123.96 a barrel in late morning trading on the New York Mercantile Exchange, after posting gains earlier in the day.
Prices surged $4.58 on Wednesday to settle at $126.77 after the government reported a surprise drop in U.S. gasoline supplies. The rally halted a dramatic two-week slide in which crude shaved 17 percent off its all-time high above $147, reached July 11.
The Commerce Department said U.S. gross domestic product rose 1.9 percent in the second quarter despite government tax rebates aimed at jolting the economy. Economists had expected growth of 2.4 percent.
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Light, sweet crude for September delivery fell $2.81 to $123.96 a barrel in late morning trading on the New York Mercantile Exchange, after posting gains earlier in the day.
Prices surged $4.58 on Wednesday to settle at $126.77 after the government reported a surprise drop in U.S. gasoline supplies. The rally halted a dramatic two-week slide in which crude shaved 17 percent off its all-time high above $147, reached July 11.
The Commerce Department said U.S. gross domestic product rose 1.9 percent in the second quarter despite government tax rebates aimed at jolting the economy. Economists had expected growth of 2.4 percent.
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Growth weaker than hoped; economy shrinks in Q4
The country didn't get the energetic rebound in economic growth hoped for from the government's tax rebates in the second quarter, and the economy jolted into reverse at the end of 2007, raising new recession fears.
The Commerce Department reported Thursday that gross domestic product, or GDP, increased at an annual rate of 1.9 percent in the April-to-June period. That marked an improvement over the feeble 0.9 percent growth logged in the first quarter of this year and the outright contraction in the economy during the final quarter of last year.
Still, the second-quarter rebound wasn't as robust as economists had hoped; they were forecasting growth at a 2.4 percent pace. The pickup, while welcome, isn't likely to be seen as a signal that the fragile economy is growing healthier. There are fears that as the bracing tonic of the tax rebates fades, the economy could be in for another rough patch later this year.
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The Commerce Department reported Thursday that gross domestic product, or GDP, increased at an annual rate of 1.9 percent in the April-to-June period. That marked an improvement over the feeble 0.9 percent growth logged in the first quarter of this year and the outright contraction in the economy during the final quarter of last year.
Still, the second-quarter rebound wasn't as robust as economists had hoped; they were forecasting growth at a 2.4 percent pace. The pickup, while welcome, isn't likely to be seen as a signal that the fragile economy is growing healthier. There are fears that as the bracing tonic of the tax rebates fades, the economy could be in for another rough patch later this year.
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GM Aims To Cut US Salaried Work Force By 15%
General Motors Corp. (GM) is looking to cut its U.S. salaried headcount by 15%, or around 5,000 workers, by Nov. 1 as part of a plan to cut $10 billion in annual expenses, according to sources briefed on the plan.
The auto maker previously said it was planning a 20% reduction in salaried- worker costs, including a combination of benefit reductions and job cuts.
GM hopes to convince workers to leave voluntarily by offering early retirement incentives rather than forcing layoffs. The company is expected to soon roll out offers to workers that will include both cash incentives and the chance for some to leave the company early with full pension benefits.
GM has reduced its white-collar work force 40% since 2000, down to about 32, 000 employees, as part of a massive downsizing underway for much of this decade.
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The auto maker previously said it was planning a 20% reduction in salaried- worker costs, including a combination of benefit reductions and job cuts.
GM hopes to convince workers to leave voluntarily by offering early retirement incentives rather than forcing layoffs. The company is expected to soon roll out offers to workers that will include both cash incentives and the chance for some to leave the company early with full pension benefits.
GM has reduced its white-collar work force 40% since 2000, down to about 32, 000 employees, as part of a massive downsizing underway for much of this decade.
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Steel union to protest NAFTA
The United Steelworkers and area labor groups will protest free-trade deals today in front of Rep. Mark Souder’s Fort Wayne office.
Street theater featuring a giant “Toxic Trader” puppet and a rally will start at 3 p.m. at 1300 S. Harrison St. in downtown, a statement from the USW said. The rally will be followed by a march to the Allen County Courthouse.
Steelworkers are protesting because of the support shown by Souder, R-3rd, of recent free-trade agreements with Peru and Chile. The union said the agreements lacked protection for workers and the environment.
“If companies operating in the U.S. must obey these rules, then it’s unfair competition when foreign firms don’t,” the statement said.
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Street theater featuring a giant “Toxic Trader” puppet and a rally will start at 3 p.m. at 1300 S. Harrison St. in downtown, a statement from the USW said. The rally will be followed by a march to the Allen County Courthouse.
Steelworkers are protesting because of the support shown by Souder, R-3rd, of recent free-trade agreements with Peru and Chile. The union said the agreements lacked protection for workers and the environment.
“If companies operating in the U.S. must obey these rules, then it’s unfair competition when foreign firms don’t,” the statement said.
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U.S. companies vulnerable to foreign buyers
With a record volume of international takeovers of U.S. companies, it almost appears America itself is up for sale.
The weak dollar and slumping stock prices of U.S. companies has created a window of opportunity for international buyers to snatch up American icons such as beer brewer Anheuser-Busch Cos Inc (BUD.N: Quote, Profile, Research) and the landmark Chrysler Building in New York.
"The dollar has depreciated so much that America is on the sale rack," said Sung Won Sohn, a professor of economics at California State University.
"America has such an appetite for foreign goods -- Chinese imports and oil -- that U.S. dollars have gone overseas. Now, many Americans aren't happy that foreign companies are buying pieces of America with the money we gave them in the first place," Sohn said.
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The weak dollar and slumping stock prices of U.S. companies has created a window of opportunity for international buyers to snatch up American icons such as beer brewer Anheuser-Busch Cos Inc (BUD.N: Quote, Profile, Research) and the landmark Chrysler Building in New York.
"The dollar has depreciated so much that America is on the sale rack," said Sung Won Sohn, a professor of economics at California State University.
"America has such an appetite for foreign goods -- Chinese imports and oil -- that U.S. dollars have gone overseas. Now, many Americans aren't happy that foreign companies are buying pieces of America with the money we gave them in the first place," Sohn said.
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Wednesday, July 30, 2008
Consumer confidence halts slide; homes keep falling
Consumer confidence halted a six-month slide in July, but barely climbed from its lowest level in more than a decade, while home prices continued their record decline in May.
The Conference Board said its overall monthly measure of consumers' mood rose to 51.9 this month -- the first increase since December -- from an upwardly revised 51.0 in June. Last month's reading was the lowest in 16 years.
U.S. home prices plunged 15.8 percent on the year in 20 leading metropolitan areas, accelerating their slide from the previous month, according to the closely watched Standard & Poor's/Case Shiller report, though the decline was not bad as some feared.
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The Conference Board said its overall monthly measure of consumers' mood rose to 51.9 this month -- the first increase since December -- from an upwardly revised 51.0 in June. Last month's reading was the lowest in 16 years.
U.S. home prices plunged 15.8 percent on the year in 20 leading metropolitan areas, accelerating their slide from the previous month, according to the closely watched Standard & Poor's/Case Shiller report, though the decline was not bad as some feared.
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Merrill sparks fears bank crisis costs to soar
Merrill Lynch & Co's surprise write-down ratchets up pressure on rivals to cut the values of their own subprime assets as they grapple with mounting debts and economies weaken.
The global credit crisis, roughly a year under way, could cause total damage of around $1 trillion to balance sheets of financial services companies. That's far above the more than $400 billion of write-downs taken so far.
Merrill's revelation of a $5.7 billion write-down and plans to sell $8.5 billion of stock heightened worry of more pain to come from European lenders UBS AG and Barclays Plc, and from Wall Street and U.S. commercial banks.
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The global credit crisis, roughly a year under way, could cause total damage of around $1 trillion to balance sheets of financial services companies. That's far above the more than $400 billion of write-downs taken so far.
Merrill's revelation of a $5.7 billion write-down and plans to sell $8.5 billion of stock heightened worry of more pain to come from European lenders UBS AG and Barclays Plc, and from Wall Street and U.S. commercial banks.
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Oil falls to lowest level in nearly 3 months
Crude futures end the day more than $2.50 lower after OPEC president says there is adequate supply and prices are much too high.
Oil prices closed at the lowest level in nearly three months on Tuesday, after a selloff was sparked by comments from OPEC's president and sustained by ongoing worries about a slowdown in demand.
Light, sweet crude for September delivery slid $2.54 to end the day at $122.19 a barrel on the New York Mercantile Exchange, after having fallen as low as $120.42 earlier in the day.
Tuesday's price represents crude's lowest level since May 6, when prices settled at $121.84 a barrel.
The drop began after Chakib Khelil, president of the Organization of Petroleum Exporting Countries, told reporters in Jakarta, Indonesia, that the oil markets were being supplied with plenty of oil to meet demand, and that prices were being inflated by geopolitical tensions.
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Oil prices closed at the lowest level in nearly three months on Tuesday, after a selloff was sparked by comments from OPEC's president and sustained by ongoing worries about a slowdown in demand.
Light, sweet crude for September delivery slid $2.54 to end the day at $122.19 a barrel on the New York Mercantile Exchange, after having fallen as low as $120.42 earlier in the day.
Tuesday's price represents crude's lowest level since May 6, when prices settled at $121.84 a barrel.
The drop began after Chakib Khelil, president of the Organization of Petroleum Exporting Countries, told reporters in Jakarta, Indonesia, that the oil markets were being supplied with plenty of oil to meet demand, and that prices were being inflated by geopolitical tensions.
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U.S. companies vulnerable to foreign buyers
With a record volume of international takeovers of U.S. companies, it almost appears America itself is up for sale.
The weak dollar and slumping stock prices of U.S. companies has created a window of opportunity for international buyers to snatch up American icons such as beer brewer Anheuser-Busch Cos Inc (BUD.N: Quote, Profile, Research) and the landmark Chrysler Building in New York.
"The dollar has depreciated so much that America is on the sale rack," said Sung Won Sohn, a professor of economics at California State University.
"America has such an appetite for foreign goods -- Chinese imports and oil -- that U.S. dollars have gone overseas. Now, many Americans aren't happy that foreign companies are buying pieces of America with the money we gave them in the first place," Sohn said.
In the second quarter, acquisitions of U.S. companies by international buyers totaled $124.3 billion, marking the highest total for any second quarter on record and jumping 23 percent over the year-earlier quarter, according to research firm Dealogic.
Read Complete StoryWTO Dispute Leaves Talks on Global Trade at Impasse
World Trade Organization talks entered their ninth day as a standoff between India and China on one side and the U.S. on the other threatened to derail efforts to reach a global accord liberalizing commerce.
Progress in the Geneva negotiations ground to a halt yesterday as the U.S. accused the two nations of refusing to open their fast-growing markets to foreign competition and snubbing a compromise on agriculture and industrial goods. One of the main sticking points is the trigger for special safeguards, which would enable developing countries to raise agricultural tariffs to protect their farmers in case of a surge in imports.
WTO chief Pascal Lamy and trade ministers from seven governments, which together represent 80 percent of global commerce, resumed discussions today in a bid to resolve the impasse. Ministers from some three dozen key nations met earlier today and delegates from all 153 WTO members will meet informally later in the day.
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Progress in the Geneva negotiations ground to a halt yesterday as the U.S. accused the two nations of refusing to open their fast-growing markets to foreign competition and snubbing a compromise on agriculture and industrial goods. One of the main sticking points is the trigger for special safeguards, which would enable developing countries to raise agricultural tariffs to protect their farmers in case of a surge in imports.
WTO chief Pascal Lamy and trade ministers from seven governments, which together represent 80 percent of global commerce, resumed discussions today in a bid to resolve the impasse. Ministers from some three dozen key nations met earlier today and delegates from all 153 WTO members will meet informally later in the day.
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Monday, July 28, 2008
U.S. Economy: Orders Up, Home Sales Beat Forecasts
Orders for U.S. durable goods unexpectedly rose in June, and sales of new homes were higher than forecast, easing concern that the economic slowdown will worsen.
Bookings for goods made to last several years gained 0.8 percent and posted the first consecutive monthly rise since July 2007, the Commerce Department said today in Washington. New homes sold at an annualized pace of 530,000, exceeding the median forecast of 503,000 in a Bloomberg News survey. A private report showed consumer sentiment rose from a 28-year low.
Stocks rose and Treasuries fell after the reports indicated the economy accelerated in the second quarter from the weakest pace of growth in five years. Economists had forecast that the slowdown would worsen by year-end as the impact of tax rebates fades and as job losses and rising consumer prices force households to cut spending.
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Bookings for goods made to last several years gained 0.8 percent and posted the first consecutive monthly rise since July 2007, the Commerce Department said today in Washington. New homes sold at an annualized pace of 530,000, exceeding the median forecast of 503,000 in a Bloomberg News survey. A private report showed consumer sentiment rose from a 28-year low.
Stocks rose and Treasuries fell after the reports indicated the economy accelerated in the second quarter from the weakest pace of growth in five years. Economists had forecast that the slowdown would worsen by year-end as the impact of tax rebates fades and as job losses and rising consumer prices force households to cut spending.
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Gas stays below $4 for second straight day
Gasoline prices declined for the 10th straight day, staying below the $4 mark for the second day in a row.
Gas prices declined for the 10th straight day, staying below $4 a gallon, according to a nationwide survey Sunday by motorist group AAA.
Gasoline: The price of regular unleaded gasoline dropped a penny to $3.970 a gallon on average, according to AAA's daily survey of credit card swipes at filling stations.
Americans have seen their pocketbooks stretched thin on the back of record high fuel prices and the churning economy. Gas prices have stayed above $4 for nearly two months, having first crossed the mark on June 7, when prices hit $4.005 a gallon.
Surging oil prices kept gas on an upward trajectory, with prices hitting a record high of $4.114 on July 16. Prices stayed there for two days before starting to retreat.
Read Complete StoryHow housing rescue bill can help you
The legislation - likely to be enacted soon - devotes $300 billion to helping troubled homeowners avoid foreclosure. See if you qualify.
The Senate on Saturday passed a $300 billion housing rescue bill aimed at helping troubled homeowners avoid foreclosure and supporting mortgage giants Fannie Mae and Freddie Mac.
President Bush is likely to sign the bill into law within days. After the law kicks in on Oct. 1, thousands of at-risk borrowers will be able to refinance their unaffordable old mortgages into new low-cost fixed-rate loans insured by the Federal Housing Administration (FHA).
The Congressional Budget Office estimates that 400,000 borrowers with $68 billion in loans may benefit from the program - but the bill allows for as many as 1 million or 2 million borrowers to participate in the program.
Here's what homeowners need to know.
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The Senate on Saturday passed a $300 billion housing rescue bill aimed at helping troubled homeowners avoid foreclosure and supporting mortgage giants Fannie Mae and Freddie Mac.
President Bush is likely to sign the bill into law within days. After the law kicks in on Oct. 1, thousands of at-risk borrowers will be able to refinance their unaffordable old mortgages into new low-cost fixed-rate loans insured by the Federal Housing Administration (FHA).
The Congressional Budget Office estimates that 400,000 borrowers with $68 billion in loans may benefit from the program - but the bill allows for as many as 1 million or 2 million borrowers to participate in the program.
Here's what homeowners need to know.
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America On Sale
The Biggest Foreign Buyouts
Anheuser-Busch (BUD) is not the first U.S. company to be swallowed by a foreign firm, and it certainly won't be the last. The announcement of Belgian brewer InBev's (INBVF) $52 billion buyout of Anheuser was followed by news on July 21 that Genentech (DNA) would be acquired by Swiss biotech company Roche Holdings (RHHVF), which offered $43.7 billion for the portion of Genentech it doesn't already own.
Both deals are among the largest foreign buyouts of U.S. companies ever.
The weak U.S. dollar and a stock market that has fallen 20% from its peak are making U.S. assets more attractive to overseas buyers these days. But while cheap valuations can give companies appeal as buyout targets, America's rocky economy and subprime financial crisis might be making some overseas acquirers think twice.
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Anheuser-Busch (BUD) is not the first U.S. company to be swallowed by a foreign firm, and it certainly won't be the last. The announcement of Belgian brewer InBev's (INBVF) $52 billion buyout of Anheuser was followed by news on July 21 that Genentech (DNA) would be acquired by Swiss biotech company Roche Holdings (RHHVF), which offered $43.7 billion for the portion of Genentech it doesn't already own.
Both deals are among the largest foreign buyouts of U.S. companies ever.
The weak U.S. dollar and a stock market that has fallen 20% from its peak are making U.S. assets more attractive to overseas buyers these days. But while cheap valuations can give companies appeal as buyout targets, America's rocky economy and subprime financial crisis might be making some overseas acquirers think twice.
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Thursday, July 24, 2008
Middle class: 'On the edge'
Experts tell Congress that middle class is struggling with stagnant wages, rising debts and increased expenses.
America's middle class is increasingly squeezed by sagging incomes and soaring expenses, experts told Congress on Wednesday.
Adjusted for inflation, median household income dropped by $1,175 between 2000 and 2007, said Elizabeth Warren, professor at Harvard Law School, in written testimony before the Joint Economic Committee.
At the same time, the average family is spending $4,655 more on basic expenses, such as gas, housing, food and health insurance. Gas alone costs $2,195 more for a family making the same commute in May 2008 as it did eight years earlier.
Families with children saw their child care costs soar. Those with children under age 5 spent an additional $1,508 a month, while after-school costs for older children rose $622.
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America's middle class is increasingly squeezed by sagging incomes and soaring expenses, experts told Congress on Wednesday.
Adjusted for inflation, median household income dropped by $1,175 between 2000 and 2007, said Elizabeth Warren, professor at Harvard Law School, in written testimony before the Joint Economic Committee.
At the same time, the average family is spending $4,655 more on basic expenses, such as gas, housing, food and health insurance. Gas alone costs $2,195 more for a family making the same commute in May 2008 as it did eight years earlier.
Families with children saw their child care costs soar. Those with children under age 5 spent an additional $1,508 a month, while after-school costs for older children rose $622.
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Lehman slashes world oil demand growth forecast
Investment bank Lehman Brothers (LEH.N: Quote, Profile, Research, Stock Buzz) said Wednesday it slashed its forecast for 2008 world oil demand growth due to a steeper-than-expected slowdown in energy consumption in the United States and other OECD countries.
Lehman added it believes the oil market is "approaching a tipping point" with prices expected to decline to an average of $90 a barrel in the first quarter of 2009.
"We now forecast annual oil demand for 2008 at 86.3 million barrels per day, a growth of 790,000 bpd from 2007. The growth has been revised down from projections of 1.5 million bpd in December," Lehman said in a research note titled 'Demand Demolition'.
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Lehman added it believes the oil market is "approaching a tipping point" with prices expected to decline to an average of $90 a barrel in the first quarter of 2009.
"We now forecast annual oil demand for 2008 at 86.3 million barrels per day, a growth of 790,000 bpd from 2007. The growth has been revised down from projections of 1.5 million bpd in December," Lehman said in a research note titled 'Demand Demolition'.
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Abu Dhabi fund gains General Electric stake in $40bn partnership
The 130-year-old US industrial empire General Electric is cosying up to a Middle Eastern sovereign wealth fund in a commercial partnership that will make Abu Dhabi's government one of its biggest shareholders.
GE has struck a broad-ranging deal with Abu Dhabi's Mubadala fund to pool financial resources in finding $40bn (£20bn) of business opportunities in the Middle East and Africa, ranging from aviation and oil to clean technologies, green energy and water purification.
To cement the deal, Mubadala intends to buy sufficient stock on the open market to become one of GE's 10 biggest shareholders. GE's shares rose 66 cents to $28.35 in early New York trading yesterday.
GE chief executive Jeffrey Immelt said he saw similarities between his company and the Abu Dhabi fund. "When we look at Mubadala we see a kind of GE in the making, if you will. We see a company that is an industrial company and a financial company with a new generation of leaders."
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GE has struck a broad-ranging deal with Abu Dhabi's Mubadala fund to pool financial resources in finding $40bn (£20bn) of business opportunities in the Middle East and Africa, ranging from aviation and oil to clean technologies, green energy and water purification.
To cement the deal, Mubadala intends to buy sufficient stock on the open market to become one of GE's 10 biggest shareholders. GE's shares rose 66 cents to $28.35 in early New York trading yesterday.
GE chief executive Jeffrey Immelt said he saw similarities between his company and the Abu Dhabi fund. "When we look at Mubadala we see a kind of GE in the making, if you will. We see a company that is an industrial company and a financial company with a new generation of leaders."
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Inflation May Offset Pay Increases in '09
Despite the weak U.S. economy, employers nationwide are expected to raise workers' salaries next year at the same rate as they did this year, a new survey shows. But the increase may be offset by rising inflation rates and lower 2008 bonuses tied to company performance.
Rank-and-file workers can expect to see their base pay rise by an average of 3.5% in 2009 -- the same amount they received this year, reports Watson Wyatt Worldwide Inc., a global human-resources consulting firm. High performers are projected to fare better, gaining an average of 4.4% in base pay, while mediocre performers are likely to see their paychecks increase by 2% or less.
In May, Watson Wyatt, based in Arlington, Va., surveyed 1,389 companies with 250 or more employees, 276 of them in the U.S., in a wide range of industries.
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Rank-and-file workers can expect to see their base pay rise by an average of 3.5% in 2009 -- the same amount they received this year, reports Watson Wyatt Worldwide Inc., a global human-resources consulting firm. High performers are projected to fare better, gaining an average of 4.4% in base pay, while mediocre performers are likely to see their paychecks increase by 2% or less.
In May, Watson Wyatt, based in Arlington, Va., surveyed 1,389 companies with 250 or more employees, 276 of them in the U.S., in a wide range of industries.
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Tokio Marine to buy Philadelphia Cons for $4.7 bln
Tokio Marine Holdings Inc (8766.T: Quote, Profile, Research, Stock Buzz) will buy property and casualty insurer Philadelphia Consolidated Holding Corp (PHLY.O: Quote, Profile, Research, Stock Buzz) for about $4.7 billion, in the largest acquisition by a Japanese financial firm in the United States.
Japan's largest property and casualty insurer said it would pay $61.5 in cash for each share of Philadelphia Consolidated, a 73 percent premium to Tuesday's closing price of $35.55.
Saddled with sluggish growth at home and unburdened by subprime investments, many cash-rich Japanese firms are once again hunting for opportunities abroad.
Japanese drug companies, food makers and financial firms have all joined in the push overseas. Outbound Japanese acquisitions for 2008 came to $24 billion as of July, nearly matching the haul for all of last year, according to Thomson Reuters data.
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Japan's largest property and casualty insurer said it would pay $61.5 in cash for each share of Philadelphia Consolidated, a 73 percent premium to Tuesday's closing price of $35.55.
Saddled with sluggish growth at home and unburdened by subprime investments, many cash-rich Japanese firms are once again hunting for opportunities abroad.
Japanese drug companies, food makers and financial firms have all joined in the push overseas. Outbound Japanese acquisitions for 2008 came to $24 billion as of July, nearly matching the haul for all of last year, according to Thomson Reuters data.
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Friday, July 18, 2008
Gore asks U.S. to abandon fossil fuels
Al Gore, who shared the Nobel Peace Prize for his effort against global warming, said Thursday that Americans should rely on the sun, winds and other environmentally friendly sources of electricity, or risk their national security as well as their creature comforts.
"The survival of the United States of America as we know it is at risk," Gore said in a speech during an energy conference in Washington. "The future of human civilization is at stake."
Gore, who was Bill Clinton's vice president, called for the kind of concerted national effort that enabled Americans to walk on the moon almost 39 years ago, just eight years after President John F. Kennedy famously embraced that goal.
Bush sees no quick fix for high gasoline prices
President George W. Bush said on Tuesday there was no quick fix to lowering record fuel prices and that oil in the U.S. Strategic Petroleum Reserve should be saved for supply emergencies.
"The SPR is for emergencies," Bush told reporters at a White House news conference. He said "there is no immediate fix" to lowering record-high fuel prices.
Several U.S. lawmakers called on the White House this week to release some of the 706 million barrels of crude held in the reserve in order to put more supplies on the market and help lower oil and gasoline prices.
"Four-dollar gasoline, bogged down in a war in Iraq, the economy entering a recession, the stock market down more than 15 percent since January, the housing market in crisis, banks failing, the highest inflation in almost 30 years, and he still doesn't think we're in an emergency?" asked Democratic Rep. Edward Markey, who wants the president to release 500,000 barrels of oil a day from the reserve for six months.
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"The SPR is for emergencies," Bush told reporters at a White House news conference. He said "there is no immediate fix" to lowering record-high fuel prices.
Several U.S. lawmakers called on the White House this week to release some of the 706 million barrels of crude held in the reserve in order to put more supplies on the market and help lower oil and gasoline prices.
"Four-dollar gasoline, bogged down in a war in Iraq, the economy entering a recession, the stock market down more than 15 percent since January, the housing market in crisis, banks failing, the highest inflation in almost 30 years, and he still doesn't think we're in an emergency?" asked Democratic Rep. Edward Markey, who wants the president to release 500,000 barrels of oil a day from the reserve for six months.
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US faces global funding crisis, warns Merrill Lynch
The US Treasury is running out of time before foreign patience snaps, writes Ambrose Evans-Pritchard
Merrill Lynch has warned that the United States could face a foreign "financing crisis" within months as the full consequences of the Fannie Mae and Freddie Mac mortgage debacle spread through the world.
The country depends on Asian, Russian and Middle Eastern investors to fund much of its $700bn (£350bn) current account deficit, leaving it far more vulnerable to a collapse of confidence than Japan in the early 1990s after the Nikkei bubble burst. Britain and other Anglo-Saxon deficit states could face a similar retreat by foreign investors.
"Japan was able to cut its interest rates to zero," said Alex Patelis, Merrill's head of international economics.
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Merrill Lynch has warned that the United States could face a foreign "financing crisis" within months as the full consequences of the Fannie Mae and Freddie Mac mortgage debacle spread through the world.
The country depends on Asian, Russian and Middle Eastern investors to fund much of its $700bn (£350bn) current account deficit, leaving it far more vulnerable to a collapse of confidence than Japan in the early 1990s after the Nikkei bubble burst. Britain and other Anglo-Saxon deficit states could face a similar retreat by foreign investors.
"Japan was able to cut its interest rates to zero," said Alex Patelis, Merrill's head of international economics.
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Merrill Lynch reports $4.9 billion loss
Nation's largest brokerage suffers its fourth-straight quarterly loss, confirms plans to sell Bloomberg stake for $4.43 billion.
Merrill Lynch booked its fourth-straight quarterly loss Thursday, this time losing nearly $5 billion, as the nation's largest brokerage was forced to once again take massive writedowns.
Merrill said it lost $4.9 billion overall. On a continuing operations basis, it lost $4.6 billion, or $4.95 a share, down from a profit of $2.01 billion, or $2.24 a share a year ago. Analysts polled by Thomson Reuters were expecting the company to report a loss of just over $1.8 billion, or $1.91 a share on this basis.
The company has now lost more than $19.2 billion in the past twelve months, making it one of the hardest hit companies during the credit crisis roiling the nation's big financial services firms.
Merrill (MER, Fortune 500) shares plunged about 6% after hours, nearly wiping out the stock's 10% gain in regular trading on the New York Stock Exchange Thursday.
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Merrill Lynch booked its fourth-straight quarterly loss Thursday, this time losing nearly $5 billion, as the nation's largest brokerage was forced to once again take massive writedowns.
Merrill said it lost $4.9 billion overall. On a continuing operations basis, it lost $4.6 billion, or $4.95 a share, down from a profit of $2.01 billion, or $2.24 a share a year ago. Analysts polled by Thomson Reuters were expecting the company to report a loss of just over $1.8 billion, or $1.91 a share on this basis.
The company has now lost more than $19.2 billion in the past twelve months, making it one of the hardest hit companies during the credit crisis roiling the nation's big financial services firms.
Merrill (MER, Fortune 500) shares plunged about 6% after hours, nearly wiping out the stock's 10% gain in regular trading on the New York Stock Exchange Thursday.
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Thursday, July 17, 2008
Jobless claims rise to 366,000 last week
The number of U.S. workers filing new claims for jobless benefits rose by a less-than-expected 18,000 last week to 366,000 on a seasonally adjusted basis, a Labor Department report showed on Thursday.
Analysts polled by Reuters had forecast initial claims for state unemployment insurance benefits to rebound to 380,000 after a sharp drop the prior week to 348,000 that was initially reported as 346,000.
Claims data is volatile because of annual auto plant shutdowns. The latest week's increase partly reflects the larger-than-expected decline the week before, a Labor Department official said.
On a non-adjusted basis, claims had been expected to rise 12.9 percent last week, but actually rose 18.5 percent, the official said.
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Analysts polled by Reuters had forecast initial claims for state unemployment insurance benefits to rebound to 380,000 after a sharp drop the prior week to 348,000 that was initially reported as 346,000.
Claims data is volatile because of annual auto plant shutdowns. The latest week's increase partly reflects the larger-than-expected decline the week before, a Labor Department official said.
On a non-adjusted basis, claims had been expected to rise 12.9 percent last week, but actually rose 18.5 percent, the official said.
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Philly Fed factory activity falls again in July
Factory activity in the U.S. Mid-Atlantic region shrank again in July, reflecting a weakening economy and the strain of rising costs.
The Philadelphia Federal Reserve Bank said on Thursday its business activity index was at minus 16.3 in July versus minus 17.1 in June. Economists polled by Reuters had forecast a reading of minus 15.0.
The index was in negative territory for the eighth straight month. Any reading below zero indicates contraction in the region's manufacturing sector.
The prices paid index rose to 75.6 in July, the highest level since March 1980, after a reading of 69.3 in June.
"Cost pressures remain widespread, with a larger share of firms reporting input price increases this month," the Philly Fed said.
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The Philadelphia Federal Reserve Bank said on Thursday its business activity index was at minus 16.3 in July versus minus 17.1 in June. Economists polled by Reuters had forecast a reading of minus 15.0.
The index was in negative territory for the eighth straight month. Any reading below zero indicates contraction in the region's manufacturing sector.
The prices paid index rose to 75.6 in July, the highest level since March 1980, after a reading of 69.3 in June.
"Cost pressures remain widespread, with a larger share of firms reporting input price increases this month," the Philly Fed said.
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Home starts still weak despite surprising jump
Housing starts took a surprising jump in June, the government reported on Thursday, but only because of a change in New York's building code that briefly obscured a drop in single-family home building.
Total starts rose 9.1 percent in June but would have dropped 4 percent except for the actions of New York City builders who sped up multi-family projects before new construction rules took hold on July 1, the Commerce Department said.
The rate of building permits, which signal future building plans, rose 11.6 percent but would have climbed only 0.7 percent except for the code change, the government said.
"The housing starts number is bloated," said Pierre Ellis, senior economist at Decision Economics, New York. "The important thing is that single-family starts were weaker than expected."
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Total starts rose 9.1 percent in June but would have dropped 4 percent except for the actions of New York City builders who sped up multi-family projects before new construction rules took hold on July 1, the Commerce Department said.
The rate of building permits, which signal future building plans, rose 11.6 percent but would have climbed only 0.7 percent except for the code change, the government said.
"The housing starts number is bloated," said Pierre Ellis, senior economist at Decision Economics, New York. "The important thing is that single-family starts were weaker than expected."
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Inflation: Price jump worst since '91
Record gas and higher costs prices spark a 5% annual jump in Consumer Price Index.
Record gas and higher food prices drove inflation to the biggest annual jump since 1991 and fanned fears about growing pressures on consumers.
The Labor Department reading on Wednesday is another sign, along with mounting job losses and declining home prices, of the economic pain suffered by Americans as prices outstrip increases in paychecks.
The latest reading came as Federal Reserve Chairman Ben Bernanke, in testimony on Capitol Hill, was warning that inflation could pose a major drag on the economy for the rest of this year.
Retail prices were up 5% annually in June, the biggest 12-month change since May 1991 - an annual figure that was skewed by the surge in gasoline prices related to the first Gulf War.
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Record gas and higher food prices drove inflation to the biggest annual jump since 1991 and fanned fears about growing pressures on consumers.
The Labor Department reading on Wednesday is another sign, along with mounting job losses and declining home prices, of the economic pain suffered by Americans as prices outstrip increases in paychecks.
The latest reading came as Federal Reserve Chairman Ben Bernanke, in testimony on Capitol Hill, was warning that inflation could pose a major drag on the economy for the rest of this year.
Retail prices were up 5% annually in June, the biggest 12-month change since May 1991 - an annual figure that was skewed by the surge in gasoline prices related to the first Gulf War.
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How Bad Will It Get on Wall Street?
As the credit crisis grinds on, the prospects for a quick recovery darken
It has been a year since the global credit markets first seized up, and four months since the dismantling of Bear Stearns. Yet bad things keep happening, from the failure of IndyMac and the stock routs of Lehman Brothers (LEH) and others to the market's collective yawn at the Treasury Dept.'s plan to bolster mortgage giants Fannie Mae (FNM) and Freddie Mac (FRE). Once again, the optimists who thought the crisis was over have been proven wrong. "People underestimated how bad things were last summer," says Frank Partnoy, a former Wall Street derivatives trader turned professor at the University of San Diego Law School.
Did they ever. July's rat-a-tat-tat of dismal news suggests that the scope of the credit crunch is much broader than most people thought. Traders, investors, bankers, and economists are waking up to the possibility that Wall Street's recovery from the worst financial disaster since the Great Depression could grind on for years. And they're realizing that while the debacle was of Wall Street's making, its aftermath will weigh on banks, other companies, and consumers alike.
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It has been a year since the global credit markets first seized up, and four months since the dismantling of Bear Stearns. Yet bad things keep happening, from the failure of IndyMac and the stock routs of Lehman Brothers (LEH) and others to the market's collective yawn at the Treasury Dept.'s plan to bolster mortgage giants Fannie Mae (FNM) and Freddie Mac (FRE). Once again, the optimists who thought the crisis was over have been proven wrong. "People underestimated how bad things were last summer," says Frank Partnoy, a former Wall Street derivatives trader turned professor at the University of San Diego Law School.
Did they ever. July's rat-a-tat-tat of dismal news suggests that the scope of the credit crunch is much broader than most people thought. Traders, investors, bankers, and economists are waking up to the possibility that Wall Street's recovery from the worst financial disaster since the Great Depression could grind on for years. And they're realizing that while the debacle was of Wall Street's making, its aftermath will weigh on banks, other companies, and consumers alike.
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Wednesday, July 16, 2008
In U.S., high cost of driving ignites online classes boom
First, Ryan Gibbons bought a Hyundai so he would not have to drive his gas-guzzling Chevy Blazer to college classes here. When fuel prices kept rising, he cut expenses again, eliminating two campus visits a week by enrolling in an online version of one of his courses.
Like Gibbons, thousands of students nationwide, including many who were previously reluctant to study online, have suddenly decided to take one or more college classes over the Internet.
"Gas prices have pushed people over the edge," said Georglyn Davidson, director of online learning at Bucks County Community College, where Gibbons studies, and where online enrollments are up 35 percent this summer over last year.
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Like Gibbons, thousands of students nationwide, including many who were previously reluctant to study online, have suddenly decided to take one or more college classes over the Internet.
"Gas prices have pushed people over the edge," said Georglyn Davidson, director of online learning at Bucks County Community College, where Gibbons studies, and where online enrollments are up 35 percent this summer over last year.
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Bernanke warns of more U.S. economic difficulties
Warning of the dual risks of a further economic slowdown and higher inflation, Ben Bernanke, chairman of the Federal Reserve, said Tuesday that the prospect for any immediate improvement in the U.S. economy was bleak.
But the U.S. stock market, after the euro rose to a record against the dollar and markets in Asia and Europe were pushed lower by fears of further cracks in the global financial system, recovered from its own sharp fall as the price of oil plunged.
Investors may have been cheered by the decline in oil prices, but that was not necessarily a sign of improvement, since the fall was driven in part by the view that a weaker global economy may no longer be able to support oil prices above $140 a barrel.
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But the U.S. stock market, after the euro rose to a record against the dollar and markets in Asia and Europe were pushed lower by fears of further cracks in the global financial system, recovered from its own sharp fall as the price of oil plunged.
Investors may have been cheered by the decline in oil prices, but that was not necessarily a sign of improvement, since the fall was driven in part by the view that a weaker global economy may no longer be able to support oil prices above $140 a barrel.
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Ron Paul: Something Big is Going On
This entry was posted on Wednesday, July 2nd, 2008 at 4:58 pm
Something Big is Going On
The following statement is written by Congressman Paul about the pending financial disaster. He will introduce this statement as a special order and insert it into the Congressional Record next week. Fortunately, we have the opportunity to debut it first on the Campaign for Liberty blog. It reads as follows:
I have, for the past 35 years, expressed my grave concern for the future of America. The course we have taken over the past century has threatened our liberties, security and prosperity. In spite of these long-held concerns, I have days—growing more frequent all the time—when I’m convinced the time is now upon us that some Big Events are about to occur. These fast-approaching events will not go unnoticed. They will affect all of us. They will not be limited to just some areas of our country. The world economy and political system will share in the chaos about to be unleashed.
NAFTA road danger to U.S.
Soon, construction will start on a new NAFTA superhighway, starting from Mexico through the heartland of this country and ending in Canada. There will be no border fence between us and Mexico, giving illegal immigrants easy access to anywhere in the U.S.
Those who enter our country in this clandestine manner will cause a rise in the crime rate and swamp our jails, hospitals, schools, health care facilities and welfare rolls. And worst of all, those who hire them for cheap labor will continue enriching their own pockets.
Oil Tumbles More Than $6 as Slowing Economy Threatens Demand
Crude oil tumbled more than $6 a barrel in New York amid concern that a slower U.S. economy will curtail demand.
Prices dropped as Federal Reserve Chairman Ben S. Bernanke said risks to growth and inflation have risen, in testimony to the Senate Banking Committee. He abandoned a June assessment that the threat of an economic slowdown had diminished.
``We're getting to the point where the market's looking at an increasing likelihood of a deep recession,'' said James Ritterbusch, president of Ritterbusch & Associates in Galena, Illinois.
Crude oil for August delivery fell $6.44, or 4.4 percent, to settle at $138.74 a barrel at 2:49 p.m. on the New York Mercantile Exchange. It was the biggest percentage drop since March and the biggest dollar decline since Jan. 17, 1991, when futures closed at $21.44 a barrel. Oil fell as much as $9.26 to $135.92 today.
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Prices dropped as Federal Reserve Chairman Ben S. Bernanke said risks to growth and inflation have risen, in testimony to the Senate Banking Committee. He abandoned a June assessment that the threat of an economic slowdown had diminished.
``We're getting to the point where the market's looking at an increasing likelihood of a deep recession,'' said James Ritterbusch, president of Ritterbusch & Associates in Galena, Illinois.
Crude oil for August delivery fell $6.44, or 4.4 percent, to settle at $138.74 a barrel at 2:49 p.m. on the New York Mercantile Exchange. It was the biggest percentage drop since March and the biggest dollar decline since Jan. 17, 1991, when futures closed at $21.44 a barrel. Oil fell as much as $9.26 to $135.92 today.
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Tuesday, July 15, 2008
Bad week ahead for banks
Analysts expect more writedowns from Citi and Merrill. The IndyMac failure and problems with Fannie and Freddie could further darken the outlook for banks.
If this weekend's news about Fannie Mae and Freddie Mac and Friday's IndyMac failure weren't scary enough, now Wall Street will have to contend with what is likely to be dismal quarterly results from many top financial firms.
Merrill Lynch (MER, Fortune 500) and Citigroup (C, Fortune 500) are each expected to report another quarterly loss. Merrill's results are due out Thursday afternoon while Citigroup will report its results Friday morning.
Analysts expect profits at other big banks, such as Wells Fargo (WFC, Fortune 500) and JPMorgan Chase (JPM, Fortune 500), to fall sharply from a year ago. Wells Fargo's second-quarter results are due out Wednesday morning and JPMorgan Chase will report its numbers Thursday.
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If this weekend's news about Fannie Mae and Freddie Mac and Friday's IndyMac failure weren't scary enough, now Wall Street will have to contend with what is likely to be dismal quarterly results from many top financial firms.
Merrill Lynch (MER, Fortune 500) and Citigroup (C, Fortune 500) are each expected to report another quarterly loss. Merrill's results are due out Thursday afternoon while Citigroup will report its results Friday morning.
Analysts expect profits at other big banks, such as Wells Fargo (WFC, Fortune 500) and JPMorgan Chase (JPM, Fortune 500), to fall sharply from a year ago. Wells Fargo's second-quarter results are due out Wednesday morning and JPMorgan Chase will report its numbers Thursday.
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Why Finance America’s Debt When It Is Failing?
Lenders to Fannie Mae and Freddie Mac were being skittish for no reason.
The risk premium on the beleaguered mortgage financiers' debt began rising in May and was, until last week, headed toward levels seen before the collapse of Bear Stearns Cos. in March.
Equity investors, not knowing how an eventual rescue will affect their interests, had reason to be nervous. Bondholders' pessimism was uncalled for.
The latter, after all, had China on their side.
And that means a lot.
Even if commercial creditors harbored any doubts about the intent or ability of Henry Paulson and Ben Bernanke to save Freddie and Fannie, they shouldn't have expected China to twiddle its thumbs, accept a big loss and still be willing to provide more capital to the U.S.
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The risk premium on the beleaguered mortgage financiers' debt began rising in May and was, until last week, headed toward levels seen before the collapse of Bear Stearns Cos. in March.
Equity investors, not knowing how an eventual rescue will affect their interests, had reason to be nervous. Bondholders' pessimism was uncalled for.
The latter, after all, had China on their side.
And that means a lot.
Even if commercial creditors harbored any doubts about the intent or ability of Henry Paulson and Ben Bernanke to save Freddie and Fannie, they shouldn't have expected China to twiddle its thumbs, accept a big loss and still be willing to provide more capital to the U.S.
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U.S. states, cities welcome investment from abroad
The Commerce Department insists that America is open for business. In 2007 it launched "Invest in America" to help attract foreign companies and calm those afraid of them. The 33-year-old Committee on Foreign Investment is refining its process for examining deals that might threaten security. But Mark O'Connell of consulting firm OCO Global describes the national strategy for foreign direct investment as "embryonic."
States are far more aggressive, courting foreign investors through trips abroad and incentives. California, New York and Texas have proved the biggest magnets, topping OCO Global's list of foreign investment in new facilities or expansions from 2003 to '07. But even Michigan, one of the rustier states, has seen a boost from foreign investors, ranking fourth.
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States are far more aggressive, courting foreign investors through trips abroad and incentives. California, New York and Texas have proved the biggest magnets, topping OCO Global's list of foreign investment in new facilities or expansions from 2003 to '07. But even Michigan, one of the rustier states, has seen a boost from foreign investors, ranking fourth.
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GM to cut jobs, suspend dividend
Beleaguered automaker also plans asset sales, aiming for $10 billion in 'cash improvements' by 2009. CEO Wagoner says 'difficult decisions' necessary for survival.
General Motors Corp. said Tuesday it will suspend its dividend, sell off $4 billion to $7 billion worth of assets and cut 20% worth of salaried cash costs in an overall plan to save billions of dollars.
"We need to take some very tough actions to ensure our survival and success," said Chief Executive Rick Wagoner, in a press conference, referring to the current market conditions as an "unprecedentedly difficult time."
GM (GM, Fortune 500) stock dropped about 5% on the news, but it bounced back later and is trading about 6% higher at mid-day.
In an earlier broadcast to employees, Wagoner said that these were "difficult decisions," but necessary for the company to prevail in the weak economy beset by high oil prices, which he called GM's "greatest concern."
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General Motors Corp. said Tuesday it will suspend its dividend, sell off $4 billion to $7 billion worth of assets and cut 20% worth of salaried cash costs in an overall plan to save billions of dollars.
"We need to take some very tough actions to ensure our survival and success," said Chief Executive Rick Wagoner, in a press conference, referring to the current market conditions as an "unprecedentedly difficult time."
GM (GM, Fortune 500) stock dropped about 5% on the news, but it bounced back later and is trading about 6% higher at mid-day.
In an earlier broadcast to employees, Wagoner said that these were "difficult decisions," but necessary for the company to prevail in the weak economy beset by high oil prices, which he called GM's "greatest concern."
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Bush Acts on Drilling, Challenging Democrats
President Bush lifted nearly two decades of executive orders banning drilling for oil and natural gas off the country’s shoreline on Monday while challenging Congress to open up more areas for exploration to address soaring energy prices.
Democrats in Congress, joined by environmentalists, criticized the step and ridiculed it as ineffectual, while most Republicans and industry representatives applauded it as long overdue.
The lifting of the moratorium — first announced by Mr. Bush’s father, President George Bush, in 1990 and extended by President Bill Clinton — will have no real impact because a Congressional moratorium on drilling enacted in 1981 and renewed annually remains in force. And there appeared to be no consensus for lifting it in tandem with Mr. Bush’s action.
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Democrats in Congress, joined by environmentalists, criticized the step and ridiculed it as ineffectual, while most Republicans and industry representatives applauded it as long overdue.
The lifting of the moratorium — first announced by Mr. Bush’s father, President George Bush, in 1990 and extended by President Bill Clinton — will have no real impact because a Congressional moratorium on drilling enacted in 1981 and renewed annually remains in force. And there appeared to be no consensus for lifting it in tandem with Mr. Bush’s action.
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Thursday, July 10, 2008
Extending the mortgage-crash pain
Modification seems like a great idea now, but it may not help Wall Street or the economy in the long run.
Mortgage debt backs a lot of the bad bonds that are wreaking balance-sheet havoc, and mortgage relief has been suggested as a cure - both for homeowners and Wall Street. But a closer look suggests that modifying homeowners' loans may simply be pushing losses into the future.
Since the turmoil in the credit markets began a year ago, investment banks have had to write down the values of all sorts of securities, but the bonds that sparked the crisis were those backed by mortgages granted to borrowers who could ill afford the payments.
New foreclosure data due out Thursday should show even more homeowners underwater, so it's clear that mortgage debt is still toxic for investment banks, hedge funds and other institutional investors.
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Mortgage debt backs a lot of the bad bonds that are wreaking balance-sheet havoc, and mortgage relief has been suggested as a cure - both for homeowners and Wall Street. But a closer look suggests that modifying homeowners' loans may simply be pushing losses into the future.
Since the turmoil in the credit markets began a year ago, investment banks have had to write down the values of all sorts of securities, but the bonds that sparked the crisis were those backed by mortgages granted to borrowers who could ill afford the payments.
New foreclosure data due out Thursday should show even more homeowners underwater, so it's clear that mortgage debt is still toxic for investment banks, hedge funds and other institutional investors.
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Candidates to focus on damaged U.S. economy
Not since at least 1980, when the United States was reeling from the oil shocks, inflation and slow growth of the previous decade, has the economy been in worse shape heading into the heart of a presidential campaign.
The crush of bad economic news - six consecutive months of job losses, rising rates of home foreclosure, gasoline prices seemingly headed toward $5 a gallon, or $1.30 a liter - is increasingly setting the contours of the race between Senators Barack Obama and John McCain.
Both candidates plan to spend this week focusing almost entirely on the economy. But both face political problems with the issue.
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The crush of bad economic news - six consecutive months of job losses, rising rates of home foreclosure, gasoline prices seemingly headed toward $5 a gallon, or $1.30 a liter - is increasingly setting the contours of the race between Senators Barack Obama and John McCain.
Both candidates plan to spend this week focusing almost entirely on the economy. But both face political problems with the issue.
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Bank of America's Lewis Expects Economic Recovery in Mid-2009
Bank of America Corp. Chief Executive Officer Kenneth Lewis expects the economy to begin recovering from the housing crisis in the middle of next year.
``Until then, depending on what sector of the economy you're in, it will feel slow and may feel like a recession,'' Lewis, 61, said today in prepared remarks in Los Angeles.
Bank of America last week became the biggest U.S. mortgage lender after completing the $2.5 billion acquisition of Countrywide Financial Corp. It plans to rework at least $40 billion in troubled loans over two years to keep more than 250,000 families in their homes, Lewis said.
Foreclosure filings rose 48 percent from a year earlier in May as banks repossessed twice as many homes, RealtyTrac Inc. said in a June 13 report.
Deteriorating housing prices, rising unemployment and record oil prices pushed U.S. consumer confidence to a 28-year low last month. Lewis said that's the ``challenge we're facing as we work to revive our housing markets and our economy.''
Read Complete StoryCrude's fall now $9 in two days
This time the price of oil declines more than $5, but some analysts doubt the week's trend is sustainable.
The cost of oil dropped in dramatic fashion Tuesday, as a stronger dollar and economic jitters helped push crude futures down more than $5 to $136.04 a barrel.
Oil's tumble is the second in as many days, reversing course after a relentless rise that yielded a record-high price of $145.85 a barrel July 3 -- double the year-earlier price -- and triggered records for retail gasoline and diesel prices.
Traders sent light, sweet crude for August delivery down $6.23 a barrel at one point, before ending the day down $5.33 on the New York Mercantile Exchange. Crude has fallen more than $9 this week.
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The cost of oil dropped in dramatic fashion Tuesday, as a stronger dollar and economic jitters helped push crude futures down more than $5 to $136.04 a barrel.
Oil's tumble is the second in as many days, reversing course after a relentless rise that yielded a record-high price of $145.85 a barrel July 3 -- double the year-earlier price -- and triggered records for retail gasoline and diesel prices.
Traders sent light, sweet crude for August delivery down $6.23 a barrel at one point, before ending the day down $5.33 on the New York Mercantile Exchange. Crude has fallen more than $9 this week.
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U.S. plans expedited rerun of aerial tanker contest
Defense Secretary Robert Gates plans an "expedited recompetition" for $35 billion worth of new aerial refueling tankers to be overseen by the Pentagon's chief weapons buyer, according to two congressional aides and a third source briefed on the plan.
Defense Undersecretary John Young would become the new "source selection authority" for the program, instead of the Air Force, said the source, who asked not to be named.
The Air Force in February awarded the contract to Northrop Grumman Corp and EADS, prompting an immediate protest by losing bidder Boeing Co, and vows of congressional intervention by its supporters in Congress.
New York's Chrysler Building Bought by Abu Dhabi
New York's Chrysler Building, an Art Deco icon that helps define the New York skyline, was bought by an Abu Dhabi sovereign wealth fund, the second purchase of a Manhattan landmark by Middle East investors in as many months.
The skyscraper at 405 Lexington Ave., the world's tallest building until 1931, was acquired yesterday by the Abu Dhabi Investment Council for an undisclosed price. Last month a Dubai fund, Boston Properties Inc. and Goldman Sachs Group Inc. paid $2.8 billion for the General Motors Building.
Abu Dhabi, Kuwait and other Persian Gulf countries flush with oil revenue have taken advantage of falling prices to invest in real estate and financial companies around the world. Middle Eastern investors have spent $1.8 billion this year on commercial property in the U.S., more than other international buyers, according to Real Capital Analytics Inc., a New York-based property research firm.
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The skyscraper at 405 Lexington Ave., the world's tallest building until 1931, was acquired yesterday by the Abu Dhabi Investment Council for an undisclosed price. Last month a Dubai fund, Boston Properties Inc. and Goldman Sachs Group Inc. paid $2.8 billion for the General Motors Building.
Abu Dhabi, Kuwait and other Persian Gulf countries flush with oil revenue have taken advantage of falling prices to invest in real estate and financial companies around the world. Middle Eastern investors have spent $1.8 billion this year on commercial property in the U.S., more than other international buyers, according to Real Capital Analytics Inc., a New York-based property research firm.
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Wednesday, July 9, 2008
Oil man unveils wind-based power plan
Texas magnate says foreign oil is 'killing' the economy; invested $2 billion in plan to build world's largest wind farm.
Texas oil man T. Boone Pickens Tuesday unveiled a new energy plan he says will decrease the United States' dependency on foreign oil by more than one-third and help shift American energy
production toward renewable natural resources like wind power.
In a news conference outlining his proposal, Pickens said his impetus for the plan is the country's dangerous reliance on foreign oil. "Our dependence on imported oil is killing our economy. It is the single biggest problem facing America today," he said.
"The Pickens Plan" calls for investing in domestic renewable resources such as wind, and switching from oil to natural gas as a transportation fuel.
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Texas oil man T. Boone Pickens Tuesday unveiled a new energy plan he says will decrease the United States' dependency on foreign oil by more than one-third and help shift American energy
production toward renewable natural resources like wind power.
In a news conference outlining his proposal, Pickens said his impetus for the plan is the country's dangerous reliance on foreign oil. "Our dependence on imported oil is killing our economy. It is the single biggest problem facing America today," he said.
"The Pickens Plan" calls for investing in domestic renewable resources such as wind, and switching from oil to natural gas as a transportation fuel.
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InBev cost-cutting measures set for U.S. export
Economy flights, enforcement of double-sided printing and fewer staff with mobile phones.
Belgian-Brazilian brewer InBev is likely to export its belt-tightening to the United States to squeeze out up to $1.4 billion of costs if it succeeds in taking over U.S. peer Anheuser-Busch.
"Zero-based budgeting" is central to InBev's business model in which departments have to justify all spending, rather than just changes in their budgets.
Brought in from Latin America when Belgium's Interbrew merged with Brazil's AmBev to form InBev in 2004, it has been applied across the company's regions -- North America from 2005, western Europe from 2006 and eastern Europe and Asia from 2007.
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Belgian-Brazilian brewer InBev is likely to export its belt-tightening to the United States to squeeze out up to $1.4 billion of costs if it succeeds in taking over U.S. peer Anheuser-Busch.
"Zero-based budgeting" is central to InBev's business model in which departments have to justify all spending, rather than just changes in their budgets.
Brought in from Latin America when Belgium's Interbrew merged with Brazil's AmBev to form InBev in 2004, it has been applied across the company's regions -- North America from 2005, western Europe from 2006 and eastern Europe and Asia from 2007.
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India Inc's US acquisition trip hits the slow lane
The economic turmoil, which has gripped the world, has slowed down the pace of US-bound acquisitions by Indian companies. In the first half of 2008, India Inc’s US-focused merger and acquisition (M&A) activities have dropped 30% in value terms compared with the first half of 2007. M&A activities decreased by 15% in volume terms.
“In the first half of 2008, Indian companies accounted for 34 US-bound acquisitions, with a cumulative transaction value of over $5.1 billion. This represents a 15% decrease in terms of volume and a 30% drop in value terms compared with the first half of 2007,” Virtus Global Partners, a US-based-India focused investment banking firm, said in its M&A report released on July 7.
However, according to Virtus Global Partners managing director Anil Kumar: “It has created significant buying opportunities for well-capitalised Indian companies. Compared to only one transaction of over $1 billion in value for 2007, there were three such transactions in the first six months of 2008 alone.”
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“In the first half of 2008, Indian companies accounted for 34 US-bound acquisitions, with a cumulative transaction value of over $5.1 billion. This represents a 15% decrease in terms of volume and a 30% drop in value terms compared with the first half of 2007,” Virtus Global Partners, a US-based-India focused investment banking firm, said in its M&A report released on July 7.
However, according to Virtus Global Partners managing director Anil Kumar: “It has created significant buying opportunities for well-capitalised Indian companies. Compared to only one transaction of over $1 billion in value for 2007, there were three such transactions in the first six months of 2008 alone.”
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Oil slips more than $9 a barrel in 2-days
Anticipated weakness in demand and some calm from Iran's leader send futures to their lowest level in nearly 2 weeks.
Oil prices extended a post-July 4th descent Tuesday - falling more than $9 a barrel over two days - as Iran's president downplayed concerns about possible war in the Middle East and investors anticipated falling demand due to high gasoline prices.
The price of light sweet crude for August delivery tumbled $5.33 to settle at $136.04 a barrel on the New York Mercantile Exchange. It was the lowest level in nearly two weeks, and followed a drop of $3.92 Monday.
Iran:Concerns over supply disruptions in the oil-rich Middle East eased after Iranian president Mahmoud Ahmadinejad said he did not believe there would be an armed conflict between Iran and Israel or the United States.
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Oil prices extended a post-July 4th descent Tuesday - falling more than $9 a barrel over two days - as Iran's president downplayed concerns about possible war in the Middle East and investors anticipated falling demand due to high gasoline prices.
The price of light sweet crude for August delivery tumbled $5.33 to settle at $136.04 a barrel on the New York Mercantile Exchange. It was the lowest level in nearly two weeks, and followed a drop of $3.92 Monday.
Iran:Concerns over supply disruptions in the oil-rich Middle East eased after Iranian president Mahmoud Ahmadinejad said he did not believe there would be an armed conflict between Iran and Israel or the United States.
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Tuesday, July 8, 2008
McCain, Obama spar over economic fixes
The likely presidential nominees, in separate speeches, draw the battle lines on health care, tax cuts, nuclear energy and more.
Barack Obama and John McCain agree on this much: The economy is staggering under the Bush administration, and Americans are hurting.
But who's to blame and how best to fix it?
Well, they part ways on that, as they made clear in dueling economic speeches Monday on the issue that has taken center stage in their presidential contest.
Obama said that McCain offers a third term of President Bush's policies. "John McCain's policies are essentially a repeat, a regurgitation of what we've been hearing from the Republican Party over the last two decades, maybe three," Obama said in St. Louis, where his plane made an unscheduled stop because of mechanical problems that forced him to cancel an appearance in Charlotte, N.C. "It's part of the reason that we're in the situation that we find ourselves in right now."
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Barack Obama and John McCain agree on this much: The economy is staggering under the Bush administration, and Americans are hurting.
But who's to blame and how best to fix it?
Well, they part ways on that, as they made clear in dueling economic speeches Monday on the issue that has taken center stage in their presidential contest.
Obama said that McCain offers a third term of President Bush's policies. "John McCain's policies are essentially a repeat, a regurgitation of what we've been hearing from the Republican Party over the last two decades, maybe three," Obama said in St. Louis, where his plane made an unscheduled stop because of mechanical problems that forced him to cancel an appearance in Charlotte, N.C. "It's part of the reason that we're in the situation that we find ourselves in right now."
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It's a recession: 75% of Americans say
Vast majority of Americans believe economy is still in a recession with no signs of recovery, though negative views are dwindling, according to a recent CNN poll.
Most Americans still think the economy is in a recession, but the number who feel that way has declined, according to a CNN/Opinion Research Corporation poll released Monday.
In a telephone poll of over 1,000 adult Americans, 75% said they believe the nation is now in a recession. That figure fell from 79% in April. In March 74% believed the U.S was in a recession.
This decline is the first time the number - which had been steadily rising since October - has fallen. Then, the poll showed only 46% thought the economy was in a recession.
"From a consumers's perspective, the economy is bad, and the environment is going to be tough for a while," said Wachovia economist Mark Vitner. "That's pretty accurate."
Weak economy may be Wal-Mart’s strong suit
There was a time when Betsy Baker would have been embarrassed to be seen shopping at Wal-Mart.
But that was a few years ago, before the price of gold shot up and the economy slowed, all but ruining her family jewelry business. And it was before her monthly house payments skyrocketed to $3,800 a month from $1,800, and she found herself trying to get rid of a house that is worth substantially less than she paid for it. It was before her family conceded that they could not escape their economic woes without filing for bankruptcy.
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But that was a few years ago, before the price of gold shot up and the economy slowed, all but ruining her family jewelry business. And it was before her monthly house payments skyrocketed to $3,800 a month from $1,800, and she found herself trying to get rid of a house that is worth substantially less than she paid for it. It was before her family conceded that they could not escape their economic woes without filing for bankruptcy.
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Energy Matters: Is oil independence an illusion?
The newly seceded United States took seven year to move from the 1776 Declaration of Independence to the Treaty of Paris, in which Great Britain ceded control of the land east of the Mississippi to the young country. In 1973, Richard Nixon set another seven-year challenge: the U.S. would achieve independence from foreign sources of energy by the end of the decade.
Thirty five years later, the U.S. energy dependence has dramatically increased. Crude oil imports, for example, have more than tripled.
In a new book, journalist and author Robert Bryce argues that the hope for energy independence is fraught with “dangerous delusions.” Bryce’s arguments in “Gusher of Lies” provide a refreshing counterpoint to many simplistic, political discussions about energy, but in the end, his blithe optimism about fossil fuel availability, U.S. financial resources, and global warming’s consequences leaves his arguments as dangerously deluded as those he criticizes.
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Thirty five years later, the U.S. energy dependence has dramatically increased. Crude oil imports, for example, have more than tripled.
In a new book, journalist and author Robert Bryce argues that the hope for energy independence is fraught with “dangerous delusions.” Bryce’s arguments in “Gusher of Lies” provide a refreshing counterpoint to many simplistic, political discussions about energy, but in the end, his blithe optimism about fossil fuel availability, U.S. financial resources, and global warming’s consequences leaves his arguments as dangerously deluded as those he criticizes.
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Home Prices Fall in 23 of 25 U.S. Metropolitan Areas
Home values fell in 23 of 25 U.S. metropolitan areas in April, according to Radar Logic Inc., as sales of a record number of foreclosed homes pushed prices down.
The Sacramento, California, region saw the biggest drop, with prices falling 31.7 percent from April 2007. Sacramento was followed by the Las Vegas area (29.9 percent), San Diego (28.1 percent), Phoenix (25.5 percent) and Los Angeles (23.4 percent), Radar Logic said.
``Prices are going down so fast they can't go down much longer,'' said Christopher Thornberg, president of Beacon Economics LLC in Los Angeles, who predicts a total decline of 30 percent nationally in the housing recession. ``We've never seen prices fall like this.''
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The Sacramento, California, region saw the biggest drop, with prices falling 31.7 percent from April 2007. Sacramento was followed by the Las Vegas area (29.9 percent), San Diego (28.1 percent), Phoenix (25.5 percent) and Los Angeles (23.4 percent), Radar Logic said.
``Prices are going down so fast they can't go down much longer,'' said Christopher Thornberg, president of Beacon Economics LLC in Los Angeles, who predicts a total decline of 30 percent nationally in the housing recession. ``We've never seen prices fall like this.''
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InBev seeks new Bud board in takeover battle
InBev NV (INTB.BR: Quote, Profile, Research) increased pressure on reluctant takeover target Anheuser-Busch Cos Inc (BUD.N: Quote, Profile, Research) on Monday with a plan to replace the U.S. rival's board of directors, which had rejected its $46.3 billion takeover offer.
Belgium-based InBev filed a preliminary proposal with the U.S. Securities and Exchange Commission that would lead to Anheuser shareholders voting on the board's future.
"InBev is increasing the pressure with this move," said Kris Kippers, analyst at Petercam. "It has also referred to the current weak market conditions. I think the chances are less that it will increase its offer."
InBev, the world's second-largest brewer by volume, said it wanted to give shareholders a voice in its proposed $65 per share takeover of the Budweiser and Michelob brewer in the face of the Anheuser board's unwillingness to talk.
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Belgium-based InBev filed a preliminary proposal with the U.S. Securities and Exchange Commission that would lead to Anheuser shareholders voting on the board's future.
"InBev is increasing the pressure with this move," said Kris Kippers, analyst at Petercam. "It has also referred to the current weak market conditions. I think the chances are less that it will increase its offer."
InBev, the world's second-largest brewer by volume, said it wanted to give shareholders a voice in its proposed $65 per share takeover of the Budweiser and Michelob brewer in the face of the Anheuser board's unwillingness to talk.
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US trade deficit widens on oil costs
THE US trade deficit widened in April, but soaring oil prices were blamed for the deterioration and analysts see strong exports giving the weak economy continued support.
The US deficit in international trade of goods and services rose by 7.8 per cent to $US60.9 billion ($64.4 billion), the Commerce Department said. Wall Street expected a $US60.00 billion shortfall.
Trade has acted as a cushion for the sagging US economy, so the surge in the deficit could be seen as worrisome. However, analysts shunned extrapolating from a single number.
"Non-petroleum import growth is likely to remain subdued, owing to weak domestic demand, while export growth will remain well-supported due to a hyper-competitive US dollar and solid growth in many export markets," MFR analyst Joshua Shapiro said.
Trade is a component of gross domestic product, which is the measure of economic activity. Trade has boosted GDP for the last four quarters, adding 0.80 percentage point in the first three months of this year.
The US deficit in international trade of goods and services rose by 7.8 per cent to $US60.9 billion ($64.4 billion), the Commerce Department said. Wall Street expected a $US60.00 billion shortfall.
Trade has acted as a cushion for the sagging US economy, so the surge in the deficit could be seen as worrisome. However, analysts shunned extrapolating from a single number.
"Non-petroleum import growth is likely to remain subdued, owing to weak domestic demand, while export growth will remain well-supported due to a hyper-competitive US dollar and solid growth in many export markets," MFR analyst Joshua Shapiro said.
Trade is a component of gross domestic product, which is the measure of economic activity. Trade has boosted GDP for the last four quarters, adding 0.80 percentage point in the first three months of this year.
Economy Enters Dangerous Waters as Job Losses Mount in June
Payrolls tumbled for the sixth consecutive month in June, bringing the total number of job losses in the first half of the year to 438,000.
Such a steep drop in employment could easily cause consumer spending to falter in the months ahead and drag the economy into a recession.
After shedding 62,000 jobs in May, U.S. employers slashed another 62,000 jobs in June, the Labor Department said last week. Builders reduced payrolls by 43,000 after cutting 37,000 employees in May. Financial firms cut 10,000 jobs in June after losing 3,000 the month prior. And factory payrolls dropped by 33,000 after declining 22,000 in May.
The national unemployment rate has gone up by a full percentage point in the past year, hitting 5.5% in May. The country added 91,000 on average in 2007, but has lost an average of 71,000 jobs each month this year.
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Such a steep drop in employment could easily cause consumer spending to falter in the months ahead and drag the economy into a recession.
After shedding 62,000 jobs in May, U.S. employers slashed another 62,000 jobs in June, the Labor Department said last week. Builders reduced payrolls by 43,000 after cutting 37,000 employees in May. Financial firms cut 10,000 jobs in June after losing 3,000 the month prior. And factory payrolls dropped by 33,000 after declining 22,000 in May.
The national unemployment rate has gone up by a full percentage point in the past year, hitting 5.5% in May. The country added 91,000 on average in 2007, but has lost an average of 71,000 jobs each month this year.
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Thursday, July 3, 2008
U.S. economy lost 62,000 jobs in June
Sixth straight month of losses; jobless rate still 5.5 percent
Employers cut payrolls by 62,000 in June, the sixth straight month of nationwide job losses, underscoring the economy’s fragile state. The unemployment rate held steady at 5.5 percent.
The latest snapshot of business conditions, released by the Labor Department on Thursday, showed continued caution on the part of employers who are chafing under high energy prices and are uncertain about how long the economy will be stuck in a sluggish mode, reflecting fallout from housing, credit and financial troubles.
Heavy job losses in construction, manufacturing and financial services, along with cutbacks in retailing, eclipsed job gains in education and health services, leisure and hospitality, and government.
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Employers cut payrolls by 62,000 in June, the sixth straight month of nationwide job losses, underscoring the economy’s fragile state. The unemployment rate held steady at 5.5 percent.
The latest snapshot of business conditions, released by the Labor Department on Thursday, showed continued caution on the part of employers who are chafing under high energy prices and are uncertain about how long the economy will be stuck in a sluggish mode, reflecting fallout from housing, credit and financial troubles.
Heavy job losses in construction, manufacturing and financial services, along with cutbacks in retailing, eclipsed job gains in education and health services, leisure and hospitality, and government.
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Change of plans for July 4 - gas too pricey
Three in ten Americans say record prices will alter their holiday weekend plans, according to a new poll.
Many Americans will watch fireworks at home instead of hitting the road this July 4, according to a new poll released Wednesday, as record gasoline prices force people to make major changes in their daily lives.
According to a CNN/Opinion Research poll, 31% of Americans have canceled or shortened their planned holiday weekend vacation because of the recent increase in the price of gas.
"When consumers talk about their thinning wallets, high fuel expenses is the reason they would point to first," said Wachovia economist Tim Quinlan.
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Many Americans will watch fireworks at home instead of hitting the road this July 4, according to a new poll released Wednesday, as record gasoline prices force people to make major changes in their daily lives.
According to a CNN/Opinion Research poll, 31% of Americans have canceled or shortened their planned holiday weekend vacation because of the recent increase in the price of gas.
"When consumers talk about their thinning wallets, high fuel expenses is the reason they would point to first," said Wachovia economist Tim Quinlan.
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Dollar Falls on U.S. Jobs Report, Europe's Inflation Fight
The dollar was knocked down Wednesday by a weak U.S. private-sector jobs report and worries from European Central Bank President Jean-Claude Trichet that inflation may "explode."
Fears of out-of-control inflation in the euro zone virtually ensure the ECB will raise interest rates after its policy meeting Thursday, providing the euro with an even better interest-rate-return advantage over the dollar. Analysts say price pressure may force the ECB to consider more rate increases later.
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Fears of out-of-control inflation in the euro zone virtually ensure the ECB will raise interest rates after its policy meeting Thursday, providing the euro with an even better interest-rate-return advantage over the dollar. Analysts say price pressure may force the ECB to consider more rate increases later.
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Americans say they'll vote with their wallets
The battered economy is the top issue for voters, and that isn't expected to change by November.
The slumping U.S. economy has become the top issue on voters' minds, according to a new poll and that concern is likely to carry on up through election day.
According to a recent CNN/Opinion Research Poll released Tuesday, 93% of voters say the economy is "extremely" or "very" important to their vote for president this November. 84% of the more than 900 registered voters surveyed from June 26 to 29 said the situation in Iraq was their top concern.
In January, the economy was virtually tied with the Iraq war as the top concern for voters.
"With the poor economic environment right now, it's not surprising at all," said Wachovia economist Mark Vitner.
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The slumping U.S. economy has become the top issue on voters' minds, according to a new poll and that concern is likely to carry on up through election day.
According to a recent CNN/Opinion Research Poll released Tuesday, 93% of voters say the economy is "extremely" or "very" important to their vote for president this November. 84% of the more than 900 registered voters surveyed from June 26 to 29 said the situation in Iraq was their top concern.
In January, the economy was virtually tied with the Iraq war as the top concern for voters.
"With the poor economic environment right now, it's not surprising at all," said Wachovia economist Mark Vitner.
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Oil Sails Past $145
The perfect storm for oil prices showed no signs of dissipating Thursday, as supply worries combined with dollar weakness pushed crude to a new record of $145.
Crude oil futures pushed up to $145.01 per barrel, from $143.57 per barrel, during early trading on the New York Mercantile Exchange. Europe's Brent crude benchmark reached $145.58 per barrel, up from $144.25 per barrel, late Wednesday.
The latest record is a sign that the balance between supply and demand is still uncomfortably tight, and will likely remain so for the rest of the year.
Wednesday's American inventory report showed a bigger drop than expected for U.S. crude stocks, which was all the more worrying given the clear decline in demand for gasoline, as higher prices take their toll.
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Crude oil futures pushed up to $145.01 per barrel, from $143.57 per barrel, during early trading on the New York Mercantile Exchange. Europe's Brent crude benchmark reached $145.58 per barrel, up from $144.25 per barrel, late Wednesday.
The latest record is a sign that the balance between supply and demand is still uncomfortably tight, and will likely remain so for the rest of the year.
Wednesday's American inventory report showed a bigger drop than expected for U.S. crude stocks, which was all the more worrying given the clear decline in demand for gasoline, as higher prices take their toll.
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