On Thursday February 10, 2011, 6:20 pm EST
Fewest requests for
unemployment aid since 2008
WASHINGTON (AP) -- The
number of people applying for unemployment benefits plunged last week to the
lowest level in nearly three years, continuing a downward trend that suggests
hiring could pick up this year.
Applications sank by a
seasonally adjusted 36,000 to 383,000, the lowest point since early July 2008,
the Labor Department reported Thursday.
Some analysts cautioned
that severe winter weather that affected 30 states could have contributed to
the sharp drop, closing some government offices and preventing people from
filing applications.
Applications are well below
their peak of 651,000, reached in March 2009, when the economy was deep in
recession. Applications below 425,000 tend to signal modest job growth. But
they would need to dip consistently to 375,000 or below to indicate a
significant and steady decline in the unemployment rate.
When unemployment was at a
more normal rate of 5 percent in 2005, applications hovered around 322,000. In
boom times, when unemployment dipped to a 30-year low of 3.8 percent in April
2000, applications fell to 259,000
Era of super-low mortgage
rates appears to be over
NEW YORK (AP) -- The days
of the absurdly low mortgage rate are over.
The average rate for a
30-year home loan rose above 5 percent this week for the first time since last
April -- just as Americans are feeling more secure in their jobs and confident
about the economy, and just before the big spring home-buying rush.
Freddie Mac said Thursday
that the average rate was 5.05 percent, almost a full percentage point higher
than in November, when it hit a 40-year low.
Economic signals suggest
the recovery is gaining momentum. New claims for jobless benefits came in this
week at the lowest in three years, and the unemployment rate has fallen nearly
a full percentage point in two months. Americans are spending more and saving
less.
The exception is the
beleaguered housing market. Record foreclosures have forced home prices down,
and last year was the worst for sales in more than a decade. About the only
good news was that qualified buyers could get the deal of a lifetime from their
lenders, if they had the means -- and the stomach -- for the market.
Now rates are rising, and
analysts expect that will continue through the end of the year, to about 5.5
percent. The next few months are the busiest for the housing market -- about
one in three home sales happens in the spring.
Wholesale businesses boost
inventories in December
WASHINGTON (AP) --
Businesses at the wholesale level added to their inventories in December at a
healthy clip even though demand for their products slowed. The expectation is
that rising demand from businesses will keep factories humming.
Wholesale businesses
boosted inventories 1 percent in December, pushing the total to $430.5 billion,
the Commerce Department reported Thursday. Economists consider that a healthy
level for inventories. It is 11.4 percent above the low reached in September
2009 when companies were slashing their stockpiles in response to a deep
recession.
Sales at the wholesale
level rose 0.4 percent in December, a smaller than expected increase and the
poorest showing since last July. However, the December advance followed a
strong 1.9 percent rise in November.
Inventory restocking had
been unchanged in November after 10 straight months of increases. Economists
did not view that slowdown as troubling, arguing that sales were so strong in
November that wholesalers probably had trouble keeping up with demand.
Most economists believe
inventories will keep growing this year as businesses respond to rising demand.
Inventories climbed to a
high of $455.6 billion in August 2008. That was not a sign of a healthy
economy, but rather an unwanted buildup of stockpiles in the face of plunging
demand.
January deficit grows by
$50B, on pace for $1.5T
WASHINGTON (AP) -- The
federal government's budget deficit grew by $50 billion in January and is expected
to finish the year as the highest in history.
The Treasury Department
said Thursday the deficit was one of the highest ever for the month of January,
second only to the $63 billion deficit recorded two years ago. For the first
four months of this budget year, the deficit totaled $418.8 billion, 2.7
percent lower than the same period a year ago.
However, this improving
trend is expected to reverse in coming months. The Congressional Budget Office
is projecting a record deficit of $1.5 trillion this budget year, which ends in
September. The estimate was revised upward last month based on a tax-cut
package brokered between the White House and Republicans that will add $400
billion to this year's red ink.
That will mark the third
consecutive year that the government's deficit has been over $1 trillion,
unprecedented imbalances that have been caused by the worst recession since the
1930s. That meant a sharp drop in government tax collections as millions of
people lost their jobs while at the same time the government was boosting
spending to stimulate the economy and stabilize the banking system.
Mortgage default notices
slow sharply in January
LOS ANGELES (AP) -- Fewer
U.S. homes entered the foreclosure process in January than in any month in more
than three years, the latest sign lenders are taking longer to move against
homeowners who have fallen behind on mortgage payments.
The number of homes that
received an initial default notice fell 1 percent last month from December and
tumbled 27 percent from January last year, foreclosure listing firm RealtyTrac
Inc. said Thursday.
Scheduled foreclosure
auctions also fell to the lowest level in two years, the firm said.
The delays stem partly from
foreclosure paperwork problems that came to light last fall, leading many
lenders to revisit thousands of foreclosure cases, especially in states such as
Florida that require foreclosures to be approved by a judge.
Some lenders that put
foreclosure actions on hold temporarily last year have since resumed, but at a
more measured pace, causing a decline in the foreclosure-related notices sent
to households last month. Banks also have been letting borrowers who have
missed payments stay in their homes longer so they can delay adding to their
backlog of bad loans.
Rising bond yield sounds
alarm for Portugal
LISBON, Portugal (AP) --
Uncertainty over Portugal's financial future flared again Thursday when its
borrowing rates hit new euro-era records, signaling the government and fellow
European leaders have been unable to check the spread of the continent's debt
crisis.
The rise in Portugal's
10-year bond yield came as investors were disappointed with the slow pace of
progress in EU efforts to coordinate measures against a crisis that is more
than a year old.
Government leaders came up with
no concrete plan at a summit last week, delaying decisions to a March 11
meeting in Brussels. But a binding resolution on a comprehensive package likely
won't come till another summit on March 24-25.
In the absence of a
comprehensive eurozone debt strategy investors continue to fret about whether
Portugal will be able to ride out the storm or will be forced to follow Greece
and Ireland in taking a bailout, adding fresh momentum to the crisis.
PepsiCo 4Q net income
falls; cuts outlook
PORTLAND, Ore. (AP) --
PepsiCo Inc. lost some fizz Thursday, offering a weak outlook for the year as
it saw tough competition, a challenging economy and higher ingredient costs
ahead.
The outlook disappointed
investors and sent shares down.
It comes as the company
faces pressure to deliver improved results after spending nearly $11 billion on
three acquisitions and making big investments in other strategies.
The company also reported a
dip in its fourth-quarter net income, but adjusted earnings beat expectations
by a penny.
Pepsi reported that its net
income fell to $1.37 billion, or 85 cents per share, for the quarter. That's
down from $1.43 billion, or 90 cents per share, last year.
Excluding the impact of
several one-time items, the company earned $1.05 per share, beating analyst
estimates of $1.04, according to FactSet.
Revenue rose 37 percent to
$18.16 billion as sales volume grew and it benefited from the acquisition of
two of its biggest bottlers.
Pepsi's CEO, Indra Nooyi,
said the acquisition of two bottlers and push to expand in emerging markets
will strengthen its business. But Pepsi also took a cautious tone for the rest
of the year.
Company leaders said
consumers are still feeling pressured by high unemployment. The company, like
many of its peers, is also facing major increases in costs for corn and other
ingredients -- volatile factors that threaten its profitability.
Pepsi is trying to increase
productivity to offset those expenses and doesn't want to raise prices, which
could shock cautious consumers.
Report: Hackers in China
hit Western oil companies
BEIJING (AP) -- Hackers
operating from China stole sensitive information from Western oil companies, a
U.S. security firm reported Thursday, adding to complaints about pervasive
Internet crime traced to the country.
The report by McAfee Inc.
did not identify the companies but said the "coordinated, covert and
targeted" attacks began in November 2009 and targeted computers of oil and
gas companies in the United States, Taiwan, Greece and Kazakhstan. It said the
attackers stole information on operations, bidding for oil fields and
financing.
Yet the report did not
offer evidence that the attacks were anything other than the standard flavor of
corporate espionage that plagues businesses around the world, which the U.S.
and China have both accused each other of being deeply involved in.
The fact that oil companies
were targeted may speak more to the value of their inside information than any
attempt to cause damage to pipelines. McAfee called the attack methods
unsophisticated, but said the culprits were patient: they may have been inside
the networks for years.
Economist: Investors
expected Mubarak's ouster
CAIRO (AP) -- An economist
says Egyptian President Hosni Mubarak's decision to hand over authority to his
vice president but not step down is likely to fuel the fears of international
investors already panicked by protests against his regime.
John Sfakianakis, chief
economist at the Riyadh, Saudi Arabia-based Banque Saudi Fransi, said late
Thursday that international investors were looking for Mubarak's speech to
provide a clear end to the crisis gripping Egypt.
Egypt's economy has been
battered by the more than two weeks of protests seeking the ouster of Mubarak's
regime.
Starbucks CEO Schultz joins
Groupon board
NEW YORK (AP) -- Online
coupon company Groupon said it elected Howard Schultz, the CEO of Starbucks
Coffee Co., to its board amid media reports that it is preparing for an initial
public offering in the spring.
The Chicago company also
said Maveron LLC, a Seattle-based venture capital firm co-founded by Schultz,
had invested an undisclosed amount in Groupon alongside the appointment.
Private companies typically
add outsiders to their boards before going public. Schultz has also served on
the boards of online auction site eBay Inc. and drugstore.com, according to
Maveron's website. He currently serves on the board of yogurt chain Pinkberry.
Schultz helped build
Starbucks, left for a while and returned to lead the coffee chain as it
struggled during the downturn. He closed stores, laid off workers and launched
an instant coffee line and a digital network as he guided the Seattle-based
company back to growth.
Schultz's investment
follows a $950 million investment from private investors in January, which
Groupon planned to use to fund its expansion.
Professional social
networking site LinkedIn Corp. last month said it planned to raise at least
$175 million in an IPO, helping pave the way for the long-awaited IPOs of other
websites that help people connect with each other.
Greek unemployment at new
high as protests go on
ATHENS, Greece (AP) --
Unemployment in Greece hit a new seven-year record and inflation was stuck
above 5 percent, as protests continued against the harsh spending cuts and tax
increases the government is using to drag the country out of its financial
crisis.
The Greek Statistical
Authority said Thursday that the jobless rate rose to 13.9 percent in November,
the highest since monthly figures were first released in 2004 and up from 13.5
percent in October.
The agency also said
inflation remained at an annual rate of 5.2 percent in January, the same as in
December and more than twice the official target for the overall eurozone.
After years of budget overspending,
Greece was saved from bankruptcy last year by a euro110 billion ($150 billion)
loan package from its European partners and the International Monetary Fund
that will keep it solvent through mid-2013. In return, the governing Socialists
took swift shock measures, cutting pensions and salaries while raising taxes
and retirement ages to reduce its runaway budget deficit.
By The Associated Press
The Dow Jones industrial
average lost 10.6 points, or 0.1 percent, to close at 12,229.29. The S&P
500 rose a point, or less than 0.1 percent, to 1,321.87. The Nasdaq composite
rose 1.38 to close at 2,790.45.
Benchmark West Texas
Intermediate crude rose 2 cents to settle at $86.73 per barrel on the New York
Mercantile Exchange. Prices climbed as high as $88.28 and dropped as low as
$85.96 during the session. In London, Brent crude fell 88 cents to settle at
$101.44 a barrel on the ICE Futures exchange.
In other Nymex trading in
March contracts, heating oil fell 5.82 cents to settle at $2.7107 a gallon and
gasoline fell 5.62 cents to settle at $2.4698 a gallon.