On Thursday March 10, 2011, 6:21 pm EST
Stocks lift household
wealth; companies amass cash
WASHINGTON (AP) --
Americans are spending more of their growing wealth. The economy still needs
companies to do the same.
Still lacking the
confidence to spend at normal levels, businesses have stockpiled nearly $1.9
trillion in cash, a record, the government said Thursday. Cash now accounts for
13 percent of corporate assets, the highest share since 1984. Economists say
the surest way to reduce unemployment would be for companies to spend more of
that cash to expand and hire.
The same report, based on
data from the last three months of last year, showed households are further
rebuilding the wealth they lost in the recession. Americans' net worth grew 3.8
percent, mostly thanks to the rising stock market.
Greater household wealth
generally leads Americans to spend more. They increased their spending in the
October-December quarter at the fastest pace since 2006. Household net worth came
to $56.8 trillion at the end of 2010, even though the value of real-estate
holdings fell 1.6 percent, according to the Fed. Last quarter's gain was faster
than the 2.6 percent gain in the previous quarter.
But companies are still
waiting for signs that the economy and their own businesses are strengthening
enough to justify spending aggressively again.
Higher oil prices threaten
global economy
WASHINGTON (AP) -- Higher
oil prices are slowing global economic growth, and the impact is likely to
spread in coming months.
Oil prices helped raise the
U.S. trade deficit to a seven-month high in January, when crude prices were
$87.50 a barrel. Oil is now trading at more than $100 a barrel, suggesting the
gap will widen in coming months. Even fast-growing China isn't immune -- higher
oil prices contributed to a rare trade deficit there in February.
Pricier oil dampens
consumer spending and that cuts into economic growth. Surging oil prices can
also stir up inflation fears, triggering higher interest rates that cut into
household and business spending.
The impact is visible in
bold numbers each morning on gas station marquees across the United States.
Pump prices have risen 13 percent in the past month to a national average of
$3.53 a gallon, according to AAA, Wright Express and Oil Price Information
Service.
Airlines have also been
rapidly raising their fares to offset higher fuel costs. American Airlines said
Thursday it is increasing its base fares by $10, the seventh price hike this
year by U.S. airlines.
GM chief financial officer
resigns unexpectedly
DETROIT (AP) -- The chief
financial officer who guided General Motors Co. to its first profitable year
since 2004 and led its successful return to the stock market is leaving after
being passed over for the top job.
Chris Liddell will step
down on April 1 after just 15 months at GM. He'll be replaced by Treasurer Dan
Ammann, a former Wall Street banker, the company said in a surprise
announcement on Thursday.
Liddell, 52, a former CFO
at Microsoft Corp., was once considered a candidate to succeed Chief Executive
Ed Whitacre. But GM's board instead picked current Chairman and CEO Dan Akerson
when Whitacre made a surprise exit in August.
During a hastily arranged
conference call with reporters, Liddell said he had no job lined up, but
doesn't want to be a chief financial officer any longer. He said he achieved
his goals of pulling off GM's IPO, fixing its accounting problems and getting
the company back on sound financial footing.
Unemployment rate falls in
24 states, rises in 10
WASHINGTON (AP) -- The
unemployment rate fell or held steady in 40 states in January, the latest sign
that hiring is strengthening throughout the country.
The Labor Department said
Thursday that the unemployment rate fell in 24 states, the most in seven
months, and remained the same in 16. The unemployment rate rose in only 10
states. In December, the rate fell in 15 states and rose in 20.
Employers added to their
payrolls in 35 states in January, up from only 15 in the previous month. That's
the most to report higher payrolls since October.
Nationwide, employers added
63,000 net jobs in January, and the unemployment rate fell sharply to 9 percent
from 9.4 percent. The rate ticked down last month to 8.9 percent and employers
added 192,000 net jobs, the most in nearly a year.
More people sought
unemployment aid last week
WASHINGTON (AP) -- The
number of people seeking unemployment benefits rose last week. But the rise
comes after applications hit their lowest level in nearly three years, and
economists expect further declines as the economy improves.
Applications increased by
26,000 to a seasonally adjusted 397,000 during the week ended March 5, the
Labor Department said Thursday.
The latest report covers
the week after the Presidents' Day holiday, when many government offices were
closed. Applications usually rise in weeks following holiday-shortened weeks.
Applications below 425,000
signal modest job growth. But they need to fall consistently below 375,000 to
signal a sustained decline in the unemployment rate. Unemployment benefit
applications peaked during the recession at 651,000.
Economists were encouraged
that claims remained below 400,000 for the third straight week.
February federal budget
deficit sets record
WASHINGTON (AP) -- The
government ran the largest-ever budget deficit for a single month in February.
The shortfall kept this year's annual deficit on pace to end as the biggest in
U.S. history. The widening deficit reflects the impact of the tax-cut package
President Barack Obama and congressional Republicans brokered in December.
As a result, the
nonpartisan Congressional Budget Office in January raised its estimate for the
annual deficit from $1.1 trillion to $1.5 trillion. It said the tax cuts would
add $400 billion to this year's gap. The budget year ends Sept. 30. The tax-cut
package extended income tax cuts, reduced workers' Social Security taxes,
extended unemployment benefits and accelerated business tax write-offs, among
other steps.
February's deficit of $222.5
billion eclipsed last February's previous record by nearly $2 billion. The
full-year deficit would exceed 2009's record deficit of $1.41 trillion. And it
would mark the third straight year of $1-trillion-plus deficits.
It's unusual for an economy
to be running record-high deficits this far into a recovery. The recession that
began in December 2007 ended in June 2009. The problem was that the financial
crisis and the recession that followed fueled explosive deficit growth.
Rate on 30-year mortgage
ticks up to 4.88 pct.
WASHINGTON (AP) -- Fixed
mortgage rates were relatively flat this week, with the 30-year loan just under
5 percent.
Freddie Mac says the
average rate on a 30-year fixed mortgage ticked up to 4.88 percent from 4.87
percent the previous week. It hit a 40-year low of 4.17 percent in November.
The average rate on the
15-year fixed home loan stayed steady at 4.15 percent from the previous week.
It reached 3.57 percent in November, the lowest level on records dating back to
1991.
Wal-Mart expands online
order pickup program
NEW YORK -- As competition
grows from Amazon.com, Wal-Mart is battling back by expanding a program
offering the convenience of shopping online along with same-day gratification.
The world's largest retailer is expanding its service that lets shoppers pick
up online orders at stores to all of its 3,600-plus locations. It's partly a
bid to win back consumers who've gone elsewhere for convenience.
The program appeals to
shoppers who want to save time on shopping trips, said Steve Nave, senior vice
president and general manager of Walmart.com. Shoppers also don't have to wait
several days for shipping -- or pay for it -- and get to shop in the peace and
quiet of home.
Wal-Mart Stores Inc., the
world's largest retailer, previously offered the service on about 2,000 items
in less than a quarter of its stores. Now it will apply 40,000 items, including
baby items, toys, electronics, video games and appliances. Groceries are not
part of the program.
By The Associated Press
Weak economic news from
China, the U.S. and Spain combined with a slump in oil companies sent stocks
sharply lower Thursday. The Dow Jones industrial average had its biggest
one-day drop since August.
Investors were jarred when
China reported a surprise trade deficit. China's exports fell in February as
businesses closed for the weeklong Lunar New Year holiday, but imports of
higher-priced oil and other goods jumped, widening the country's deficit to
$7.3 billion.
Moody's downgraded Spain's
debt, re-igniting fears about Europe's debt crisis. In the U.S., the government
reported that new applications for unemployment benefits rose more than
expected last week.
The Dow Jones industrial
average fell 228.48 points, or 1.9 percent, to close at 11,984.61. McDonald's
Corp. was the only stock in the Dow 30 that rose.
The Standard & Poor's
500 index fell 24.91, or 1.9 percent, to 1,295.11. The Dow and S&P 500 are
still up 3 percent since the start of the year.
The Nasdaq composite fell
50.70, or 1.8 percent, to 2,701.02.
Benchmark West Texas
Intermediate for April delivery eventually settled down $1.68, or 1.6 percent,
to $102.70 per barrel on the New York Mercantile Exchange.
In London, Brent crude lost
51 cents to settle at $115.43 per barrel on the ICE Futures Exchange.
Natural gas fell 10 cents
to settle at $3.83 per 1,000 cubic feet after the government said U.S. supplies
are still higher than last year despite a drop in price. U.S. inventories have
been growing as new technologies allow companies to tap underground shale
deposits.
In other Nymex trading for
April contracts, heating oil fell 2.58 cents to settle at $3.0449 per gallon
and gasoline dropped less than a penny to settle at $3.0196 per gallon.