Consumers are squeezed as inflation
outpaces wages WASHINGTON (AP) -- The notion that
consumers will help lead the economic rebound received a stark rebuttal Friday:
The spending power of American families is being squeezed. Workers saw their inflation-adjusted
weekly wages fall 1.6 percent last year -- the sharpest drop since 1990 -- even
as consumer prices rose only modestly. Slack pay and scarce job growth are
slowing consumer spending, along with tight credit and a rising savings rate.
That's hindering the economy's ability to mount a strong recovery. JPMorgan Chase profit rises, but so do
loan losses NEW YORK (AP) -- JPMorgan Chase &
Co.'s $3.28 billion profit report carried a sobering message: Consumers are
still struggling to pay off their loans, posing a threat to a strong economic
recovery. Even as the bank reported Friday its
earnings more than quadrupled from $702 million during the final three months
of 2009, JPMorgan said it's not finished setting aside money to cover failed
loans. In other words, it expects many more consumers to default to default on
mortgages and other loans. JPMorgan is the first of the big banks
to announced fourth-quarter earnings. Analysts expect other banks to show
similar results. Stocks fall on JPMorgan results,
sentiment survey NEW YORK (AP) -- The Dow Jones
industrial average had its first triple-digit drop of 2010 as mounting losses
from loans at JPMorgan Chase & Co. and a disappointing consumer sentiment
reading sent investors rushing from stocks. Financial stocks led the market lower
Friday, pulling major stock indexes down about 1 percent from 15-month highs.
The Dow lost almost 101 points 10,609.65, its steepest drop since Dec. 31.
Interest rates fell in the bond markets as investors bought Treasurys in search
of safety. Investors took little solace from a
much stronger than expected profit report late Thursday from Intel Corp., the
biggest maker of computer chips. US Attorney: J&J paid kickbacks to
boost sales TRENTON, N.J. (AP) -- Federal
prosecutors said Friday that health care giant Johnson & Johnson paid tens
of millions of dollars in kickbacks so nursing homes would put more patients on
its blockbuster schizophrenia medicine and other drugs. In a complaint filed Friday,
prosecutors said J&J paid rebates and other forms of kickbacks to Omnicare
Inc., the country's biggest dispenser of prescription drugs in nursing homes.
Prosecutors allege Omnicare pharmacists then recommended that nursing home
patients with signs of Alzheimer's disease be put on the powerful schizophrenia
drug Risperdal, which was later found to increase risk of death in the elderly. Oil drops on more signs of a struggling
consumer NEW YORK (AP) -- Oil prices ran up
against forecasts for warmer weather, people who won't drive or spend money and
a stronger dollar. Those factors combined for a fifth
straight day of losses. Benchmark crude for February delivery slid $1.39 cents
Friday to settle at $78 a barrel on the New York Mercantile Exchange. The price
was down $4.75 for the week. Government data raised more concerns
about consumer spending power. The Labor Department reported that
inflation-adjusted wages fell 1.6 percent last year, the sharpest drop since
1990. Energy costs were an additional burden, shooting up 18.2 percent last
year -- the biggest jump since 1979 -- led by a nearly 54 percent rise gasoline
costs. Obama mortgage relief program fails to
deliver WASHINGTON (AP) -- President Barack
Obama's plan to fix the foreclosure crisis has been a dud, putting the housing
market recovery at risk. Hopes were over-inflated when Obama
unveiled the program before an adoring audience of Arizona high school students
last February. Almost a year later, it appears only about 750,000 homeowners --
a fraction of the 3 million to 4 million originally projected -- might complete
the application process, predicts Mark Zandi, chief economist at Moody's
Economy.com. The more borrowers who can't be helped,
the more foreclosed properties will flood the market. And that means the
nation's housing market, which appeared to recover last summer, could soon take
another turn for the worse. Verizon Wireless lowers voice plan
prices NEW YORK (AP) -- Verizon Wireless is
cutting the price of unlimited call plans, but the largest cell phone carrier
in the U.S. is requiring more of its customers to buy the data plans used to
access the Internet and check e-mail on high-end mobile devices. The latest move in a long-running
pricing competition between the nation's wireless carriers shows that the
industry is mature and competitive, which leads to lower prices for customers,
said Walter Piecyk, an analyst with Pali Research. But it also shows that data use is
becoming an increasingly important service for mobile carriers as they look to
new sources of revenue from customers dependent on mobile access to e-mail and
the Web. Government fines United $30,000 for
fare flub MINNEAPOLIS (AP) -- The U.S.
Transportation Department said on Friday that United Airlines must pay a
$30,000 fine for failing to include a federal tax when it quoted some airfares
on its Web site. The government said United left a 7.5
percent federal excise tax out of some fare quotes for two-and-a-half days. United spokesman Rahsaan Johnson says a
programming error moved the tax from the base fare, where government rules
require it. Instead, the tax was part of the final price a customer sees later. Lacker: recovery must be rooted before
rate hikes WASHINGTON (AP) -- The economic
recovery needs to be firmly rooted before the central bank reverses course and
begins to raise interest rates, a Fed official said Friday. The comments by Jeffrey Lacker,
president of the Federal Reserve Bank of Richmond, are especially interesting
because Lacker has a reputation for being an inflation "hawk." Hawks
worry more about super-low borrowing costs and other special support stoking
inflation, while "doves" worry more about rising unemployment. Lacker said he will be "looking
for the time at which economic growth is strong enough and well-enough
established" as a precursor to boosting the Fed's key bank lending rate,
now at a record low near zero. London mayor warns of banker exodus LONDON (AP) -- London Mayor Boris
Johnson has warned that thousands of high earning bankers will flee London
because of the government's tougher taxes on bonuses. In a letter to Treasury chief Alistair
Darling released on Friday, Johnson sought an urgent meeting to discuss the
introduction of new tax rates for top earners and a temporary 50 percent levy
on bank bonuses above 25,000 pounds ($40,700). He estimated that around 9,000 bankers
may relocate abroad, with knock-on effects on London's legal, accountancy,
publishing and media industries and a reduction in the tax resources available
to fund public services. By The Associated Press The Dow fell 100.90, or 0.9 percent, to
10,609.65, the biggest drop since it lost 120 points on the final day of 2009. The broader Standard & Poor's 500
index fell 12.43, or 1.1 percent, to 1,136.03, and the Nasdaq composite index
fell 28.75, or 1.2 percent, to 2,287.99. Benchmark crude for February delivery
slid $1.39 cents Friday to settle at $78 a barrel on the New York Mercantile
Exchange. The price was down $4.75 for the week. In other Nymex trading in February
contracts, heating oil fell 3.69 cents to settle at $2.046 a gallon and
gasoline slid 2.84 cents to close at $2.0454. Natural gas futures gained 10.3
cents to settle at $5.691 per 1,000 cubic feet. In London, Brent crude for February
delivery fell 71 cents to $77.11 a barrel on the ICE Futures exchange.