See full story.
November 6:
Unemployment rate hits 10.2% in October
Source: Marketwatch
Washington
-- The U.S. unemployment rate climbed to 10.2% in October, topping the 10% mark for the first time in 26 years, the Labor Department reported Friday. Nonfarm payrolls dropped by a seasonally adjusted 190,000 in October, bringing to total number of jobs lost in the recession to 7.3 million. It was the 22nd straight decline in payrolls. Large losses were seen in manufacturing, construction and retail. Health care and temporary-help agencies added jobs. The October jobs report shows a growing disconnect between a recovery in economic output and continued job losses. The economy grew at a 3.2% annual rate in the third quarter, with productivity rising at a 9.5% rate.
"The grinding pace of progress in labor markets likely flags a tepid economic recovery," wrote Sal Guatieri, an economist for BMO Capital Markets. The report was worse than expected. Economists surveyed by MarketWatch were forecasting a rise in the unemployment rate to 10%, with 150,000 lost payroll jobs. An upward revision to August and September payrolls cushioned some of the disappointment, however. See full story.
November 5:
Jobless claims fall 20,000 to 512,000
Source: Marketwatch
Washington
-- The number of people filing initial claims for state unemployment benefits fell by 20,000 to a seasonally adjusted 512,000 in the week ending Oct. 31, the Labor Department reported Thursday. It was the first decline in two weeks. It's the fewest initial claims since early January. Initial jobless claims have been above 500,000 for 51 straight weeks. The news was mixed, said Jennifer Lee, an economist for BMO Capital Markets. The decline in initial claims was "clearly good news," but her enthusiasm was tempered by a rise in recipients of extended federal benefits.
The figures come one day before the Labor Department reports on the October employment rate. Economists surveyed by MarketWatch expect nonfarm payrolls to fall by 150,000 in October, and for the unemployment rate to rise to 9.9%. "If the pace of decline from the peak is maintained, we are still some five months away from claims reaching the level that will signal net job growth," wrote economists for RDQ Economics. Economists surveyed by MarketWatch expected initial claims to fall to about 520,000. The level of initial claims in the week ending Oct. 24 was revised up by 2,000 to 532,000. See full story.
November 4:
Fed to keep rates low for ‘extended period’
Source: Bloomberg
Washington
-- The Federal Reserve restated its intention to keep interest rates “exceptionally low” for “an extended period” as long as inflation expectations are stable and unemployment fails to decline. “Businesses are still cutting back on fixed investment and staffing, though at a slower pace,” the Federal Open Market Committee said in a statement today. “Household spending appears to be expanding, but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth and tight credit,” the FOMC said after meeting in Washington.
Chairman Ben S. Bernanke is trying to determine when the recovery is strong enough to withdraw the $1 trillion the Fed injected to avert a depression. While gross domestic product rose for the first time in a year during the third quarter, figures this week are forecast to show payrolls fell further in October. Johnson & Johnson, the world’s largest health-products company, said yesterday it will fire more than 7,000 people. Officials kept their benchmark overnight lending rate at between zero and 0.25 percent, where it has been since December. The conditions they cited to keep it there are “low rates of resource utilization, subdued inflation trends, and stable inflation expectations,” the Fed said. See full story.
November 3:
No hints, winks, nods from Fed about rate hikes
Source: Marketwatch
Washington
-- The Federal Reserve will not give the market any hints, winks or nods about its battle plan for pushing interest rates higher after their meeting concludes on Wednesday, economists said. The overwhelming consensus is that the Fed will hold the federal funds rate steady at near-zero, where the Fed's target has been since last December. The Federal Open Market Committee begins its two-day meeting on Tuesday. An announcement is expected Wednesday at about 2:15 p.m. Eastern. "The facts on the ground -- high unemployment, low inflation, no net private-sector job creation -- suggest to us that it is inconceivable that policy will actually change on Nov. 4," said the economic team at Credit Suisse in a report to clients.
A report in the Financial Times on Oct. 23 set off a firestorm when it suggested that the Fed was considering scrapping its promise to keep rates "exceptionally low" for "an extended period." The 'extended period' phrase has been in place since March. As the dust has settled, most Fed watchers have concluded that Wednesday is too early for the central bank to edit the language. "We don't expect them to move away from the extended-period language," said Dean Maki, chief U.S. economist at Barclays Capital Inc., in New York. See full story.
November 2:
Factory sector strengthens in October
Source: Marketwatch
Washington
-- The nation's manufacturing firms grew at the fastest pace in more than three years in October, according to a closely followed survey of top executives released Monday. The Institute for Supply Management index rose to 55.7% from 52.6% in September, well above the 53.0% expected by economists surveyed by MarketWatch. It's the highest reading since April 2006. The production gauge also rose to a five-year high.
Readings over 50% in the ISM diffusion index indicate that more firms are growing than contracting. The ISM tracks the breadth of growth across firms, asking purchasing managers if business is better this month than last. The nation's economy, as measured by gross domestic product, grew at a 3.5% pace in the third quarter. The big question remains whether the economy can stand on its own as the stimulus wanes. See full story.
October 30:
Consumer spending, confidence fall on job worries
Source: Bloomberg
Washington
-- Americans cut spending for the first time in five months and a gauge of confidence weakened, signaling consumers will make a limited contribution to the recovery without government incentives. Consumer spending fell 0.5 percent in September after a 1.4 percent jump in August, Commerce Department figures showed today in Washington. The Reuters/University of Michigan final index of consumer sentiment decreased to 70.6 in October from 73.5 the month before.
Mounting jobs losses, stagnant incomes and the expiration of programs such as the cash-for-clunkers auto rebates threaten to hold back household spending as the nation emerges from a recession. An unexpected improvement in an index of business activity reported separately today supports forecasts that manufacturing may help fill the void and propel the expansion that started last quarter. “Manufacturing growth is going to be robust and broad- based,” said Dean Maki, chief U.S. economist at Barclays Capital Inc. in New York. “Consumers are waiting to see whether the job market will improve before confidence takes another big leg up. That’s coming, but it’ll be a gradual process.” See full story.
October 29:
Dollar weakens after U.S. economy grows, boosting stocks
Source: Marketwatch
New York
-- The dollar declined versus major counterparts Thursday, stemming a string of gains in recent sessions, after a report showed the U.S. economy returned to growth in the third quarter, boosting stocks and reducing the appeal of the relative safety of the greenback. A separate report showed first-time jobless claims dropped in the latest week. "The better-than-expected report caused risk appetite to surge across the board," said Michael Woolfolk, senior currency strategist at The Bank of New York Mellon. The dollar index, which tracks the performance of the greenback against a basket of other major currencies, fell for the first day in six. It traded at 75.891 recently, down from 76.456 in North American trading on Wednesday.
The euro rose for the first time in four days to $1.4847, compared to $1.4713 late Wednesday. The British pound jumped 1.1% versus the dollar to buy $1.6567. The Japanese yen, however, has been the most sensitive to risk aversion trading, falling when investors are more interested in riskier assets such as equities. Against the yen, the dollar rose to buy 91.42 yen, from 90.80 yen on Wednesday. Both the yen and dollar have declined as traders borrow in the low-yielding currencies to buy higher-yielding assets, putting on so-called carry trades. See full story.
October 28:
Gold to rise to $2,000 amid 'massive' inflation, Superfund says
Source: Bloomberg
Singapore
-- Gold may rise to a record $2,000 an ounce in the next three years as investors hedge against “massive” inflation sparked by governments printing money, according to Superfund Financial Singapore Pte’s Aaron Smith. “In the next few years, after the deflation cycle, we’ll see massive inflation,” Managing Director Smith, 30, said in an interview. “Soon, when you go to buy a cup of coffee, you’ll pay $20 or $30 because the dollar won’t be worth anything.”
The company’s Superfund Green Gold A Fund, which has more than doubled since its inception in 2005, has lost 15.6 percent this year because of higher volatility, said Smith, who joined in 2002. Gold rose to an all-time high this month as governments including the U.S. boosted debt to combat the global recession. “When the U.S. dollar crashes, all the paper currencies have to crash, otherwise if their currencies are too strong, their economies will be weak,” said Smith, who issued similar gold forecasts in May and earlier this month. “Another excellent buying opportunity for investors is silver.” Gold for immediate delivery, which touched a high of $1,070.80 an ounce on Oct. 14, traded at $1,039.32 at midday in Singapore. The metal has strengthened 18 percent this year, while the Dollar Index, a six-currency gauge of the dollar’s strength, fell 6.4 percent. See full story.
October 27:
Confidence drops for second straight month in Oct.
Source: Marketwatch
Washington
-- U.S. consumers doubt that the much-touted economic recovery is under way, according to the latest report on consumer confidence released by the Conference Board on Tuesday. The consumer confidence index was much weaker than expected, falling for the second straight month as the assessment of present-day conditions fell to its lowest level in 26 years.
"This indicator, and its component detail, appears to be pointing to a longer and more difficult journey to recovery than most would like to believe at the moment," said Josh Shapiro, chief economist at MFR Inc., in a note to clients. The Conference Board's consumer confidence index fell to 47.7 in October from an upwardly revised 53.4 in September, according to the survey of 5,000 households. Economists surveyed by MarketWatch expected the index to stay steady at around 53.2. See full story.
October 26:
National index climbs above recession level
Source: Marketwatch
Washington
-- A broad gauge of U.S. economic activity rose above the level that typifies recessions, the Federal Reserve Bank of Chicago reported Monday. For the three months through September, the average national activity index -- composed of fully 85 separate indicators -- increased to a reading of negative 0.63, up from negative 0.96 for the three-month interval ended in August. It's the first time since January 2008 that the three-month average has been above negative 0.70, the level that typically marks a recession.
In the past four recessions, the end of the downturn has come about the same time that the three-month average of the national index rose above negative 0.70, the Chicago Fed said. The index is designed so that a reading of zero indicates the economy's long-term growth trend. The index measures deviations from the trend. The September data take on greater importance as the government prepares to release results on gross domestic product for the third quarter on Oct. 29. See full story.
October 23:
Bank failures hit 100 for year
Source: Marketwatch
New York
-- A Naples, Fla., bank failed Friday, marking the first year since 1992 that at least 100 have gone under. Experts suggest we could be no more than 10% of the way through this cycle of bank collapses, which is sure to be the worst run of closures since the Great Depression. The parade of bank failures continued on Friday as the FDIC took control of Partners Bank of Naples after it was closed by the Office of Thrift Supervision. So far 100 banks have failed in 2009. See FDIC timeline of 2009's failed banks.
CreditSights, which tracks the dismal data, predicts that in the current cycle, from 2008 through 2011, as many as 1,100 banks will fail. That would wipe out 13.4% of all U.S. banks, representing 7% of U.S. banking assets. The last year in which the FDIC had that many banks to deal with was in 1992, at the tail end of the last real estate crisis. The FDIC rescued 122 in 1992, according to Keefe, Bruyette & Woods researchers. The increasing stream of bank failures is likely to run through 2011 according to some industry experts, as the fallout from the credit crisis continues. See full story.
October 22:
Fed’s Rosengren sees 'risk' of relapse into recession
Source: Bloomberg
Washington
-- Federal Reserve Bank of Boston President Eric Rosengren said the U.S. economy is at risk of relapsing into recession after expanding in the second half of 2009. “It’s certainly a risk,” Rosengren said today in an interview with CNBC, when asked about the danger of a relapse. “That’s why we don’t want to take the stimulus away too quickly.”
A report from the Fed’s 12 district banks yesterday portrayed an economy on the mend with little danger of inflation. District banks saw “stabilization or modest improvements” in many areas of the economy, with “little or no” price pressures, according to the Beige Book report. At their meeting last month, policy makers repeated their promise to keep interest rates exceptionally low for “an extended period” and pushed back the end-date of their program to purchase $1.45 trillion of mortgage-backed securities and housing agency bonds by three months. The jobless rate and inflation, excluding food and energy costs, are both “pretty far away from where we’d like to end up,” Rosengren told CNBC. “We need to wait until we make a little bit more progress on the economy before it’s appropriate to take some of the stimulus away.” See full story.