U.S. Unemployment Rate Now 9.5%

Thursday July 2, 2009
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The U.S. economy lost 467,000 jobs in June, which was substantially worse than the 363,000 in jobs losses that economists were forecasting. The nation’s unemployment rate now stands at 9.5% from 9.4% in May, a 26-year high.

Since the recession started in December of 2007, the economy has lost 6.5 million jobs and in total, there are now 14.7 million unemployed Americans.

July 2, 2009 | Filed Under Economy | Leave a Comment 

Bill To Expand Home Buyer Tax Credit Introduced In Senate

Wednesday June 10, 2009
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A bill that would increase the homebuyer tax credit from the current $8,000, to $15,000, was introduced today in the senate. Senator Johnny Isakson, a republican from the state of Georgia, introduced the bill. It was co-sponsored by Senator Christopher Dodd of Connecticut.

Unlike the current tax credit, which can only be claimed by those who haven’t owned a house in the past three years and making under $75,000 if filing individually and twice that if filing jointly, this bill would apply to any one buying a home.

The bill would also expand the tax credit to cover multi-family properties, if the person buying the home lives in the property. Furthermore, it would extend the tax credit to cover a period that is one year after the news bill is signed into law. As it now stands, the credit can only be claimed if a qualifying buyer purchases the home between January 1 and December 31, 2009.

The current tax credit is part of the American Recovery and Reinvestment Act of 2009. President Obama signed it into law on February 17. It provides for a tax credit that is equal to 10% of the purchase price of a home up to the $8,000 maximum and does not have to be repaid.

June 10, 2009 | Filed Under Economy | Leave a Comment 

U.S. GDP Contracts By 5.7%

Saturday May 30, 2009
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According to the U.S. Commerce Department, which on Friday released GDP numbers for the first quarter of 2009, real Gross Domestic Product, which measures the output of goods and services that is produced by labor and property, fell by 5.7% on an annualized basis, when compared to the fourth quarter of 2008.

While the number came in worse than forecasts of 5.5%, it was much better than the 6.3% decline seen in the fourth quarter of 2008, which was the worst showing since 1982, lending credence to the idea that that the economy might have hit bottom and is starting to improve.

Also adding to that was the fact that corporate profits rose 3.4% to $1.307 trillion in the first quarter, from a drop of 16.5% in the Q4 period. Financial sector income, which rose 94.9%, was a major driver. However, compared to the same period last year, corporate profits are off by 18%.

With the improvement in the economy, consumer sentiment is also starting to improve. The latest Reuters/University of Michigan survey of consumer sentiment, which was released on Friday, showed a rise to 68.7 in May, in consumer sentiment, from 65.1 in April. This is the highest reading since September.

May 30, 2009 | Filed Under Economy | Leave a Comment 

American Express Plans To Eliminate 4,000 Jobs

Tuesday May 19, 2009
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American Express (AXP) announced on Monday that it is embarking on a “new company-wide reengineering initiative,” that is expected to produce savings of about $800 million through the rest of 2009.

The company plans to eliminate 4,000 jobs, about 6% of the company’s global workforce, which is expected to save $175 million, with most of the cuts coming from “business units, markets and staff groups.” The company will take a charge of $180 to $250 million pre-tax (approximately $117 to $163 million after-tax) in the second quarter as a result of the move because of severance and other job related costs.

Investment spending on marketing and business development will be reduced, producing anticipated cost benefits of approximately $500 million.

Cuts to be made in operations will come from consulting and other professional services, travel, and general overhead, with savings from such cuts estimated at $125 million.

In October 2008, the company announced a reengineering plan that is expected to save the company $1.8 billion.

In commenting on the reengineering, Chairman and CEO Kenneth Chenault stated “While we have remained solidly profitable at a time when some parts of the card industry were incurring substantial losses, we continue to be very cautious about the economic outlook and are therefore moving forward with additional reengineering efforts to help further reduce our operating costs.”

The company believes that these planned initiatives will put it in a better position “to remain profitable and free up some additional resources that will be reinvested in the business to make sure we can take competitive advantage of opportunities as the economy begins to rebound.”

May 19, 2009 | Filed Under Company News | Leave a Comment 

Producer Price Index Rises 0.3% In April

Thursday May 14, 2009
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According to the Labor Department, the Producer Price Index, which is the price paid to manufacturers, rose 0.3% in April, slightly better than the 0.2% rise that was being forecasted. This follows a worrisome decline of 1.2% in March.

An increase in food prices, including a 43.7% rise in egg prices, contributed to the rise in PPI, with the Labor Department reporting that food prices rose 1.5% in April, to recover from back to back declines in February and March. The 1.5% rise in food prices is the largest increase since January 2008.

Energy prices on the other hand showed a drop of 0.1% in April, after a 5.5% drop in the prior month. Yes, gasoline prices have been rising as oil has moved to nearly $60 in the past few weeks, but prices for residential electric power and natural gas fell, which countered the rise in gasoline prices.

The Core PPI, which excludes the more volatile food and energy prices, came in inline, with a rise of just 0.1%

May 14, 2009 | Filed Under Economy | Leave a Comment 

Foreclosure Notification Rises By 32% In April

Wednesday May 13, 2009
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According to a report issued by real estate research firm RealtyTrac, the number of homes that are facing foreclosure, rose by 32% in April, on a year over year basis.

California, Nevada and Florida were the hardest hit, even as a report by the National Association of Realtors that was released yesterday, showed that homes sales jumped 80.6%, 116.8% and 25% respectively as home buyers continue rush to purchase the steeply discounted foreclosures hitting the market in those states.

In the month, over 342,000 households were notified by their mortgage holder that their home was in danger of foreclosure, which translates into one in 374 housing units in the U.S. that are in danger of foreclosure.

April is now the second consecutive month that we are seeing more than 300,000 households receive a foreclosure notice.

Receipt of a notice does not mean a home will be foreclosed upon, it means the homeowner has been late three months in a row. By bringing their mortgage back into compliance – before its too late, no foreclosure will take place.

Even as we have been getting strong signs in the past two months that the economy might be stabilizing and the stock market has rallied substantially since the March 9 lows that saw the Dow hit 6440.08, this data is a reminder that all is not well with the consumer.

May 13, 2009 | Filed Under Economy, Real Estate | Leave a Comment