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Gallup says Fed cut rates and confidence

Sat, 02/02/2008 - 17:56 by MT Bureau

Princeton, N.J. -- Americans' worries over the U.S. economy spiked just after the U.S. Federal Reserve cut interest rates on Jan. 22, a Gallup Poll released Friday said.

Although the interest rate was meant to stimulate the economy and boost confidence, in terms of consumer anxiety, "the exact opposite happened," the report said.

Before the Fed took emergency action, reducing interest rates by 3/4 of a point, 32 percent of Americans asked indicated they were worried about the economy with 9 percent indicating they were "very worried" and 23 percent saying they were "somewhat worried," a Gallup Poll said.

That figure was consistent through January 2007.

But, after the Fed cut interest rates, "consumers worried about money surged to a new high of 39 percent," the report said.

Economists say Fed rate cut favors banks

Fri, 01/02/2008 - 22:05 by MT Bureau

New York -- Recent Federal Reserve interest rate cuts are more about saving banks than saving the average U.S. citizen, a New York business analyst says.

"This is more about saving Wall Street than Main Street," Ken Goldstein, an economist at the Conference Board, said after the Fed cut short-term rates banks use for overnight loans to 3 percent on Wednesday.

The rate cut was the second in eight days. Since September 2007, the Fed has reduced the rate 2.25 points, from a previous rate of 5.25 percent.

The Fed stressed the banking mortgage crisis in its statement Wednesday, but also mentioned "households."

"Financial markets remain under considerable stress, and credit has tightened for some businesses and households," the statement said.

Stimulus package stalls in Senate

Fri, 01/02/2008 - 18:44 by MT Bureau

Washington -- U.S. Senate leaders lacked the votes Thursday to pass a $157 billion economic stimulus package and said they would accept a less ambitious plan, a report said.

The Senate Finance Committee had approved the larger package earlier in the day. It included significant differences from a measure approved Tuesday by the House of Representatives.

Senate Democratic leaders told The New York Times they could not get 60 votes for the $157 billion package. They said they hoped to be able to find enough votes for some important changes to the House plan when they vote on it, possibly Wednesday.

The House plan was worked out with the Bush administration but the Senate package included payments to 20 million low-income senior citizens and 250,000 disabled veterans, which the House version excludes.

Senate raises ante on stimulus package

Thu, 31/01/2008 - 20:44 by MT Bureau

Washington -- The U.S. Senate Finance Committee approved a $157 billion economic stimulus package that includes significant differences from a House-approved measure.

The Senate is to consider the $146 billion package the U.S. House of Representatives approved Tuesday, The Washington Post reported.

The House plan was worked out with the Bush administration but the Senate's package includes payments to 20 million low-income senior citizens and 250,000 disabled veterans, which the House version excludes.

The Senate's version raises the cap on individual eligibility from $75,000 to $150,000 and for couples from $150,000 to $300,000.

The House version could get checks in the mail in May. But, Finance Committee member, Sen. Chuck Grassley, R-Iowa, said, "concern with timing must be weighed against the question of the quality of the House bill."

U.S. economic growth slows

Thu, 31/01/2008 - 00:14 by MT Bureau

Washington -- Gross domestic product advanced at a seasonally adjusted rate of 0.6 percent in the fourth quarter of 2007, the U.S. Commerce Department said Wednesday.

The report, which could be revised later, attributed the decline in GDP growth from the third quarter to the housing market slump, lethargic consumer spending, reduced factory inventories and a reduction in exports.

Advanced figures released by the Bureau of Statistical Analysis "reflect positive contributions from personal consumption expenditures, nonresidential structures, and state and local government spending," Commerce said. Exports, equipment and software expenditures also rose, but not at a sufficient rate to match third quarter growth.

Decreases were noted in private inventory investment and residential fixed investment.

China's GDP up 11.4 percent in 2007

Thu, 24/01/2008 - 21:39 by MT Bureau

Beijing -- China's economy, on its fifth straight year of double-digit growth, jumped 11.4 percent in 2007 from 2006, the largest increase in 13 years, statistics show.

The 2007 gross domestic product, driven by massive exports and big infrastructure investment, stood at $3.43 trillion, but the National Bureau of Statistics warned Thursday the risks of spiraling inflation and economic overheating also were on the rise, Xinhua reported.

In 2006, the GDP rose 11.1 percent from the previous year.

Xie Fuzhan, head of the bureau, credited his country and the Untied States for leading the current cycle of global growth but noted any U.S. recession would have a negative impact on world economy.

As an indication of that warning, China's GDP in the fourth quarter slowed to 11.2 percent from 11.5 percent in the third and 11.9 percent in the second quarter.

CBO says economy slow, not recessionary

Thu, 24/01/2008 - 18:38 by MT Bureau

Washington -- The top economic forecaster for the U.S. Congress said Wednesday he believes the United States is entering a slow-growth period, but will avoid a recession.

Peter Orszag, Congressional Budget Office director, projects that a slowing economy will increase the deficit, predicted to rise to 1.5 percent of the gross domestic product in 2008 from 1.2 percent in 2007.

"Enactment of legislation to provide economic stimulus or additional funding for military operations in Iraq and Afghanistan could further increase the deficit for this year," Orszag testified before the House Budget Committee.

The economy slowed last year, "and there are strong indications that it will slacken further in in 2008" because of problems in the housing and financial sectors and high energy prices, he said.

Consumer confidence slipping, poll says

Wed, 23/01/2008 - 13:54 by MT Bureau

Princeton, N.J. -- Confidence in the U.S. economy is sagging among consumers, 30 percent of whom now rate the economy as "poor," a Gallop Poll released Tuesday indicates.

That number is up from 25 percent of consumers who considered the economy to be in poor shape in a poll conducted Jan. 4-6. That poll indicated a flush of confidence during the holiday season had already started to wane.

While lawmakers try to work out an economic stimulation package, a significant number of Americans said they feel the economy will worsen before it gets better. President George Bush announced a proposal to boost the economy with a $150 billion aid package Friday. However, the bulk of consumers surveyed, 82 percent, said the economy will continue to decline.

The poll, which indicates consumer expectations are at an historic low, was conducted Jan. 19-20, after Bush's announcement.

Bush, Congress discuss plan for economy

Wed, 23/01/2008 - 13:43 by MT Bureau

Washington -- President George Bush and congressional leaders Tuesday discussed how to find "common ground" for a stimulus package to boost the U.S. economy.

Flanked by party leaders from the House of Representatives and the Senate, Bush told reporters he believed "we can find common ground to get something done, (that's) big enough and effective enough" to boost an economy that's "inherently strong."

Edward Lazear, chairman of the Council of Economic Advisers, echoed the desire that "we want to get something together quickly."

Whatever form it takes, House Speaker Nancy Pelosi, D-Calif., said, "It's important that we have a stimulus package that is timely, that is temporary, and that is targeted."

Bush said he and congressional leaders were committed to quickly developing and enacting a stimulus package.

Fed cuts interest rates to boost economy

Tue, 22/01/2008 - 20:37 by MT Bureau

Washington -- The U.S. Federal Reserve cut the federal funds rate 3/4 point Monday in a bid to stem panic on Wall street.

The action brought the rate at which banks loan money to each other overnight down to 3 1/2 percent. It also lowered the discount rate 3/4 point to 4 percent.

The Federal Open Markets Committee said in a statement it took the step, "in view of a weakening of the economic outlook and increasing downside risks to growth."

Eight of the committee members including Chairman Ben S. Bernanke approved the new rate, while William Poole of the Federal Reserve Bank of St. Louis was the sole member to oppose it. Poole said he did not believe the move was warranted before next week's FOMC regular meeting.

House Dems, GOP seek consensus on economy

Thu, 17/01/2008 - 17:34 by MT Bureau

Washington -- U.S. congressional Democrats said they would consider an economic stimulus plan with small-business tax cuts and consumer rebate checks, and no tax hike.

House Democrats and Republicans pledged to work together to jump-start the nation's listless economy, The Washington Times reported Wednesday.

"The conversation between Congress and the administration will continue as we develop an economic stimulus plan that is timely, targeted and temporary and one that restores confidence -- consumer confidence and confidence in the market," House Speaker Nancy Pelosi, D-Calif., said after a teleconference with Treasury Secretary Henry M. Paulson Jr.

House Republican leaders gave Pelosi and Senate Majority Leader Harry Reid, D-Nev., credit for seeking common ground to revive the economy.

Economic activity uneven, Fed says

Thu, 17/01/2008 - 15:06 by MT Bureau

Atlanta -- Economic activity varied across the United States from mid-November through the holiday season, the Federal Reserve Bank in Atlanta reported.

Some economic sectors remain weak. Residential housing and automobile sales were sluggish during the reporting period, while, overall, economic activity showed modest gains, the report says.

Many cities reported disappointing retail sales through the holiday season. Atlanta, Boston, Chicago, Dallas, New York and San Francisco were among the districts reporting spending that was below the levels of spending a year ago. Kansas City reported "solid" sales, the report said. Sales were up on Minneapolis, Philadelphia and St. Louis.

While automobile sales have slowed compared with a year ago, Minneapolis reported, "strong demand from area farmers," with customers from Canada crossing the border to purchase cars, the report says.