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Consumer Spending Rose Slightly in August

September 27, 2013 by

Consumers’ spending on goods and services rose 0.3 percent in August, the Commerce Department said on Friday. That was up from a 0.2 percent gain in July.

Income rose 0.4 percent in August, the best gain since February and up from a 0.2 percent July increase. Private wages and salaries rose 0.5 percent, while government wages and salaries rose 0.2 percent.

The government figures would have been higher if not for forced federal furloughs that reduced wages and salaries by $7.3 billion.

Consumer spending drives 70 percent of economic activity. Many analysts say the increases are not enough to accelerate economic growth in the third quarter from the 2.5 percent annual rate in the April-June quarter.

“With more money coming in, consumers spent a little, just a little, more freely,” said Jennifer Lee, senior economist at BMO Capital Markets.

Americans grew more pessimistic this month about the economy, their own finances and government budget policies, according to a survey of consumer confidence released Friday.

The University of Michigan says its final reading of consumer sentiment dropped to 77.5 in September from 82.1 in August. It was the second straight decline after confidence reached a six-year high of 85.1 in July.

Paul Ashworth, chief United States economist at Capital Economics, said the economy has been growing at an annual rate of 2 to 2.5 percent in the July-September quarter. Still, the pickup in August spending could signal stronger growth in the final three months of the year.

But other economists were less hopeful. Peter Newland, an economist at Barclays, said that the modest increase did not change the bank’s forecast for growth, at a 1.7 percent rate.

There are some signs that consumers may be better positioned to step up spending soon.

The number of people seeking unemployment benefits has sunk to its lowest point in six years because few companies are laying anyone off anymore. That has led some economists to predict that employers added 200,000 jobs or more jobs in September, the most since February.

Article source: http://www.nytimes.com/2013/09/28/business/economy/consumer-spending-rose-slightly-in-august.html?partner=rss&emc=rss

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Gains for a 4th Week in a Row, and Milestones, Too

May 17, 2013 by Leave a Comment

Stocks continued their climb into uncharted territory on Friday, racking up the fourth week in a row of gains as encouraging economic data prompted investors to buy shares of growth companies.

The Dow Jones industrial average and the Standard Poor’s 500-stock index finished at highs, driven by gains in energy and industrial shares. The indexes have pushed to a series of high levels as part of the rally that has lifted equities more than 16 percent for the year so far.

The Dow Jones industrial average gained 121.18 points, or 0.80 percent, to close at a milestone 15,354.40. The S. P. 500-stock index rose 17 points, or 1.03 percent, to end at a record 1,667.42.

The Nasdaq composite index climbed 33.73 points, or 0.97 percent, to finish at 3,498.97 — its highest close since October 2000.

In a sign of how far the market has come, the S. P. 500 is about 1,000 points above the low it hit in March 2009 in the wake of the credit crisis and recession.

“It’s hard to hold this market down,” said Michael Sheldon, chief market strategist at RDM Financial in Westport, Conn.

Data released on Friday showed Americans felt better about their economic and financial prospects in early May, with consumer sentiment at its highest in nearly six years, while a gauge of future economic activity rose in April to a near five-year high.

“If you believe the economy is going to gradually get better and that global growth will improve, the parts of the market that have not benefited so far, like cyclicals, will probably be the next group to outperform,” Mr. Sheldon said. Cyclical industries are those that do well when times are good, like an airline that benefits from more people flying on vacation.

The SP energy sector index gained 0.8 percent, with Exxon Mobil up 1.2 percent at $91.76.

Boeing shares led the S. P. 500’s industrial sector index higher with a 2.4 percent advance to $98.92, its highest since October 2007. The S. P. industrial index rose 1.4 percent.

The rate of growth in the economy has been expected to slow in the second quarter as tighter fiscal policy started to take effect. But recent improvements, including in the labor market and retail sales, suggest the recovery remains resilient.

“We are still recovering,” said Doreen Mogavero, chief of Mogavero, Lee Company in New York, who also noted that the comeback was slow. She added that markets in the United States, for all their troubles, were “still the best place to be at this moment.”

Earlier in Friday’s session, the Dow touched a high at 15,357.40. For the week, the Dow advanced 1.7 percent, while the S. P. 500 climbed 2.1 percent and the Nasdaq rose 1.9 percent.

J. P. Morgan raised its year-end target for the S. P. 500 to 1,715 from 1,580, implying a gain of just under 3.5 percent for the index for the rest of the year.

“We realize investors are apprehensive about making fresh money purchases, but we see the risk/reward as particularly attractive in technology, health care and financials,” said the client note from Thomas Lee, J. P. Morgan’s United States equity strategist.

J. C. Penney shares lost 4.2 percent to $18.01 after the retailer reported another steep quarterly loss on weak sales and heavy clearance deals, and the chief executive, Myron Ullman, cautioned that he needed time to fix the company’s problems.

Tableau Software, a maker of data analysis software, surged in its first day of trading as investors bet the rising interest in Big Data would drive its growth. Tableau surged 64 percent to $50.75.

The price of the benchmark 10-year Treasury note fell 22/32 to 98 5/32, increasing the yield to 1.95, from 1.88 on Thursday.

Article source: http://www.nytimes.com/2013/05/18/business/daily-stock-market-activity.html?partner=rss&emc=rss

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Economix: Sequestration and the Jobs Report

April 5, 2013 by Leave a Comment

The March jobs report came in much weaker than expected, with employers adding just 88,000 workers over the course of the month. Did sequestration – the $85 billion in mandatory budget cuts that Congress never managed to unwind, despite promises to the contrary – take a bite?

The short answer is no. At least according to the preliminary data, sequestration does not seem to be particularly at fault.

Government employment at all levels actually climbed during March, if you exclude the Postal Service, which shed nearly 12,000 workers. Economists expect the government ranks to take a hit as agencies and offices carry out their budget cuts before the end of the fiscal year in September.

But not yet. The budget cuts formally came into effect on March 1, and many agencies waited to see if Congress might undo them later in the month. Furloughs, layoffs, contract changes and other disruptions have started accumulating, but remain very small at this point. Economists expect the jobs hit from sequestration to be significant, but backloaded toward the end of the year.

But another change emanating from Washington seems as if it might be having a serious effect on jobs: the expiration of the payroll tax cut. In January, Congress effectively increased payroll taxes by declining to extend a temporary tax holiday. That wiped out a full year’s worth of wage gains for millions of Americans, and economists expected it to depress consumer sentiment and consumer spending.

Lo and behold, the retail sector showed significant weakness in this report, perhaps evidence of families’ having less spending money and cutting back at the mall. Employment dropped by 24,000 positions, with significant declines in clothing stores, garden supply stores and electronic stores.

Granted, that could just be statistical noise, and next month’s revisions could erase the drop. In other government reports, the retail sector has looked just fine. Commerce data showed consumer spending surging, and separate private reports have showed consumer confidence climbing. But it could be that families are spending a little less, thinning retailers’ profits and forcing them to cut back on staffing.

Article source: http://economix.blogs.nytimes.com/2013/04/05/sequestration-and-the-jobs-report/?partner=rss&emc=rss

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Economix Blog: Sequestration and the Jobs Report

April 5, 2013 by Leave a Comment

The March jobs report came in much weaker than expected, with employers adding just 88,000 workers over the course of the month. Did sequestration – the $85 billion in mandatory budget cuts that Congress never managed to unwind, despite promises to the contrary – take a bite?

The short answer is no. At least according to the preliminary data, sequestration does not seem to be particularly at fault.

Government employment actually climbed during March, if you exclude the Postal Service, which shed nearly 12,000 workers. Economists expect the government ranks to take a hit as agencies and offices carry out their budget cuts before the end of the fiscal year in September.

But not yet. The budget cuts formally came into effect on March 1, and many agencies waited to see if Congress might undo them later in the month. Furloughs, layoffs, contract changes and other disruptions have started accumulating, but remain very small at this point. Economists expect the jobs hit from sequestration to be significant, but backloaded toward the end of the year.

But another change emanating from Washington seems as if it might be having a serious effect on jobs: the expiration of the payroll tax cut. In January, Congress effectively increased payroll taxes by declining to extend a temporary tax holiday. That wiped out a full year’s worth of wage gains for millions of Americans, and economists expected it to depress consumer sentiment and consumer spending.

Lo and behold, the retail sector showed significant weakness in this report, perhaps evidence of families’ having less spending money and cutting back at the mall. Employment dropped by 24,000 positions, with significant declines in clothing stores, garden supply stores and electronic stores.

Granted, that could just be statistical noise, and next month’s revisions could erase the drop. In other government reports, the retail sector has looked just fine. Commerce data showed consumer spending surging, and separate private reports have showed consumer confidence climbing. But it could be that families are spending a little less, thinning retailers’ profits and forcing them to cut back on staffing.

Article source: http://economix.blogs.nytimes.com/2013/04/05/sequestration-and-the-jobs-report/?partner=rss&emc=rss

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Split U.S. Economy in Data

March 15, 2013 by Leave a Comment

Despite a measure of caution on the part of consumers, new data on Friday suggested that the economy had underlying strength. Factories reported a healthy gain in output in February, and inflation remained under control, even though gasoline prices have been rising sharply.

Led by the automobile sector, industrial production jumped 0.7 percent in February, the biggest gain in three months, the Federal Reserve said. Economists had been expecting a 0.4 percent rise.

By contrast, the Thomson Reuters/University of Michigan’s preliminary reading for consumer sentiment in March showed a marked drop; the index fell to 71.8, from 77.6 in February. That was its lowest level since December 2011.

The split in the data underscores the wider crosscurrents buffeting the economy.

On one hand, the stock market is near record levels, big companies are reporting strong profits and the labor market seems to be finally gaining some steam, with better data last week and this week on unemployment. In particular, the addition of 236,000 new jobs in February spurred hopes that the economy was finally producing enough jobs to lower the unemployment rate, which has been stuck at just under 8 percent since last September.

In recent days, many economists have raised their estimates for growth in the first quarter in light of other signs, like the move by businesses to increase inventories that fell in the final quarter of 2012. The housing sector has also been strong — a trend that may get more confirmation next week, when new data on housing starts and home sales will be released.

Still, consumers are being hit by the restoration of full Social Security taxes, which went into effect in January, in addition to feeling the effects of federal spending cuts that began March 1. Many experts estimate that the federal budget cuts could cost the economy more than 700,000 jobs this year. In the Thomson Reuters/University of Michigan survey, consumers were more concerned about growth in the future, rating current economic conditions more positively.

Gasoline prices have also been rising, putting additional pressure on some consumers. Higher gas prices helped lift the Consumer Price Index 0.7 percent in February, although the less volatile core reading was up 0.2 percent, according to other data released Friday by the Labor Department.

The jump in taxes and gas prices is squeezing lower-income consumers in particular, said Steve Blitz, chief economist at ITG Investment Research. Big-ticket items like homes and cars continue to sell well, for example, but otherwise-strong retail sales data out earlier this week showed that spending at restaurants declined for the second month in a row. “People who can’t afford it aren’t going out as much to eat,” he said.

“I think we’ve got two economies,” said Mr. Blitz. “The industrial economy started to pick up at the end of last year, but it doesn’t grow in lock step with consumers.”

Factory production and hiring is being bolstered in part by a rebound in China, said Ian Shepherdson, chief economist for Pantheon Macroeconomic Advisors. The Chinese economy, the world’s second-largest, slowed last summer and fall but has gained momentum more recently.

While that is good news in the long run for the American economy and the job market, it affects companies much more than consumers. “Right now, consumers are feeling something up close and personal with higher gas prices and higher taxes,” he said.

Mr. Shepherdson expects the economy to grow by more than 2 percent in the first quarter but to slow substantially in the second and third quarters as the cuts in Washington take hold.

“There will be a hit from the austerity, but the timing and extent is difficult to determine,” he said. “If you impose an enormous fiscal tightening on an economy that isn’t growing too quickly, you have to have some adverse consequences.”

Article source: http://www.nytimes.com/2013/03/16/business/economy/consumer-inflation-jumps.html?partner=rss&emc=rss

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Americans Spent More and Made Less, Data Shows

March 1, 2013 by Leave a Comment

WASHINGTON — Consumer spending rose in January as Americans spent more on services, with savings providing a cushion after income recorded its biggest drop in 20 years. Other economic reports showed consumer sentiment and manufacturing activity higher.

The Commerce Department said Friday that consumer spending increased 0.2 percent in January after a revised 0.1 percent rise the prior month. Spending had previously been estimated to have increased 0.2 percent in December.

January’s increase was in line with economists’ expectations. Spending accounts for about 70 percent of American economic activity. When adjusted for inflation, it rose 0.1 percent after a similar increase in December.

Though spending increased in January, it was supported by a rise in services, probably related to utilities consumption. Spending on goods fell, suggesting some hit from the expiration at the end of 2012 of a 2 percent payroll tax cut. Tax rates for wealthy Americans also increased.

The impact is expected to be larger in February’s spending data and possibly extend through the first half of the year as households adjust to smaller paychecks, which are also being strained by rising gasoline prices.

Income tumbled 3.6 percent, the largest drop since January 1993. Part of the decline was payback for a 2.6 percent surge in December as businesses, anxious about higher taxes, rushed to pay dividends and bonuses before the new year.

A portion of the drop in January also reflected the tax increases. The income at the disposal of households after inflation and taxes plunged a 4 percent in January after advancing 2.7 percent in December.

With income dropping sharply and spending rising, the saving rate — the percentage of disposable income households are socking away — fell to 2.4 percent, the lowest level since November 2007. The rate had jumped to 6.4 percent in December.

In another report on Friday, the Institute for Supply Management said its index of national factory activity rose to 54.2 points from 53.1 in January, topping economists’ forecasts for a pullback to 52.5. It was the highest level since June 2011, a sign that manufacturing is picking up as new orders continue to accelerate.

A reading above 50 points indicates expansion in manufacturing. The sector lost traction in the second half of last year and contracted in November in the wake of the damage in the Northeast caused by Hurricane Sandy.

The new orders index jumped to 57.8 from 53.3, making for the highest level since April 2011. The gauge of production gained to 57.6 from 53.6, while inventories edged up to 51.5 from 51.

But the employment component slipped to 52.6 points, from 54.

Separately, a survey released Friday showed that consumer sentiment rose in February as Americans were more optimistic that the jobs market would improve, even as confidence in fiscal policy was near all-time lows.

The Thomson Reuters University of Michigan’s final reading on the overall index on consumer sentiment rose to 77.6 points from 73.8 in January, topping expectations for attitudes to hold steady with February’s preliminary reading of 76.3.

Fewer Americans expected unemployment to rise, with survey respondents feeling slightly better about prospects for the economy.

The barometer of current economic conditions rose to 89 points from 85, while the gauge of consumer expectations gained to 70.2 from 66.6.

At the same time, 43 percent considered government economic policies to be poor and just 15 percent said the administration was doing a good job.

“Consumers find the blame-game for policy inaction a very unsatisfactory substitute for a concerted effort to improve the economy,” Richard Curtin, survey director, said in a statement.

Article source: http://www.nytimes.com/2013/03/02/business/economy/americans-spend-more-and-make-less-data-shows.html?partner=rss&emc=rss

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Stocks Trade in Narrow Range

February 16, 2013 by Leave a Comment

Stocks were mixed on Friday, lifted by a strong report on consumer sentiment but pulled down in late trading by what was said to be an internal report of weak Walmart sales at the start of February.

The Standard Poor’s 500-stock index fell in late trading, with Wal-Mart Stores leading the way down after the report on February sales, but the index remained higher for the week and extended its streak of weekly gains to seven. The last such run was from December 2010 to January 2011.

Equities were little changed for much of the session, with investors finding few reasons to make big bets after an extended rally on Wall Street.

Interest rates were steady. The Treasury’s benchmark 10-year note fell 2/32, to 99 31/32, and the yield rose to 2.01 percent from 2 percent late Thursday.

Wal-Mart Stores dropped 2.2 percent to $69.30 after Bloomberg News reported a weak start to February sales, citing internal company e-mails. The stock was the biggest decliner on the Dow Jones industrial average. The S. P. retail index fell 0.5 percent.

“When a retailer of this size comes out with this kind of lousy news, the whole market can fall off, especially on a Friday afternoon,” said Mike Shea, of Direct Access Partners in New York. “However, I’m not worried that this is indicative of any larger macro issue with retail.”

The Dow Jones industrial average was up 8.37 points, or 0.06 percent, at 13,981.76. The Standard Poor’s 500-stock index was down 1.59 points, or 0.1 percent, at 1,519.79. The Nasdaq composite index was down 6.63 points, or 0.21 percent, at 3,192.03.

For the week, the Dow and Nasdaq fell 0.1 percent each, while the S. P. rose 0.1 percent.

“There’s no news that suggests the strong underpinning for stocks isn’t appropriate,” said Mark D. Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia. “We may have gotten ahead of ourselves, but there’s also an absence of bad news.”

Many investors are looking ahead to a debate in Washington over the automatic, across-the-board spending cuts put in place as part of a larger Congressional budget fight. The cuts are set to kick in on March 1 unless lawmakers agree to an alternative.

“This had been far enough out to not yet become an impediment for stocks, but it will start to move into the forefront,” Mr. Luschini said.

The Federal Reserve Bank of New York said manufacturing in New York State expanded for the first time in seven months. A preliminary Thomson Reuters/University of Michigan reading of consumer sentiment rose, beating expectations. But manufacturing fell in January.

Wall Street’s gains thus far in 2013 have been driven largely by strong corporate earnings. A surge in merger and acquisition activity, with more than $158 billion in deals announced so far in 2013, has given further support to the equity market as it points to healthy valuations and bets on the economic outlook.

Herbalife shares cut earlier gains to rise 1.2 percent on Friday, to $38.74. Late on Thursday, the billionaire investor Carl C. Icahn disclosed that he owned 13 percent of Herbalife and was ready to put it in play.

MeadWestvaco, a packaging company, climbed 12.5 percent to $35.65, making it the biggest percentage gainer on the S. P. index, after the activist investor Nelson Peltz’s Trian Fund Management said it had bought about 1.6 million shares of the company.

Article source: http://www.nytimes.com/2013/02/16/business/daily-stock-market-activity.html?partner=rss&emc=rss

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Angry Salvos on Euro Pact Sail Across the Channel

December 16, 2011 by Leave a Comment

A week after the British prime minister, David Cameron, refused to sign a Europe-wide pact leaders hoped would stabilize the euro zone, a cross-Channel spat has escalated into a full-blown war of words as Paris has reached a fever-pitch over the prospect that France is about to lose its triple-A credit rating, the highest available.

President Nicolas Sarkozy had already started preparing the country this week for the imminent loss of its gilt-edged status — an event made more likely after the summit meeting of European Union leaders last week, like so many before it, was widely declared a flop. But in the past two days, French officials have unleashed a diatribe suggesting that Britain, not France, is far more deserving of a downgrade.

“At this point, one would prefer to be French than British in economic terms,” the French finance minister, François Baroin, declared Friday.

The ruckus comes as Mr. Sarkozy is gearing up for a tense re-election campaign heading into what promises to be a gloomy year economically for the country and much of the rest of Europe.

Troubled by the crisis in the euro zone, France is probably already in a recession, the government and the central bank warned this week, with a decline in economic activity expected to continue at least through March. Business and consumer sentiment have deteriorated, and unemployment is stuck just below 10 percent.

Paris has embraced two austerity plans since the summer in a bid to reduce the country’s chronic budget deficit and meet the demands from Berlin to set an example for the rest of Europe to follow. Officials believe those steps are also necessary to prevent France’s international borrowing costs from rising to unhealthy levels as investors worry that France is losing the capacity to foot a growing bill from the euro zone crisis.

The verbal onslaught seemed aimed at deflecting attention from those problems. Within hours, headlines blared from British news Web sites taking exception to the perceived French snub.

“The gall of Gaul!” read The Mail Online. An article in The Guardian accused French politicians of descending “to the level of the school playground.”

To be sure, both countries are in poor economic shape. While the French are not suffering anything like the distress being felt in Greece, Portugal and Ireland — which cannot pay their bills without help from the European Union and the International Monetary Fund — the French government is not immune to speculators who see its rising debt levels as making it vulnerable to attacks in the bond market.

France’s debt as a percentage of gross domestic product was 82.3 percent in 2010, a figure that is expected to rise in the coming years even after it tightens its belt. Britain’s debt to G.D.P. ratio was 75 percent, also rising fast despite a stringent austerity program that is, at least for now, only adding to the country’s economic woes.

In France, the deficit was 7.1 percent of G.D.P. last year. Mr. Sarkozy has pledged to reduce it to 3 percent by 2013, partly through higher taxes, but he has been reluctant to spell out which social programs might have to be cut as well, out of fear of further alienating already disenchanted voters.

A looming recession is making that fiscal dilemma even worse by adding to social costs and reducing tax revenues.

“It is very bad news for people, because it means the unemployment rate will increase as more firms will have to fire people or go bankrupt in the private sector,” said Jean-Paul Fitoussi, a professor of economics at L’Institut d’Études Politiques in Paris. “It’s also bad news for politicians: they are in a kind of a trap because they have to say to the people that there is nothing they can do for them.”

As he walked to his job in an affluent suburb of Paris, Steve Kamguea, 22, an entry-level banker at AlterValor Finances, said he saw little hope for a revival of economic growth in France.

Article source: http://feeds.nytimes.com/click.phdo?i=cb317f09d72b545a54a1e42e1698d6c1

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Survey Says Consumers Remain Uneasy About the Future

September 17, 2011 by Leave a Comment

Consumer sentiment in the United States rose in early September, but Americans remained gloomy about the future with their expectations for the economy falling to the lowest level since 1980.

The Thomson Reuters/University of Michigan’s survey showed consumer sentiment edged up to 57.8 from 55.7 in August, topping economists’ forecasts after reaching the lowest level in nearly three years last month.

Even so, the expectations gauge in the preliminary survey inched lower, and three out of four consumers expected bad times for the economy in the year ahead.

“The consumer is still very frustrated with virtually everything — 9 percent unemployment, still very tepid jobs creation and heightened job destruction,” Lindsey M. Piegza, economist at FTN Financial in New York, said.

The survey’s index of consumer expectations dipped to 47.0 from 47.4, hitting the lowest level since May 1980. The economic outlook for the next 12 months fell to 38 from 40, the lowest since February 2009 when the world economy was gripped by the credit crisis.

Only 17 percent of those surveyed expected their finances to improve, the lowest rate ever recorded.

“Consumers are going to be very hesitant to spend with such negative views of their personal finances,” the survey director, Richard Curtin, said.

Still, the survey’s barometer of current economic conditions rose to 74.5 from 68.7, better than a forecast of 68.0.

“It was certainly nice to see the current conditions index rise again, but all we did was retake some ground to where we were in July,” said Tom Porcelli, senior United States economist at RBC Capital Markets in New York.

Investors are now turning their attention to next week’s Federal Reserve meeting. The central bank is expected to introduce new measures to bolster growth, though analysts expect the Fed will be able to take only modest steps.

The survey’s one-year inflation expectation rose to 3.7 percent from 3.5 percent, while the survey’s five- to 10-year inflation outlook rose to 3 percent from 2.9 percent.

Article source: http://feeds.nytimes.com/click.phdo?i=9c0f477b12c810d64d739eac9d8c1672

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