The number of newly laid-off workers filing claims for unemployment benefits fell more than expected last week to the lowest level in over a year. The concern is that the big improvement will be temporary as the weak economy continues to push unemployment higher. The Labor Department says the number of people filing first-time claims for jobless benefits fell by 35,000 to 466,000. That was the lowest level for initial claims since the week of September 13th, 2008, and was far better than the 500,000 that economists had expected. The number of workers receiving benefits also fell sharply, dropping 190,000, to 5.42 million, the lowest level for continuing claims since February.
Sales of new homes rose more than expected last month to the highest level in more than a year as the housing market shows stability after its historic collapse. The Commerce Department says sales rose 6.2 per cent to a seasonally adjusted annual rate of 430,000 from an upwardly revised 405,000 in September. Economists surveyed by Thomson Reuters had expected a pace of 410,000. Home shoppers in October were acting before lawmakers decided to extend a tax credit for first-time buyers and expand it to existing homeowners. Nevertheless, sales were up 5.1 per cent from a year ago, the first yearly increase since November 2005. The median sales price of $212,200 was off 0.5 per cent from $213,200 a year earlier, but up 0.7 per cent from September’s level of $210,700.
Consumers got back in the buying mood in October as their incomes grew modestly, an encouraging sign for the budding economic recovery. The Commerce Department said consumer spending rose a brisk 0.7 per cent last month, following a pullback in September when spending plunged by 0.6 per cent. It was the best showing since a big 1.3 per cent jump in August when the government’s now-defunct cash for clunkers programs enticed people to buy cars. Incomes, the fuel for future spending, rose 0.2 per cent for the second straight month.
And now Black Friday looms—the day after Thanksgiving, when consumers traditionally begin holiday shopping in earnest. Many retailers are opening early to accommodate what they hope will be thousands of early shoppers. Economics Professor Nancy Granovsky at Texas A&M’s AgriLife Extension Service says the term “Black Friday” actually has relatively recent roots.
“A term used since the late 1960s, according to the American Dialect Society. And apparently it really related to taxi drivers and law enforcement, because after Thanksgiving, as sales would usually go into effect, there were really very sizable crowds of people and it was an effort put into place to help the congestion and people pouring into stores. But now the color reference really refers to the time when retailers expect to essentially go in the black from being in the red for the year.”
Granovsky says it goes back to shopping basics—be armed with a shopping list.
Orders for big-ticket factory goods fell unexpectedly in October as the economy struggles to get back to full health. The Commerce Department says orders for costly manufactured goods dropped 0.6 per cent last month, following a 2 per cent gain in September. It marked the first decline since August. The performance was weaker than economists expected. They were forecasting orders for durable goods to grow 0.5 per cent.
Could be trouble times-two according to the Federal Reserve. It says recovery could take a while before the unemployment rate is brought down. And the central bank says efforts to keep the recovery going could be fueling a speculative bubble. Documents released from the Fed’s closed-door meeting earlier this month said record-low interest rates “could lead to excessive risk-taking in financial markets.” There’s also a risk seen that consumers, investors and businesses might begin to worry more about inflation building. At the November 3rd and 4th meeting, Fed Chairman Ben Bernanke and his colleagues kept the target range for its bank lending rate at zero to 0.25 per cent. Fed policymakers also pledged to hold rates at such super-low levels for an “extended period,” to ensure the recovery gains traction. Most analysts predict that means rates will stay where they are through the rest of this year and into part of 2010.
Bankruptcy filings in federal courts jumped by more than one-third this year, as businesses and individuals struggled to regain their footing in a weakened economy. New numbers from the administrative office of the U.S. courts show about 1.4 million bankruptcy cases were filed this fiscal year. That’s up 34.5 per cent compared with the more than a million cases filed last fiscal year. The bankruptcy figures cover a period from October 1st, 2008, to September 30th. Filings under Chapters 7, 11, 12 and 13 all rose —particularly filings for Chapter 11 protection, which increased 68 per cent. Overall, business filings were up 52 per cent, while non-business filings rose by 34 per cent.
Freddie Mac reports that average rates for 30-year fixed mortgages have matched a record low of 4.78 per cent this week. Rates for 30-year mortgages hit an all-time low the week ending April 30th. Since then, rates have hovered near five per cent, spurring refinancing activity and home sales. However, credit standards remain stringent, so the best rates usually are available only to borrowers with solid credit and a 20 per cent down payment. The Federal Reserve has pumped $1.25 trillion into mortgage-backed securities to try to lower rates on mortgages and loosen credit availability. Rates on 30-year mortgages traditionally track yields on long-term government debt.
The Transportation Department says Toyota will replace gas pedals on 3.8 million vehicles in the United States to address problems with sudden acceleration or the pedal becoming stuck in the floor mat. As a temporary step, Toyota will have dealers shorten the length of gas pedals beginning in January. Transportation officials told the Associated Press the Japanese automaker will develop replacement pedals for the vehicles, and new pedals will be available beginning in April. The automaker announced the massive recall in September. The recall includes vehicles such as the Toyota Camry, the top-selling passenger car in America, and the Toyota Prius, the best-selling gas-electric hybrid.
Retail gasoline prices remained largely stable across Texas going into the Thanksgiving day holiday this week. The weekly AAA Texas survey finds regular grade gasoline averaging $2.50 per gallon across the state, two cents above last week’s average but 14 cents below the national average. The $2.64 national price average is a penny higher than last week. The state’s costliest gasoline is, as usual, in El Paso where it fell a penny to $2.61 per gallon. The cheapest gas is in Houston and Galveston, where regular-grade averages $2.45 per gallon. That’s a penny more than last week in Galveston but unchanged in Houston. The biggest increase from last week was a nickel a gallon to $2.52 in Amarillo.
With economic pressures still hitting household budgets hard, many Americans are forgoing air travel for the Thanksgiving holiday. Instead, they’re opting for cheaper alternatives such as trains or their own vehicles. Others are staying home completely. Thanksgiving travel plummeted a staggering 25 per cent between 2007 and 2008, and many of those habits seem to be sticking this year. According to an AAA survey, the number of people traveling is likely to stay about the same, inching up only by about 1.4 per cent. AAA also estimates that about 33 million people will travel by car. About 38 million domestic travelers are expected to go somewhere. That compares to the roughly 58 million who made holiday journeys in 2005 when the economy was better.
Savor that holiday sweet potato pie and those marshmallow yams while you can. Agricultural experts and industry officials expect enough sweet potatoes for the traditionally high-demand period of Thanksgiving and Christmas. But by Easter, they could be in limited supply in some parts of the country due to crop losses in the major growing states of Louisiana and Mississippi. Whether that leads to higher prices at the grocery store depends in part on demand and how far the North Carolina and California crops stretch. North Carolina is the nation’s leading producer and had what officials there consider a good–but not great–crop. The full extent of losses due to heavy late-season rains in the Gulf south isn’t yet known.
The number of rigs actively exploring for oil and natural gas in the U.S. this week has risen by 24 this week to 1,137. Houston-based Baker Hughes said that 748 rigs were exploring for natural gas and 379 for oil. Ten were listed as miscellaneous. A year ago this week, the rig count stood at 1,866. Texas gained 11 rigs. The rig count tally peaked at 4,530 in 1981, during the height of the oil boom. The industry posted a record low of 488 in 1999.