Americans earned more and spent more last month, a hopeful sign for the economy ahead of the holiday buying season. The government says consumers boosted their spending 0.4 percent in October. That was up from a 0.3 percent increase in September. People showed a slightly bigger appetite to spend because their incomes rose 0.5 percent, reflecting a slowly healing jobs market. Incomes didn’t grow at all the month before. The increases in both income and spending last month were the most since August. Even with the pickup, consumers are still shying away from the type of spending needed to dramatically lower the 9.6 unemployment rate.
Debt isn’t stressing people as much as it had been, but consumers remain gun-shy about embarking on a big holiday spending spree. An Associated Press-GFK poll also suggests Americans are more disciplined about using their credit cards. Deep into a stubbornly harsh economic downturn, more people than last year say they pay off their balances right away. Fewer say they make credit card purchases if they lack enough money at the time. Fifty-nine percent said they feel little or no stress from their family’s debt from mortgages, credit cards and other loans. That’s an improvement from the 49 percent who said so a year ago, with women and city residents reporting significantly less tension than last year.
Orders to U.S. factories for long-lasting manufactured goods plunged in October by the largest amount in 21 months, reflecting widespread weakness in a number of areas. The Commerce Department says that orders for durable goods dropped 3.3 percent last month, the biggest setback since January 2009, when the country was still mired in a recession. Excluding transportation, which is often volatile, orders were down 2.7 percent, the biggest drop in this area since March 2009. The unexpectedly sharp declines raised questions about the strength of manufacturing, which has been one of the economy’s standout performers.
The number of people applying for unemployment benefits fell sharply last week to the lowest level since July 2008, a hopeful sign that improvement in the job market is accelerating. The Labor Department says that weekly unemployment claims dropped by 34,000 to a seasonally adjusted 407,000 in the week ending November 20th. Wall Street analysts expected a much smaller drop. A Labor Department analyst says weekly claims are volatile during the week between the veteran’s day and Thanksgiving holidays. A key question is whether claims will remain this low in future weeks, or bounce back.
Sales of new homes fell in October to near a record low while the median home price dropped to the lowest point in seven years. The Commerce Department reports that sales of new single-family homes declined 8.1 percent to a seasonally adjusted annual rate of 283,000 units in October. That was just 2.9 percent above the all-time low of 275,000 units hit in August for government records that go back to 1963. The median price of a home sold in October dipped to $194,900, the lowest level since October 2003.
Applications for mortgages to buy homes rose last week to the highest level since May. The Mortgage Bankers Association says purchase applications jumped 14.4 percent from the previous week. The increase got an extra lift because the previous week’s results included Veterans Day holiday. The survey didn’t make an adjustment for the extra day in the latest week. Applications to refinance slipped one percent from a week earlier, while overall applications edged up 2.1 percent. The rate on 30-year mortgages increased during the week, while the rate on the 15-year loan dipped. Rates have been at or near their lowest levels in decades since spring as investors put money into safer Treasury bonds. That has lowered their yields, which mortgage rates tend to track.
Rates on fixed mortgages edged up this week, inching further away from the lowest level in decades. Freddie Mac says the average rate for 30-year fixed loans rose to 4.40 percent from 4.39 percent last week. Two weeks ago, the rate hit 4.17 percent, the lowest level on records dating back to 1971. The 15-year loan also increased, to 3.77 percent from 3.76 percent. It hit its lowest point since the survey began in 1991 two weeks earlier at 3.57 percent. Mortgage rates rose because Treasury yields have increased as a recent string of strong data eased economic worries. Mortgage rates tend to track bond yields.
The administrator of a $20 billion fund set up to pay for damages from the Gulf oil spill says he received a flood of last-minute emergency claims before a key deadline ended. Kenneth Feinberg says that most of those claims likely will be denied because there was not enough documentation to support them. Feinberg says about 450,000 emergency claims were filed by Tuesday’s deadline. Of those, about 30,000 were filed Monday or later. Also, Feinberg discussed the next phase of the claims process. People and businesses will be able to ask for a lump sum payment, so long as they agree not to sue BP or other companies involved in the spill. They can also ask for smaller payments every three months, which leaves open the possibility of suing the oil giant for damages.
Dynegy says shareholders rejected a takeover bid from an affiliate of private equity firm the Blackstone Group. Dynegy says it expects to start soliciting proposals from other potential buyers and to review other restructuring alternatives. That could open the door for either billionaire investor Carl Icahn or Seneca Capital, each prominent shareholders in Dynegy, to make bids for the Houston company. The rejection of Blackstone’s $5-per-share bid had been expected.
Farmers Insurance has filed for a nearly four percent rate increase in Texas. The Dallas Morning News reports that Farmers’ filing with the Texas Department of Insurance will affect about half the company’s customers in Texas. Farmers’ spokesman Luis Sahagun says the rate hike is needed to handle the increasing cost of claims in Texas. The new rates will go into effect in March. It will affect customers who have either the Texas Family home policy or the Farmers Next Generation homeowners policy. About 324,000 customers have those policies. A State Insurance Department spokesman says actuaries will review the company’s filing to make sure the rate hike is justified. But an insurer can increase premiums once it notifies the agency.
General Motors and Isuzu are recalling more than 192,000 midsize pickups to fix a problem with child safety seat anchors. The National Highway Traffic Safety Administration says the recall affects the Chevrolet Colorado and GMC Canyon models from the 2004 to 2011 model years. Also affected are Isuzu I-280 and I-350 pickups from 2006 and I-290 and I-370 models from 2007 and 2008. The Isuzus are built by GM. NHTSA says the trucks have a bench front seat with no rear seat. It says the top anchor for the front center seat is not accessible and the owner’s manual has no instructions on how to use it. No injuries or accidents have been reported. Dealers will cut a hole in a back seat panel to fix the problem.
Facebook has moved a step closer toward trade-marking the word “face”–at least in certain contexts. The company’s 2005 application with the U.S. Patent and Trademark Office received a “notice of allowance” which means Facebook now has six months to show that it uses the trademark and pay a $100 fee. Or, it can file for an extension for up to 36 months. Once that’s done, the trademark can be approved or rejected. Even if it’s approved, Facebook wouldn’t have trademark on “face” in every instance. So another company could well use “face” in a different context–such as Delta Air Lines and Delta Faucets. Facebook is also trying to rein in use of the other half of its name. It has sued teachbook.com, a community for teachers.
The number of rigs actively exploring for oil and natural gas in the U.S. increased by ten this week to 1,687. Houston-based Baker Hughes says 953 rigs were exploring for natural gas and 724 for oil. Ten were listed as miscellaneous. A year ago this week, the rig count stood at 1,137. The tally, normally released on Friday, was advanced this week because of Thanksgiving. Texas gained six. The rig count peaked at 4,530 in 1981 at the height of the oil boom. It posted a record low of 488 in 1999.