The nation’s unemployment rate climbed to 9.8 percent in November, a seven-month high, as hiring slowed. Employers added only 39,000 jobs last month, a sharp decline from the 172,000 created in October. The weakness was widespread. Retailers, factories, construction companies, financial firms and the government all cut jobs last month. Private companies–the backbone of the economy–created 50,000 jobs. That was down significantly from the 160,000 private-sector jobs created in October and was the smallest gain since January. With hiring so weak, the unemployment rate rose from 9.6 percent to 9.8 percent. The jobless rate has now topped nine percent for 19 straight months, the longest stretch on record.
The service sector expanded for the 11th straight month in November and at the fastest pace in six months. The Institute for Supply Management says that its service sector index rose to 55 last month from 54.3 in October. It was the highest reading since May. Any figure over 50 indicates growth. Retailers, hotels and restaurants, and the transportation and health care industries were among the ten industries reporting expansion last month. Six industries contracted, including educational services; mining, agriculture and forestry; and government. New orders grew at a faster pace, rising to 57.7 from 56.7. The employment index also increased.
Orders to U.S. factories fell in October by the largest amount in five months, reflecting a big drop in demand for aircraft. The Commerce Department says that factory orders declined 0.9 percent in October, the first setback since June and the biggest decline since a 1.8 percent fall in May. The weakness was led by plunging demand for commercial and military aircraft. Excluding the transportation categories, orders were down a smaller 0.2 percent. Manufacturing has been one of the standout performers in what has been a sub-par economic recovery. Booming export sales have helped to offset weakness in domestic demand.
BP is mounting a new challenge to U.S. government estimates of how much oil flowed from the runaway well deep below the Gulf of Mexico. The issue will be critical in determining the size of federal pollution fines the company will pay. Staff working for the Presidential Oil Spill Commission told the Associated Press that BP is arguing that the government overestimated by as much as 50 percent the amount of oil that spilled. The company’s argument could reduce BP’s likely fines under the Clean Water Act by as much as $2.7 billion. Money collected from BP could be used to pay for restoration of the Gulf Coast. The federal government has estimated that about 2.6 million gallons of oil a day spewed from the well, declining to about 2.2 million gallons daily before the well was capped in mid-July.
A federal judge in Ohio plans to resentence an executive convicted in a $1.9 billion health care financing fraud that prosecutors likened to the Enron or Worldcom scandals. Donald Ayers has argued that giving him the same 15-year sentence would violate his constitutional rights prohibiting double jeopardy. He also says the sentences he originally received for his multiple convictions must be viewed independently of each other, meaning he should get a lesser sentence. An appeals court overturned Ayers’ money laundering conviction last summer, saying the government didn’t provide enough proof. But prosecutors say U.S. District Court Judge Alegnon Marbley should follow the appeals court decision that said the sentence could stay the same.
The Senate has sent a stopgap spending bill to President Barack Obama that’s needed to prevent a government shutdown on Friday at midnight. The bill passed by a voice vote. It gives negotiators in the lame-duck Congress two more weeks to try to pass a bill funding the government for the rest of the budget year, which ends September 30th. If that fails, lawmakers would have to pass another stopgap measure to fund agency budgets into next year, when Republicans will control the House. The Democratic-controlled Congress hasn’t passed a single annual spending bills in an unprecedented breakdown of the budget process. The House approved the legislation Wednesday.
A deal to extend expiring tax cuts for all taxpayers is starting to take shape even as Senate Democrats plan weekend votes on bills that would let the tax cuts for the wealthy die. The White House is seeking to expand the tax package to include other measures designed to boost the nation’s sluggish economy. Among the proposals are extending jobless benefits for millions of unemployed workers and continuing tax breaks that were part of President Barack Obama’s economic recovery package enacted last year. Without action by Congress, unemployment benefits will run out this month for two million people. Democrats also are seeking to extend Obama’s making work pay tax credit, which provides tax credits of up to $400 for individuals and $800 for married couples.
An austere deficit-cutting plan by President Barack Obama’s Budget Commission has failed to win the supermajority required to force a quick vote in Congress. The plan won support from 11 of 18 commission members. Fourteen were needed for official approval. The plan would have cut $4 trillion from the budget over the coming decade through a combination of curbs to social security, tax increases and a slew of other spending cuts. Commission Co-Chairman Erskine Bowles declared victory, nevertheless. He said the panel’s nonpartisan deliberations showed it’s possible to have an “adult conversation” about cutting the deficit.
The next crisis for the U.S. economy could have its roots in municipal bonds, which are issued to build schools, pave roads and lay water pipes. Prices of municipal bonds dropped last month at one of the fastest clips since the credit crisis two years ago. Shares of mutual funds that hold the bonds have fallen hard, too. For much of the past decade, investors were pouring money into Munis, not taking it out, in the belief that governments would always pay back what they owed. Municipalities use revenue from taxes, fees and other sources to make interest payments and repay principal when a bond matures. But the recession has left local governments strapped for cash. Some are even discussing the possibility of bankruptcy, which raises the prospect of defaulting on bonds. Some experts worry that problems in the municipal bond market could spread to other markets. In the worst case, they say a plunge in Muni prices could trigger panic among investors and widespread selling of other financial assets.
Retail gasoline prices are poised to test highs for the year just as the holiday season pushes into high gear. Gasoline production has been affected by a series of issues at refineries that serve different parts of the country, which is sending prices higher on futures contracts. That comes as oil prices are rising on upbeat news about the global economy. Analysts say as a result, pump prices are expected to climb back toward their highs of around $2.90 a gallon and perhaps even higher before retreating in the latter half of December. Oil prices have surged for much of the week amid more positive economic news.