Wednesday PM November 3rd, 2010

President Obama to discuss extending tax cuts, after Democrats lose control of the House…Service sector growing at faster pace…Factory orders rise as steepest increase since January…


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President Barack Obama says he will meet with Congressional leaders from both parties in the coming weeks to discuss extending tax cuts. Obama says extending tax cuts for middle class Americans is one of his top priorities. He wouldn’t say whether he’s willing to change his position to accommodate Republicans who want to extend tax cuts for all Americans, including top income earners. The Bush-era tax cuts are set to expire at the end of the year. Obama spoke at a White House news conference a day after Democrats lost control of the House and lost seats in the Senate.

But President Obama says tax cuts alone aren’t the recipe for the economic expansion necessary to replace the millions of jobs that disappeared during the recession. Obama said sweeping tax cuts enacted in the last decade didn’t produce the type of economic growth that’s necessary to drive down unemployment. He predicted the stalled economic recovery will pick up steam next year if the parties work together.

Obama says he could have found a better balance between regulating businesses and making his support for the private sector clear. Obama has faced accusations that his administration has been anti-business. He said he realizes he needs to make clear to the business community, and the country, that the most important thing the administration can do is to boost and encourage the business sector and make sure businesses can hire. He said setting the right tone publicly is important and could make a difference in how businesses decide to spend their money. The president said that setting that tone is one of the things he didn’t manage as well as he needed to.

A trade group reports the nation’s service sector grew faster in October than in the previous month, posting a tenth straight month of expansion. The Institute for Supply Management’s service sector index rose to 54.3, up from 53.2 in September. A figure above 50 indicates that the sector is expanding. Analysts had expected a slight drop. The economy’s manufacturing sector is rebounding more quickly than the service sector, which covers about 80 percent of the economy. The service sector includes the health care, retail, utilities and financial services industries.

Orders to U.S. factories rose broadly in September, propelled by business spending on commercial airplanes, boats and machines. The Commerce Department says factory orders rose by 2.1 percent in September, the steepest increase since January. Orders were flat in August. Business spending on big-ticket goods such as airplanes and heavy machines produced most of the demand. But consumer spending also rose by 1.0 percent, after running flat in August. Excluding the volatile transportation sector, orders rose 0.4 percent, after gaining 1.3 percent in August. Economists have worried that recession-weary consumers will not spend enough to keep factories moving as business spending subsides. This report includes some rare hints that the consumer economy may be improving.

The Organization for Economic Cooperation and Development says the world economic recovery has slowed and is cutting its forecast for growth in developed countries in 2011. The Paris-based organization is also warning that the global economic crisis has brought “public deficits and debt to unsustainable levels.” The OECD issued a report ahead of the Group of 20 summit of rich and developing countries in South Korea next week. The watchdog group for 33 of the world’s most developed economies forecast 2010 growth for its members at between 2.5 and three percent of gross domestic product–a wider range than in its previous forecast of 2.7 in June. It also lowered its growth forecast for next year to two to 2.5 percent, down from 2.8 percent.

Testing done by the federal government on a San Antonio produce processing plant closed after contaminated celery was linked to four deaths came up positive for the food-borne pathogen listeria. The Food and Drug Administration announced the results matched the initial testing done by Texas Department of State Health Services. The bacteria was found in multiple locations in the Sangar Produce & Processing’s plant, including on food contact surfaces. State regulators on October 20th closed the plant and ordered the company to recall all the produce that has passed through the facility since January. Messages left for an attorney for Sangar by the Associated Press were not immediately returned.

Short-term Treasurys jumped after the Federal Reserve unveiled details of its plan to boost the country’s economy. The Federal Reserve said it would begin spending an extra $600 billion on Treasury bonds through June of next year. The Fed’s move is meant to push long-term interest rates lower and encourage spending. The yield on the five-year bond fell to 1.11 percent from 1.16 percent late Tuesday. The two-year yield moved to 0.34 percent from 0.35 percent the previous day. The ten-year yield slipped to 2.60 after the announcement, and the yield on the 30-year bond rose to 4.02 percent. The 30-year bond was not among those being targeted heavily by the Fed’s bond-buying program.

Ford says its October U.S. sales rose 19.2 percent, led by big increases in trucks and small cars. General Motors, Honda and others have already reported strong sales of crossover wagons last month, and Ford was no exception. Sales of the redesigned edge crossover were up 24 percent, while Ford escape sales rose 17 percent. Ford says sales of the F-series pickup rose 24 percent, thanks in part to a month-long truck promotion. The fusion midsize sedan had its best October ever. Sales for the car rose 29 percent over the same month last year. Analysts are expecting this October to be the strongest in three years, as consumer confidence increased and new models drew buyers to showrooms.

Carmax says it’s hiring people for more than 1,200 positions at the nation’s largest used car chain’s stores across the country. The Richmond company says the move is to help Carmax meet seasonal staffing and expansion needs. Carmax said the majority of the positions are in sales and service operations, with additional positions in purchasing and the business office. CEO Tom Folliard says Carmax is proud to offer jobs that provide training, development and benefits even as unemployment continues to be a concern. The company operates more than 100 stores in 26 states.

If you use Facebook to “check in” to your favorite restaurants or shops, you can now expect to see rewards and discounts from companies looking to drum up business. Facebook is looking to bridge online advertising with people’s offline behavior as it announced a service called “deals.” It’s an extension of places, the check-in feature the company unveiled this year. Rising with the explosive growth of smart phones, services based on people’s location help them find coupons, earn quirky merit badges or simply share with friends where they are. Facebook is launching a test version of deals with 23 companies, including the Gap, 24 Hour Fitness, North Face and Alamo Drafthouse Cinema, a small theater chain that serves food and drinks along with movies.

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