US factory jobless claims data signal weak economic Arab Times

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US factory jobless claims data signal weak economic Arab Times Powered By Docstoc
					                                                                                                                                                                                                               ARAB TIMES, FRIDAY, SEPTEMBER 21, 2012
BUSINESS                                                                                                                                                                                                                                                               41

                                                              Goldman CEO against austerity measures                                                                                                                 BoA to cut 16,000 jobs

The chief executive of Goldman Sachs              another stimulus because of the conse-         ing “fiscal cliff” in January, when Bush-era               Bank of America plans to cut 16,000 jobs by             top executives, are part of a larger strategy by
says he is against austerity measures in          quences to the government’s balance            tax cuts expire and across-the-board spend-                year-end in a major restructuring that would            chief executive Brian Moynihan — who took
the short term as the US “fiscal cliff” looms.    sheet and said the US has to convince          ing cuts are set to take effect. Economists                end its title as the biggest US banking indus-          over in 2010 — to make the bank more effi-
   Lloyd Blankfein, also chairman of the          the market it will deal with its problems in   warn that unless Congress acts, the one-two                try’s largest employer, The Wall Street                 cient and reduce its exposure to risk, the
investment bank, said during a talk               the long term.                                 austerity punch would send the fragile econ-               Journal reported Thursday.                              Journal said.
Wednesday at the Canadian Club of                    “I’m all for implementing budget            omy back into recession.                                      The cuts will take the banking giant’s total            Most of the cuts are expected to come from
Toronto that he’s all for budget cutbacks         changes that accelerate over the long             Blankfein, who took questions from                      employment to 260,000, the Journal said, the            the consumer banking division, as the bank
in the long term but not right now.               term, but in the short term I wouldn’t take    Royal Bank Chief Executive Gord Nixon,                     lowest level since 2008, when the bank                  plans to close 200 branches, in addition to 178
   Blankfein said, “You can’t austere your-       too much money away from people or cut         said Republicans and Democrats have                        acquired failing mortgage lender Countrywide            shut down in 2011, the newspaper said, citing
self into a higher GDP” and added, “It’s          back on a lot of expenditure programs,”        the power to solve the problem, but a                      Financial and the Merrill Lynch investment              an individual familiar with the document.
not going to be very good if the medicine         Blankfein said.                                “defect” in the political system has pre-                  bank.                                                      A spokeswoman for the bank refused to
kills the patient.” He said there can’t be           The US faces the prospect of a debilitat-   vented moderates from agreeing. (AP)                          The cuts, outlined in a document given to            comment on the report. (AFP)

                   Govt policies critical
                                                                                     US factory, jobless claims data
US economy has hit
trough, says survey                                                                  signal weak economic recovery
WASHINGTON, Sept 20, (AP): The
US economy is showing signs of
                                             Income inequality varied widely
                                          by region. The gap between rich and
                                                                                                                                       Measure of future activity falls in Aug
finally bottoming out: Americans are      poor was most evident in the District
on the move again after record num-       of      Columbia,       New       York,    NEW YORK, Sept 20,
bers had stayed put, more young           Connecticut, Louisiana and New
adults are leaving their parents’         Mexico, where immigrant or minori-         (Agencies): US manufacturing                                    Rate on 30-year mortgage falls to record 3.49 pct
homes to take a chance with college       ty groups were more numerous.              closed out its weakest quarter
or the job market, once-sharp                As a whole, Americans were slow-        in three years this month and
declines in births are leveling off and
poverty is slowing.
   New 2011 census data released
                                          ly finding ways to get back on the
                                          move. About 12 percent of the
                                          nation’s population, or 36.5 million,
                                                                                     the number of Americans fil-
                                                                                     ing new claims for jobless ben-
                                                                                                                                  US housing market recovery picks up
Thursday offer glimmers of hope in        moved to a new home, up from a             efits held near two-month                    WASHINGTON, Sept 20, (Agencies):                   New building permits, an indicator of      purchases and refinancing,” which in turn
an economic recovery that technical-      record low of 11.6 percent in 2011.                                                     The recovery in the US housing market           future homebuilding, fell 1.0 but were        would help the economy grow, Bernanke
ly began in mid-2009. But not all is         Among young adults 25 to 29, the        highs last week, suggesting the              continues to strengthen, data released          24.5 percent higher than a year ago, the      said.
well. The jobless rate remains high at    most mobile age group, moves also          economic recovery is failing to              Wednesday showed, a key improvement             department said.                                 IHS Global Insight economists Patrick
8.1 percent. Home ownership               increased to 24.6 percent from a low       gain traction.                               in the struggling economy just seven               Last month it reported new-home sales      Newport and Michelle Valverde predict-
dropped for a fifth straight year to      of 24.1 percent in the previous year.        Financial information firm Markit          weeks before the presidential election.         surged in July to their highest level since   ed that existing-home sales would climb
64.6 percent, the lowest in more than     Longer-distance moves, typically for       said its US “flash”, or preliminary,            The National Association of Realtors said    April 2010. The August numbers are due        7.0-10.0 percent this year, but stressed
a decade. More Americans than ever        those seeking new careers in other                                                      that sales of so-called “existing”, or previ-   next Wednesday.                               that would be “from very low levels.”
are turning to food stamps, while res-    regions of the country, rose modestly      manufacturing Purchasing Managers            ously occupied, homes, jumped 7.8 percent          Homebuilders waxed optimistic. On             “Normal conditions are still at least a
idents in housing that is considered      from 3.4 percent to 3.8 percent.           Index stood at 51.5 in September,            from July, the highest pace since May 2010,     Tuesday, the National Association of          couple of years away,” the analysts said.
“crowded” held steady at 1 percent,          Less willing to rely on parents,        unchanged from August. A reading             and were up 9.3 percent from a year ago.        Home Builders said its NAHB/Wells
tied for the highest since 2003.          roughly 5.6 million Americans ages         above 50 indicates expansion.                                                                                                                          Also:
                                                                                                                                     Prices increased the most in more than       Fargo sentiment index rose for a fifth
   And growth in the foreign-born         25-34, or 13.6 percent, lived with            The index averaged 51.5 in the third      six years. The median price, the middle         straight month to its highest reading since   WASHINGTON: The average US rate on
population is slowing.                    Mom and Dad, a decrease from 14.2          quarter, below the 54.2 registered           point between the top and bottom prices,        June 2006.                                    the 30-year fixed mortgage touched its
   Taken as a whole, however, ana-        percent in the previous year.              between April and June, for its worst        rose to $187,400, up 9.5 percent year-             Even so, home prices remain about 30       record low this week and the rate on 15-
lysts say the latest data provide wide-      The increases in mobility coincide      showing since the third quarter of 2009.     over-year.                                      percent below their 2006 peak and rough-      year mortgage hit a new record.
ranging evidence of a stabilizing US      with modest improvements in the job        At 51.2, the output component was the           “The US housing recovery is for real,”       ly 15 percent below their August 2004            The declines followed the Federal
economy. Coming five years after the      market as well as increased school         lowest since September 2009.                 said Sal Guatieri, senior economist at          level. Barclays analyst Michael Gapen         Reserve announcement last week that it
housing bust, such a leveling off         enrollment, especially in college and         After growing at a 1.7 percent annual     BMO Capital Markets.                            cautioned that the housing recovery still     would buy bonds to try to push mortgage
would mark an end to the longest and      at advanced-degree levels.                 pace between April and June, the econo-         “Great affordability, pent-up demand         faced significant challenges.                 rates lower and stimulate the housing
most pernicious economic decline             Marriages dipped to a low of just       my likely slipped “closer towards stagna-    and strong investor interest in rental units       “Our view is that housing is in a recov-   market.
since World War II.                       50.8 percent among adults 18 and           tion” between July and September, he         are driving the market, and QE3 can only        ery phase, but one that will be restrained       Mortgage buyer Freddie Mac said
   “We may be seeing the beginning of     over, compared with 57 percent in          added.                                       help by reducing mortgage rates further.”       by the availability of credit, the pace of    Thursday that the average rate on the 30-
the American family’s recovery from       2000. Among young adults 25-34,               A separate report from the US Labor          Signs of life are welcome in the hous-       improvement in labor market conditions,       year loan declined to 3.49 percent from
the Great Recession,” said Andrew         marriage was at 43.1 percent, also a       Department showed initial claims for         ing sector, where millions of Americans         and the overhang from distressed and          3.55 percent last week. That matched the
Cherlin, a professor of sociology and     new low, part of a longer-term cultur-     state unemployment aid edged down just       have tied up their savings only to see          foreclosed properties,” he said.              lowest rate since long-term mortgages
public policy at Johns Hopkins            al trend in which people are choosing      3,000 to a seasonally adjusted 382,000       them evaporate when a price bubble burst           The US central bank last week rolled       began in the 1950s.
University. He pointed in particular to   to marry at later ages and often live      last week                                    in 2006, leading the economy into the           out its biggest stimulus in two years,           The average on the 15-year fixed mort-
the upswing in mobility and to young      with a partner first.                         Economists had attributed a spike in      Great Recession.                                QE3, in part to boost home building and       gage, a popular refinancing option,
men moving out of their parents’             Births, on the other hand, appeared     claims in the prior week to Tropical            They come as President Barack Obama          buying, and fight high unemployment in        plunged to 2.77 percent, a new record.
homes, both signs that more young         to be coming back after years of           Storm Isaac, but the minimal improve-        grapples for re-election on November 6          the aftermath of the Great Recession.         That’s down from 2.85 percent last week
adults were testing out job prospects.    steep declines. In 2011, the number        ment in the latest reading pointed to fun-   in a tight race against Republican rival           Federal Reserve Chairman Ben               and the previous record low of 2.80 per-
   “It could be the modest number of      of births dipped by 55,000, or 1 per-      damental weakness.                           Mitt Romney, with economic issues at the        Bernanke said the QE3 program — pur-          cent.
new jobs or simply the belief that the    cent, to 4.1 million, the smallest drop                    Claims                       top of voters’ concerns.                        chases of mortgage-backed securities at a        Cheap mortgages have helped drive a
worst is over,” Cherlin said.             since the pre-recession peak in 2008,         The four-week moving average for             A separate report from the Commerce          pace of $40 billion a month — should          modest housing recovery this year.
   Richard Freeman, an economist at       according to Kenneth Johnson, a            new claims, a better measure of labor        Department showed housing starts rose           help lower interest rates, particularly on       Sales of both previously occupied and
Harvard University, said the data point   sociology professor and senior             market trends, rose 2,000 to 377,750 —       2.3 percent from July, and were up 29.1         mortgage rates which have been hovering       newly built homes are up from last year.
to a “fragile recovery,” with the econ-   demographer at the University of           the highest level since June. It was the     percent from the August 2011 rate.              at historic lows.                             Home prices are rising more consistently.
omy still at risk of falling back into    New Hampshire.                             fifth consecutive weekly increase in the        Starts on single-family homes jumped            QE3 “should provide further support to     Builders are more confident in the market
recession, depending in part on who is       “There are signs that young adults      measure.                                     5.5 percent.                                    the housing sector by encouraging home        and are started more homes.
president and whether Congress            have turned a corner,” said Mark              Major US stock indexes opened lower,
averts a “fiscal cliff” of deep govern-   Mather, associate vice president at        with investors also wary of data showing
ment spending cuts and higher taxes       the Population Reference Bureau.                                                        month until it sees a sustained upturn on       future economic activity, dipped 0.1 per-     zero indicates contraction.
                                                                                     increasing economic weakness in China        the jobs front.                                 cent in August after rising 0.5 percent in       Nearly 23 percent of firms in the
taking effect in January. “Given the      “More young adults are staying in          and Europe. The dollar extended losses
situation in the world economy, we are    school, which will increase their                                                          Boston Federal Reserve Bank President        July and dropping 0.5 percent in June.        region reported declines in activity in
                                                                                     and prices for US government securities      Eric Rosengren, one of the more vocal              The weakness in August came from           September. That’s down from 30 percent
doing better than many other coun-        potential earnings when the job mar-       added to gains.
tries,” he said. “Government policies     ket bounces back.”                                                                      “doves” at the central bank, said the new       declines in manufacturing orders, con-        in August. The region includes firms in
                                                                                        The report on jobless claims covered      stimulus program was need to “avoid a           sumer confidence and average weekly           Pennsylvania, Delaware and New Jersey.
remain critical.”                                         Climb                      the period for the government’s September    prolonged economic stagnation.”                 manufacturing hours. Conference Board            Manufacturing, which helped lift the
               Growth                        While poverty slowed, food stamp        nonfarm payrolls survey. Claims have            The unemployment rate has been stuck         economist Ken Goldstein says the index        country out of the Great Recession, has
   The census figures also show slow-     use continued to climb. Roughly 14.9       risen 8,000 between the August and           above 8 percent for more than three
                                                                                     September survey periods, suggesting                                                         depicts an economy still facing signifi-      slowed since spring. A weak job market
ing growth in the foreign-born popu-      million, or 13 percent of US house-                                                     years, the first time this has happened         cant domestic and international weak-         and meager pay raises have hurt US con-
lation, which increased to 40.4 mil-      holds, received food stamps, the           modest job growth this month.                since the Great Depression.
                                                                                        However, Markit’s survey of purchas-                                                      ness.                                         sumer spending. Businesses are investing
lion, or 13 percent of the US popula-     highest level on record for that gov-                                                                   Programs                           The overall economy grew at an annu-       less in machinery. And slower global
tion. Last year’s immigration increase    ernment aid.                               ing managers showed hiring in the facto-
                                                                                     ry sector strengthened a bit, with the          The number of people still receiving         al rate of just 1.7 percent in the April-     growth has cut demand for US exports.
of 400,000 people was the lowest in a        Government programs did much to                                                                                                      June quarter. Many economists believe            US manufacturing activity shrank in
decade, reflecting a minimal gain of      stave off higher rates of poverty. While   employment sub-index edging up to 52.7       jobless benefits under regular state pro-
                                                                                     from 52.4.                                   grams after an initial week of aid fell         growth will stay weak in the second half      August for the third straight month,
Latinos after many Mexicans already       the official poverty rate for 2011                                                                                                      of this year.                                 according to the closely watched national
in the US opted to return home. Some      remained stuck at 15 percent, or a            US employers added only 96,000 jobs       32,000 to 3.27 million in the week ended
                                                                                     last month, a step down from July’s          Sept 8, the claims report showed. That             Manufacturing in the Philadelphia          survey from the Institute for Supply
11 million people are estimated to be     record 46.2 million people, the govern-                                                                                                 region shrank for a fifth straight month in   Management. The contraction in the
in the US illegally.                      ment formula did not take into account     141,000 count. While the unemployment        was the lowest level since mid-May and
                                                                                     rate dropped to 8.1 percent in August        most likely reflected people exhausting         September, suggesting demand for              Philadelphia region suggests the broader
   The bulk of new immigrants are         noncash aid such as food stamps,                                                                                                        American-made goods has weakened.             picture hasn’t improved.
now higher-skilled workers from           which the Census Bureau estimates          from 8.3 percent, it was because many        their benefits.
                                                                                     Americans gave up the search for work.          A measure of US economic activity               The Federal Reserve Bank of                   Paul Dales, senior US economist at
Asian countries such as China and         would have lifted 3.9 million people
                                                                                        Lackluster labor market conditions        declined in August for the second time in       Philadelphia says its index of regional       Capital Economics, said that the string of
India, contributing to increases in the   above the poverty line. If counted, that
                                                                                     prompted the Federal Reserve last week       three months, suggesting the economy            manufacturing activity had a reading of -     declines in the Philadelphia manufactur-
foreign-born population in California,    safety net would have lowered the
                                                                                     to launch an aggressive stimulus pro-        remains weak.                                   1.9 in September. That was slightly better    ing survey was consistent with his fore-
New York, Illinois and New Jersey.        poverty rate to 13.7 percent.              gram. It vowed to buy $40 billion worth         The Conference Board says its index          than the August reading of -7.1 and a July    cast for continued manufacturing trou-
                                                                                     of mortgage-backed securities each           of leading indicators, designed to forecast     reading of -12.9. Still, any reading below    bles.

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