Your Monthly Update in U.S. Economic Trends
Congress Approves Stimulus Package
President Bush signed legislation that will give most American households cash and grant tax incentives for business investment. Tax returns must be filed in order to receive the rebates. Congress, President Bush, the Federal Reserve and Wall Street hope consumers will put the money back into the economy; however, according to a recent Associated Press-Ipos poll, 45% plan on paying bills, 32% plan on saving or investing, while only 19% plan on putting the money back into the economy. The bill will provide $600 to individuals who have an annual gross income of $75,000 and lower, $1,200 for couples plus $300 for each child younger than 17 who have an annual gross income of $150,000 and lower. Singles who make more than $75,000 and couples whose income exceeds $150,000 will receive a smaller rebate. Workers, disabled veterans, seniors and veterans’ widows who can show $3,000 in Social Security or veterans’ disability benefits in 2007 will also be eligible for $300. These payments will be mailed separately from tax refunds and recipients should start receiving these payment mid-May.
WashingtonPost.com – Feb. 14, 2008
U.S. Durable-Goods Orders Increase
Factory orders for December increased by 5.2%, the largest amount in five months, according to a report from the Commerce Department. The increase was more than double what economists had anticipated, indicating business investment is holding up. A spike in demand for commercial aircraft pushed up orders for transportation products, increasing the overall total by 11.3%.
Bloomberg.com – Jan. 29, 2008
Unemployment Rate Fell in January
According to the U.S. Department of Labor, U.S. employers cut payrolls by 17,000 in January; however, the unemployment rate fell to 4.9%, down from 5% in December. Job losses were seen for a variety of services, including manufacturers, construction firms and professional and business sectors, the report showed. Education, health care, and retail posted gains in job numbers.
MSNBC.com – Feb. 1, 2008
Federal Reserve Cuts Interests Rates
Federal interest rates have been cut again by half a percentage point, now resting at 3%, according to the Federal Reserve. This is the fifth rate cut since August 2007 when the interest rate was 5.25%. The Federal Reserve has been cutting interest rates in hopes of stimulating the economy, according to analysts. This is the lowest the interest rate has been since June 2005.
ABCNews.com – Jan. 30, 2008
Productivity Increases in Fourth Quarter
Worker productivity – the amount of output per hour of work – increased at an annual rate of 1.8% in the fourth quarter of 2007, according to the U.S. Department of Labor. Overall, productivity increased 1.6% for 2007, up from the 1% gain from 2006, the report showed. Worker productivity is the key factor in determining whether living standards can rise. It allows businesses to pay their employees more without raising the price of their products, which increases inflation.
CNNMoney.com – Feb. 6, 2008
Oil Prices Drop
Crude oil futures fell due to a surplus of crude oil and gasoline and an increase in stocks of heating oil, according to the Energy Department’s Energy Information Administration (EIA). The report showed crude oil inventories increased by 7 million barrels, almost triple what analysts had anticipated. Gasoline supplies grew by 3.6 million barrels, double the 1.8 million analysts predicted, while distillates, which include heating oil and diesel fuel, increased 100,000 barrels. With supplies increasing, demand for gasoline fell by 2.4%. Light, sweet crude oil fell to $87.28 a barrel for March delivery, down from $88.31.
Forbes.com – Feb. 6, 2008
Construction Spending Drops
The Commerce Department reported that construction spending fell by 2.6% in 2007. The drop followed a 5.3% increase in 2006 and a 10.6% increase in 2005, the report showed. December construction spending fell by 1.1% from November’s rate. The housing market has had low home sales and prices, according to economists. To help the housing market, home builders have cut back on home building projects and offered consumers incentives to buy new homes.
CNNMoney.com – Feb. 1, 2008
Consumer Confidence Declines in January
Consumer confidence fell to 87.9 in January, down from 90.6 in December, according to the Conference Board Consumer Confidence Index. The Conference Board conducts a monthly survey on roughly 5,000 U.S. households to determine consumer confidence. The director of the Conference Board reported that consumers believe business conditions and the job market are weak. The Expectations Index, which measures consumers’ expectations on future economic conditions, decreased to 69.6, down from 75.8, the report showed.
Reuters.com – Jan. 29, 2008
Service Sector Fell in January
The Institute for Supply Management released their report showing the service sector index fell to 44.6 in January, down from a revised reading of 54.4 in December 2007. Economists expected the service sector index to slow but still show growth.
MSNBC.com – Feb. 5, 2008
Economic Trends is a publication of Express Services, Inc., Oklahoma City, Oklahoma. © 2008.