WASHINGTON — The economy expanded less than expected this spring, and actually shrank in the final months of 2007, the Commerce Department said Thursday in a report raising concern the nation is headed toward, or is already in, a recession. The gross domestic product, the broadest measure of U.S. goods and services, increased at a 1.9% annual rate in the April-to-June quarter, buoyed by $78 billion in federal tax rebate checks and the strongest exports in decades. Growth was slower than economists predicted, but was up from the 0.9% pace of the previous quarter. The economy contracted at a 0.2% rate in the final months of 2007 — its worst showing since the 2001 recession.
WASHINGTON (Reuters) — Former Federal Reserve Chairman Alan Greenspan said Thursday that a slowing global economy may push the United States into recession, though it is not yet in one. "I think the data at this stage in the United States are not ... suggesting recession," Greenspan said in an interview on CNBC television. But he added: "We're right on the brink and I would be more surprised if we didn't (have a recession) than if we did, given the financial state."
WASHINGTON — The nation's unemployment rate climbed to 5.7% in July, highest in more than four years, as employers cut payrolls for a seventh month, the government said Friday. The unemployment rate jumped from 5.5% in June. The rate, which measures unemployment among people actively seeking work, was the highest since March 2004. Employers have cut jobs every month in 2008 at an average 68,667 per month. During the 2001 recession, employers cut an average 181,000 per month.
ST. LOUIS (AP) — The cost of crops and livestock has risen 16% this year compared to last year, driven higher by rising costs for feedstock and fuel, the U.S. Department of Agriculture said Thursday. Grains like corn and soybeans are trading at all-time highs this month, while wheat is down from historic highs in March but still up steeply from last year. Grain prices were up 42% for the year overall. A number of factors are driving up the cost of grains and meat, including the increasing use of crops for biofuels, and the higher cost farmers are paying for gasoline and fertilizer, said USDA statistician Daryl Brinkman.
DETROIT — General Motors said Friday that its losses widened to $15.5 billion in the second quarter as North American sales plummeted and the company faced expenses due to labor unrest and its massive restructuring plan. The loss of $27.33 per share is the third-worst quarterly loss in the automaker's history. In the same period a year earlier, GM recorded a net profit of $891 million, or $1.56 per share. Revenue for the April-June period was $38.2 billion, down $8.5 billion from a year earlier.
NEW YORK — Banks borrowed a record amount of funds from the Federal Reserve in the latest week as the year old credit crisis took a persistent toll. Banks' primary credit borrowings averaged $17.45 billion per day in the latest week, the second straight week this had hit a record and up from $16.38 billion the previous week, Fed data showed Thursday. "It shows there's a shortage of liquidity in the system," said Christopher Low, chief economist at FTN Financial in New York. Secondary credit the Fed extended, which is usually taken out by banks in need of emergency cash, rose to $89 million in the latest week, from $34 million the week before. Although these numbers are still very small compared with primary credit, "What that tells you is that there's an increasing number of banks that the Fed is classifying as 'unsound' or inadequately capitalized," Low said.
VERDE VALLEY: The market for homes in the Verde Valley, both new and old, continues to slip. Not only are sales of existing homes down from a year ago, but the average price has also continued to drop. The slump is valley wide. Home sales for the Cottonwood, Clarkdale and Cornville communities have fallen from 320 sold in the first seven months of 2007 to 191 for the same period this year. A similar trend in Camp Verde shows 32 homes sold in the last six months compared to 46 homes last year. The median price has fallen by $34,700 in the Cottonwood, Clarkdale and Cornville area to $200,800 and by $19,000 in Camp Verde to $217,000.
ARIZONA: Revenues at the state's Indian casinos fell in the latest quarter for the second time ever, the Arizona Department of Gaming reported. The state collected about $26 million from tribes in the quarter that ended June 30, down from $28.1 million in the same quarter of 2007. The department gets a percentage of revenue from tribal casinos under a 2003 contract. Casino revenues help fund education, emergency services and wildlife programs.
ARIZONA: For 27 years, the state's collection of sales taxes had been a steadily rising number. But it turned downward during the fiscal year that ended June 30, the latest sign of the state's bleak fiscal health, according to a report issued Thursday by legislative budget officials. The result has already been felt by state agencies, which in May had to absorb a collective $1.3 billion cut in the state budget to reflect the falling tax revenues. Much of that belt-tightening translated into reduced travel, a hiring freeze and sweeps of unspent agency dollars. The real pain of the state government's budget cuts will play out in the coming months, as deeper reductions to state agencies approved by lawmakers in late June start to be felt. A program to provide temporary assistance to the disabled waiting to get on Medicare or state medical assistance has been cut. Money for many of the state's vaccination programs is gone. Ditto for a scholarship program that used to provide state dollars to pay for private tuition for disabled students. The report of the state's income by the Joint Legislative Budget Committee underscores the grim financial factors that led lawmakers to cut spending in order to bridge a $2 billion deficit in the fiscal 2009 budget. Most financial analysts predict that more pain is likely in the coming year or two before the economic picture brightens.
WASHINGTON: State and local government spending has been rising three times as fast as revenue amid warnings from governors that their finances are nearing crisis stage. As many Americans face stagnant wages, high gas prices and job uncertainty, new government figures show that state and local governments boosted spending 7.8% in the second quarter compared with 2007 while revenue rose 2.5%. Government is on a hiring binge, too, even as private-sector jobs disappear. In a move to curb spending, California Gov. Arnold Schwarzenegger took sweeping action Thursday to pressure the Legislature to pass an overdue budget. He signed an order laying off up to 22,000 part-time and temporary state workers and cutting the pay of 200,000 others to the minimum wage of $6.55 per hour. The state is on track to spend $15 billion more than it will take in during the next year. The robust public spending reported Thursday by the Bureau of Economic Analysis means that government can provide more services, such as smaller class sizes, bridge repairs and expanded health care, but it also could bring higher taxes. The added spending is financed mostly by debt and budget reserves.
WASHINGTON — The Bush administration gave details Wednesday on how it plans to borrow the billions of dollars it will need to finance soaring budget deficits. Those plans include raising $27 billion by selling a new 10-year note and a new 30-year bond at the regularly scheduled quarterly auctions to be held next week. The government needs to borrow $171 billion during the July-September quarter, second-highest quarterly borrowing on record. The increased borrowing needs reflect the exploding federal budget deficit, which is projected to more than double this year and to hit an all-time high of $482 billion in the 2009 budget year.
- JJ Commentary: It’s so reassuring that we have the government to show us how to deal with declining income – just go deeper into debt!
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