Rise In Jobless Claims Boosts Fed Easing Expectations

From MSNMoney.com:

New U.S. claims for jobless benefits rose last week, hardening the view the central bank will pump more money into the economy, and keeping pressure on Democrats poised to lose congressional seats in November 2 polls.

At the same time, record-high imports from China helped push the U.S. trade deficit wider in August, while rising food and energy prices pushed inflation at the wholesale level up twice as fast as expected last month.

Initial claims for state unemployment benefits rose to a higher-than-expected 462,000 in the latest week, the Labor Department said on Thursday.

Economists polled by Reuters had expected initial claims at 445,000 in the latest week.

"These numbers don't fall out of the range of expectations, so they don't move the needle too much," said Jason Pride, director of investment strategy at Glenmede Investment and Wealth Management in Philadelphia.

Read the full article on MSNMoney.com here.

Consumer Prices Rise, but Underlying Trend Flat

From MSN Money.com:

Underlying inflation pressures were muted in August, keeping deflation fears alive, even though a rise in food and energy costs drove overall consumer prices higher.

The core consumer price index was flat last month, the Labor Department said on Friday, defying financial market expectations of a 0.1 percent gain. The core CPI, which excludes food and energy prices, rose 0.1 percent in July.

While the report strengthened the Federal Reserve's bias toward further monetary easing, the data was not so weak that the U.S. central bank is expected to announce new steps to ease monetary policy when it meets on Tuesday to assess the economy, analysts said.

"It keeps alive the possibility that the trend could turn negative over the next year or two, but the numbers are not weak enough to encourage them to start a new purchasing program next week," said Jim O'Sullivan, chief economist at MF Global in New York.

The overall CPI rose 0.3 percent, lifted by higher food and energy costs, after a similar gain in July. August's rise was a touch above expectations of a 0.2 percent increase.

Jobless Claims Hit Half A Million

In a disappointing turn of events, the number of people applying for unemployment benefits hit half a million last week. The represents the highest unemployment numbers since November of 2009. This also marks the third week in a row claims have increased, which is a major disappointment to those who thought the economy was recovering.

"These numbers are important because they indicate the rate of growth in the economy is weakening and that the rate for growth is now insufficient to stop unemployment from rising," said Mark Zandi, chief economist for Moody's Analytics.

The latest jobless claims numbers, released by the Labor Department today, mark the third straight week that they've risen. In a healthy economy, jobless claims usually drop below 400,000. Right now, they've risen to 500,000.

In Washington, the grim numbers prompted a statement from President Obama.

"This morning's news that unemployment claims rose again compels us to act," he said this morning, touting a plan to promote hiring by small business.

Continue reading at ABCNews.com…

New Claims for Unemployment Aid Reach 484K

Last week, claims for unemployment benefits rose to the highest point in over 5 months. Although a drop was anticipated, instead claims rose by 2,000.

Read more from the Forbes.com story below.

New applications for unemployment insurance rose last week to their highest level in almost six months, a sign that employers are still cutting their staffs.

The Labor Department says first-time claims for jobless benefits edged up by 2,000 to a seasonally adjusted 484,000. Analysts had expected a drop. That's the highest total since the week of Feb. 20.

Initial claims have now risen in three of the last four weeks and are close to their high point for the year of 490,000, reached in late January. The four-week average, which smooths volatility, soared by 14,250 to 473,500, also the highest since late February.

The total number of people receiving benefits dropped 118,000 to 4.45 million, the department said.

Gold Prices Hit New Record

From CNN Money.com:

Gold prices climbed to a new record Tuesday as Europe's debt troubles sparked demand for perceived safe havens, such as the precious metal, and investors hedged against inflation.

What prices are doing: Gold for August delivery rose $3.60 to $1,244.40 an ounce. It climbed as high as $1,254.50 an ounce earlier in the day, a record for intraday trading.

What's moving the market: Investors remained wary about the global economic recovery amid Europe's ongoing sovereign debt problems and looked to gold and other low-risk investments, which are attractive during times of economic crisis and uncertainty.

The metal's price has jumped 13% this year.

Gold prices also got a boost from investors who believe Europe's fiscal problems will subside and are instead worried about rising prices. The Federal Reserve's loose monetary policy has some traders worried about inflation.

What analysts are saying: "One one hand you have the possibility of additional problems in Europe going forward. And if Europe implodes, gold prices will continue to rise sharply higher," said Tom Pawlicki, precious metals analyst at MF Global.

"But if the European problems go away, gold will still trade higher based on the inflation outlook," he added. "Gold is the perfect hedge against inflation.

When the dollar loses its value, gold has been seen as the alternate currency since it holds its value."

U.S., U.K. Move Closer to Losing Rating, Moody’s Says

From Bloomberg.com:

The U.S. and the U.K. have moved “substantially” closer to losing their AAA credit ratings as the cost of servicing their debt rose, according to Moody’s Investors Service.

The governments of the two economies must balance bringing down their debt burdens without damaging growth by removing fiscal stimulus too quickly, Pierre Cailleteau, managing director of sovereign risk at Moody’s in London, said in a telephone interview.

Under the ratings company’s so-called baseline scenario, the U.S. will spend more on debt service as a percentage of revenue this year than any other top-rated country except the U.K., and will be the biggest spender from 2011 to 2013, Moody’s said today in a report.

“We expect the situation to further deteriorate in terms of the key ratings metrics before they start stabilizing,” Cailleteau said. “This story is not going to stop at the end of the year. There is inertia in the deterioration of credit metrics.”

The pound fell against the dollar and the euro for the first time in three days, depreciating 0.8 percent to $1.5090, while the dollar index snapped a four-day drop, adding 0.3 percent to 90.075.

The U.S. government will spend about 7 percent of its revenue servicing debt in 2010 and almost 11 percent in 2013, according to the baseline scenario of moderate economic recovery, fiscal adjustments in line with government plans and a gradual increase in interest rates, Moody’s said.

Mortgage Rates on 30-Year U.S. Loans Rise to 5.05

According to Bloomberg.com, US mortgage rates climbed for the first time in nearly a month; this increased the cost of borrowing and caused home sales to be the lowest levels on record. The 30-year fixed rate rose to 5.05%, up from 4.93%.

“This is potentially a preview of the data we’ll have to watch over the next few months,” Donald Rissmiller, Chief Economist at Strategas Research Partners in New York, said in a telephone interview. “Big changes are on the horizon that are going to be critical for the economy.”

Mortgage rates may rise further when a Federal Reserve program to purchase as much as $1.25 trillion in mortgage-backed securities ends next month. The program is credited with helping reduce mortgage rates, which fell to a record low of 4.71 percent in December.

Bond purchases from Fannie Mae, Freddie Mac and Ginnie Mae, which buy home loans from lenders and package them into securities, brought down yields and allowed lenders to reduce mortgage rates while still selling the bonds at a profit.

Initial Jobless Claims Unexpectedly Rise

From Yahoo Finance:

A surprising jump in first-time claims for unemployment benefits is a painful reminder that jobs remain scarce six months into the economic recovery.

The increase deflated hopes among some analysts that the economy would produce a net gain in jobs in January.

The Labor Department said Thursday that initial claims for unemployment insurance rose last week by 36,000 to a seasonally adjusted 482,000. Wall Street economists expected a small drop, according to Thomson Reuters.

The four-week average, which smoothes fluctuations, rose for the first time since August, to 448,250.

A Labor Department analyst said that much of the increase last week was due to administrative backlogs leftover from the winter holidays in the state agencies that process the claims.

Permit Request Jump, Signaling Construction Increases

The number of new building permit requests unexpectedly jumped in the U.S. this past December. The U.S. Commerce Department made the announcement yesterday in Washington, signaling a good sign for the economy and job market alike. For more information, check out the following story from BusinessWeek.com.

Applications rose 11 percent to a 653,000 annual rate last month, the most since October 2008, the Commerce Department said today in Washington. Work began on houses at a 557,000 pace, down 4 percent from November.

Builders are probably anticipating sales will increase after the government extended a tax credit for first-time buyers through June and expanded it to include some current owners. Record foreclosures and unemployment near a 26-year high represent hurdles that may prevent the industry from strengthening much further.

“After a disappointing December, homebuilding may pick up in the current quarter,” said Ryan Sweet, a senior economist at Moody’s Economy.com in West Chester, Pennsylvania. “Housing has formidable headwinds to overcome, led by foreclosures and double-digit unemployment.”

A report from the Labor Department showed wholesale prices increased 0.2 percent after jumping 1.8 percent the prior month, indicating the economy is recovering without the immediate threat of inflation. Excluding food and fuel, so-called core prices were unchanged.

Continue reading at Business Week.com…

Fewer Banks Tightened Lending Standards Last Quarter, Federal Reserve Says

From the Los Angeles Times:

Fewer U.S. banks tightened lending standards for companies and consumers in the third quarter as the economy grew for the first time in more than a year, a Federal Reserve survey showed.

Demand for most types of loans weakened at a smaller number of banks than in the second quarter, the Fed also said Monday in its quarterly Senior Loan Officer survey. For prime residential mortgages, a larger number of banks reported stronger demand, the central bank said.

The report helps explain why Fed policymakers last week said "tight credit" remains a drag on the economy and pledged to keep their benchmark interest rate near zero for an "extended period." JPMorgan Chase & Co. is among the banks that have reduced lending in response to stricter underwriting standards for consumer loans and lower demand from companies.

"It will be helpful if the banks were more prepared to lend, because there are creditworthy borrowers that are having difficulty getting credit," said Brian Bethune, chief financial economist at IHS Global Insight.

The survey of loan officers at 57 U.S. banks and 23 U.S. branches of foreign banks was conducted from about Oct. 6 to Oct. 20, the central bank said. The report doesn't identify respondents.

Loans and leases held by U.S. commercial banks have declined for 10 straight months, falling to $6.7 trillion as of Oct. 28 from $7.2 trillion at the end of 2008, according to a separate statistical release from the Fed.

Job Openings Rise, But Hiring Still Weak

Although the real estate industry is showing signs of improvement, high unemployment is still troubling this country. According to new reports, the number of job seekers outnumbers the number of job openings by six to one. These statistics come from the recent Job Openings and Labor Turnover survey from the Bureau of Labor Statistics. Their report also claims that layoffs were up by nearly 90% from the year prior in the month of September.

15.7 million people are out of work. The nation's unemployment rate rose above 10% for the first time since 1983 in October. And with fewer openings available, prospects for the unemployed are looking grim.

Job seekers now outnumber openings by more than six to one, the greatest discrepancy since the labor department began tracking job openings.

Job openings: There were fewer than 2.5 million job openings in September, down 35% from a year ago, according to the latest Job Openings and Labor Turnover survey from the Bureau of Labor Statistics.

The only bright spot, according to Bernard Baumohl, chief global economist for the Economic Outlook Group, is that the number of job openings rose slightly to 2.48 million in September from 2.42 million in August.

The uptick in job openings "could be the first break in the clouds," he said."If the economy continues to show strength, then the new job openings could very well result in an increase in employment later this year and into 2010."

Continue reading at CNN.com…

Foreclosures: 'Worst Three Months of All Time'

Despite suggestions that the housing crisis was cooling off, a new report is claiming that the third quarter of this year was actually the worst three months of all time for home foreclosures in the U.S. According to the report, over 938,000 families received foreclosure notices in the past three months. To put those numbers into perspective, 1 out of every 136 homeowners in this country was forced into foreclosure in just the past few months.

"They were the worst three months of all time," said Rick Sharga, spokesman for RealtyTrac, an online marketer of foreclosed homes.

During that time, 937,840 homes received a foreclosure letter – whether a default notice, auction notice or bank repossession, the RealtyTrac report said. That means one in every 136 U.S. homes were in foreclosure, which is a 5% increase from the second quarter and a 23% jump over the third quarter of 2008.

Nevada continued to be the worst-hit state with one filing for every 23 households. But even tranquil Vermont, where the foreclosure crisis has barely brushed the housing market, saw foreclosure filings jump nearly 170% compared with the third quarter of 2008. Still, that resulted in just one filing for every 5,023 households in the state -- the best record in the country.

The RealtyTrac report also unveiled the results for September, and it found that there was slight relief from foreclosure filings. Last month, notices totaled 343,638, down 4% compared with August. Unfortunately, that total accounts for 87,821 homes that were repossessed by lenders.

Check out the rest of the article at CNNmoney.com, or click here to read an entry on the top foreclosure alternatives I posted earlier this week.

Personal Bankruptcy Filings Soar

From the Wall Street Journal:

Consumer bankruptcies topped one million for the first nine months of this year, the highest point since the system was overhauled in 2005.

The number of personal bankruptcy filings for the nine months rose to 1,046,449 as of Sept. 30, the American Bankruptcy Institute, an organization made up of attorneys, accountants and other bankruptcy professionals, said Friday, using data from the National Bankruptcy Research Center. There were 773,810 personal bankruptcy filings for the same time period in 2008.

September's filings reached 124,790, 41% higher than the same month last year.

The 2005 revamp was intended to make it harder for Americans to shed their debts by filing for bankruptcy. In that year, before the law took effect, there were 1.35 million bankruptcy filings in the first nine months.

But a tough economic climate has sent filings soaring again and ABI expects personal bankruptcies to exceed 1.4 million by the end of the year. "Bankruptcy filings continue to climb as consumers look to shelter themselves from the effects of rising unemployment rates and housing debt," the institute's Executive Director Samuel J. Gerdano said.

Unemployment Among Youths Skyrockets to 52.2%

It was recently announced that the unemployment rate for young Americans (between 16 and 24 years old) has increased to a staggering 52.2%. This is the highest it has been since World War II and represents a significant problem for the county’s economic recovery. There has not been any real mention at any plans aimed at creating new entry-level jobs, meaning many of these youths are entering the work force with expectations of low earning potential, and a fierce job market.

"It's an extremely dire situation in the short run," said Heidi Shierholz, an economist with the Washington-based Economic Policy Institute. "This group won't do as well as their parents unless the jobs situation changes."

Al Angrisani, the former assistant Labor Department secretary under President Reagan, doesn't see a turnaround in the jobs picture for entry-level workers and places the blame squarely on the Obama administration and the construction of its stimulus bill.

"There is no assistance provided for the development of job growth through small businesses, which create 70 percent of the jobs in the country," Angrisani said in an interview last week. "All those [unemployed young people] should be getting hired by small businesses."

There are six million small businesses in the country, those that employ less than 100 people, and a jobs stimulus bill should include tax credits to give incentives to those businesses to hire people, the former Labor official said.

More Than 350,000 Homeowners Aided by Federal Mortgage Program

According to reports released this morning, federal mortgage programs have aided a surprisingly large amount of homeowners in the country. So far, over 300,000 families have been helped by the program, which is getting close to President Obama’s goal of half a million. Check out the following clip from a WashingtonPost.com article on the topic.

Lenders have helped more than 350,000 homeowners reduce their monthly mortgage payments through a federal foreclosure prevention program, according to government data released Wednesday morning.

That brings the industry closer to meeting the Obama administration's goal of modifying the loans of at least 500,000 borrowers by Nov. 1. But the data illustrate that some large lenders continue to struggle to address the backlog of homeowners in need of help.

Under the federal program, known as Making Home Affordable, lenders are paid to lower the payments of troubled borrowers. Consumer advocates and homeowners have complained that it's still difficult to reach lenders for help and confusion remains about how the program works.

Since the initiative was launched in March, 12 percent of delinquent borrowers have received help under the program, according to the Treasury data. That is up from less than 10 percent last month.

Obama Raises 2010 Deficit Estimate to $1.5 Trillion Obama Raises 2010 Deficit Estimate to $1.5 Trillion

According to Bloomberg.com, the unemployment rate is expected to surge to 10 percent, while the budget deficit is predicted to be a staggering $1.5 trillion. These numbers are both much higher than the Obama administration had predicted, and the announcement has many wondering if the recession will last longer then we had all hoped.

The Office of Management and Budget forecasts a weaker economic recovery than it saw in May as the gross domestic product shrinks 2.8 percent this year before expanding 2 percent next year, according to the administration’s mid-year economic review issued today. The Congressional Budget Office, in a separate assessment, forecast the economy will grow 2.8 percent next year. Both see the GDP expanding 3.8 percent in 2011.

“While the danger of the economy immediately falling into a deep recession has receded, the American economy is still in the midst of a serious economic downturn,” the White House report said. “The long-term deficit outlook remains daunting.”

The budget shortfall for 2010 would mark the second straight year of trillion-dollar deficits. Along with the unemployment numbers, the deficit may complicate President Barack Obama’s drive for his top domestic priority, overhauling the U.S. health care system.

“It throws a wrench in health-care reforms,” Maya MacGuineas, president of the bipartisan Committee for a Responsible Federal Budget, said in an interview. “No matter the specific numbers, they’re a constant reminder that we’re in bad, bad shape.”

Tax Credit For Home Purchase Could Rise

A couple of weeks ago, I published an article on the pros and cons of buying a home in 2009, and one of the major pros on the list was the new homebuyers credit. Lately there has been a lot of talk surrounding the possibility of the same homebuyers tax credit being extended form $8,000 to $15,000.

This would come as a pleasant surprise to the many American taxpayers who have taken advantage of the credit, and could potentially provide another nice boost for the struggling real estate market. Will the change actually take effect this year? It is probably still too early to tell, but I certainly think it could be a possibility if the economy continues to struggle. For more information on the issue, check out the following story from USA Today.

Lawmakers and businesses are calling for expansion of a tax credit for first-time home buyers that has helped spark home sales in an otherwise dismal real estate market.

With the tax credit scheduled to expire in fall, some business groups say the amount of the credit, now capped at $8,000, should be raised to $15,000 and applied to anyone who buys a home.

First-time buyers make up a hefty 40% of home purchases, according to the National Association of Realtors (NAR), which is about 5 percentage points higher than the historical average.

The credit, introduced in July 2008, was expanded in February as part of the economic stimulus package. The proposals may face headwinds amid growing public criticism of government spending to rescue the economy and the widening budget deficit.

Some economists say a tax benefit is vital to spur home buying and help stabilize prices.

Continue reading this story, here.