US stock futures edge up after steep declines
May 24, 2011, 8:44 a.m. EDT Associated Press
Journal By Calvin Lee Ledsome Sr.,
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NEW YORK (AP) — Stock futures rose Tuesday, a day after fears about European debt sparked steep declines in financial markets around the world.
Ahead of the opening bell, Dow Jones industrial average futures are up 39, or 0.3 percent, at 12,401. Standard & Poor’s 500 futures are up 5, or 0.4 percent, at 1,319. Nasdaq 100 futures are up 7, or 0.3, at 2,322.
The modest advance in futures trading came despite more troubling news about the state of European debt management.
Greece‘s main opposition party said it opposed the government’s new austerity measures. The announcement dashed hopes that the country might be able to repair its finances enough to get another loan package from the International Monetary Fund.
Ratings agency Moody’s warned that a Greek restructuring of its debt would constitute a default. Moody’s said such a move would hurt the credit ratings of Greece and other debt-laden European countries. The ratings agency also said it would review 14 British financial institutions for a possible downgrade.
Nonetheless, European stocks recovered Tuesday after Monday’s declines.
The FTSE 100 index of leading British shares rose 0.4 percent in midday trading. Germany’s DAX rose 0.7 percent and the CAC-40 in France was 0.2 percent higher. The euro also rose slightly against the dollar after falling to a two-month low Monday.
In economic news, the Commerce Department is expected to report at 10 a.m. Eastern on how many new homes were bought in April, offering traders a glimpse at the housing market.
Analysts expect sales to have been roughly flat, rising slightly to an annual rate of 303,000 from 300,000 in March. That is still far below the 700,000 in annual sales seen as representing a healthy market.
New homes are unappealing to budget-conscious families because their median price is nearly 31 percent higher than previously-occupied homes. That’s twice the price difference typical of a healthy economy. At their current rate, new-home sales are on track to experience a sixth straight year of declines.
The Dow fell as much as 180 points Monday before paring back some of its losses after Greece, Italy and Spain suffered weekend setbacks in their attempts to control their debt. The Dow fell 130.78 points, or 1 percent, to close at 12,381.26.The S&P 500 index lost 15.90, or 1.2 percent, to 1,317.37. The Nasdaq dropped 44.42, or 1.6 percent, to 2,758.90.
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WASHINGTON (AP) — Americans are growing more optimistic about the U.S. economy, a sentiment that is benefiting President Barack Obama despite public disenchantment with his handling of rising gasoline prices and swollen government budget deficits.
An Associated Press-GfK poll shows that more than 2 out of 5 people believe the U.S. economy will get better, while a third think it will stay the same and nearly a fourth think it will get worse, a rebound from last month’s more pessimistic attitude. And, for the first time since the 100-day mark of his presidency, slightly more than half approve of Obama’s stewardship of the economy.
Both findings represent a boost for Obama, though he still must overcome ill will over government red ink and the price of gas at the pump, now hovering around $4 a gallon.
But the public’s brighter economic outlook also could signal a boost to the current recovery, which relies to a great degree on consumer behavior. A public that is confident about economic performance is more likely to spend more and accelerate the economy’s resurgence.
The poll was conducted May 5-9 in the aftermath of the U.S. commando raid that killed Osama bin Laden, the al-Qaida leader behind the Sept. 11, 2001, terrorist attacks. The spike in public esteem for Obama as a result of that successful clandestine mission may have helped Obama’s standing on issues other than national security.
The poll coincides with renewed attention in Washington to the nation’s growing debt and the federal government’s long-term budget deficits, so any positive signs from the public could help Obama push his policy proposals. A bipartisan team of lawmakers is working with Vice President Joe Biden to identify spending cuts. Meanwhile, lawmakers also are discussing major structural changes to the tax system and to the government’s mammoth benefits programs of Medicare, Medicaid and Social Security.
The results of the AP-GfK poll stood out because other surveys taken after bin Laden’s death, while showing a spike in support for the president, continued to indicate dissatisfaction by a majority for his handling of the economy. Still, like the AP-GfK poll, other surveys also found American attitudes about the state of the nation improving.
Forty-five percent of those polled in the AP-GfK survey said the country was now moving in the right direction, an increase of 10 percentage points from five weeks ago. And attitudes about life in general remained positive, with 4 out of 5 respondents saying they were happy or somewhat happy with their circumstances.
“Once you hit bottom the only one way to go is up,” said John Bair, 23, a photographer and filmmaker from Pittsburgh. “Everybody that I come in contact with seems to be on the upswing. I consider that a pretty good thing.”
But Bair, who describes himself as a moderate to conservative independent, doesn’t believe Obama deserves re-election. He strongly disapproves of the president’s handling of gasoline prices and says Obama should do more to increase domestic production of oil.
“When I’m paying $4 for a gallon of gas, it gets me wondering what’s going on,” he said.
Obama has tried to appear engaged on gas prices even though there is little presidents can do to alter market fluctuations. He has called for new renewable energy policies and for eliminating tax breaks for oil and gas companies, while conceding those steps will not address the current price increases. The efforts have not given the public much to cheer about, however. A total of 61 percent disapprove of Obama’s approach to the rising cost of gasoline.
Indeed, for all the long-term confidence that the economy will recover, the public is hardly upbeat about the current state of things. Only 21 percent describe the economy as good and 73 percent describe it as poor. About 1 in 5 thought the economy got better during the past month; an equal number thought it got worse.
A favorable jobs report last Friday showed that private companies had exceeded expectations by creating 268,000 jobs last month, the third month of at least 200,000 new jobs. And while unemployment has dropped from a high of 10.1 percent nationally in October 2009, it is now 9 percent, the same as in January.
“We haven’t done anything to create the jobs that (Obama) promised —that all of them promised,” said John Grezaffi, 60, a rancher from Pointe Coupee Parish, La.
Grezaffi, taking a short break from working to shore up his land against a rising Mississippi River on Wednesday, said he somewhat supports Obama but does not support his handling of the economy and believes the country is moving in the wrong direction.
Approaching retirement age, he said he wasn’t eager to see his upcoming benefits shortchanged.
“I’m willing to give up a little, but not everything when you see the waste that occurs in so many other areas,” he said.
Deana Floss, 39, a Springfield, Ohio, restaurant cook and owner of a cleaning business, voiced lukewarm approval for Obama even though she doesn’t care for the state of the economy or Obama’s handling of the nation’s budget deficits.
“I don’t think he has done a very bad job with the economy,” she said. “It was already going downhill when he took the reins.”
The Associated Press-GfK Poll was conducted by GfK Roper Public Affairs and Corporate Communications. It involved landline and cell phone interviews with 1,001 adults nationwide and had a margin of sampling error of plus or minus 4.2 percentage points.
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Associated Press Deputy Polling Director Jennifer Agiesta contributed to this report.
Poll: US economy improving despite global events
Posted by Calvin Lee Ledsome Sr.,
Owner and Founder of: http://economicnewsblog.wordpress.com
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WASHINGTON (AP) — Economists say the U.S. economy is gaining strength despite political unrest in North Africa and the Middle East and last month’s devastating earthquake and tsunami in Japan.
A survey from the National Association for Business Economics finds that economists are hopeful that the broader economy is substantially improving, with rising employment reported for the fifth quarter in a row. The survey found that “companies appear to be positioning themselves for a firming economic environment,” said Shawn DuBravac, an economist with the Consumer Electronics Association, who analyzed the findings.
The outlook for employment rose slightly, reaching a 12-year high. No firms reported significant layoffs, with the only reductions coming from already planned cuts.
Sales increased for the third consecutive quarter, profit margins continued to improve and the number of economists whose firms increased spending over the previous quarter held steady. Nearly all of the 72 economists surveyed, about 94 percent, now expect the economy to grow at least 2 percent in 2011.
The quarterly survey includes the views of economists for private companies and trade groups who are NABE members. The data are reported by broad industry groupings. Many results in the survey are expressed through the Net Rising Index, or NRI — the percentage of panelists reporting better outlooks minus the percentage whose outlook is bleaker.
The survey looked at two new questions for its April survey, gauging the financial impact of anti-government unrest in the Arab world and the deadly Japanese earthquake and tsunami.
Nearly 60 percent of those polled said they expected higher costs because of political turmoil in Bahrain, Egypt, Tunisia, Libya and Syria and about 52 percent said they expected economic growth to be weaker in 2011 because of the protests and fighting.
The March 11 earthquake and tsunami, which left nearly 28,000 people dead or missing and sparked a crisis at a nuclear plant, had less of an impact on the economic forecasts. About 31 percent said costs would be higher and 40 percent said it would weaken the broader economic recovery.
In the first quarter of this year, 63 percent of economists said sales rose from the previous quarter — the highest percentage since 1994. The NRI rating for sales rose 11 points from the previous quarter to 54, and the improvement was across all industry sectors: goods, utilities, information and communications, finance, insurance and real estate, and services.
Profit margins rose to an NRI figure of 31 — the highest rating since 1983. The number of economists reporting rising profits has almost doubled over the past year, to 45 percent from 25 percent.
Prices rose, with about one third of those surveyed saying their firms had made increases over the past three months. Two-thirds of the goods-producing industry, which includes farming, mining, construction and manufacturing, reported their firms had raised prices. Similarly, the costs paid for materials rose for the third quarter in a row and wages and salaries jumped to the highest reading since a survey in October 2007.
WASHINGTON (AP) — The Obama administration warned Wednesday that a federal government shutdown would undermine the economic recovery, delay pay to U.S. troops fighting in three wars, slow the processing of tax returns and limit small business loans and government-guaranteed mortgages during peak home buying season.
The dire message, delivered two days before the federal government’s current spending authority expires, appeared aimed at jolting congressional Republicans into a budget compromise. Billions of dollars apart, congressional negotiators were working to strike a deal by Friday that averts a shutdown by setting federal spending limits through the end of September. The last such shutdown took place 15 years ago and lasted 21 days.
President Barack Obama told congressional leaders he would have them back at the White House on Wednesday if they didn’t make progress. Obama did call House Speaker John Boehner Wednesday morning. Boehner’s office said the call lasted just three minutes and that the speaker told Obama he was hopeful a deal could be reached.
As the talks continued, the White House sought to put the prospect of a shutdown in terms people would care about, warning even that the beloved Cherry Blossom parade in the nation’s capital would be wiped out. The Smithsonian Institution and national parks around the country would also be closed.
A shutdown would come at an especially busy time for the Smithsonian. The Cherry Blossom Festival, which concludes this weekend, draws many tourists to an area near the museums. The Smithsonian counts about 3 million visits each April and has already sold 23,000 IMAX movie and lunch combos to school groups for the month.
Under long-standing federal rules, agencies would not be affected that provide for U.S. national security, dispense most types of federal benefit payments, offer inpatient medical care or outpatient emergency care, ensure the safe use of food and drugs, manage air traffic, protect and monitor borders and coastlines, guard prisoners, conduct criminal investigations and law enforcement, oversee power distribution and oversee banks.
Under the shutdown scenario described by the administration, the government would have to significantly cut staffing across the executive branch, including workers at the White House and civilian employees at the Defense Department; close to 800,000 workers would be affected. Congress and the federal court system will also be subject to a shutdown.
At the Pentagon, defense officials were finalizing plans that would lay out how the department would deal with a shutdown. But they already have acknowledged that U.S. military troops — including those in war zones — would receive one-week’s pay instead of two in their next paycheck if the government closes.
Military personnel at home and abroad would continue to earn pay, but they won’t get paychecks until there is a budget agreement and government operations resume.
Col. Dave Lapan, a Pentagon spokesman, said that the Pentagon will be open on Monday and will be staffed. He said decisions on which Defense Department employees must report to work will depend on their jobs, rather than where they are based.
Key national security responsibilities, including operations in Afghanistan, Iraq and Libya and earthquake assistance to Japan would not be interrupted by a shutdown, the Pentagon said.
The CIA also won’t be closing, though it will be drawing down some non-essential personnel, to be in compliance with federal law, according to a senior intelligence official, speaking on condition of anonymity to discuss matters of intelligence.
Officials familiar with the shutdown say essential counterterrorism functions in other parts of the intelligence community will continue, like monitoring of the terrorist watch lists, and essential intelligence collection and analysis.
At the Internal Revenue Service, the tax filing deadline remains April 18 — delayed three days because of a local holiday in Washington. Tax audits, however, will be suspended if there is a shutdown.
The IRS won’t process paper returns during a shutdown. Those expecting a refund should file their returns electronically and ask that the money be deposited directly into their bank accounts. Tax payments are welcome, though it is still unclear whether help lines for taxpayers will be staffed.
Social Security payments will continue to be delivered, and applications for benefits will continue to be processed. But some services will be limited, Social Security Commissioner Michael Astrue said.
“The checks will continue to go out. The problem will be on an extended CR, it will be increasingly difficult to get changes in address, changes in status, and those types of things done,” Astrue said.
Astrue said Social Security headquarters and field offices will be closed. Some limited services will still be available at field offices, but the details are still being worked out, he said.
Medicare would still pay medical claims for its 48 million recipients, who are mainly seniors but also several million younger people who are permanently disabled or have kidney failure. Payments to doctors, hospitals and other service providers could be delayed, however, should a shutdown continue for several months.
At the National Institutes of Health, groundbreaking medical research would experience a disruption. Patients already being treated at the NIH’s famed hospital in Bethesda, Md., would continue to get that care, but new patients could not be admitted. Likewise, no new studies of drugs or other treatments could begin.
The Federal Housing Administration, which guarantees about 30 percent of home mortgages, would stop guaranteeing loans. The issuance of government backed loans to small businesses would be suspended, according to the White House.
The Obama administration said the impact on the housing market would be more severe than in 1995, the last time there was a government shutdown. The Federal Housing Administration accounts for 30 percent of the mortgage market, nearly three times the amount 16 years ago.
Among other consequences cited by the administration:
—The Environmental Protection Agency would cease issuing permits and stop reviewing environmental impact statements which will slow approval of projects.
— Most government websites would not be updated, unless they were deemed essential.
— The Environmental Protection Agency will stop issuing permits of industrial facilities for air, land and water pollution limits.
— Federal courts would be unable to hear cases as employees like clerks, stenographers, bailiffs, and security guards would not be at work.
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Associated Press writers Lolita Baldor, Anne Gearan, Stephen Ohlemacher, Lauran Neergard, Ricardo Alonso-Zaldivar and Brett Zongker contributed to this report.
