A raft of data released Thursday reinforced evidence of the economy’s gradual stabilization.
First-time applications for jobless benefits fell below a milestone level last week, heartening analysts even as they warned of the measure’s volatility. Meanwhile, the National Association of Realtors said pending home sales notched a 3.5 percent increase in November, and a key manufacturing gauge hit a 22-year high in December.
Initial claims for regular state unemployment insurance benefits fell 34,000 to a seasonally adjusted 388,000 in the week ended Dec. 25, hitting the lowest level since July of 2008, the Labor Department reported Thursday.
The level of claims helps observers to analyze the health of the labor market, and economists say claims would have to remain below 400,000 before a substantial gain in hiring happens.
Economists polled by MarketWatch had expected initial claims of 413,000. The four-week average of new claims, which is smoother than the weekly data, fell 12,500 to 414,000, also reaching the lowest level since July of 2008.
Analysts also note that claims are difficult to adjust seasonally near the holidays. Without seasonal adjustment, the initial claims level rose about 25,000.
The positive trend could lift the gloom clouding the housing industry.
“Housing affordability has improved dramatically in recent months, and the recent slide in weekly jobless claims may be allaying potential homebuyers’ fears about job security,” said Mark Vitner, senior economist at Wells Fargo.
But for now, housing’s recovery is slow at best. The National Association of Realtors said its pending-home-sales index rose to 92.2, a 3.5 percent rise from October. The index is still 5 percent below November 2009 levels.
Separately, the Institute for Supply Management said a barometer of manufacturing conditions in the Chicago region rose to 68.6 in December from 62.5 in November. That’s the 15th straight month the gauge was over the 50 level, indicating economic expansion, and well above the reading of 61 that economists expected for December.
How important is the federal deficit?
According to a new national poll, it’s very important in the minds of most Americans. But a CNN/Opinion Research Corporation survey released Monday also indicates that only one in five believe that deficit reduction should be the main goal of government today.
Sixty-eight percent of people questioned in the poll say they personally worry a lot about the size of the federal deficit, with one in four saying they only worry about it a little and 7% say they don’t worry at all about the federal deficit.
The poll also indicates that nearly eight in ten say earmarks are unacceptable, with just 19% of the public saying that earmarks, which are practice of many members of Congress of adding to bills spending project provisions for their home districts or states, are acceptable.
Opposition to earmarks earlier this month helped sink a push by Senate Democrats to pass a budget that included billions of dollars in the provisions.
"The concerns over the deficit and the opposition to earmarks helps explain why nearly half say that reducing the deficit is very important," says CNN Polling Director Keating Holland. "But only 22% say that deficit reduction should be the government’s main goal."
CNN poll numbers released last week indicate that 57% opposed an increase in the deficit to pay for tax changes and unemployment benefits, which were part of a tax cut compromise between President Obama and congressional Republicans that was passed into law.
But a CNN survey from November showed that holding the line on Social Security, Medicare, and taxes were more important to most Americans than deficit reduction. In that poll, just 19% of those surveyed thought reducing the federal deficit was more important than preventing cuts to Medicare and Social Security, and 28% believed it was more important than avoiding cuts to Medicaid.
But that survey showed that cutting deficits was as or more important than preventing defense cuts, stopping cuts to art funding or cutting government salaries.
"That may mean that reducing the deficit may be a hard sell when it comes at the cost of higher taxes or reductions in government programs," adds Holland.
The CNN/Opinion Research Corporation poll was conducted Dec. 17-19, with 1,008 adult Americans questioned by telephone. The survey’s overall sampling error is plus or minus three percentage points.
Any additional measures by Hong Kong’s government to cool house-price gains would run the risk of crimping demand among “real buyers” as well as speculators, a senior HSBC Holdings Plc executive said.
Hong Kong’s government on Nov. 19 announced additional stamp duties on short-term property holdings and higher down- payments for some mortgages, stepping up measures to curb speculation after housing prices surged more than 50 percent since the start of 2009.
“What we want to just be careful is that any further tightening would definitely be impacting the real buyer, the person who wants to live in that house,” Mark McCombe, chief executive officer of HSBC’s Hong Kong unit, said in an interview. “It’s important that Hong Kong doesn’t lose sight of property ownership being an important driver” of the economy.
Hong Kong Chief Executive Donald Tsang said when the latest measures were announced that the government was targeting “speculative activity” and the curbs “will not affect the users.” On Nov. 26, Tsang said he’s prepared to take further action if needed to stem price gains.
McCombe said he supports the steps taken so far, which include a 15 percent stamp duty on homes sold within six months of purchase. “That was a good move because it takes a little bit of the froth out of the market,” he said.
In the first weekend after the measures were introduced, sales of used homes in some of Hong Kong’s biggest private housing estates fell 83 percent from a week earlier, according to data from Centaline Property Agency Ltd. Sales have stabilized since then, Centaline said guaranteed cash advance.
Rates Raised
The property market’s rebound from the global financial crisis was powered by falling interest rates, an expanding economy and an influx of buyers from mainland China. Banks rushed to undercut each other on mortgage costs as they vied to lock in new customers and sell them additional financial services.
HSBC is Hong Kong’s biggest mortgage provider, accounting for 19 percent of all home loans in the city in the first 11 months of this year, according to Centaline.
McCombe said that while there are signs the market has recovered, it’s too early to judge the impact of the latest property curbs because of the Christmas and Chinese New Year holiday season.
“What I’m most interested in is what the behavior from February through April will be,” he said. “I think that will give us a better sense of whether or not this has had any real cooling impact on the market.”
The top five mortgage lenders in Hong Kong — HSBC, BOC Hong Kong (Holdings) Ltd., Hang Seng Bank Ltd., Standard Chartered Plc and Bank of East Asia Ltd. — last month raised costs for home loans tied to the Hong Kong Interbank Offered Rate, after mortgage competition hurt margins.
“I don’t think there’s going to be some kind of price war in 2011,” said McCombe. “Aggressive price competition is unlikely in the short term. But it’s very difficult to predict how other banks will behave.”
Back in the good old days, when his family still controlled the nation’s largest brewery and no one doubted the Busch family name was the closest thing St. Louis had to royalty, August A. Busch IV would host a small party on Super Bowl Sundays for top marketing executives.
It was an informal gathering, held at Busch’s home in Huntleigh, a 6,300-square-foot mansion with 16 rooms and a massive six-columned portico set on 4 1/2 wooded acres of an exclusive suburb. The same place is now the setting for the many unanswered questions surrounding a young woman’s death last Sunday, the type of curious tragedy that previously has stricken Busch and his famous family.
But back then, the mansion was still just a place to watch a football game, or really to watch the many Super Bowl TV ads for Budweiser and Bud Light, their Clydesdales and talking frogs.
It was a good period in Busch’s life. He had risen in 2006 at age 42 to be Anheuser-Busch’s chief executive, just like his father and his father’s father and so on. That same year he settled down and got married, ending years of broken engagements and endless relationships.
He appeared to have retired the problems of his wild youth, including a 1983 car accident that killed a young woman when he was a college freshman and a car chase with police in 1985 through the streets of St. Louis. He no longer appeared to be the party boy with a reputation for speedboats and blondes.
Many acquaintances said that Busch, known widely as the Fourth, had grown up. As he told Fortune magazine in 1997, when he was climbing the corporate ladder, “I’m not going to hang out in a bar till 11 if I need to be up at 5 to conquer the world.”
In 2000, then-Post-Dispatch gossip columnist Jerry Berger lamented Busch’s failure to produce fodder, writing: “The young Busch is much more likely these days to race from one corporate meeting to another than to posh watering holes.”
And then, in 2008, the brewery was sold.
Busch was blindsided by the $52 billion takeover of his family business, according to former co-workers. He had barely moved into the CEO’s office when it appeared that his father and former A-B CEO, August Busch III, decided to sell out. Father and son had a notoriously icy relationship. Now, one more common bond had been cut.
Busch disappeared from public view. Anheuser-Busch InBev kept him on as a nonexecutive director and gave him a rich contract as a consultant that runs through 2014. Corporate filings show that Busch attended seven board meetings in 2009. He still has an office at A-B InBev’s North American headquarters in St. Louis, although it is unclear if he has ever used it. Beer industry veterans noted his absence from the trade shows and conferences and meetings that once dominated his life.
In 2009, he and his wife divorced. Friends said he spent his time in Florida or at his Lake of the Ozarks house.
They wondered and worried what Busch would make of himself.
A-B InBev also had agreed to provide Busch with “personal security services” through the end of 2011. It was not known if security personnel were with him last weekend. An A-B spokeswoman declined to comment.
Last Sunday’s death of Adrienne N. Martin at Busch’s home is still being investigated. The St. Louis County medical examiner’s office has said it has not determined the cause of death. Results from toxicology and other tests were pending.
Martin’s ex-husband has told the Post-Dispatch that she had a heart condition, but that has not been confirmed by authorities.
Martin was pronounced dead at 1:26 p.m. last Sunday.
Martin, 27, of St. Charles, was the divorced mother of a son. She and Busch had been dating for a year, Busch attorney Art Margulis said.
A law enforcement source told the Post-Dispatch the death was being investigated as a potential overdose.
Martin’s death recalled what happened to Busch 27 years ago, when he was a freshman engineering student at the University of Arizona in Tucson.
In November 1983, also on a Sunday, Busch crashed his new Corvette. Michele Frederick, a 22-year-old waitress, was killed in the accident. Police discovered Busch at his home six hours after the accident, disoriented and suffering from a fractured skull. After lengthy legal wrangling, prosecutors in Arizona declined to press charges.
In 1985, Busch sped away from undercover St. Louis police officers, later saying he thought the detectives were kidnappers. A jury acquitted him of three counts of assault, stemming from accusations that he tried to run down detectives when they approached his car in the city’s Central West End.
The Busch family has been touched by tragedy before, in unusual ways that seemed to only confirm the family’s role as what Life magazine once termed “the baronial Busches.”
In 1976, Busch’s uncle Peter Busch fatally shot his friend David W. Leeker in a bedroom at the Grant’s Farm mansion. Peter Busch said the pistol fired accidentally. He pleaded guilty of manslaughter and received probation.
In 1974, the youngest child of August “Gussie” Busch Jr., Christina, died in a traffic accident. She was 8 years old.
The Grant’s Farm mansion, which resembles a Bavarian-styled castle, was also the place where August Busch Sr. committed suicide with a gun in 1934.
Authorities have not indicated there were any signs of wrongdoing in last Sunday’s death. But tragedy once again has visited the Busches.
And outside Busch’s home in Huntleigh, the massive iron gates blocking the driveway seemed to be less a reflection of the privilege of wealth, than Busch’s desire to block out the world.
Christmas travel rebounded Thursday in Britain after days of snow-related delays, with most services running normally at Heathrow Airport and Eurostar, but heavy snow shut down Dublin Airport for several hours.
The Irish airport suspended flights in the morning because heavy snow made the runway unsafe, but reopened in the afternoon. Ireland has been hit by unusually heavy snow and frigid temperatures in recent days, causing widespread delays.
Cleanup efforts in London were aided by a slight rise in temperature that melted much of the ice. Heathrow Airport said both runways were open and about 90 percent of flights were operating. Eurostar also reported “near normal” service on its trains between England, France and Belgium.
The long lines of the past few days disappeared from the Eurostar hub at St. Pancras Station in London, where staff handed out coffee and croissants to relieved travelers faxless payday advance.
But motoring groups warned that millions of drivers are expected to make Christmas holiday journeys over the next two days, snarling roads across Britain.
Police in England found the body of a 21-year-old student who disappeared in freezing conditions after a night out Saturday with friends. Duncan Gibbon’s body was found on an embankment in the northern city of Newcastle.
A night storm dumped snow on most of Denmark, hampering road, rail, and air traffic with up to 6 inches (15 centimeters) of snow. Worst hit was the Danish Baltic Sea island of Bornholm, where police urged people to stay indoors. In the south, the Danish army mobilized armored personnel carriers to help ambulances and other emergency vehicles get through the snow.
Buoyant in political victory, President Barack Obama on Wednesday wrapped up a long, rough year in Washington by rejoicing in a rare, bipartisan “season of progress” over tax cuts, national security and civil justice. Halfway through his term, he served notice to his skeptics: “I am persistent.”
The president who strode on stage for a news conference cut a remarkably different figure than the Obama who, just seven weeks ago, held a similar event in which he somberly admitted he had taken a “shellacking” in the midterm elections and needed to re-evaluate. This time, Obama was about to jet off to a Hawaiian holiday vacation knowing he had secured the kind of legislative wins that rarely come so bundled as they just did, particularly in a postelection lawmaking session.
Obama spoke on the same day that he found enough allies in both parties to get Senate ratification of a nuclear arms treaty with Russia, a vote watched around the world as a test of international security and presidential clout. He also signed landmark legislation to allow gays to serve openly in the military, calling himself overwhelmed by the enormity of the moment.
And that was on top of other achievements, including a hard-fought deal to extend tax cuts and unemployment insurance even as it piled on more debt, a broad food security bill, a trade deal with South Korea and declarations of progress in the widening war in Afghanistan.
“If there’s any lesson to draw from these past few weeks, it’s that we are not doomed to endless gridlock,” Obama said. “We’ve shown in the wake of the November elections that we have the capacity not only to make progress, but to make progress together.”
That spirit may be fleeting.
Obama was able to get the votes he needed in a lame-duck session in which his party still controlled the House and Senate, retiring or ousted members could act knowing they would no longer face voters, and the potential of a politically devastating tax hike on Jan. 1 forced lawmakers into action. None of those factors will be in play come January when Republicans take control of the House and have a greater voice in the Senate as well.
To a nation long tired of political gamesmanship, Obama used the moment to try to put himself above it _ and to challenge both parties to join him. He said voters wanted this “season of progress,” promising to stick with that mission and hoping “my Democratic and Republican friends will do the same.”
He also did not get all he wanted, losing some fights and swallowing a two-year extension of tax cuts for wealthier people as part of the tax deal.
Obama underscored his agenda ahead, much of it amounting to unfinished promises: deficit reduction, energy innovation, immigration reform, the closing of the Guantanamo Bay prison, education and research investments, and the biggest item of all: finding ways to create more jobs for millions of hurting Americans payday loans.
In the course of questioning, Obama revealed that his position on gay marriage is “constantly evolving.” He has opposed such marriages and supported instead civil unions for gay and lesbian couples. The president said such civil unions are his baseline _ at this point, as he put it.
“This is something that we’re going to continue to debate, and I personally am going to continue to wrestle with going forward,” he said.
The slow progress on the economy continues to pull down the spirits of the country and threaten to overshadow many of Obama’s other successes. Unemployment was measured at 9.8 percent in November, down only slightly from its double-digit high in 2009. Obama sought to broaden the burden of responsibility to Republicans for a faster economic rebound, saying “people are going to be paying attention to what they’re doing as well as what I’m doing.”
Obama sought to give credit to Congress, and chiefly the Democrats who have been running it, for what he called the most successful post-election period in decades. But he also sought to assert his own role and power, just weeks after his relevancy had been called into question.
“One thing I hope people have seen during this lame duck: I am persistent,” Obama said. “If I believe in something strongly, I stay on it.”
He saved his most emotional appeal for committing anew to the DREAM Act, a measure which would offer a path to legal status for young illegal immigrants who enroll in college or join the military. It died in Congress in the waning days of the session, overwhelmed by Republican opposition. Obama said those young people live in fear of deportation.
“It is heartbreaking,” he said. “That can’t be who we are.”
Obama also promised that deficit reduction would be a major issue in 2011. The midterm elections were seen in part as a reflection of how many Americans are sick of Washington’s spending ways, and promises over the years to rein in deficit spending have fallen short of reality when the choices get tough.
“I guarantee you, as soon as the new Congress is sworn in, we’re going to have to have a conversation about, how do we start balancing our budget or at least getting to a point that’s sustainable when it comes to our deficit and our debt?” he said.
Obama was flying to Hawaii later in the day, joining his wife and the couple’s two children for a year-end holiday. When he returns, it will be a few days before a new Congress convenes, with a House controlled by Republicans and a Senate with a shrunken Democratic majority.
Among the nation’s 35 biggest metro areas, only two had more units of government per capita in 2007 than St. Louis.
Rank: Region Governments*
1: Pittsburgh 32.9
2: Denver 32.1
3: St. Louis 31.5
4: Kansas City 30.5
5: Louisville 26.4
Average 12.1
31: San Diego 3.9
32: Phoenix 3.3
33: Washington, D payday loans direct lenders.C. 2.8
34: Los Angeles 2.6
35: Baltimore 1.5
*Local governments per 100,000 people
Source: East-West Gateway Council of Governments. 2007 Census of Governments
Treasury Secretary Tim Geithner outlined the benefits of the government’s bailout of the financial system Thursday, saying that the overall cost will be a "fraction" of the original estimate.
Geithner told the Congressional Oversight Panel that the cost of TARP, the Troubled Asset Relief Program, will be no more than the amount spent on the program’s housing initiatives.
"The remainder of the investment programs under TARP — in banks, AIG, credit markets, and the auto industry — will likely, in the aggregate, ultimately yield a positive return for taxpayers," he said.
The government created the $700 billion program at the height of the financial crisis in 2008. But the cost of TARP has been significantly reduced in the years since, as the economy has stabilized and investments made under the program have become profitable.
"Because of the success of the program, TARP is likely to cost a fraction of that amount," he said. The bailout, he said, "will rank as one of the most effective crisis response programs ever implemented," in terms of direct financial cost.
The Congressional Budget Office estimated last month that TARP will cost taxpayers $25 billion, down from a previous projected cost of $109 billion in March.
Geithner said he thinks the final cost will be below the CBO’s estimate. "I think it’s a little high," he said about the $25 billion projection. Although he acknowledged much of it depends on how the government’s housing initiatives play out, among other things.
TARP, enacted under the Bush Administration, was initially intended to stabilize the banking system by buying or backing "troubled assets." It subsequently evolved into a broader effort to rescue the economy and prop up the housing market.
The bulk of the remaining cost of TARP stems from the bailout of insurance giant AIG and the auto industry, as well as efforts to prevent foreclosures, according to CBO. Those programs cost about $45 billion, while other transactions resulted in a net gain of $20 billion for taxpayers.
Geithner said the economy has made "substantial progress" since the recession ended last year. But he acknowledged that significant challenges remain for the economy and the financial system.
"We are still living with the scars of this crisis, and both our financial system and the economy as a whole continue to show signs of significant damage" he said.
While household wealth has begun to recover, Geithner noted that many families are still struggling with high unemployment and financial stress. The housing market "remains weak" and small businesses are still under pressure, even as larger companies have returned to profitability, he said.
"It’s going to take years — years — to repair the damage," he said.
China agreed to take steps that would counter mounting losses for U.S. software companies from piracy and spur shipments of farm goods, as the two nations sought to ease trade tensions.
“We made measurable progress to open the Chinese market to U.S.-made products,” U.S. Commerce Secretary Gary Locke said yesterday at a news conference ending two days of meetings with China’s Vice Premier Wang Qishan in Washington. “Of course, now we need to ensure full implementation of these promises.”
Trade tensions have increased as China reported a record $153.3 billion of exports for November and some U.S. lawmakers called for legislation on Chinese imports to combat any advantages from what they say is an undervalued yuan. The agreements announced yesterday come ahead of a visit to Washington by Chinese President Hu Jintao next month.
“Today’s promises must be measured not by words on paper, but by tangible progress on the ground,” Myron Brilliant, senior vice president of the U.S. Chamber of Commerce, said in a statement after the announcements. “We urge both governments to quickly agree on metrics in future discussions that will quantify that new efforts are in fact translating into results.”
Trade Deficit
Locke and U.S. Trade Representative Ron Kirk met with Wang and a Chinese delegation in Washington as part of the 21st annual Joint Commission on Commerce and Trade. The U.S. trade deficit with China widened to $201 billion in the first nine months of this year, more than the deficits with the next seven largest trading partners combined.
China is at the same time the U.S.’s third-largest export market with $69.5 billion of sales in 2009. Sales of goods and services by U.S. companies in China reached $98.4 billion, more than a fourfold jump from 2000, according to the U.S.-China Business Council, a Washington-based group that represents companies including Wal-Mart Stores Inc. and Citigroup Inc.
The Chinese government also at the meetings offered fresh pledges on express delivery, wind-turbine equipment and medical- device regulations. The two nations will start work on an agreement to end restrictions on U.S. beef and poultry exports to China, Agriculture Secretary Tom Vilsack said.
Chinese Middle Class
“China’s burgeoning middle-class are discouraged by the appalling food safety records within China and are increasingly looking for food products from overseas,” Guan Anping, chief consultant at Beijing Duebound Law Office and a former Chinese trade official, said by telephone today.
Japan and China imposed restrictions on U.S. beef imports in 2003 after mad-cow disease was found in three U online pay day loans.S. cattle. China began imposing anti-dumping duties on U.S. broiler chicken products in September after the Ministry of Commerce said an investigation showed the American poultry industry received subsidized soybean and corn.
In addition, China has also called on the U.S. to relax export controls on technology products, the official Xinhua News Agency reported, citing Commerce Minister Chen Deming. China aims to achieve a “greater growth” in imports as it maintains export growth, Chen was cited as saying.
A press official with the Ministry of Commerce, who refused to be identified because of the agency’s rules, declined to comment.
U.S. Lawmakers
The U.S.-China trade gap, the drop in American manufacturing employment and the lack of appreciation of the Chinese currency, the yuan, have focused U.S. lawmakers on the commercial relationship. The House of Representatives passed legislation in September aimed at forcing China to raise the value of the yuan.
House Ways and Means Committee Chairman Sander Levin, a Michigan Democrat, and the panel’s incoming Republican chairman, Dave Camp of Michigan, wrote Kirk and Locke on Dec. 9, prodding the administration to get China to accept strong new protections for copyrighted movies, music and software and end discriminatory restrictions on U.S. investors.
The annual meeting “has been an important vehicle for dialogue with China on piracy and other issues,” the lawmakers wrote. “But improved market access results for U.S. companies, as measured by sales, jobs and exports, have been meager.”
Software Piracy
The Business Software Alliance, which represents companies such as Apple Inc. and Microsoft Corp., complains that previous commitments by China to curb piracy haven’t led to a reduction in their losses to unlicensed sales. Before the meeting, the alliance pressed Locke and Kirk to seek from the Chinese a guarantee that U.S. software sales to China would increase 50 percent in two years.
“We will know China has made real progress in reducing piracy only when software companies start seeing substantial increases in sales,” President Richard Holleyman said in an e- mail statement yesterday.
In addition to commitments on software, China agreed to deal with U.S. demands to ease its rules requiring Chinese- developed technologies for government projects and said it would revise an offer to join the government procurement agreement of the World Trade Organization in 2011.
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