Gas prices jumped 6 cents overnight, as the recent spike in oil prices begins to hit filling stations across America.
The national average price for a gallon of regular gas rose 5.9 cents to $3.287, motorist group AAA said Friday. That marks the third day in a row that prices have risen, and brings the national average to the highest level since October 2008.
So far this week, gas prices have increased nearly 12 cents a gallon. And analysts expect prices to continue higher in the next few days following a sharp rise in the price of crude oil.
Gas prices were highest in Hawaii, where drivers paid $3.757 a gallon, on average. Wyoming had the lowest gas prices at roughly, $3.014 a gallon.
Tom Kloza, chief oil analyst at the Oil Price Information Service, said the jump in gas prices reported Friday was the largest one-day increase since at least 2008.
"This will definitely be the most expensive February ever," he said, adding that gas prices are typically lower during the winter months.
The jump in pump prices follows a surge in prices for crude oil, the main ingredient in gasoline. Oil prices were holding near $98 a barrel early Friday morning, one day after prices hit a high of $103 a barrel — the highest since October 2008.
Analysts expect prices to continue rising over the next few days, since gas prices typically lag trends in the oil market.
The spike in oil this week could translate to an increase in gas prices of 37 cents per gallon in the coming weeks, according Moody’s Analytics economist Chris Lafakis. He estimates that for every $1 increase in the price of oil, retail gas prices typically rise 2.5 cents a gallon.
Economists warn that an energy price shock could hurt the economic recovery in the United States. In general, every $1 increase in the price of oil costs consumers $1 billion over the course of a year.
That’s concerning because consumer spending makes up the bulk of U.S. gross domestic product, the broadest measure of economic growth.
The government said Friday that GDP was revised lower to an annual growth rate of 2.8% in the three months ending in December. The initial reading had been for a 3.2% growth rate in the period.
Oil prices have been driven higher by political unrest in North Africa and the Middle East, where much of the world’s oil comes from. Despite the surge in prices this week, the amount of oil that has been taken off the world market has been relatively minimal.
Federal Reserve Vice Chairman Janet Yellen said the central bank could use communications to make policy more accommodative, lower unemployment and raise the rate of inflation if financial markets expected a tightening of policy before the Fed intended.
If policy makers expected the Fed’s target rate to stay lower for longer “and market participants came to share that view, then financial conditions would become significantly more accommodative, even in the absence of any change in the current level of the funds rate,” Yellen said, according to prepared text of a speech today in New York.
“Such a shift in policy expectations would be associated with a lower trajectory for the unemployment rate,” Yellen said at the University of Chicago Booth School of Business’s annual U.S. Monetary Policy Forum. The shift would also cause “a somewhat higher path of core inflation,” Yellen said.
Yellen is leading a committee of policy makers to evaluate the effectiveness of the central bank’s communications strategy as it carries out a plan to purchase $600 billion of Treasuries by the end of June to boost the recovery.
Yellen also said the policy making Federal Open Market Committee is “regularly reviewing the asset purchase program in light of incoming information,” echoing the language of its statements. She said the panel “will adjust the program as needed” to fulfill its congressional mandate to deliver full employment and stable prices.
Presents Scenario
The Fed vice chair presented a scenario in which the Fed persuaded investors that it would postpone a policy tightening by one year from current expectations. Charts accompanying her presentation showed unemployment falling by 0.5 percentage point by 2013 from this action, and core inflation rising by 0.3 point.
She said that “it is not my intention to provide new information about the outlook for the U.S. economy or monetary policy,” and that she only wanted to “highlight the role of central bank communications in bolstering the effectiveness of unconventional monetary policy.”
The Fed first lowered its target interest rate to a range of zero to 0.25 percent in December 2008. In March 2009, it began saying it would keep rates low “for an extended period.”
In November 2009, the Fed said it would maintain its policy so long as the economy had “low rates of resource utilization, subdued inflation trends, and stable inflation expectations.”
Adjusting Language
Yellen said that “down the road, once the recovery is well established and the appropriate time for beginning to firm the stance of policy appears to be drawing near, the FOMC will naturally need to adjust its ‘extended period’ guidance and develop an alternative communications strategy to shape market expectations about the policy outlook.”
She said that in the case the economy faltered, current communications might cause markets to expect a later tightening of policy. “The forward guidance now in place might well be sufficient to facilitate an outward shift in the expected path of the funds rate, just as we saw over the course of last year,” she said.
Yellen also elaborated on a defense of the Fed’s large- scale asset purchases that she gave in Denver last month, saying that without the purchases, unemployment would have “remained persistently above 10 percent, and core inflation would have fallen below zero this year.”
Yellen, 64, became vice chair of the Fed in October after serving six years as president of the San Francisco Fed. She also served as a Fed governor from 1994 to 1997 and as chairman of President Bill Clinton’s Council of Economic Advisers from 1997 to 1999.
EDWARDSVILLE
Bank of England Chief Economist Spencer Dale joined policy makers Andrew Sentance and Martin Weale in voting for an interest-rate increase as a split widened on the dangers of inflation at double the target.
“For three members, the case for removing some monetary stimulus at this meeting was compelling,” according to minutes of the Feb. 10 decision published today in London. “Of those members not favoring a rise in bank rate, some thought that the case for an increase had nevertheless grown in strength.”
Among members pushing for the first interest-rate increase since July 2007, Dale and Weale voted for a 25 basis-point move from the record low of 0.5 percent, while Sentance increased his call to 50 basis points. Adam Posen maintained his vote to add 50 billion pounds ($81.2 billion) to the bank’s 200 billion- pound bond-purchase plan. The other five members voted for no policy changes. The pound rose after the minutes were published.
The Monetary Policy Committee noted the risks of inflation and said “one possibility was that the recent increase in commodity prices, which in many cases had been associated with strong growth in emerging market economies, would continue.”
On the downside, it said that while the “apparent weakness” of the economy in the fourth quarter “could prove temporary,” it could “also be an early signal of a worsening outlook for growth and hence medium-term inflation.”
Rate Bets
The pound rose as much as 0.9 percent against the dollar following the decision and was 0.5 percent stronger at $1.6219 as of 11:09 a.m. in London. Short sterling futures dropped, pushing the implied yield on the December contract up 3 basis points to 1.76 percent.
Higher yields signal investors are adding to bets that the central bank will raise interest rates. Investors are wagering that the bank will increase its benchmark rate to 0.75 percent by its May meeting, 1 percent by September and 1.25 percent by December, according to Sterling Overnight Index Average data from Tullett Prebon Plc.
Dale’s decision marks the first time a career bank official has argued for a change in policy since the bond plan reached its current limit in November 2009. Sentance, who started his drive for higher rates in June, Weale and Posen are among the four “external” members of the panel, who serve part time. The remaining five are “internal” members who are full-time employees at the bank.
‘Mounting Evidence’
“We see these developments as consistent with our expectation for a rate hike in May,” said Philip Rush, an economist at Nomura International Plc in London. “Barring any major shocks between now and then, the MPC is effectively saying that it will be appropriate to start withdrawing stimulus” around the middle of the year.
Sentance voted for a 50 basis-point increase as “there was mounting evidence that firms were able to pass on cost increases to the prices they set, and noted also that nominal domestic demand had been growing for some time at near to the top of its typical range prior to the recession.”
Posen indicated he is growing more concerned about inflation, noting that a “sustained upward trend in global demand prospects, or a shift in sentiment against sterling, could outweigh the domestic forces pushing down on inflation.”
Governor Mervyn King said last week the bank hasn’t preannounced higher rates, and suggested that investors were too quick to raise bets that borrowing costs would increase soon to contain prices. Inflation quickened to 4 percent in January, double the central bank’s target, fueled by a government sales- tax increase, soaring commodity prices and a weaker pound.
In a letter published Feb. 15 to Chancellor of the Exchequer George Osborne explaining the increase in the inflation rate, King said there was a “great deal of uncertainty” about the outlook as he noted “real differences of view” on the panel.
“With its credibility as an inflation fighter increasingly at stake,” the bank may raise rates “by the autumn — or even sooner,” Jean-Michel Six, an economist at Standard & Poor’s in Paris, said in a research note yesterday.
Asian shares fell sharply Tuesday, battered by ongoing unrest in the Middle East, an earthquake in New Zealand and a downgrade of Japan’s credit rating outlook.
Oil prices, meanwhile, soared to near $93 a barrel Tuesday in Asia as Libyan leader Moammar Gadhafi struggled to keep power of the OPEC nation amid violent protests.
The Nikkei 225 stock average shed almost 2 percent to 10,646.22, Hong Kong’s Hang Seng index lost 1.7 percent to 23,084.92, and South Korea’s Kospi was down 2.1 percent at 1,964.07.
Japan’s ability to tackle its massive debt came under scrutiny after Moody’s Investors Service downgraded its outlook for Japan’s credit rating. The rating agency on Tuesday changed its outlook for Japan’s Aa2 rating from stable to negative.
The move comes less than a month after Standard & Poor’s cut Japan’s sovereign debt rating low fee payday loans.
Stock markets in Taiwan, Singapore and mainland China also retreated. New Zealand’s benchmark lost 0.9 percent to 3,351.14 after a powerful earthquake hit the city of Christchurch. The temblor collapsed buildings and buried vehicles under debris as police tried to confirm reports of multiple deaths.
Meanwhile, sentiment was hurt by fears that the political unrest in Libya is worsening, which is pushing oil prices sharply higher. U.S. markets were closed Monday for a national holiday.
In currency markets, the dollar rose slightly to 83.16 yen. The euro was down at $1.3608 from $1.3645.
European Central Bank President Jean-Claude Trichet said the central bank isn’t discounting the possibility that the euro-region may face a greater risk of inflation.
“In our own judgment there was a balance between risks of the price stability in the medium run but we did not exclude that the future of this balance is unbalanced on the upside,” Trichet said at a press conference after a meeting of Group of 20 nations in Paris today. He also said that the ECB’s rate- setting policy is independent from unconventional measures.
Trichet last month toughened his tone on inflation as labor unions use strengthening economic growth to justify pay demands and companies pass on higher energy costs. Euro-region inflation in January accelerated to 2.4 percent, the fastest since October 2008, and Volkswagen AG, Germany’s biggest automotive employer, earlier this month agreed to raise compensation for 100,000 workers by 3.2 percent to avert strikes.
The ECB is looking “very, very carefully” at oil prices, Trichet told reporters after the briefing. “No second-round effects,” that “is our motto.”
Crude oil prices have surged 14 percent over the past six months, eroding households’ purchasing power and adding pressure on companies to protect their earnings through price increases. Trichet said that G-20 ministers also “noted inflationary pressures” and that they “were to be taken seriously.”
The Frankfurt-based ECB, which aims to keep annual gains in consumer prices just below 2 percent, in December forecast inflation to average about 1.5 percent in 2012. It will release its latest inflation forecasts next month.
ECB governing council member Axel Weber also noted that “the upward pressure is increasing” on inflation.
“I think this is the best characterization of what we see in Europe,” he told reporters. “I’ve already said in the past that we’re above 2 percent now, with a tendency to increase. I think that the turnaround in inflation developments might not come as soon as we expected in the past. So, clearly, there are risks to the upside.”
President Barack Obama says the U.S. must invest in research and development, science, and especially education _ or risk seeing the technological breakthroughs of the future happen in some other country.
Obama says he wants to focus “like a laser” on improving education. He said the quality of a nation’s education is one of the biggest predictors of a nation’s success.
The president Obama spoke at Intel Corp. in Oregon on Friday during a West Coast swing designed to highlight his vision of making the U.S. more competitive globally. Before the visit, the White House announced that Obama had picked company CEO Paul Otellin, a sometimes critic, to serve on a presidential competitiveness council.
Obama is hoping to rewrite the No Child Left Behind law to create more competition and less top-down control in education. It’s not clear that major education legislation will be able to advance on Capitol Hill with newly empowered Republicans focused on cutting the deficit.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.
President Barack Obama is promoting his job-creation agenda at Intel Corp., the Silicon Valley giant known for its processors and a commitment to math and science education.
Obama named Intel’s chief executive, a sometimes critic, to an economic advisory council as the White House pressed to build ties to business.
Obama’s West Coast swing is highlighting his vision of making the U.S. more competitive globally through increased spending on research and education, while cutting or freezing spending elsewhere.
His stop Friday at Intel follows after a private dinner in San Francisco with the leaders of Facebook, Apple and other innovators.
Trying to draw attention to the need for high-tech jobs, Obama planned to tour Intel’s semiconductor manufacturing facility with Intel CEO Paul Otellini. Before the visit, the White House announced that Obama has picked Otellini to serve on the presidential council charged with finding new ways to promote economic growth and bring jobs to the United States.
Otellini was among 20 business CEOs who met privately with Obama in December. Otellini has been a critic of Obama administration policies, saying they have created too much uncertainty for business low interest rate personal loans. He told CNN in September that the policies had not resulted in either job growth of increased consumer confidence.
In explaining Obama’s choice of the Intel leader, White House spokesman Jay Carney said Obama was not seeking to “collect people who agree with him on every issue, every policy decision made, but to create an environment, a council, where ideas, good ideas, can be generated.”
Obama created the council last month and named General Electric Co. chief executive Jeffrey Immelt as chairman.
Besides touring the semiconductor facility, Obama was to learn about programs the company has to encourage studies in science, technology, engineering and math, and get people the skills they need to compete for new high-tech jobs.
Intel last year announced a 10-year, $200 million commitment to promote math and science education. It also is one of four companies that are working to help meet Obama’s goal of getting the U.S. to first place in science and math education in a decade.
With unemployment holding at 9 percent and millions out of work, a seal of approval from Silicon Valley’s leading innovators could bolster Obama’s sales pitch. He is pushing for new spending on education, high-speed rail, faster Internet service and other programs.
At the Thursday dinner, Obama was joined by Eric Schmidt of Google, Mark Zuckerberg of Facebook and Steve Jobs of Apple, who is on his third medical leave as concern about his health mounts. Also present were the chief executives of Yahoo!, Oracle, NetFlix and Twitter, and the president of Stanford University.
Pushing back on Obama’s agenda, Republicans say government spending without restraint is hindering job creation. They want to slash the budget. On Capitol Hill, the Republican-controlled House neared a vote on whether to cut $61 billion from government spending this year.
Oregon is a solidly Democratic state. Its governor and two senators are Democrats and Obama won the state handily in 2008.
Asian stock markets were mixed Thursday, with some getting a boost from a major U.S.-French pharmaceutical deal and strong U.S. corporate earnings but other indexes sagged after Beijing slapped new restrictions on real estate purchases to cool its overheated property sector.
Oil prices hovered around $85 a barrel in Asia amid concerns that political upheaval in the Middle East could spread and disrupt crude supplies. In currencies, the dollar was down against the yen and the euro.
The Nikkei 225 stock average rose 41.28 points, 0.4 percent, to 10,849.57. Foreigners indulged in Japanese shares as the country’s auto sector rose: Honda Motor Corp. gained 2 percent and Nissan Motor Corp. was up 1.4 percent. Still, investors wanting to cash in on profits drove some blue chips lower, like Toshiba, down 2 percent, and Hitachi, down 1 percent.
“Foreign investors bought stocks in line with a steady increase in the U.S. market overnight. But gains were modest amid a dearth of fresh leads, and trading lacked a clear direction,” said Masatoshi Sato, analyst at Mizuho Investors Securities Co. Ltd. in Tokyo.
Wall Street was boosted by news that French drug maker Sanofi-Aventis SA, the world’s fourth-largest drug maker, will buy U.S. biotechnology firm Genzyme Corp. for $20 billion in cash. The deal ended months of haggling between the companies.
Meanwhile, mainland property shares in Hong Kong were pummeled a day after Beijing’s city government announced measures to ease its housing squeeze, including restrictions on purchases by nonresidents and limits on the number of homes that residents can buy.
Hong Kong’s Hang Seng was flat at 23,157.68 and the Shanghai Composite index dropped 0.4 percent to 2,913.76.
Stocks taking a hit include the Hong Kong-listed China Overseas Land & Investment, which was down 2.4 percent and China Resources Land Ltd., which dropped 2.8 percent. Among mainland shares, Poly Real Estate Group Co. slid 3 percent.
“Properties fell because the mainland government is really going to crack the whip on property developers,” said Francis Lun, general manager of Fulbright Securities Ltd. in Hong Kong. “They want property prices to go down. For two years, Premier Wen Jiabao has been promising action.”
It remains to be seen whether the measures _ on top of others recently implemented in China’s commercial capital of Shanghai and elsewhere _ will prove effective, Lun said.
“The problem is that most local governments don’t follow the central government’s directives, so we have to wait and see how effective the new measures will be,” he said.
Elsewhere, Australia’s S&P/ASX 200 was up 0.2 percent at 4,939.10. Shares in New Zealand, Indonesia and Thailand were also higher.
But South Korea’s Kospi index slipped 1 percent to 1,968.20. Singapore’s benchmark was 0.4 lower to 3,084.68 after the city-state raised its 2011 inflation forecast. Indian shares were also down.
In New York overnight, the Dow Jones industrial average gained 61.53 points, or 0.5 percent, to close at 12,288.17, its highest close since June 13, 2008. The tech-heavy Nasdaq composite index rose 21.21, or 0.8 percent, to 2,825.56 on Wednesday.
Teen clothing maker Abercrombie & Fitch Co. said its fourth-quarter net income nearly doubled on strong sales overseas and better U.S. results. Cable TV giant Comcast Corp. also reported better-than-expected earnings.
In currencies, the dollar fell to 83.56 yen from 83.82 yen late Wednesday in New York. The euro rose to $1.3584 from $1.3573,
Benchmark crude for March delivery was up 6 cents at $85.05 a barrel in electronic trading on the New York Mercantile Exchange. The contract added 67 cents to settle at $84.99 a barrel on Wednesday.
Homebuilders have yet to see a turnaround in the housing market after the worst year for new-home sales in a half-century.
The National Association of Home Builders said Tuesday that its index of builder sentiment for February remained unchanged for the fourth straight month at 16. Any reading below 50 indicates negative sentiment about the market. The index hasn’t been above that level since April 2006.
Homebuilders are struggling to compete with millions of foreclosures that are forcing home prices down. Last year was also the worst in more than a decade for sales of existing homes.
Weak sales mean fewer jobs. Each new home built creates, on average, the equivalent of three jobs for a year and generates about $90,000 in taxes, according to the trade group.
“Builders are telling us that some pockets of optimism have begun to emerge, but many prospective purchasers are concerned about selling their existing home in the current market,” said David Crowe, the home builders group’s chief economist.
High unemployment, tighter bank lending standards and uncertainty about home prices have also kept many people from buying homes. Mortgage rates had been at the lowest levels in decades, but have since started to rise.
The housing market is expected to show some signs of life this year but the recovery will likely be uneven. The latest regional data showed builders are becoming more optimistic in the Northeast and South and more grim in the Midwest and West. And while hopes for improved single-family sales now and over the next six months improved, the amount of foot traffic by prospective buyers remained flat.
The online coupon site Groupon.com and the FTD flower company are giving refunds after getting complaints that a Valentine’s Day flower deal wasn’t so sweet.
Groupon customers were offered $20 off a $40 purchase from FTD last week. But some customers found the flowers were priced lower as sale items on FTD’s own website. They complained on the Internet that FTD inflated prices for Groupon customers to make up for the discount.
But FTD President Rob Apatoff says that’s not so. He says it was clear on the sites that the coupon didn’t apply to sale items.
Still, Apatoff says his company will credit the customers’ accounts to give them the lower price because of the confusion. Both companies also say they’ll make full refunds if people aren’t satisfied.
Powered by WordPress -- XHTML 1.0