Monday February 2, 2009, 6:12 pm EST
Consumer spending and incomes fall; savings rise
WASHINGTON (AP) -- Consumer spending fell for a record sixth
straight month in December as recession-battered households, worried about
surging layoffs, boosted their savings rates to the highest level since May.
Economists expect consumer spending, which accounts for the
largest portion of total economic activity, to remain weak this year,
prolonging an already painful recession.
The Commerce Department reported Monday that personal consumption
spending dropped by 1 percent in December. That was slightly worse than the 0.9
percent decline economists expected. The government also revised its November
estimate lower to show spending fell 0.8 percent rather than 0.6 percent in
that month.
Macy's to cut 7,000 jobs, slash dividend
NEW YORK (AP) -- Macy's Inc. announced Monday that it will cut
7,000 jobs, almost 4 percent of its work force, reduce its contributions to its
employees' retirement funds and slash its dividend to preserve cash amid a
severe pullback in consumer spending.
The Cincinnati-based department store chain also delivered bleak
earnings and sales forecasts for the year.
Macy's said the cuts, which include some unfilled jobs and 1,900
positions being eliminated in a restructuring now under way nationwide, will
come at corporate offices, stores and other locations. The company employs
about 180,000 people.
Tech stocks rise but broader market declines
The market's concerns Monday were focused on two fronts: the
economic stimulus proposal now before the Senate, and a possible plan to give
further aid to the nation's banks. Meanwhile, mostly negative economic data and
news of more layoffs helped extend the gloomy mood that gave the market its
worst January ever.
The Dow Jones industrial average fell 64.03, or 0.80 percent, to
7,936.83, hurt by sliding industrial, energy and financial stocks.
GM, Chrysler offer new retirement, buyout packages
DETROIT (AP) -- General Motors Corp. and Chrysler LLC are
offering blue-collar employees another round of buyout and early retirement
offers as the automakers try to cut their work forces and reduce expenses,
union officials said.
GM detailed its offers in an e-mail message to local union
officials Monday, according to a union official who spoke on condition of
anonymity because workers have yet to be notified of the packages.
Chrysler made its offers Friday to all hourly workers represented
by the United Auto Workers except those at the company's Kenosha, Wis., engine
plant, according to a memo detailing the offers that was obtained by The
Associated Press.
Fed: Banks still tightening loan standards
WASHINGTON (AP) -- Many banks have made it harder for borrowers to
obtain all kinds of loans over the last three months despite a $700 billion
federal bailout program and a flurry of other bold moves to stem the worst
financial crisis to hit the country since the 1930s.
The Federal Reserve in its quarterly survey of bank lending
practices released Monday found large numbers of banks reporting tighter credit
standards across a broad range of loan products -- from credit cards and home
mortgages to business loans.
Manufacturing index for Jan. rises from record low
WASHINGTON (AP) -- A private measure of the manufacturing
sector's health for January rose from a record low, but still posted the 12th
straight month of contraction amid a global recession.
The Institute for Supply Management, a trade group of purchasing
executives, said Monday that its manufacturing index rose to 35.6 in January
from an upwardly revised 32.9 in December. The January reading was above the
32.6 that economists surveyed by Thomson Reuters had expected.
Any reading above 50 signals growth,
while a reading below 50 indicates contraction.
The index has fallen steadily since August as the economy deteriorated, hitting
a 28-year low in December.
Mattel 4Q profit falls by nearly half
NEW YORK (AP) -- As toy maker Mattel Inc. reported that its
profit fell almost by half for the key fourth quarter and more than one-third
for the year, it said Monday that it will raise its prices and cut its 2009
spending, including on advertising.
Analysts had expected Mattel to report weak results for the
quarter that included the worst holiday season in decades. But the company's
profit and sales fell further than most predicted, and its shares fell more
than 16 percent in trading Monday.
Toys tend to resist economic strain better than many products
because parents tend to keep spending on their children even when they spend
less on themselves and on household goods.
Oil falls 4 percent on more bad economic news
SIOUX FALLS, S.D. (AP) -- Oil prices tumbled nearly 4 percent
Monday in a volatile trading day fraught with more bad economic news, including
thousands of job cuts by Macy's department store.
Light, sweet crude for March delivery fell $1.60 to settle at
$40.08 a barrel on the
Consumers have cut spending on everything from clothes to
gasoline, and those cuts are showing up in falling crude prices and tumbling
sales for retailers.
Obama stimulus plan faces changes in Senate
WASHINGTON (AP) -- A top Republican called for more mortgage
relief and additional tax cuts in President Barack Obama's massive economic
stimulus package as Democrats conceded privately they will drop items that have
drawn bipartisan criticism.
Senate Minority Leader Mitch McConnell, R-Ky.,
promised that Republicans would offer a plan to have the government step in to
reduce mortgage rates to the 4 percent range, which could shore up home prices
and lower housing payments for millions of Americans.
At the same time, two questionable items in the plan -- $75 million
for smoking cessation programs and $400 million to slow the spread of HIV and
other sexually transmitted diseases -- have already been dropped from the most
recent draft of the measure.
Humana reports lower 4Q earnings
LOUISVILLE, Ky. (AP) -- Health insurer Humana Inc. reported a 28
percent drop in fourth-quarter profit Monday, driven by higher claim expenses
from its stand-alone Medicare prescription drug plans, lower investment income
and a loss in its commercial business.
The company again predicted a big turnaround in the next year,
forecasting earnings per share in the range of $5.90 to $6.10 for 2009,
compared with $3.83 for the year just ended.
Top company executives also gave assurances that the drag on
Humana's 2008 earnings from its Medicare prescription drug plans, dogged by
premiums the company set too low, were now in the past.
By The Associated Press
The Dow Jones industrial average fell 64.03, or 0.80 percent, to
7,936.83.
The Nasdaq
composite index rose 18.01, or 1.22 percent, to 1,494.43. The Standard &
Poor's 500 index slipped 0.44, or 0.05 percent, to 825.44.
The Russell 2000 index of smaller companies rose 6.08, or 1.37
percent, to 449.61.
Light, sweet crude fell $1.60 to settle at $40.08 a barrel on the
In other Nymex trading, gasoline
futures tumbled 19 cents to settle at $1.1535 a gallon. Heating oil slid 9.16
cents to settle at $1.3424 a gallon while natural gas for March delivery rose
14 cents to settle at $4.557 per 1,000 cubic feet.
In