In surprise news which sent the pound sliding on Thursday, official figures showed that the Government borrowed £4.3 billion last month.

It was the first time since 1993 that the public finances had gone into the red in January – a month in which tax revenues usually push the Exchequer into the black.

Economists said that the scale of the shortfall in the budget could this year mount to above £180 billion – higher than even the Chancellor’s forecast of a record £178 billion.

Such a deficit would, at 12.8 per cent of British gross domestic product, be even greater than the deficit faced in Greece, which is facing a full-scale fiscal crisis and may need to be bailed out by fellow euro nations or the International Monetary Fund.

The public borrowing figures coincided with further bad news from the housing market, as the Council of Mortgage Lenders reported that mortgage lending dropped last month by 32 per cent, hitting the lowest monthly total in a decade.

The Bank of England also reported a decline in lending to businesses, indicating that the economic slowdown is far from over.

Source/Full Story: Telegraph

Walmart has suffered its first fall in quarterly sales at its US discount stores, underlining the challenges facing future growth in its home market as the economy recovers.

During the important holiday quarter ending on January 31, net sales at Walmart’s 3,400 plus US stores fell 0.5 per cent year-on-year to $71bn, while comparable store sales declined 2 per cent. Customer traffic also fell.

The retailer blamed price deflation in food and electronics for lowering the overall value of its sales, as well as the impact of store refurbishment.

The decline contrasted with the strong sales and traffic growth during its first three quarters, as low prices attracted new budget-minded shoppers.

Tom Schoewe, chief financial officer, argued that the declines did not mean Walmart was losing some of the customers it had gained during the recession, saying the “modest decline” in traffic was “not in our mind an indication of trend”.

He highlighted the cautious mood of Walmart’s largely low-income shoppers, saying there was still a high level of anxiety over unemployment.

Source/Full Story: FT.com

Retail sales unexpectedly fell in December, leaving 2009 with the biggest yearly sales drop on record and highlighting the formidable hurdles facing the economy as it struggles to recover from the recession.

A second disappointing economic report yesterday showed that the number of newly laid-off workers requesting unemployment benefits rose more than expected last week.

While many economists were puzzled by the decline in retail sales, they cautioned that the December figures do not necessarily signal a big consumer pullback and could be a blip.

Source/Full Story: Philadelphia Inquirer

State and local tax revenues fell 7% in the third quarter of 2009 from a year ago, the Census Bureau said in a report underscoring how the economic downturn is stressing government collections.

Sales taxes declined 9% to $70 billion in the third quarter compared with the year-ago period, the Census Bureau said. Income taxes plunged 12% to about $58 billion. Together, sales and income taxes make up roughly half of state and local tax revenue.

“We expect continued weakness well into 2010 if not further,” said Lucy Dadayan, an analyst at the Rockefeller Institute of Government at the State University of New York.

Property taxes increased 3.6% in the third quarter compared with a year ago. But as property assessments catch up with falling residential and commercial real-estate values, property-tax revenues are expected to be weak. That will have a particularly severe impact on local governments, which fund much of their operations from property taxes.

“At minimum, cities will be working through the catastrophic drops in revenue for the next 18 months to two years,” said Mark Muro of the Brookings Institution’s Metropolitan Policy Program.

Source/Full Story: WSJ.com

Mark Zandi, chief economist at Moody’s Economy.com in West Chester, Pennsylvania, said in an interview with Reuters home prices will resume their decline by early next year as foreclosure sales pick up again.

“The housing crash is not over,” he said.

The U.S. housing market has suffered the worst downturn since the Great Depression, and its impact has rippled through the recession-hit economy as well as the rest of the world.

A setback for the hard-hit housing market could portend problems for the U.S. economy.

Home prices, as measured by the Standard & Poor’s/Case-Shiller U.S. National Home Price Index, will trough in the third quarter of 2010 after declining 38 percent, Zandi said.

The index peaked in the second quarter of 2006 and hit a trough in the first quarter of 2009, a drop of about 32 percent.

Source/Full Story: Zandi | Reuters

The world is much closer to running out of oil than official estimates admit, according to a whistleblower at the International Energy Agency who claims it has been deliberately underplaying a looming shortage for fear of triggering panic buying.

The senior official claims the US has played an influential role in encouraging the watchdog to underplay the rate of decline from existing oil fields while overplaying the chances of finding new reserves.

The allegations raise serious questions about the accuracy of the organisation’s latest World Energy Outlook on oil demand and supply to be published tomorrow – which is used by the British and many other governments to help guide their wider energy and climate change policies.
‘There’s suspicion the IEA has been influenced by the US’ Link to this audio

In particular they question the prediction in the last World Economic Outlook, believed to be repeated again this year, that oil production can be raised from its current level of 83m barrels a day to 105m barrels. External critics have frequently argued that this cannot be substantiated by firm evidence and say the world has already passed its peak in oil production.

Now the “peak oil” theory is gaining support at the heart of the global energy establishment. “The IEA in 2005 was predicting oil supplies could rise as high as 120m barrels a day by 2030 although it was forced to reduce this gradually to 116m and then 105m last year,” said the IEA source, who was unwilling to be identified for fear of reprisals inside the industry. “The 120m figure always was nonsense but even today’s number is much higher than can be justified and the IEA knows this.

“Many inside the organisation believe that maintaining oil supplies at even 90m to 95m barrels a day would be impossible but there are fears that panic could spread on the financial markets if the figures were brought down further. And the Americans fear the end of oil supremacy because it would threaten their power over access to oil resources,” he added.

A second senior IEA source, who has now left but was also unwilling to give his name, said a key rule at the organisation was that it was “imperative not to anger the Americans” but the fact was that there was not as much oil in the world as had been admitted. “We have [already] entered the ‘peak oil’ zone. I think that the situation is really bad,” he added.

The IEA acknowledges the importance of its own figures, boasting on its website: “The IEA governments and industry from all across the globe have come to rely on the World Energy Outlook to provide a consistent basis on which they can formulate policies and design business plans.”

Source/Full Story: The Guardian
Technorati Tags: Peak Oil

The Social Security Administration makes it official Thursday: There will be no cost of living increase for Social Security recipients next year, the first year without one since automatic adjustments were adopted in 1975.

The announcement comes as President Barack Obama and key members of Congress call for a second round of $250 payments to more than 50 million seniors, veterans, retired railroad workers and people with disabilities.

The payments would be equal to about a 2 percent increase for the average Social Security recipient. The cost: $13 billion.

Obama called on Congress Wednesday to approve the payments, and several key members of Congress said they would.

“This additional assistance will be especially important in the coming months, as countless seniors and others have seen their retirement accounts and home values decline as a result of this economic crisis,” Obama said in a statement.

Blame falling consumer prices for no automatic increase next year. By law, Social Security’s cost-of-living adjustment, or COLA, is pegged to inflation, which was negative this year, due largely to falling energy costs.

Source/Full Story: Yahoo! News
Technorati Tags: Social Security, COLA

U.S. mortgage applications fell last week despite the lowest loan rates in four months, the Mortgage Bankers Association said on Wednesday, in another sign that housing will likely recover slowly from its three-year plunge.

Home loan applications fell a seasonally adjusted 2.8 percent in the September 25 week, driven down by a 6.2 percent drop in demand for purchase loans and a 0.8 percent decline in refinancing requests.

Borrowing costs inched closer to record lows, with average 30-year rates dipping 0.03 percentage point to 4.94 percent.

The 30-year rates were the lowest since the week ended May 22, at 4.81 percent, after hitting an all-time low of 4.61 percent in March, according to the industry group. A year ago, before intensive government interventions, 30-year rates averaged 6.33 percent.

Source/Full Story: Reuters
Technorati Tags: mortgages

The U.S. private sector eliminated 532,000 net jobs in May, the fewest jobs lost since November, according to the ADP employment index released Wednesday. Goods producing industries cut 267,000 jobs while services cut 265,000. The index comes two days before the government releases its estimate of May nonfarm payrolls. Economists surveyed by MarketWatch are looking for payrolls to drop by 500,000 in the government survey, which would be the smallest decline since October. Including government jobs not counted in the ADP report, the ADP index implies total nonfarm payrolls may have fallen by 545,000 in May, close to the number of jobs lost in April.

Source/Full Story: MarketWatch

US unemployment climbed to 8.9 per cent in April, its highest level in a quarter of a century, as the economy shed more than half a million jobs, official figures revealed on Friday.

The latest non-farm payrolls data showed that 539,000 jobs were lost in April, making it the seventh-worst month for job losses in half a century.

The decline was down from a revised 699,000 loss the previous month and the smallest monthly loss total since last October. However, the reduction was mostly due to increased government hiring, boosted by a once-in-a-decade census. In the private sector, 611,000 jobs were lost.

“While it is somewhat encouraging that this number is lower than it has been in each of the past six months, it is a sobering toll,” said Barack Obama, US president. “It underscores the point that we are still in the midst of a recession that was years in the making and will be months or even years in the unmaking.”

FT.com

Private-sector employment in the United States fell by 491,000 jobs in April, according to the ADP employment index released Wednesday. The March number was revised higher to a decline of 708,000 from a decline of 742,000. The index comes two days before the government releases its estimate of April nonfarm payrolls. Economists are looking for payrolls to drop by 580,000 in the government survey, which would be the smallest decline since October.

Source/Full Story:: MarketWatch

The World Health Organization cautioned that the swine flu outbreak could gain momentum in the months ahead, despite claims by the health secretary of Mexico — the epicenter of the outbreak — that the virus “is in its declining phase.”

The outbreak is only about 10 days old, and even if the illness is declining, it could return, said Gregory Hartl, the WHO spokesman for epidemic and pandemic diseases, at a briefing Sunday.

“I … would like to remind people that in 1918 the Spanish flu showed a surge in the spring, and then disappeared in the summer months, only to return in the autumn of 1918 with a vengeance,” Hartl said. “And we know that that eventually killed 40 million to 50 million people.”

Mexican authorities believe the virus’s most active period in Mexico was between April 23 and April 28, and Mexican Health Secretary Jose Cordova described the outbreak as being in decline in his country.

As of Sunday, WHO confirmed 898 cases of swine flu — known to scientists as influenza A (H1N1) — reported in 18 countries.

Mexico has 506 confirmed cases, including 19 deaths, WHO reported.

The United States has reported 226 confirmed cases in 30 states. The U.S. cases include one death — a Mexican toddler visiting relatives in the United States.

Source/Full Story:: CNN.com

Wait, didn’t I just hear the talking heads say that things were looking better?

The U.S. economy contracted violently again in the first quarter of the year as business investment declined at a record rate, the Commerce Department reported Wednesday. Real gross domestic product fell at a 6.1% annualized rate in the first quarter, nearly matching the 6.3% decline in the fourth quarter of 2008. The two-quarter contraction is the worst in more than 60 years. The big story for the first quarter was in the business sector, where firms halted new investments, and shed workers and inventories at a dizzying pace to bring down production and stockpiles to match the lower demand from U.S. and foreign markets.

Source/Full Story:: MarketWatch

No great surprise here…

An unexpected 25% surge in personal thefts and a 4% increase in burglaries are recorded in the first set of official quarterly crime figures since the economic recession took hold.

A worrying rise in what the Home Office calls “stealth and snatch thefts” is accompanied by a 5% increase in robberies at knifepoint, according to the police-recorded crime figures published today comparing October to December 2008 with the same period in 2007.

The figures show a 16% drop in gun crime and a fall in the number of people stabbed to death from 59 to 52 over the same period. They record that the increase in robberies at knifepoint occurred within the context of an overall 2% fall in the total number of street robberies.

Overall there was a 4% drop in offences recorded by the police. The British Crime Survey, which is based on a survey of 40,000 people’s experience of crime, shows that the volume of all types of offences , including violent crime, remained broadly stable during 2008.

The figures contain the first confirmation of Home Office projections that the economic recession and rise in unemployment are likely to be accompanied by an increase in some types of crime, particularly involving theft of property and burglary. The 4% rise in burglary, including domestic burglary, last winter comes on top of a similar increase between July and September and marks the end of a sustained 55% decline in burglary since the mid-1990s.

Source/Full Story::  guardian.co.uk

Orders for U.S. durable goods and home sales probably retreated in March after rebounding the previous month, showing any economic recovery will be slow to develop, economists said before reports this week.

Bookings for goods meant to last several years fell 1.5 percent, the fifth drop in six months, according to the median forecast in a Bloomberg News survey ahead of a Commerce Department report April 24. Combined sales of new and existing homes likely decreased to a 5.02 million annual rate, down from a 5.06 million pace in February, other figures may show.

Companies may not invest in new equipment nor add to payrolls until sales here and abroad show sustained gains and government efforts to stem the recession take hold. Record foreclosures are adding to the glut of properties on the market, leading to a drop in values that helps stabilize sales even as it hurts builder profits.

“It’s not a good environment for capital spending,” said Michael Feroli, an economist at JPMorgan Chase & Co. in New York. “Housing doesn’t seem to be getting worse, which is good, because you’ve got to crawl before you can walk.”

A decline in orders for durable goods would follow a 3.5 percent jump in February. The Commerce Department’s report may also show bookings excluding transportation equipment dropped 1.2 percent last month, according to the Bloomberg survey.

Source/Full Story::  Bloomberg.com