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

A record one in seven U.S. mortgages were in foreclosure or at least one payment past due in the third quarter, according to fresh data signaling the recovery in the housing market will be tepid at best.

U.S. mortgage delinquency rates and the percentage of loans that entered the foreclosure process also jumped to records from July to September, the Mortgage Bankers Association said on Thursday.

Rising job losses were behind the increasingly bleak portrait of the housing market in a trend that will continue into next year, the group said in data that adds to recent evidence of a still-struggling housing market.

Housing and related business account for about 20 percent of the economy and recovery is essential to bring unemployment down from a 26-1/2-year high and kick-start economic growth.

Source/Full Story: Reuters

The number of bankruptcies across the country was 43 per cent higher in September than at the same point a year ago, government data shows.

The latest figures provided by the Office of the Superintendent of Bankruptcy Canada show the increase is disproportionately slanted towards consumer bankruptcies over business insolvencies. The September figure for the former was up by 45.5 per cent in the last year; the latter by only 1.6 per cent.
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“It’s got to do with unemployment,” he said. “It’s consumer driven in part because unemployment continues to rise, which makes it hard to keep up with bills. But companies are better structured to handle the recession because they weren’t as debt-addled as consumers,” he said.

Source/Full Story: CBC
Technorati Tags: bankruptcy

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The government will release figures this week expected to show that the economy has awakened from its deepest slump since the 1930s and is in the early stages of a recovery. But the following week, the government will issue another set of figures expected to show unemployment continuing to rise toward and possibly above a clearly recessionary 10 percent.

How can both be possible?

The government releases third-quarter Gross Domestic Product figures on Thursday. Many forecasters say they will show GDP growing at an annual rate of about 3 percent, validating a widely held belief among economists that the recession ended in June or July.

But try telling that to the more than 15 million still unemployed, the small businesses and individuals who can’t get loans and the people whose homes are worth less than their mortgages.

Assertions by government and private economists that the recession is over — issued amid graphic examples of continuing wide distress — are raising fresh questions about economic scorekeeping.

Source/Full Story:  Yahoo! News

The British economy is in its longest recession on record, as figures out this morning showed a shock 0.4% drop in gross domestic product (GDP) in the third quarter of the year.
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TUC general secretary Brendan Barber said he hoped today’s figures would “head off the growing signs of complacency” on an economy which remains “extremely fragile”.

“Even if we had achieved a technical recovery today, it would not feel like a recovery to the thousands losing their jobs or afraid that they will join the dole queue in the months ahead when unemployment will continue rising. It takes more than a statistical read out and the return of big bank bonuses for a real recovery,” he said.

Philip Shaw, chief economist at Investec bank, said: “We thought there was a chance that the economy could contract, but not by this much … the numbers do come as a big shock.”

Peter Dixon, economist at Commerzbank in London said the figures made it more likely the Bank of England would next month extend its policy of flooding the economy with money, known as “quantitative easing”.

Source/Full Story: guardian.co.uk

Source/Full Story: FT.com

Whoda thunk it…

The number of working Americans turning to free government food stamps has surged as their hours and wages erode, in a stark sign that the recession is inflicting pain on the employed as well as the newly jobless.

While the increase in take-up is often attributed to the sharp rise in unemployment – which on Friday hit 9.7 per cent – the Financial Times has learnt that some 40 per cent of the families now on food stamps have “earned income”, up from 25 per cent two years ago.

The agriculture department, which runs the programme, attributes this rise to workers having their hours cut back.

“I’m sort of stunned, it seems like a dire warning . . . that even the jobs people are retaining in this recession aren’t at the wage level and hours level that they need to provide for their families,” said Heidi Shierholz, economist at the Economic Policy Institute.
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Food stamps are distributed once a month on electronic cards that can be spent at many grocery stores. The $787bn stimulus bill added about $80 (€55, £50) to a family’s monthly allowance, which now stands at an average $290.

Technorati Tags: food stamps, welfarre

Rhode Island will shut down its state government for 12 days and hopes to trim millions of dollars in funding for local governments under a plan Gov. Don Carcieri outlined Monday to balance a budget hammered by surging unemployment and plummeting tax revenue.

The shutdown will force 81 percent of the roughly 13,550-member state work force, excluding its college system, to stay home a dozen days without pay before the start of the new fiscal year in July.

The closures come as the worst recession in decades has eliminated hundreds of millions of dollars in tax collections and pushed unemployment to 12.7 percent, the second-highest jobless rate in the nation behind Michigan.

Carcieri predicted the state’s fiscal future could grow even bleaker.

Source/Full Story: sfgate.com

The country’s growing unemployment is overtaking subprime mortgages as the main driver of foreclosures, according to bankers and economists, threatening to send even higher the number of borrowers who will lose their homes and making the foreclosure crisis far more complicated to unwind.

Economists estimate that 1.8 million borrowers will lose their homes this year, up from 1.4 million last year, according to Moody’s Economy.com. And the government, which has already committed billions of dollars to foreclosure-prevention efforts, has found it far more difficult to help people who have lost their paychecks than those whose mortgage payments became unaffordable because of an interest-rate increase.

“It’s a much harder nut to crack, unemployment,” said Mark A. Calabria, director of financial regulation studies at the Cato Institute. “It’s much easier to bash lenders than to create jobs.”

Source/Full Story: msnbc.com

After a near six-month ascent, the U.S. stock market is more than likely headed for a pause as investors waited for signals to continue a rally that many now view as overdone in light of the still-shaky economy.

“We’ve had a great run here, but here’s five reasons to be concerned going into the fall,” said Art Hogan, chief market strategist, Jefferies & Co.:

• September is historically the worst month of the year.

• The market has had a significant run up from its March 9 lows, up about 50%. “On valuation alone we may be getting ahead of ourselves,” said Hogan.

• Insider selling. “The significant increase in insider selling activity suggests that in the eyes of corporate management valuations are becoming stretched at current levels,” the analyst said.

• Short interest is winding down. “The lack of meaningful short positions for the most economically sensitive sectors eliminates a source of market support that was significant during the most recent rally,” said Hogan.

• The consumer in general. “Unemployment is rising, the value of consumers’ home continues to be languishing, and the consumer seems to have become a saver. The de-leveraging of the U.S. consumer is going to be a long process,” said Hogan.

Source/Full Story: MarketWatch

A record 33.8 million people received food stamps in April, up 20 percent from a year earlier, as unemployment surged toward a 26-year high, government figures show. Spending also jumped, as the average benefit rose.

It was the fifth straight month of record participation in the Supplemental Nutrition Assistance Program, according to the U.S. Department of Agriculture, and up 1.8 percent from the prior month. Total spending was $4.5 billion, up 19 percent from the previous all-time high reached in March, the USDA said.

The government is boosting food aid in response to a jobless rate that rose to 9.5 percent in June from 9.4 percent in May. An additional $20 billion over five years was authorized for nutrition assistance in the $787 billion stimulus bill Congress passed in February.

Utah had the biggest increase in the number of recipients from a year earlier, 46 percent, while South Dakota had the steepest jump from March, 6.4 percent.

Texas was the only state where the number of participants declined from the previous month. It still had the most recipients, 2.92 million, followed by California with 2.7 million and New York with 2.34 million. The average monthly benefit for an individual rose 17 percent from March to $133.28.

An average of about 35 million people are expected to be receiving food stamps each month in the year that begins Oct. 1, according to the budget President Barack Obama sent to Congress in May.

Source/Full Story: Bloomberg.com

The Centre for Labour Market Studies (CLMS) in Boston says US unemployment is now 18.2pc, counting the old-fashioned way. The reason why this does not “feel” like the 1930s is that we tend to compress the chronology of the Depression. It takes time for people to deplete their savings and sink into destitution. Perhaps our greater cushion of wealth today will prevent another Grapes of Wrath, but 20m US homeowners are already in negative equity (zillow.com data). Evictions are running at a terrifying pace.

Some 342,000 homes were foreclosed in April, pushing a small army of children into a network of charity shelters. This compares to 273,000 homes lost in the entire year of 1932. Sheriffs in Michigan and Illinois are quietly refusing to toss families on to the streets, like the non-compliance of Catholic police in the Slump.

Europe is a year or so behind, but catching up fast. Unemployment has reached 18.7pc in Spain (37pc for youths), and 16.3pc in Latvia. Germany has delayed the cliff-edge effect by paying companies to keep furloughed workers through “Kurzarbeit”. Germany’s “Wise Men” fear that the jobless rate will jump from 3.7m to 5.1m by next year. The OECD expects unemployment to reach 57m in the rich countries by the end of next year.

Source/Full Story: Telegraph

California’s government risks a financial “meltdown” within 50 days in light of its weakening May revenues unless Governor Arnold Schwarzenegger and lawmakers quickly plug a $24.3 billion budget gap, the state’s controller said on Wednesday.

Underscoring the severity of California’s cash crisis, Controller John Chiang, who has previously warned the state’s government risks running out of cash without a budget deal, said revenues in May fell by $1.14 billon, or 17.7 percent, from a year earlier.

Additionally, the revenues of the government of the most populous U.S. state fell short of estimates in Schwarzenegger’s budget plan by $827 million, Chiang said.

He warned California’s state government is speeding toward a financial disaster unless officials act urgently to balance its books.

“Without immediate solutions from the governor and legislature, we are less than 50 days away from a meltdown of state government,” Chiang said in a statement.

California’s revenues have been on a dramatic slide as a result of recession, rising unemployment and its lengthy housing downturn.

Source/Full Story: Reuters

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With unemployment rising to its highest level in more than a quarter century, more Americans are confronting the double crisis of losing both their jobs and their employer-sponsored insurance, which covers 177 million people.

Many unemployed Americans say they cannot afford the high premiums insurance companies charge for personal policies. People like Furchak and Drake who have pre-existing medical conditions have a tough time even finding coverage.

A recent study by the Robert Wood Johnson Foundation said the number of uninsured Americans could jump to more than 65 million in 10 years as healthcare costs more than double. The U.S. Census Bureau says about 46 million Americans are currently without insurance.

Source/Full Story:: Reuters

World economic recovery will be slow and rising unemployment could bring the threat of social crisis and protectionism, World Bank President Robert Zoellick said in an interview with Spanish Sunday newspaper El Pais.

“What began as a great financial crisis and became a great economic crisis is now becoming a great crisis of unemployment, and if we don’t take measures there is a risk of a great human and social crisis, with major political implications,” he said.

“That’s a good breeding ground for populist, protectionist policies,” he added.

“The finance ministers of the G7 and the G20 are displaying a certain relief because the contraction has slowed. Although we could still have low or negative growth, the situation is less bad,” he said.

“But economists and industrialists are conscious that the recovery will be slow coming and weaker than expected.”

Source/Full Story:   World Bank

The depth and severity of this recession have humbled Federal Reserve Chairman Ben Bernanke, who sprinkled a lot of cautionary warnings into his otherwise hopeful testimony to Congress on Tuesday.

Investors may have cheered his assessment that the Fed expects “economic activity to bottom out, then to turn up later this year,” but his testimony can’t be mistaken for unabashed cheerleading: There are still too many things that could go wrong. Even under the best-case scenario, unemployment will probably increase for some time.

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And crucially, the logic of the inventory cycle requires that, after businesses have reduced their unwanted stocks of goods, production of new goods must resume to meet demand. In the arithmetic of gross domestic product, the turn of the inventory cycle will produce positive numbers, at some distant point. The cupboard is not bare, but it’s getting there.

Note carefully: There is no growth just yet, merely hints that some of the worst-hit sectors are no longer falling, and that the necessary inventory adjustments are occurring.

But some sectors aren’t yet improving.

Source/Full Story:: MarketWatch