Global economic news
U.S. economy grew 3.1% in the fourth quarterThe U.S. economy grew more than had been estimated in the fourth quarter of 2010, according to revised figures from the U.S. Department of Commerce. The 3.1% annual rate of growth was led by a 4% rise in consumer spending. The 2010 U.S. economic growth rate of 2.9% was the country’s highest annual growth rate in five years. Corporate profits rose 29% last year, their largest annual gain since 1948.Portugal's crisis deepens; prime minister resignsPortugal’s political and economic crisis deepened as it came closer to an international bailout after the country’s parliament rejected a proposed austerity plan and the prime minister resigned. The cost of Portuguese borrowing hit a new high after the country’s debt was downgraded by two notches by Standard & Poor’s, to BBB from A, and Fitch cut its rating for Portugal to A-.
New eurozone bailout fund createdEuropean finance ministers set up a new bailout fund that will be able to lend €500 billion ($710 billion) to eurozone member nations in need. The fund, which will require €80 billion in cash from the 17 eurozone countries, will replace the current temporary fund in 2013.
U.S. consumer sentiment downConsumer sentiment in the United States fell more than expected in March on higher gasoline prices and in the wake of Japan’s earthquake and tsunami. The Thomson Reuters/University of Michigan Index of Consumer Sentiment fell to 67.5, its lowest reading since November 2009, from 77.5 in February.
U.S. new home sales hit record lowSales of new single-family homes fell to a record low in February, with prices dipping to their lowest point since December 2003, according to a report from the Commerce Department. Home sales fell 16.9% in February from the previous month to a seasonally adjusted level of 250,000 units, the lowest since records began in 1963. February sales were down 28% from a year earlier.
U.S. existing home sales down 9.6%Sales of existing, or previously occupied, U.S. homes slid 9.6% in February to their lowest level in almost nine years, the National Association of Realtors reported. The results were worse than forecast.
U.S. jobless claims fallA trend of fewer first-time jobless claims continued in the week ended March 19, as unemployment benefits claims fell by 5,000 to 382,000. The four-week moving average fell to 385,250, its lowest level since July 2008. And, the total number of people continuing to receive jobless benefits declined by 2,000 to 3.72 million, the smallest amount since September 2008.
U.S. durable goods orders slowU.S. orders for durable goods fell 0.9% in February, the third decline in four months for manufacturers’ orders for goods meant to last at least three years. Despite the recent downturn, year-to-date orders are 7.6% higher than for the same period last year.
Japanese consumer prices continue to slideJapan’s core consumer price index fell 0.3% in February from a year earlier, the 24th consecutive month it has declined. Analysts are unsure what impact the March 11 earthquake and tsunami will have. Reconstruction spending could put pressure on prices to rise, possibly offset by weakening consumer spending.
Ireland's economy shrinksIreland’s gross domestic product shrank by 1.6% in the fourth quarter of 2010, according to the country’s Central Statistics Office. The country’s gross national product shrank 2.1% in 2010 after a 10.7% decline in 2009.
Eurozone recovery slowsEconomic recovery in the eurozone continued in March, but at a slower pace, according to Markit Economics’ composite purchasing managers' index, which fell to 57.5 from 58.2 in February.
U.K. inflation reaches 4.4%U.K. annual inflation rose at its fastest rate in more than two years in February, up from a 4% annual increase in January. Inflation now is at twice the Bank of England’s targeted 2% rate, putting pressure on the central bank to increase its interest rate. Contributing to higher inflation are increases in the cost of housing services such as water, electricity, gas, and other fuels.
Global corporate news
AT&T purchase of T-Mobile to be reviewed closelyAT&T has agreed to buy T-Mobile USA from Deutsche Telekom for $39 billion, creating the largest cellular company in the United States, and leaving only two other major U.S. competitors – Verizon and Sprint Nextel. However, the proposed deal is expected to face very close scrutiny and a political battle in Washington, as politicians consider the impact on competition, costs, and consumers.Oracle income rises after its Sun acquisitionBusiness software developer Oracle reported a 78% jump in income on a 37% rise in revenue for its fiscal third quarter. Results were boosted by its acquisition of Sun Microsystems a year ago.
Japan’s manufacturers begin to resume operationsJapan’s automakers had mixed plans for resuming production after the earthquake. Nissan Motor restarted its auto assembly operations and parts manufacturing this week, while Toyota Motor plans to resume production of three hybrid models next Monday, March 28. Honda Motor extended the suspension of its two domestic auto assembly operations through April 3 and canceled orders for May. One issue affecting these firms was inconsistent power supply for makers of computer chips used in the vehicles. Manufacturing stoppages could curb global auto production – estimated at 75 million vehicles this year – by 5 million units.
U.S. Federal Reserve denies Bank of America dividend increaseThe Federal Reserve Board rejected a Bank of America proposal to increase its dividend in 2011. The central bank gave no reason for the rejection, which led observers to speculate that it had to do with results of the latest government stress tests for the nation’s 19 largest holding companies.
Inditex profit, sales rise on global expansionSpain’s Inditex, the world’s largest fashion retailer, posted a 32% rise in net profit in 2010. It plans to add up to 500 stores to its 5,044 existing stores in 77 countries this year. Included are 120 new stores slated for China, where Inditex already owns 143 stores.
Best Buy hurt by slow sales, tough competitionBig-box electronics retailer Best Buy saw its fourth-quarter earnings fall 16% on weak computer and television sales and stiff competition from online retailers and discount stores.
The week ahead
- Japan’s industrial production report released Tuesday, March 29
- U.S. consumer confidence survey results released Tuesday, March 29
- European Union economic sentiment data released Wednesday, March 30
- U.S. jobless claims data released Thursday, March 31
- Bombardier earnings due Thursday, March 31
- U.S. employment report released Friday, April 1
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Sources: MFS research; The Wall Street Journal; The Wall Street Journal Online; Bloomberg News; Financial Times; Forbes.com; CNNMoney.com; msnbc.com.
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