U.S. Economic/Financial News

The Latest View from the Morgue

March 26 (EIRNS)—Happy times are here again? Not on your life.

* GDP contracted in the fourth quarter 2008 by a 6.3% annual rate, the weakest since 1982, the Commerce Department said today. Profits dropped 16.5% from the prior quarter, the most since 1953.

* Initial claims for jobless benefits last week rose 8,000 to 652,000, topping 600,000 for an eighth straight time, the Labor Department reported. Total benefit rolls jumped by 122,000 in the week ended March 14, from 5.44 million the previous week to 5.56 million.

* IBM plans to lay off about 5,000 U.S. employees, with many of the jobs being transferred to India. Workers abroad accounted for 71% of IBM's nearly 400,000 employees at the start of the year, up from about 65% in 2006. IBM employed 74,000 people in India in 2007.

* GM announced that 7,500 UAW members have signed up for buyouts, which will allow the company to hire replacement workers for half the current union wage.

* The International Association of Machinists (IAM) bi-weekly newsletter March 24 cited the Labor Department's latest report showing that "Mass lay-offs for all industries, including the manufacturing sector, rose to their highest levels on record" in February. Of the "2,769 mass layoff events in of February, which resulted in 295,477 people losing their jobs," 1,235, or 45%, were in manufacturing, which resulted in 152,618 new unemployment claims.

* The delinquency rate on about $700 billion in securitized loans backed by commercial property has more than doubled since September 2008, to 1.8% this month, according to Deutsche Bank AG. Foresight Analytics in Oakland, Calif. estimates that the U.S. banking sector could suffer as much as $250 billion in commercial real-estate losses and that more than 700 banks could fail as a result of their exposure to commercial real estate.

* The Metropolitan Transportation Authority in New York City voted to boost fares as much as 30% and sharply cut services on the system's rail lines, subways, and buses. The cost of a monthly subway pass will rise from $81 to $103.

'Acknowledge the Truth: They Are Bankrupt'

March 23 (EIRNS)—"It is remarkable that after the Wall Street boys wrecked the economy, and then paid themselves billions of dollars of bonuses with bailout money, Geithner comes up with a plan that will involve handing billions more to Wall Street, with no strings attached. The simple, honest approach is to trash the exotic schemes for rescuing the banks and acknowledge the truth: they are bankrupt. The public has paid enough already for the incompetence of the Wall Street crew. They've lost their jobs, their homes, their retirement accounts and hundreds of billions of tax dollars."

That was the opening of a statement March 23 by Dean Baker on Politico.com. Baker is co-founder and co-director of the Center for Economic and Policy Research, a Washington think tank whose advisory board includes economist Joseph Stiglitz.

Baker continued, "Compare the alleged injustice in the AIG bonus babies seeing most of their million dollar bonuses being taxed away with retired autoworkers in their fifties losing their health care in the GM or Ford deal. I can't muster too many tears for the AIG folks."

Illinois Unemployment Rate Climbs to 8.6%

March 25 (EIRNS)—The Chicago Tribune reports today that Illinois' "jobless rate continued to climb in February, with the economy's meltdown driving Illinois unemployment to 8.6 percent—its worst level since December 1991." The "0.8 percentage point jump in Illinois' unemployment rate, from a revised 7.8 percent in January, represents the largest one-month increase since the department began keeping records in 1976 ... a year ago, the rate was 5.9 percent." In February, the "damage was most prominent in manufacturing, where 16,400 workers lost their jobs. Over the past 12 months, the manufacturing sector has lost 52,000 workers, bringing employment to 616,600 last month."