U.S. Economic/Financial News
Hunger, Homelessness Rise Steeply in Major U.S. Cities
Overall requests for emergency food assistance jumped by an average of 14% over the past year, with 96% of the cities showing an increase, according to a new U.S. Conference of Mayors-Sodexho USA Hunger and Homelessness Survey of 27 major cities, released Dec. 14. In particular, emergency food requests by families increased substantially, by an average of 13% in 2004. Also, requests for emergency shelter rose by an average of 6%, with 70% of the cities surveyed reporting an increase.
Insisted Nashville Mayor Bill Purcell, who co-chairs the Conference's Task Force on Hunger and Homelessness, "These are not simply statistics. These are real people; many are families with children, who are hungry and homeless in our cities." More than half of those requesting emergency food aid were families.
Twenty percent of the requests for emergency food have gone unmet, as 48% of the cities surveyed reported that food banks and soup kitchens may have to turn away people in need, due to lack of resources.
Further, employed adults accounted for 34% of those requesting food assistance, demonstrating that low-paying jobs and rising poverty, not just mounting unemployment, are reasons for the increase. In all of the cities surveyed, families depended on emergency food assistance centers as a steady source of food over long periods of time.
Of the homeless population, families with children comprised 40%, the survey found. Emergency shelter requests by homeless families increased by 7% during the past year. Additionally, 32% of such requests were not met.
Net Foreign Money Inflows Can't Cover Trade Deficit
Americans are increasing purchases of foreign stocks and bonds, while foreigners have slowed their buying of U.S. securities, moves that are accelerating the fall of the dollar. Americans bought a whopping $51.9 billion of foreign stocks and bonds through October, up sharply from $36.2 billion in all of 2003, according to data released by the U.S. Treasury Department. In October alone, U.S. investors spent $15.2 billion on foreign stocks and bonds, the biggest monthly amount since July 2000. Meanwhile, the overall net flow of foreign money into American stocks and bonds plunged 28.8% in October, to $48.1 billion.
The 2004 trade deficit surged to a record $500.5 billion, just through October, despite the falling dollar. The U.S. trade gap in goods and services jumped 8.9% in October to a record $55.5 billion, compared to September, as imports swelled to an all-time high of $153.5 billion, due to rising oil prices and an increase in the volume of imported oil.
At the same time, housing starts tumbled 13.1% in November, the biggest drop since January 1994, to an annualized rate of 1.77 million.
Retirees Pay Higher Premiums for Health Benefits
Retirees paid 25% more this year on premiums for private health benefits, according to a new study by the Kaiser Family Foundation and Hewlitt Associates, the New York Times reported Dec. 15. Drew E. Altmann, Kaiser's President, told the Times that "prospects for retiree health coverage are slowly disappearing for America's workers, and retirees who have it will be paying more." In the past year, about 8% of large private employers forced retirees to cover a larger portion of premiums, and 11% say they will do so this coming year. For anyone starting a new job today, this implies that the likelihood of their receiving any retiree health benefits is practically nil. The same is true for anyone older who might want to change jobs, as this would almost certainly mean losing health benefits.
Auto Slowdown Drives Up Michigan Jobless Rate
The auto industry slowdown has driven Michigan's official unemployment rate to 7%, the highest level since December 2003, the Detroit News reported Dec. 16. An official report released by the Michigan Department of Labor and Economic Growth, shows that the state's jobs picturealready dismalis not improving. In November, the state's jobless rate jumped, as layoffs hit 7,000 permanent factory workers, as well as 8,000 employees in the service sector. Total employment fell by 26,000 during the month, while unemployment grew by 16,000. Over the past five years, manufacturing has lost a staggering 210,000 jobs23% of its workforce.
Meanwhile, Dec. 17 effectively is the last production day for about two-thirds of the 900 workers at Ford's assembly plant in St. Louis. The automaker is eliminating one of its two production shifts as of Jan. 3, together with the Hazelwood plant's seasonal shutdown from Dec. 17-Jan. 1.
At the same time, bankrupt auto supplier Intermet Corp. said it will close its die-casting and machining plants in Sturtevant, Wisc. during the second quarter of 2005, eliminating about 600 jobs.
Fannie Mae Told To Restate Earnings
The Securities and Exchange Commission has told home mortgage behemoth Fannie Mae to restate its earnings, which could total up to $9 billion in previously unreported losses. The Commission found that Fannie had used hedge accounting which involved the use of derivatives. It found also that Fannie Mae had internally developed its "own unique methodology" to assess whether hedge accounting was appropriate. So, the SEC ordered Fannie Mae to restate its earnings and stop the use of hedge accounting.
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