Washington, DC, United States (AHN) – The U.S. economy grew at a meager 1.8 percent during the first quarter of the year, according to the U.S. Commerce Department’s Bureau of Economic Analysis report released Thursday.

That was down from the 3.1 percent growth in real gross domestic product (GDP) registered in the fourth quarter of 2010.

It was the Commerce Department’s second estimate of real GDP for the first quarter of 2011. The 1.8 percent annual growth rate in real GDP was unchanged from the advance report released last month. In addition, it was below the private-sector expectations for an upward revision, the Commerce Department said in a release.

The private sector had expected a 2 percent growth in GDP.

“Today’s report shows little change from the GDP estimates released last month,” said U.S. Commerce Department Chief Economist Mark Doms. “What today’s data does tell us is that corporate profits continue to grow and businesses continue to hire more workers. In the first four months of this year, the economy added 854,000 jobs, and that will help boost our economy further in the quarters ahead.”

Indeed, although unemployment remains high and hiring remains low, the initial estimate for corporate profits is that they grew by $21.9 billion in the first quarter of 2011 to reach $1,700.2 billion.

Real GDP is the output of goods and services produced by labor and property that is located in the U.S. It is expressed as an annualized figure based on what growth would be for the year if it continued at that pace.

A drop in consumer spending contributed to the slowdown in economic growth.

Consumer spending accounts for more than two-thirds of GDP. Growth in consumer spending during the first three months of the year was revised downward from 2.7 percent to 2.2 percent.

View full post on Politics Stories

Washington, D.C., United States (AHN) – The U.S. Postal Service might still have a chance to raise its rates by more than 5 percent after a federal court ruling this week.

The Postal Service tried to raise its rates earlier this year but the plan was rejected by the Postal Regulatory Commission, which oversees the agency.

The U.S. Circuit of Appeals for the District of Columbia ruled this week that the Postal Regulatory Commission must better explain why it rejected the proposed rate increase before it can block a rate increase for the nation’s mail.

“While we continue to evaluate the court’s opinion and ruling to understand the full implications and options it presents to the Postal Service, we have renewed confidence that we are entitled to a rate increase under the exigency provision,” the Postal Service said in a statement.

The dispute is further evidence of the Postal Service’s failing fortunes as electronic mail and the nation’s staggering economy take a deep bite out of its finances.

The Postal Accountability and Enhancement Act of 2006 says the Postal Service can raise postage fees no more than the rise in the Consumer Price Index. The index represents an average price for typical consumer products, such as gasoline and some food items.

However, the federal law grants an exception for “either extraordinary or exceptional circumstances.”

Attorneys for the Postal Service argued that the recession that began in December 2007 created the “extraordinary” circumstances that would justify raising postage rates above the consumer price index.

The recession resulted in lower mail volume, which hurt the Postal Service’s revenue.

Before the Postal Service can raise its rates, it must apply for permission to the Postal Regulatory Commission. The commission is an agency whose leaders are appointed by the president.

The Postal Regulatory Commission denied the Postal Service’s request to raise rates above the consumer price index. The commission said the Postal Service failed to prove its drop in revenue was “due to” the recession. The “due to” proof is required by federal law.

Other factors that traditionally have hurt Postal Service revenue include e-mail and competition with private mail carriers, such as UPS and FedEx.

The U.S. Circuit Court of Appeals said the Postal Regulatory Commission relied on “ambiguous” language in the federal law.

“It incorrectly concluded the plain meaning of that ['due to'] phrase requires the proposed rate adjustments to be ‘tailored to offset the specific effects of the claimed exigency,’” the court’s ruling said.

The court concluded that the Postal Regulatory Commission must better explain why the Postal Service’s request to raise rates by 5.6 percent is unjustified before the postage increase can be blocked.

The court dispute follows by days a dismal quarterly report from the Postal Service that showed it lost $2.2 billion in the second quarter of fiscal 2011. The Postal Service lost $1.6 billion in the same quarter of last year. Mail volume fell another 3 percent in the second quarter of this year.

Bad business is forcing the Postal Service to look harder at touch choices, such as ending Saturday mail service and asking Congress for a financial bailout that could reach $90 billion, according to policy analysts.

However, Postal Service officials have made a strong case for themselves in recent congressional hearings.

The estimated 170 billion pieces of mail they handle each year come from companies and individuals worth about $10 trillion. Many of the companies rely heavily on the Postal Service to continue operating.

The Postal Service also employs 520,000 workers on no taxpayer subsidies. The Postal Service is the nation’s second largest employer, surpassed only by Wal-Mart.

View full post on All Stories

View full post on All Stories

Jerusalem, Israel (TML) – The Israeli growth engine has powered the economy through wars, a global financial crisis and turmoil in the Middle East, but Stanley Fischer, the country’s central banker, is now determined to get a grip on the controls.

Fischer took economists and the financial markets by surprise late on Monday by lifting the Bank of Israel’s base lending rate 0.5 percentage point to 3%. While the rate is low by historical standards, the bank has doubled the rate in just nine months. More hikes are likely to come, the economists said.

Israel’s economy grew by 4.6% last year, capped by a 7.7% annual rate in the final quarter of the year. Even as oil prices are climbing and regional unrest raises political uncertainty for the country, there has been little sign that the expansion is cooling very much. The Bank of Israel’s S index, a barometer for economic activity, rose a sharp 0.4% in February.

But the heady rate of growth has begun to show its dark side in higher consumer prices, a development of major concern for a country with a long and bitter memory of hyperinflation. The consumer price index (CPI) rose 4.2% in the 12 months to February, well over the bank’s target range of 1% to 3%. Economists see inflation slowing over the next year, but not enough to bring it back into the range.

“He made a mistake. He didn’t understand the significance of the inflationary danger,” Michael Sarel, head of research at Harel Group, told The Media Line. “It’s a step that was very much needed. It’s a pity he didn’t act earlier.”

Until Monday, Fischer had been steering interest rates higher, but only gradually, as he tried to balance his mandate to contain inflation with the need to prevent the shekel from appreciating by boosting interest rates much higher than in other developed economies. A stronger shekel hurts export, a key sector for the Israeli economy, by making

costs measured in dollars higher.

Except for a brief dip in 2008, Israeli gross domestic product has grown between 4% and 6% annually since 2003. The expansion has proceeded even as the world economy was reeling from the fallout of the U.S. housing market and during wars with Hizbullah in Lebanon and Hamas in the Gaza Strip.

With the interest rate less than inflation and likely to remain so for some time, Fischer acted too slowly in raising interest rates, most economists say. Monday’s unusually sharp rate increase marks an “admission of failure to some extent,” Citigroup Global Markets said in a report on Tuesday. It said investors are now looking for rates to be pushed up to as much as 4.5% by the end of the year, a forecast it labeled as “excessive.” Most economists and the central bank itself said it would likely be about 4%.

But Citigroup and others said Fischer may now have changed his strategy and wants to rely on a stronger shekel to mitigate the inflationary impact of higher global prices for oil and other commodities. If so, the Bank of Israel has some very early indications that it’s wish is being granted: The shekel appreciated on the back of the rate hike, with the official rate set at 3.525 to the dollar on Tuesday, close to its strongest level in 27 months.

The Israel Manufacturers Association, which represents the country’s biggest industrial companies, warned on Tuesday that if the shekel appreciates to 3.5 to the dollar, companies will lose some $2.9 billion in export sales, equal to about 6.6% of the country’s exports. They will even be hurt in the domestic market because the price of imports will fall.

The Bank of Israel itself assumes that every 10% appreciation in the exchange rate after inflation causes a 2% drop in exports, with a more adverse impact on profit margins.

Economists said the latest rate hike and the ones expected over the next months would certainly put a brake on economic growth but, with the economy in hyper drive, Fischer has room to maneuver without causing damage. Merchandise exports jumped at a near 30% annual rate in the December-February period, according to Israel’s Central Bureau of Statistics.

“The more significant impact is on both the mortgage rates for floating rates loans which will become more expensive,” Jonathan Katz, Jerusalem-based economist at HSBC Holdings, told The Media Line. “It will have a damping effect on housing demand as well as consumer demand because those who are making interest payments will see their disposable income decline.”

For the Bank of Israel anything that would help calm the local real estate market would be welcome. Home prices, which aren’t included in the official CPI but factor into household costs all the same, have shot up by 16.3% in the 12 month to February, even after the central bank took steps to discourage people from taking out mortgages.

In January alone, home price rose 0.9%, slowing only marginally from a 1.3% monthly pace in November and December. Jean-Michel Saliba, a Bank of America/Merrill Lynch economist who covers the Israeli economy, said Fischer would probably have to do more to address the problem of home prices.

“Average mortgage rates are increasing but are still close to historic lows. More macro-prudential tools may be needed along with measures on the supply side,” Saliba told The Media Line. “The export sector is likely to bear the pain of the shekel’s strength.”

View full post on Economy, Business And Finance Stories

View full post on All Stories

Mohe, China (AHN) – Russian oil began flowing to China on Saturday via a 621-mile long pipeline stretching from Siberia to northeastern China’s Daqing City.

Some 42,000 tons of crude oil had flowed from the Russian town of Skovorodino to Mohe in China’s Heilongjiang Province on Sunday. From Mohe, the oil will flow up to Daqing City.

The pipeline was built by the two countries so China can import 15 million tons of crude oil from Russia per year until 2030. The pipeline cost $16 billion to build.

About 45 miles of the pipeline is in Russian territory and the rest are in China. The pipeline will be extended up to 2,900 miles by 2014.

Russia is now the world’s largest oil producer and supplier while China is the world’s largest oil consumer. In 2009, Saudi Arabia was still the largest oil producer and the U.S. was the largest oil consumer.

View full post on All Stories

View full post on All Stories

View full post on All Stories

View full post on All Stories

Yonkers, NY, United States (AHN) – A new Consumer Reports holiday shopping poll has found that the average American expects to spend about 42 hours buying, wrapping, and returning gifts, as well as partying and traveling to visit family and friends during the 2010 holiday season.

“When you break down the numbers you really get an idea of how much so many of us have invested in the holidays,” said Tod Marks, Consumer Reports senior editor and resident shopping expert. “And it’s nice to see that it’s not all about shopping, but it’s also about coming together.”

According to the findings Americans will spend the next few weeks doing the following:

Gifts

• Consumers will spend lots of time gift-shopping, 15 hours on average. Women plan to spend twice as long as their male counterparts, 20 hours versus 10 hours respectively.

• Shoppers estimate they will wait on checkout lines in stores for about three and a half hours, on average; one in four expect to stand in line four hours or more.

• Once they get home, Americans plan to spend about three hours, on average, wrapping gifts; one in four expect to spend four or more hours doing so.

• Americans anticipate that they will devote about an hour, on average, to returning holiday gifts; half say they won’t spend any time making returns.

Entertainment

• About 15 hours, on average, will be spent attending holiday parties, gatherings or events with friends or family; a quarter (24 percent) of Americans plan to will spend 20 hours or more.

The poll also found that Americans estimate that they will spend 7.4 hours on average traveling to or from their holiday destinations. Nearly a quarter say they will spend 10 hours or more travelling.

View full post on Economy, Business And Finance Stories