Deflation looms as Europe’s economic bugbear
LONDON (AP) — It’s the D-word that’s pushing the European Central Bank into a corner.
But it’s not debt — Europe’s main economic problem in recent years — that is driving speculation the ECB will switch on the printing press to help the economy.
At first glance, deflation, which is generally defined as a sustained drop in prices, sounds good — getting goods cheaper surely warms the heart of any consumer.
The problem lies when prices fall consistently over time, as opposed to temporary declines, which can give economic activity a boost. The recent sharp fall in the oil price, for example, is expected to help growth.
Longer-term deflation encourages people to put off spending and can prove difficult to reverse because it requires altering people’s expectations. It can lead to years of economic stagnation, as in Japan over the past two decades, or at worst, into something more pernicious, such as the Great Depression of the 1930s.
Promotions, gas prices boost US auto sales
DETROIT (AP) — American shoppers passed on the malls and headed to the car dealerships over Thanksgiving weekend.
Black Friday promotions — coupled with falling gas prices, low-interest loans and hot new vehicles — drove U.S. auto sales higher in November, kicking off what’s expected to be a strong holiday season.
Subaru and Chrysler led the major automakers with sales increases around 20 per cent on strong demand for their small SUVs. It was Subaru’s best November ever and Chrysler’s best November in 13 years.
General Motors, Toyota, Honda and Volkswagen also reported gains. Sales fell at Ford, Hyundai and Nissan.
According to a National Retail Federation survey of 4,000 shoppers, sales were down 11 per cent to $50.9 billion over the four-day holiday compared to a year ago. A move by retailers to discount merchandise in the days and weeks before Thanksgiving appeared to cut down on store traffic over the holiday weekend.
Thanksgiving deals shift S. Korea shopping habits
SEOUL, South Korea (AP) — South Korea does not celebrate Thanksgiving, but the hot deals at U.S. online retailers during the holiday season are changing the shopping habits of South Koreans who are aggrieved at marked-up prices of locally made and imported goods at hometown stores.
The volume of goods ordered by Korean shoppers from websites overseas has surged in recent years and sales are forecast to set a record high this year above $1 billion. It remains small compared with retail sales within South Korea, which are forecast at $243 billion this year, but is expanding at a faster rate.
China’s carbon goal a tough sell in coal country
TANG COUNTY, China (AP) — The black slabs of coal came in by the truckload through this dusty valley in northern China, slated to power cement and steel plants, heat the houses of poor farmers and even grill skewers of lamb and beef.
Just a few dozen miles from the capital of Beijing, in Hebei province, coal use has long been a way of life here, with countless house-sized mounds of it dotting the forest floor. Yet the soot-covered residents of Tang County said they see change coming as Chinese leaders pledge to cut back on the kind of rampant coal use that has made this country the world’s biggest emitter of greenhouse gases.
Russia warns of recession next year
MOSCOW (AP) — The Russian government has acknowledged that the country will fall into recession next year, battered by the combination of Western sanctions and a plunge in the price of its oil exports.
The news caused the stock market to drop and pushed the ruble to a fresh record low against the dollar.
The economic development ministry on Tuesday revised its GDP forecast for 2015 from growth of 1.2 per cent to a drop of 0.8 per cent. Russian households are expected to take hit, with disposable income seen declining by 2.8 per cent against the previously expected 0.4 per cent growth.
Russia’s economic outlook is at the mercy of the global market for oil, a key export that finances the bulk of the state budget. Sanctions over Moscow’s role in eastern Ukraine are making things worse, hurting Russian banks and investment sentiment in particular.
CoreLogic: US home prices accelerated in October
WASHINGTON (AP) — U.S. home prices rose at a faster year-over-year pace in October than in September, snapping a seven-month slowdown.
Real estate data provider CoreLogic said Tuesday that prices increased 6.1 per cent in October compared with 12 months earlier. That was up from September’s year-over-year increase of 5.6 per cent.
Still, home values are rising more slowly than they were earlier this year, when 12-month gains were averaging nearly double their current pace.
The price momentum began to tail off in the middle of the year as home values in more cities and states neared the record highs last seen shortly before the Great Recession began in late 2007.
Higher prices have reduced affordability, especially because the incomes of many would-be buyers have yet to match their pre-recession levels. Lending standards also remain comparably tight.
More US CEOs plan to boost hiring in next 6 months
WASHINGTON (AP) — Chief executives at the largest U.S. companies expect sales to keep growing in the next six months and also plan to step up hiring.
The Business Roundtable said Tuesday that 40 per cent of its member CEOs plan to hire more workers, up from 34 per cent in the third quarter. Nearly three-quarters project their sales will rise, roughly the same as the previous quarter.
The findings suggest that slowing growth overseas hasn’t caused large corporations to pull back on their hiring plans. That bodes well for the government’s report on November job gains, to be released Friday.
Still, the CEOs say they are less likely to invest in new facilities or equipment: 13 per cent say they plan to cut such spending, up from just 10 per cent in the previous quarter.
US construction spending up 1.1 per cent in October
WASHINGTON (AP) — Newly built homes and schools boosted U.S. construction spending in October to the highest level since May.
The Commerce Department said Tuesday that construction spending rose a seasonally adjusted 1.1 per cent in October, after having slipped 0.1 per cent in September.
Fueling the gains in October was a 1.8 per cent increase in spending on single-family houses. A similar boost in building schools led to a 2.3 per cent increase in government construction spending. Meanwhile, private construction of power plants and commercial centres slipped in October.
Cyber Monday deals get stretched, crimping sales
NEW YORK (AP) — Cyber Monday deals are being stretched out this holiday season, crimping sales on the day itself.
Retailers from Target to Amazon have been offering online deals since the beginning of November, and are promising “cyber” deals all week. That seems to have put a dent in Cyber Monday sales. Sales were up, according to estimates. But they weren’t as strong as some were expecting.
IBM Digital Analytics Benchmark reported that online sales rose 8.5 per cent compared to 2013. That still makes it the busiest U.S. online shopping day of the year so far — a title the date has held since 2010. But it was less stellar growth than last year’s Cyber Monday, when online sales jumped more than 20 per cent.
By The Associated Press=
The Dow Jones industrial average gained 102.75 points, or 0.6 per cent, to 17,879.55. The Standard & Poor’s 500 index rose 13.11 points, or 0.6 per cent, to 2,066.55. The Nasdaq composite rose 28.46 points, or 0.6 per cent, to 4,755.81.
Benchmark U.S. crude fell $2.12 to close at $66.88 a barrel on the New York Mercantile Exchange. Brent crude, a benchmark for international oils used by many U.S. refineries, fell $2 to close at $70.54 on the ICE Futures exchange in London. Wholesale gasoline fell 6.9 cents to close at $1.812 a gallon. Heating oil fell 5.8 cents to close at $2.154 a gallon. Natural gas fell 13.3 cents to close at $3.874 per 1,000 cubic feet.