What is going on with the economy?

[2Real4me!]

Consumer Confidence Falls to New Low
Friday April 11, 11:57 am ET
By Jeannine Aversa, AP Economics Writer



Confidence Sinks to Lowest on Records Going Back to 2002 As Fear Tightens Hold on Consumers

WASHINGTON (AP) -- Americans' confidence in the economy fell to a new low, dragged down by worries about mounting job losses, record-high home foreclosures and zooming energy prices.
According to the RBC Cash Index, confidence dropped to a mark of 29.5 in April, down from 33.1 in March. The new reading was the worst since the index began in 2002. It marked the fourth month in a row where confidence has fallen to an all-time low.
"Consumers are very pessimistic," said Mark Vitner, economist at Wachovia. "There are not a lot of happy campers out there."
Over the past year, consumer confidence has deteriorated significantly. Worsening problems in housing, harder-to-get credit, financial turmoil on Wall Street and lofty energy prices have put people in a much more gloomy mind-set. Last April, confidence stood at 85.4. The index is based on results from the international polling firm Ipsos.
All the economy's problems are taking a toll on President Bush's approval ratings, too. The public's approval rating on his economic stewardship fell to a low of 27 percent, according to a separate Associated Press-Ipsos poll. Bush's overall job-approval rating dipped to 28 percent, also an all-time low, the poll said.
Many economists believe the country has tipped into its first recession since 2001. Federal Reserve Chairman Ben Bernanke for the first time acknowledged last week that a recession was possible. It was a rare public utterance of the "r" word by a Fed chief.
"Consumer sentiment is tracking at levels we think are consistent with a mild recession at this point," said Brian Bethune, economist at Global Insight.
A measure looking at consumer's feelings about current economic conditions slipped to a 54.6 in April, from 54.7 in March. The new reading was the lowest in six years of records.
Rising unemployment and job losses are making people more uneasy.
The government reported last week, that employers slashed 80,000 jobs in March, the most in five years and the third straight month where the nation's payrolls were cut. The unemployment rate jumped from 4.8 percent to 5.1 percent, the highest since the aftermath of the devastating Gulf Coast hurricanes.
Another factor blamed for eroding consumer confidence is high gasoline prices, which are socking people's wallets and pocketbooks. That's squeezing already strained budgets and leaving people with less money to spend on other things.
"Much of the angst we're seeing from consumers is `Gosh, I'm working harder and harder, and all I'm doing is paying for my basic necessities. I don't have anything left to have any fun,'" Vitner said.
Gasoline prices, which have set a string of records in recent weeks, climbed to a new record of $3.357 a gallon on Thursday, according to AAA and the Oil Price Information Service.
Anxiety also has grown as people wonder if there is any relief in sight for the troubled housing market. With the housing collapse, many people have watched their single-biggest asset -- their home -- drop in value. That has made them feel less wealthy and less inclined to spend.
Against the backdrop of all these concerns, another measure tracking individuals' sentiments about the economy and their own financial standing over the next six months fell deeper into negative territory. This gauge dropped to a negative 48.3 in April, down from a negative 41.6 in March. The new reading was the worst on record.
A measure on consumers feelings about employment conditions fell to 97 in April, from 99.2 in March. The new reading was the lowest since early October 2003. Another gauge of attitudes about investing, including comfort in making major purchases, declined to 56.4 in April, from 56.7 in March. The new figure was the lowest on records going back to 2002.
Economists keep close tabs on confidence barometers for clues about consumer spending, a major shaper of overall economic activity.
Cautious shoppers gave most retailers their most dismal March in 13 years, according to sales figures reported by major retailers on Thursday. J.C. Penney Co., Gap Inc., and Limited Brands Inc. were among the merchants hit by a sharp drop in sales.
The RBC consumer confidence index was based on the responses from 1,005 adults surveyed Monday through Wednesday about their attitudes on personal finance and the economy. Results of the survey had a margin of sampling error of plus or minus 3 percentage points. The overall confidence index is benchmarked to a reading of 100 in January 2002, when Ipsos started the survey.
Pointing to the overall confidence reading of 29.5 in April, T.J. Marta, a fixed-income strategist at RBC Capital Markets, said: "What confidence? There is no confidence. It's like 1929."

[2Real4me!]

American Cancels 600 More Flights
Friday April 11, 9:26 am ET



American Airlines Cancels Another 595 Flights Friday Amid Wiring Inspections on Its MD-80 Jets

FORT WORTH, Texas (AP) -- American Airlines has canceled 595 more flights, bringing this week's total to nearly 3,100 as inspections continue on the wiring of its MD-80 jets.
Fort Worth-based American on Friday announced the latest cancellations and that it expected to operate about half of its MD-80 schedule through much of the day.
The company's chief executive has said this week's flight cancellations will cost American Airlines tens of millions of dollars but the carrier can withstand the losses.
CEO Gerard Arpey said he takes full responsibility for the airline's failure to comply with a federal safety rule on the bundling of wires in MD-80 wheel wells.



Frontier Files for Bankruptcy Protection
Friday April 11, 12:37 pm ET
By Catherine Tsai, AP Business Writer



Frontier Becomes the Latest Airline to File for Bankruptcy Protection


DENVER (AP) -- Frontier Airlines sought bankruptcy protection Friday, the fourth carrier to do so over the past several weeks as exorbitant fuel prices eat into earnings and a weak U.S. economy keeps more people grounded.
Frontier says it will continue operations as it reorganizes.
Frontier Airlines Holdings Inc., the low-fare carrier's parent, said it was forced into bankruptcy after its principal credit card processor announced it would begin withholding a greater share of proceeds from ticket sales.
Denver-based Frontier said it will continue to operate a full schedule of flights, pay suppliers and employees as it reorganizes. The filing in U.S. Bankruptcy Court in New York prevents the credit card processor from increasing its "holdback," Frontier CEO Sean Menke said.
"By filing for Chapter 11, we will now have the time and legal protection necessary to obtain additional financing and enhance our liquidity," Menke said in a statement. "Fortunately, we believe that we currently have adequate cash on hand to meet our operating needs while we take steps to further strengthen our company."
ATA Airlines, Skybus and Aloha Airgroup have also filed for bankruptcy in the past three weeks, but Menke said Frontier's reasons for doing so were different.
"Unfortunately, our principal credit card processor very recently and unexpectedly informed us that, beginning on April 11, it intended to start withholding significant proceeds received from the sale of Frontier tickets," he said.
"This change in established practices would have represented a material change to our cash forecasts and business plan. Unchecked, it would have put severe restraints on Frontier's liquidity and would have made it impossible for us to continue normal operations."
The credit card processor, First Data Corp., did not immediately comment.
John Stemmler, who heads the Frontier Airline Pilots Association, said First Data's decision was a shock to the airline.
"Had it not been for First Data, we really had our act together," he said.
Stemmler said he believes the airline's 700 pilots will continue to support management.
The creditor listed in bankruptcy court documents as having by far the largest general unsecured claim against Frontier was Wells Fargo, with $93.5 million.
Frontier has struggled amid rising fuel prices and aggressive competition at Denver International Airport from both United and Southwest airlines. It blamed a 16.3 percent jump in fuel costs a third-quarter loss that more than doubled from the previous year.
At the end of last year, Frontier had assets of $98.3 million and debts of $92.2 million.
The carrier has adjusted routes, put four jets up for sale, laid off 100 employees and conducted an extensive review of its schedule in an effort to rein in costs.
Last week, Calyon Securities analyst Ray Neidl voiced concerns about some budget airlines, including Frontier. He said Frontier's cash holdings were likely to fall well below 10 percent of expected revenue by the end of the year and estimated it would have less than 5 percent of revenue in cash at the end of 2009.
Frontier spokesman Joe Hodas said earlier this week the airline had "no concerns about bankruptcy."
In a research note to clients Friday, Neidl said the bankruptcy "happened more quickly than we expected."
"We do not see a future for Frontier as it faces tough competition in Denver from United on the network side and Southwest on the low cost side," he wrote.
Industry analyst Mike Boyd said it appears the bankruptcy was triggered by Wall Street speculation about Frontier, which likely raised concern at First Data.
"When rumors start, it can kill an airline," he said.
Frontier carries about 21 percent of the overall traffic at Denver International and leases about 20 gates, dominating one of the airport's three concourses.
Frontier passenger Preston Tucker, 19, a University of Colorado student, said he didn't expect the filing to affect his plans.
"As long as they keep flying, it is not going to cause problems," he said.
Frontier opened in 1994 with fewer than 200 employees and two planes, flying between its Denver home and three cities in North Dakota. The airline now has about 350 flights to more than 60 cities and employs about 6,000 people.
Frontier shares lost most of their value in trading Friday, tumbling $1.12 to 45 cents each.
AP Business Writer Sandy Shore and AP Writer Ivan Moreno contributed to this report.

[stevepiv]

I paid $4.29 a gallon for diesel today. Last week it was around 3.99 now with it fluctuating, setting prices and giving quotes is very tough.

[2Real4me!]

Food Costs Rising Fastest in 17 Years
Monday April 14, 4:10 pm ET
By Ellen Simon, AP Business Writer



Food Costs Rising at Fast Clip, Squeezing Poor, Forcing Food Vendors to Explain Higher Prices

NEW YORK (AP) -- Steve Tarpin can bake a graham cracker crust in his sleep, but explaining why the price for his Key lime pies went from $20 to $25 required mastering a thornier topic: global economics.
He recently wrote a letter to his customers and posted it near the cash register listing the factors -- dairy prices driven higher by conglomerates buying up milk supplies, heat waves in Europe and California, demand from emerging markets and the weak dollar.
The owner of Steve's Authentic Key Lime Pies in Brooklyn said he didn't want customers thinking he was "jacking up prices because I have a unique product."
"I have to justify it," he said.
The U.S. is wrestling with the worst food inflation in 17 years, and analysts expect new data due on Wednesday to show it's getting worse. That's putting the squeeze on poor families and forcing bakeries, bagel shops and delis to explain price increases to their customers.
U.S. food prices rose 4 percent in 2007, compared with an average 2.5 percent annual rise for the last 15 years, according to the U.S. Department of Agriculture. And the agency says 2008 could be worse, with a rise of as much as 4.5 percent.
Higher prices for food and energy are again expected to play a leading role in pushing the government's consumer price index higher for March.
Analysts are forecasting that Wednesday's Department of Labor report will show the Consumer Price Index rose at a 4 percent annual rate in the first three months of the year, up from last year's overall rise of 2.8 percent.
For the U.S. poor, any increase in food costs sets up an either-or equation: Give something up to pay for food.
"I was talking to people who make $9 an hour, talking about how they might save $5 a week," said Kathleen DiChiara, president and CEO of the Community FoodBank of New Jersey. "They really felt they couldn't. That was before. Now, they have to."
For some, that means adding an extra cup of water to their soup, watering down their milk, or giving their children soda because it's cheaper than milk, DiChiara said.
U.S. households still spend a smaller chunk of their expenses for foods than in any other country -- 7.2 percent in 2006, according to the USDA. By contrast, the figure was 22 percent in Poland and more than 40 percent in Egypt and Vietnam.
In Bangladesh, economists estimate 30 million of the country's 150 million people could be going hungry. Haiti's prime minister was ousted over the weekend following food riots there.
Still, the higher U.S. prices seem eye-popping after years of low inflation. Eggs cost 25 percent more in February than they did a year ago, according to the USDA. Milk and other dairy products jumped 13 percent, chicken and other poultry nearly 7 percent.
USDA economist Ephraim Leibtag explained the jumps in a recent presentation to the Food Marketing Institute, starting with the factors everyone knows about: sharply higher commodity costs for wheat, corn, soybeans and milk, plus higher energy and transportation costs.
The other reasons are more complex. Rapid economic growth in China and India has increased demand for meat there, and exports of U.S. products, such as corn, have set records as the weak dollar has made them cheaper. That's lowered the supply of corn available for sale in the U.S., raising prices here. Ethanol production has also diverted corn from dinner tables and into fuel tanks.
Soybean prices have gone up as farmers switched more of their acreage to corn. Drought in Australia has even affected the price of bread, as it led to tighter global wheat supplies.
The jump has left people in the food business to do their own explaining. Twin Cafe Caterers in lower Manhattan posted a letter on its deli cooler: "Due to the huge increase of the gas, the electricity, the water and all the other utilities, we had to raise the prices a little bit." It went on to say that all its food prices have risen, too.
Wonder Bagels, in Jersey City, N.J., posted a letter from its wheat supplier, A. Oliveri & Sons, saying the recent situation was unprecedented.
"The major mills across the country are using words like 'rationing' and 'shortages' if things continue," it said. "We will sweat out the summer together, hoping there will be some flour left to purchase at any price."
The letter called for an immediate halt to exports and a change in farm policy, "stop paying farmers NOT to grow crops." A new farm bill, stalled in Congress, would expand farm subsidies if it passes, however.
For some Americans, the resulting increases might be barely perceptible. The Cheesecake Factory raised prices by 1.5 percent at the end of February, Applebee's by 3 percent.
But for the poorest U.S. families, the higher costs may mean going hungry. A family of four is eligible for a maximum $542 a month in food stamps, which never lasted the whole month before, Food Bank of New Jersey's DiChiara said.
"Now food stamps go fewer and fewer days of the month," she said.
The Food Bank recently got a letter of its own from a key vendor. Its grim message: Sorry, but the prices they charge the Food Bank would be increasing 20 percent, due to food inflation.

[2Real4me!]

Oil futures jump to record over $115 on supply concerns
Wednesday April 16, 4:35 pm ET
By John Wilen, AP Business Writer



Oil futures pass $115 for the first time on supply concerns; investors shrug off tepid demand

NEW YORK (AP) -- Crude futures made their first foray past $115 Wednesday, propelled to a new record by concerns about how much gas will be available during the peak summer months.
Inventories of gas fell by 5.5 million barrels last week, according to the Energy Department's Energy Information Administration, a much bigger decline than forecast by analysts surveyed by Dow Jones Newswires. Light, sweet crude for May delivery responded by rising as high as $115.07 on the New York Mercantile Exchange, and later settled up $1.14 at a record $114.93 a barrel.
The report said crude inventories fell by 2.3 million barrels last week, compared to the gain analysts expected.
Oil prices were also boosted by the falling dollar, which declined to a new low against the euro on Wednesday. Many investors buy commodities such as oil as a hedge against inflation and a falling greenback. A weaker dollar also makes oil cheaper to investors overseas.
But the market was torn and traded sharply lower at times due to data deeper in the report showing that the country's appetite for increasingly expensive gas is declining.
"Demand for gasoline is terrible," said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago. Gas demand has fallen an average of 1 percent each of the last four weeks compared to the same period last year. "Demand should be rising this time of year."
Still, May gasoline futures rose 5.8 cents to settle at a record $2.939 a gallon on the Nymex after earlier rising to a trading record of $2.9427.
The EIA report also said inventories of distillates, which include heating oil and diesel, unexpectedly rose last week by about 100,000 barrels. Analysts had expected a sharp decline. May heating oil futures rose 0.91 cent to settle at $3.283 a gallon.
Demand for gasoline has been falling for months as consumers reacted to a series of price records by driving less. The national average price of a gallon of regular unleaded gas rose 1.3 cents Wednesday to a record $3.399 a gallon, according to a survey of stations by AAA and the Oil Price Information Service. That's 53 cents higher than a year ago, and is expected to keep climbing along with futures prices and as the summer driving season draws near.
The average national price of a gallon of diesel, meanwhile, rose a cent to a record $4.129 a gallon, the survey showed. High prices for diesel -- used to fuel most trucks, trains and ships -- is a large part of the reason food prices are rising.
Gas and diesel prices are following crude futures, which have risen from about $64 a barrel last spring, mostly because of the falling dollar. Prices also have been supported in recent months by a view that demand for oil remains strong globally, although it may be falling in the United States. But that could change, if U.S. demand continues to weaken, analysts say.
"We're seeing a major slowdown in U.S. demand growth," Flynn said.
Still, analysts expect gas prices to rise higher before they fall. Many see retail prices peaking around $3.65 a gallon next month. The Energy Department, in a recent forecast, said prices could average as high as $3.60 a gallon this summer on a monthly basis, but could spike to $4 on a national average basis at times.
In other Nymex trading, May natural gas futures rose 22.8 cents to settle at $10.433 per 1,000 cubic feet.
In London, June Brent crude futures rose $1.08 to settle at $112.66 a barrel on the ICE Futures exchange.

[2Real4me!]

Fed: economy weakened further in the spring
Wednesday April 16, 4:36 pm ET
By Jeannine Aversa, AP Economics Writer



Fed: economy weakened further in the spring as shoppers buckled under multiple strains

WASHINGTON (AP) -- The country's economic health deteriorated further in early spring as shoppers buckled under the strains of the housing and credit debacles and a weaker employment climate.
Manufacturers and others businesses, meanwhile, were walloped by zooming prices for energy and other raw materials. However, their ability to jack up retail prices to customers was mixed, with some companies restrained by competitive pressures, according to the Federal Reserve's new snapshot of nationwide economic conditions released Wednesday.
"Economic conditions have weakened," the Fed report stated.
Many analysts believe the economy has fallen into a recession, predicting that economic activity contracted in the first three months of this year and is still ebbing. Even Fed Chairman Ben Bernanke recently acknowledged for the first time that a recession was possible. That was a rare utterance of the "r" word for a Fed chief. The government later this month will report on the economy's first-quarter performance.
Janet Yellen, president of the Federal Reserve Bank of San Francisco, said in a speech Wednesday that the economy "has all but stalled and could even contract over the first half of the year."
On Wall Street, investors -- buoyed by upbeat earnings reports from JPMorgan Chase, Intel Corp. and Coca-Cola Co. -- looked past the downbeat economic news. The Dow Jones industrials jumped 256.80 points.
The Fed report underscored the challenges facing Bernanke and his colleagues as they fight to keep the economy from sinking into a deep recession, while at the same time avoiding a flare-up of inflation. The report will figure prominently when the Fed meets April 29-30 to decide its next move on interest rates.
The Fed, which has been cutting rates since September to bolster the economy, turned much more forceful in January, when conditions took another turn for the worse. Many economists believe the Fed will lower rates yet again at the April meeting to help shore things up.
The Fed snapshot "either portrayed a slowdown in already subpar economic growth or a deepening recession," said Michael Gregory, economist at BMO Capital Markets, who predicted a quarter-point rate reduction.
Even with the rate reductions, though, consumers have turned more cautious, the Fed report suggested. Consumers are major shapers of the economy because their spending accounts for such a big chunk of overall economic activity.
"Consumer spending was characterized as softening across most of the country, with some districts reporting year-over-year declines in retail and or auto sales," the Fed report said. Merchants -- other than auto dealers -- reported sales were "sluggish or declining" in 10 of the Fed's 12 regions, the report said. With inventories of unsold goods starting to pile up, retailers in the Richmond, Va., and San Francisco regions have canceled orders, the report noted.
Lofty energy prices are squeezing businesses' profits and pinching consumers, leaving them with less money to spend on other things. That is putting a damper on economic growth and adding to inflation pressures.
Oil prices briefly topped $115 a barrel for the first time Wednesday. Gasoline prices have soared, too, marching toward $4 a gallon.
Businesses must cope with higher prices for food, fuel and energy products and many raw materials, the Fed report said.
"Most manufacturers have or are planning to increase prices" in response to such rising costs, the Fed said. However, the response of companies in the service sector has been more mixed, the Fed said, "in part due to differences in competitive pressures."
Overall, most of the Fed's regions reported "little change in retail price inflation," the Fed report said, suggesting that producers -- and their profits -- are getting hit by rising energy and raw material prices.
The government reported Wednesday that consumer prices went up by a relatively modest 0.3 percent in March. Producer, or wholesale, prices, meanwhile rose a lot faster -- by a whopping 1.1 percent.
On the manufacturing front, activity varied across the country.
The Fed regions of Chicago, Boston and Richmond, for instance, reported factory activity was rising -- but not substantially. But the regions of New York, Kansas City, Philadelphia and Dallas all reported weakening factory production. The regions of St. Louis and Cleveland saw activity hold steady, while the regions of Atlanta, Minneapolis and San Francisco said it was mixed.
Nonetheless, most Fed regions saw a "continued slide" in demand for goods related to housing construction, the Fed said. Uncertainty about economic conditions, the Fed added, is leading to a "generally subdued" outlook for manufacturers.
In a separate report Wednesday, the Fed said big industry production nationwide rose 0.3 percent in March, an improvement from a drop of 0.7 percent in February.
The housing market remained stuck in a rut.
Home building stayed sluggish throughout the nation, although "there were few signs of any quickening in the pace of deterioration," the Fed said. Declines or downward pressure on home prices were reported in many Fed regions. And the regions of New York and San Francisco noted "some incipient price declines in areas that had previously shown resilience.'
The Commerce Department, in yet another report Wednesday, said home building sank in March to its lowest point in 17 years, fresh evidence of the depth of the housing market's woes.
The Fed's survey is based on information supplied by the Fed's 12 regional banks. The information was collected before April 7.

[2Real4me!]

March consumer prices up, reflecting higher energy prices
Wednesday April 16, 5:49 pm ET
By Martin Crutsinger, AP Economics Writer



Higher energy and food prices boost March consumer inflation; bigger increases expected

WASHINGTON (AP) -- Inflation rose again last month, reflecting big jumps in the cost of energy and airline tickets. And the forecast is for even bigger energy-related increases to come, including the possibility of $4 per gallon gasoline by Memorial Day.
Those inflation pressures are occurring just as the economy seems to be sinking into a recession, with consumers cutting back on spending and the housing industry, where all the troubles started, sinking further.
That was the somber news from a batch of economic reports released Wednesday that depicted an economy still struggling with multiple problems from a prolonged slump in housing, soaring energy prices, a severe credit crisis and rising unemployment.
The Labor Department said consumer prices rose by 0.3 percent in March, after being unchanged in February, as energy prices jumped by 1.9 percent and airline fares, reflecting higher fuel costs, increased 3 percent, the biggest one-month gain in six years.
Food prices, which have been steadily rising for more than a year, were up by 0.2 percent in March and 4.4 percent over the past 12 months. The price of some food staples showed even bigger increases over the past year, including a 14.7 percent rise in the price of bread and a 13.3 percent increase in milk prices over the past year.
With crude oil prices briefly touching a new record near $115 per barrel this week, and food prices remaining under pressure because of global shortages, analysts predicted consumers will feel more inflation pressures in the months ahead.
Gasoline pump prices hit a new nationwide record of $3.40 per gallon on Wednesday, up 53 cents from a year ago, according to the Oil Price Information Service and AAA, and many economists believe that price will hit $4 per gallon by Memorial Day.
"People are going to be paying a lot more for gasoline and groceries in the months ahead," said Mark Zandi, chief economist at Moody's Economy.com. "Nothing is going right at the moment. That is why consumer confidence has fallen to the lowest point since the early 1980s."
Wall Street ignored all the bad economic data and instead focused on better-than-expected quarterly results from JPMorgan Chase and two other companies to send stocks higher. The Dow Jones industrial average rose 256.80 points Wednesday to close at 12,619.27.
Zandi said the rise in food and fuel prices has been a significant drain on consumers' purchasing power, another reason he and other analysts believe the country has fallen into a recession. Consumer spending accounts for two-thirds of economic activity.
While the Bush administration is hoping that economic stimulus checks being mailed to households starting next month will make any slump short and mild, Zandi said the $100 billion in payments consumers will get this year will be just enough to offset their higher gasoline bills, leaving nothing left to boost consumer spending in other areas.
In its latest look at business activity around the country, the Federal Reserve said Wednesday that "economic conditions have weakened," citing sluggish consumer spending and rising costs to businesses for raw materials.
Many analysts expect the Fed, which has been aggressively cutting interest rates and shoveling money into the banking system to combat the credit squeeze, will cut rates again when officials next meet on April 29-30.
The Fed also reported Wednesday that industrial output managed a 0.3 percent rise in March but the gain in manufacturing was a weak 0.1 percent as auto production continued to fall.
And the housing industry, where the troubles began two years ago, remained under severe strain with construction of new homes and apartments plunging by 11.9 percent in March, the Commerce Department reported, double what had been expected, to a seasonally adjusted annual rate of 947,000 units, the slowest pace in 17 years.
Many analysts said construction is likely to fall more in coming months, reflecting a huge overhang of unsold homes that includes not only new homes but also houses being dumped on the market as foreclosures rise to record levels.
David Seiders, chief economist at the National Association Home Builders, said he believed construction activity would fall to just 948,000 units this year, the third straight decline and the lowest level of activity in the post World War II period.
For March, construction fell in all parts of the country, led by a 21.4 percent drop in the Midwest and declines of 12.6 percent in the South, 8.5 percent in the Northeast and 5.7 percent in the West.
The Consumer Price Index showed that overall prices are up 4 percent over the past 12 months while core inflation, which excludes energy and food, has risen by 2.4 percent in the past year, including a 0.2 percent March increase. Clothing costs fell by 1.3 percent, the biggest drop in nearly a decade.
In another reflection of the squeeze on ordinary Americans, the Labor Department said that average weekly earnings for nonsupervisory workers dropped by 1 percent last month, compared with a year ago, the sixth straight month that inflation-adjusted wages have fallen.

[IV]

[flash=320,256]http://www.liveleak.com/e/760_1208366715&autoplay=1[/flash]


Listen to this. If you think you're worried now, now you can be outright scared.

[2Real4me!]

Google's 1Q profit climbs 30 pct and tops analyst views
Thursday April 17, 6:59 pm ET
By Michael Liedtke, AP Business Writer



Google's first-quarter profit rises 30 percent, beats analyst expectations

SAN FRANCISCO (AP) -- Google Inc. tweaked its online advertising formula and expanded its business outside the United States to produce a first-quarter profit that surpassed analysts' predictions, alleviating some of the economic worries battering its stock this year.
The news, released after the stock market closed Thursday, lifted Google's recently drooping shares by more than $76, or 17 percent.
The Internet search leader said it earned $1.31 billion, or $4.12 per share, during the first three months of the year. That represented a 31 percent increase from net income of $1 billion, or $3.18 per share, in the first quarter of 2007.
If not for expenses to cover stock given its employees, Google said it would have made $4.84 per share.
That figure outstripped the average projection of $4.52 per share among analysts surveyed by Thomson Financial.
First-quarter revenue totaled $5.19 billion, up 42 percent from $3.66 billion a year ago.
After subtracting the commissions paid to the company's advertising partners, Google's revenue stood at $3.7 billion -- about $100 million above analyst estimates.
"It's clear we are well positioned for 2008 and beyond, regardless of the business environment we are surrounded by," Google Chief Executive Eric Schmidt told analysts during a Thursday conference call.
Google's showing could be a precursor to a strong earnings report from Yahoo Inc. next week.
If it can meet or exceed analyst expectations like Google did, Yahoo will be in a better position to ward off Microsoft Corp.'s unsolicited takeover bid or at least argue for its suitor to raise the cash-and-stock offer from its current value of about $42 billion.
Mountain View-based Google is trying to help Sunnyvale-based Yahoo thwart Microsoft by helping Yahoo place ads on its Web site as part of a test scheduled to conclude next week. Schmidt declined to answer a question about the chances of Google signing a long-term advertising contract with Yahoo -- a deal that would likely face intense scrutiny from antitrust regulators.
"It's nice to be working with Yahoo," Schmidt said. "We like them very much."
Investors had serious doubts about Google's short-term prospects before Thursday.
The financial targets that guide Wall Street's expectations had fallen during the past two months as Web surfing data convinced analysts that Google's advertising links aren't attracting as much consumer interest amid mounting evidence the U.S. economy had tumbled into a recession. Google makes money from the links only when Web surfers click on them.
But management has said the slowdown in ad clicking largely reflected changes that purposefully reduced the volume of commercial in an effort to deliver more compelling messages that lead to purchases.
By making this switch, Google bet that advertisers would be willing to pay more for each ad link and ultimately generate more revenue from fewer clicks.
That appears to be what happened in the first quarter when the company said the number of paid clicks from last year rose by 20 percent, less than half the rate of the first-quarter revenue increase.
Google's performance indicates the Internet's advertising market -- expected to generate $44 billion in worldwide spending -- remains robust, especially outside the United States.
International markets accounted for 51 percent of Google's revenue in an expansion that was accentuated by the weak dollar. It's the first time in Google's 9 1/2-year history that more than half of its revenue came from outside the United States.
Google said its revenue would have been about $202 million lower if the dollar's value hadn't declined so dramatically from the first quarter of 2007.
An unusually low tax rate of 24 percent also bolstered Google's earnings. The company's quarterly tax rate ranged from 25 percent to 27 percent last year. Management attributed this year's lower rate primarily to its widening exposure to markets outside the United States.
The results restored some of the $75 billion in shareholder wealth that had evaporated with the 35 percent drop in Google's stock price this year.
Google shares declined $5.49 during regular trading to finish at $449.54.
This was the 12th quarter out of the 15 since Google went public that its performance has topped analyst expectations -- a trend that had helped propel its stock to nearly $750 before the recent plunge.

[2Real4me!]

Retail gas hits record $3.50 a gallon as oil marches higher
Monday April 21, 3:48 pm ET
By Adam Schreck, Associated Press Writer



Gas prices at the pump jump to record $3.50 a gallon as crude prices close above $117 a barrel

NEW YORK (AP) -- Rising gasoline prices tightened the squeeze on drivers Monday, jumping to an average $3.50 a gallon at filling stations across the country.
Crude oil, meanwhile, set a new record of its own, spiking after an attack on a Japanese oil tanker in the Middle East to close above $117 a barrel for the first time.
"It's killing us," said Jean Beuns, a cab driver in New York who estimated he is making $125 to $150 a month less than in the fall because of costlier fuel. "And it was so quick. Every day you see the price go up 5, 6, 10 cents more."
Diesel prices at the pump also struck a record high, of $4.20 a gallon, according to AAA and the Oil Price Information Service, putting pressure on truckers and other shippers who rely on the fuel to transport goods to market.
Prices are expected to keep climbing as they trace the path of crude, which has surged to new records for six trading sessions in a row. Oil prices are rising along with a host of commodities, from corn and wheat to gold and platinum, that are enticing speculators seeking hedges against a weakening dollar.
Light, sweet crude for May delivery rose to a record $117.76 a barrel on the New York Mercantile Exchange before settling at $117.48, up 79 cents from Friday's close.
Nationally, retail gas prices jumped more than a nickel over the weekend, and are up 23 percent from a year earlier. Drivers are paying the lowest prices in New Jersey and the most in California, where a gallon of regular is now averaging $3.86 for a gallon.
For motorists, the worst may be still to come. That is because the summer driving season, when demand is at its greatest, has yet to begin.
"People want to drive, they need to drive, they have to go to their job," said Samer Katib, manager of a Marathon station on Chicago's South Side. "But people who would drive around or go places for fun, they're not doing that any more. It's just go to your work and go home."
The Energy Department predicted earlier this month that monthly average gasoline price will peak at over $3.60 per gallon in June and could possibly reach the $4 threshold.
"It's uncharted territory," said Tom Kloza of the Oil Price Information Service, Wall, N.J. "I don't think we're done, but I have to believe we're in the eighth or ninth inning" of price increases.
The higher prices are already prompting some drivers to cut back.
In New York, Elvis Ragbir and Anthony Winckler said they are driving less and taking the subway more.
"I'm spending all my gas money on MetroCards," Winckler said in the waiting room of a vehicle inspection station in Manhattan. Ragbir, a delivery truck driver, said he is looking to trade in his Lexus LS 400 for a smaller car.
In downtown Chicago, Sharon Cooper spent $52 to fill up three-quarters of the tank in her Toyota Highlander SUV. She said she tries not to let the prices get to her, although she also is changing her habits: "I am buying a bike to commute to work this summer," she said.
Energy Department data show gasoline consumption fell more than 1 percent during the four weeks ended April 11, compared with the same period a year ago.
That change in consumption patterns, while not drastic, is significant, said Mariano Gurfinkel, project manager at the Center for Energy Economics at the University of Texas at Austin, who expects per-capita demand to drop further this summer if gas prices rise or even remain at the current levels.
Americans will continue to drive, but some may change a summer vacation destination as gasoline costs continue to make a bigger dent in their pocketbooks, Gurfinkel said.
Crude prices came under increased pressure Monday after the 150,000-ton tanker Takayama was struck off the coast of Yemen as it headed for Saudi Arabia, its Japanese operator, Nippon Yusen K.K., said in a statement posted on its Web site. None of the ship's 23 crew members was injured, but several hundreds of gallons of fuel leaked before a 1-inch hole in the tanker's stern was repaired, the company said.
Kyodo News agency reported that the Japanese tanker was fired on by a rocket launcher from a small boat.
"There's clearly some geopolitical tension in the market," said Mark Pervan, senior commodity strategist at the ANZ Bank in Melbourne, Australia. "This will die down, but the market is pretty jittery at the moment."
Adding to the worries were claims Monday from the main militant group in Nigeria's restive south that it had launched two more attacks on oil pipelines in the region. Attacks since early 2006 on Nigerian oil infrastructure by the militant group have cut nearly one-quarter of the country's normal petroleum output, boosting oil prices. Nigeria is a major supplier to the U.S.
Comments over the weekend by an OPEC official that the group was not likely to increase production also supported prices Monday. Abdalla Salem el-Badri, secretary-general of the Organization of Petroleum Exporting Countries, said Sunday that oil prices would likely go higher and that the group was ready to raise production if the price pressure was due to a shortage of supply -- something he doubted.
"Oil prices, there is a common understanding that has nothing to do with supply and demand," el-Badri said on the sidelines of an energy conference in Rome.
In other Nymex trading, heating oil futures rose 1.9 cents to settle at $3.3114 a gallon while gasoline futures fell about a penny to settle at $2.9791 a gallon. Natural gas futures jumped 14.6 cents to settle at $10.733 per 1,000 cubic feet.
Associated Press Writers Dave Carpenter in Chicago, Dan Caterinicchia in Washington, Pablo Gorondi in Budapest and Thomas Hogue in Bangkok, Thailand, contributed to this report.