Americans Reduce Spending
The U.S. Commerce Department reported Friday that during October, for the first
time in five months, Americans reduced personal spending as wage growth and
income remained flat. For October, personal spending fell a seasonally adjusted
0.2% - its first decline since May - after rising 0.8% during September. At an
annual rate, Hurricane Sandy was reportedly responsible for reduced wages and
salaries to the tune of over $18 billion. The savings rate of Americans remained
near a five-year low since spending fell compared to income growth which edged
higher to 3.4% from 3.3%. During October, inflation remained subdued. Overall,
the CPE price index rose 0.1% and core rate, which excludes food and energy,
fell 0.1% as well. Over the past 12 months the core rate is up 1.6%. As reported
by Commerce, consumer spending rose a revised 1.4% instead of original report of
rising 2%, during Q3. For 2012, Q4 is unlikely to match the 2.7% growth rate of
Q3 unless consumer spending accelerates. Defense spending and a corporate
buildup in inventories generated the largest boost in growth for Q3. Although
consumer confidence hit a four year high, income and weak job market suggest
American will remain cautious spenders during the holiday season. Disposable
income – money left over after people pay taxes and other fees - fell 0.1%
during October. In the past 12 months, disposable income has risen 1.2%, down
from 1.6% in September. Spending during August was revised down to a 0.3%
increase from 0.5%.|
As the month of November comes to a close Friday, NASDAQ was successful at
hosting a record positive November not seen since 2009.
Zynga (ZNGA) shares ended the trading session Friday down 6% after an
announcement on Thursday of several changes in terms with Facebook (FB). While
Zynga relies heavily for a majority of its revenue and traffic - on consumers
using Facebook to play their games such as “CityVille” and “Mafia Wars”, in a
regulatory filing, the company said it is no longer under obligation to use
Facebook credits for payments on its own Zynga.com gaming platform, and that
Facebook will now be able to develop its own games.
A new deal to keep operating the registry with the U.S. government, VeriSign
(VRSN) shares ended the trading session lower by 13% on Friday. The domain-name
registrar said it would be limited in raising prices due under the new agreement
with the Department of Commerce and can serve as the registry operator for the
next six years. VeriSign no longer has the right to four automatic price
increases of up to 7%. Any price increases have to be “limited to circumstances
based on the imposition of new Consensus Policy or extraordinary expenses
related to security or stability threats,” and the Commerce Department must sign
off on them. Current pricing of $7.85 per domain name registration from VeriSign
will continue throughout the term, although Commerce could remove price
restrictions entirely, if the company can demonstrate they are no longer
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Nov 30, 2012