Countdown To Sequester
Consumers are alert to the countdown to sequester, which will take effect
tomorrow, Friday March 1 since lawmakers failed to come to terms, today. We all
are aware of the politics played in Washington and how their actions directly
effect Main Street America. While not all automatic government spending cuts as
a result of the sequester will take effect immediately, Americans will
definitely feel the effects in the not so distant future as a result of the
across-the-board spending reductions. Spending cuts are slated for 1,200
different programs and could be extended to thousands more with defense budget
cuts account for almost half the $85 billion in spending cuts while
discretionary programs pertain to the rest. On Thursday, bills presented by both
Senate Democrats and Republicans, which would have replaced the automatic cuts
with a combination of alternative spending cuts and tax increases on the
wealthy, failed a test vote. On Friday, President Barack Obama is set to meet
with congressional leaders to discuss alterative spending cuts that can be
approved by both sides of the aisle.
Robo-signing scandal settlements were announced Thursday by Federal regulators.
The $9.3 billion settlement included 13 banks over foreclosure abuses. The
largest banks will pay up as follows with funds due by January 7, 2015: Bank of
America Corp. (BAC) was ordered to deposit $1.1 billion into a fund to be used
to provide cash payments to troubled borrowers plus pay, $1.8 billion in other
assistance to homeowners such as modifications to mortgages or reductions to the
amount borrowers owe; J.P. Morgan Chase (JPM) was ordered to deposit $753
million into the fund plus pay, $1.2 billion in other assistance; Wells Fargo &
Co. (WFC) was ordered to deposit $766 million into the fund plus pay, $1.2
billion in other assistance.
The U.S. Commerce Department reported GDP on Thursday that showed during Q4
2012, the U.S. expanded at a 0.1% annual rate, but well below Q3 pace of 3.1%. A
slower pace of inventory growth subtracted 1.6 percentage points from Q4 GDP.
Lower government spending chopped off 1.4 percentage points from Q4 GDP. A
breakdown for GDP: business inventories grew by $12 billion; construction
spending on new homes was revised up to a 17.5% increase from 15.3%; consumer
spending was revised down to 2.1%; exports fell a revised 3.9% instead of 5.7%;
government spending dropped 6.9%; imports dropped by 4.5% vs. initially reported
3.2% decline. Personal income during Q4 was trimmed to a 6.2% gain. Excluding
food and energy, inflation as measured by the PCE index, rose at a subdued 1.5%
rate or by 0.9%.
The U.S. Department of Labor reported on Thursday that in the week ended
February 23, the number of people who applied for regular state
unemployment-insurance benefits dropped 22,000 to 344,000, sending signals of
improvement in the labor market. For week ended February 16, Labor revised
claims to 366,000 from previous estimate of 362,000. Average new claims over the
past month, fell 6,750 to 355,000. For the week ended February 16, new jobless
claims fell by 91,000 to 3.07 million, striking the lowest level seen since June
2008. Four-week average of continuing claims fell 35,500 to 3.16 million,
striking lowest level seen since July 2008.
Chicago PMI - a measure of Chicago-area manufacturing - rose to 56.8 in February
from reading of 55.6 in January, striking the highest reading since March. New
orders subcomponent rose to a reading of 60.2 from 58.2 in January.
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Feb 28, 2013