World markets wait on Fed Chairman Ben Bernanke

By The Associated Press - Tuesday, May 21, 2013 at 6:09 AM - 0 Comments

BANGKOK – World stock markets were mixed Tuesday as investors waited for the U.S. Federal Reserve to telegraph what it plans to do next with its economic stimulus program.

The Fed is conducting its third round of massive bond purchases known as quantitative easing to help drive down interest rates and spur lending. But recently improving data on the U.S. economy has led to speculation that it might consider scaling back the program or winding it down earlier than expected.

On Wednesday, Fed Chairman Ben Bernanke will appear before Congress and the central bank will release minutes of its most recent policy meeting.

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Weekly US unemployment aid applications fall to 323,000, lowest in 5 years

By The Associated Press - Thursday, May 9, 2013 at 10:44 AM - 0 Comments

WASHINGTON – The number of Americans who applied for unemployment benefits fell by 4,000 last week to a seasonally adjusted 323,000, a five-year low. Layoffs have returned to pre-recession levels, a trend that could lead to more hiring.

The Labor Department said Thursday that the less volatile four-week average dropped 6,250 to 336,750. That the fewest since November 2007, one month before the Great Recession began.

Applications are a proxy for layoffs. Weekly applications have fallen about 9 per cent since November and are now at a level consistent with a healthy economy. The last time weekly applications were lower was in January 2008, when they were 321,000.

Economists were largely encouraged by the decline.

“This is a very positive trend and we should embrace it,” Jennifer Lee, an economist at BMO Capital Markets, said in an email to clients.
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In the U.S., a recovery for the rich

By Erica Alini - Wednesday, May 8, 2013 at 5:00 PM - 0 Comments

Officially, the Great Recession in the United States ended in June 2009. For the following 2½ years, though, the recovery has only blessed the rich. For the rest of America, it felt like the recession kept on going.

That’s according to research based on the latest available data on the wealth of U.S. households. At the height of the financial crisis, the economy spared few American families, rich or poor. But once it started growing again, relief came unevenly. Only households in the top seven per cent of the income ladder saw their net worth—assets minus debt—grow between the second half of 2009 and the end of 2011, the recent Pew Research Center analysis shows. For the bottom 93 per cent, wealth continued to decline, shrinking by four per cent—more worrisome evidence, say economists, of rising inequality in the U.S.

Blame goes to the opposite trajectories of financial assets and real estate. Rising stock prices and soaring gains in bonds gave a quick lift to America’s top earners, for whom wealth is mostly concentrated in financial holdings. For most people, however, their homes are their most valuable assets and the housing market kept sliding through 2011. With bond prices at record highs and stocks up 34 per cent in December 2011 from June 2009, America’s eight million richest households saw their mean net worth grow to $3.3 million from $2.6 million. For the other 111 million households, mean net worth fell by $6,000 to an average of $136,426, as home prices declined five per cent in the first 30 months of the recovery.

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U.S. employers added 165K jobs in April, unemployment rate at 4-year low

By The Associated Press - Friday, May 3, 2013 at 8:36 AM - 0 Comments

WASHINGTON – U.S. employers added 165,000 jobs in April, and hiring was much stronger in the previous two months than the government first estimated. The job increases helped reduce the unemployment rate from 7.6 per cent to a four-year low of 7.5 per cent.

The report Friday from the Labor Department was a reassuring sign that the U.S. job market is improving despite higher taxes and government spending cuts that took effect this year.

The government revised up its estimate of job gains in February and March by a combined 114,000. It now says employers added 332,000 jobs in February and 138,000 in March. The economy has created an average of 208,000 jobs a month from November through April — above the 138,000 added in the previous six months.

An additional 210,000 people started looking for work in April, and many of them found jobs. Continue…

Fed expected to maintain its efforts to strengthen a still-subpar economy

By The Associated Press - Wednesday, May 1, 2013 at 6:08 AM - 0 Comments

WASHINGTON – The Federal Reserve is widely expected Wednesday to stick with its aggressive efforts to strengthen a still-subpar economy.

The Fed will likely end a two-day meeting with a statement noting that job growth remains modest and that it’s standing by its campaign to keep loan rates at record lows to help ease unemployment.

The central bank’s efforts include buying $85 billion a month in Treasurys and mortgage bonds to try to keep long-term borrowing costs down.

Investors will have only the Fed’s brief statement to study for clues to its thinking. This isn’t one of the four policy meetings each year that are capped by a news conference by Chairman Ben Bernanke.

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Is the U.S. economy in for a spring slowdown?

By Erica Alini - Friday, April 26, 2013 at 11:48 AM - 0 Comments

To recap:

• The U.S. economy expanded by 2.5 per cent of GDP annualized in the first three months of the year, below the consensus forecast of three per cent growth but still a much stronger performance than the 0.4 per cent gain registered in the fourth quarter of 2012.
• Government spending cuts were the main drag on the economy, shaving eight percentage points off growth, meaning that GDP would have otherwise expanded by 3.3 per cent. The sweeping federal spending cuts known as sequester weren’t expected to take effect until late March or early April, but some government agencies—particularly the defense department—seem to have trimmed their expenditures preemptively. As more federal agencies follow suit, government spending will likely continue to weigh on the recovery in the coming months.
• Consumers, on the other hand, were the main propellers of growth. Spending by American families grew by 3.2 per cent, above the 2.8 per cent expected. However, analysts believe some of that activity reflects a one-time bounce-back after Hurricane Sandy, which ravaged the north-eatsern U.S. late last year.
• Business investment growth slowed to 2.1 per cent from 13.1 per cent in the previous quarter, but residential investment leaped forward by 12.6 per cent, the second consecutive double-digit increase in six months.
• International trade was a source of drag, with imports outpacing exports and subtracting half a percentage point from growth.

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U.S. economy grows 2.5 per cent rate in first quarter, propelled by consumer spending

By The Associated Press - Friday, April 26, 2013 at 9:44 AM - 0 Comments

WASHINGTON – U.S. economic growth accelerated to an annual rate of 2.5 per cent from January through March, buoyed by the strongest consumer spending in more than two years. Government spending fell, though, and tax increases and federal budget cuts could slow growth later this year.

The Commerce Department said Friday that the economy rebounded from an anemic 0.4 per cent annual growth rate in the October-December quarter. Consumer spending surged at an annual rate of 3.2 per cent — its biggest jump since the end of 2010.

Growth was also helped by businesses, which responded to the greater demand by rebuilding their stockpiles. And home construction rose further.

Government spending sank at a 4.1 per cent annual rate, led by another deep cut in defence spending. The decline kept last quarter’s increase in economic growth below expectations of a 3 per cent rate or more. Continue…

U.S. economy adds just 88,000 jobs, fewest in nine months

By The Associated Press - Friday, April 5, 2013 at 9:50 AM - 0 Comments

WASHINGTON – U.S. employers added just 88,000 jobs in March, the fewest in nine months and a sharp retreat after a period of strong hiring. The slowdown may signal that the economy is heading into a weak spring.

The Labor Department said Friday that the unemployment rate dipped to 7.6 per cent, the lowest in four years, from 7.7 per cent. But the rate fell only because more people stopped looking for work. People who are out of work are no longer counted as unemployed once they stop looking for a job.

The percentage of Americans working or looking for jobs fell to 63.3 per cent in March, the lowest such figure in nearly 34 years.

Stock futures sank after the jobs report was released at 8:30 a.m. Eastern time.

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Obama’s budget proposes cuts to Social Security: official

By The Associated Press - Friday, April 5, 2013 at 8:24 AM - 0 Comments

WASHINGTON – President Barack Obama’s proposed budget will call for reductions in the growth of Social Security and other benefit programs by including a proposal to lower cost-of-living adjustments to government social safety net spending, a senior administration official says.

The proposal attempts to strike a compromise with congressional Republicans on the Fiscal 2014 budget by combining the president’s demand for higher taxes with GOP insistence on reductions in entitlement programs.

The official, who spoke on a condition of anonymity to describe a budget that has yet to be released, said Obama would reduce the federal government deficit by $1.8 trillion over 10 years.

A key feature of the plan Obama is proposing for the federal budget year beginning Oct. 1 is a revised inflation adjustment called “chained CPI.” This new formula would effectively curb annual increases in a broad swath of government programs, but would have its biggest impact on Social Security.

Obama’s budget proposal also calls for additional tax revenue, including a proposal to place limits on tax-preferred retirement accounts for wealthy taxpayers. Obama has also called for limits on tax deductions by the wealthy, a proposal that could generate about $580 billion in revenue over ten years.

The inflation adjustment would reduce federal spending over 10 years by about $130 billion, according to past White House estimates. Because it also affects how tax brackets are adjusted, it would also generate about $100 in higher taxes and affect even middle income taxpayers.

Obama’s budget, to be released next week, comes after the Republican-controlled House and the Democratic-run Senate passed separate and markedly different budget proposals. House Republicans achieved long-term deficit reductions by targeting safety net programs; Democrats instead protected those programs and called for $1 trillion in tax increases.

Obama’s budget proposal includes features from an offer he made to House Speaker John Boehner during fiscal negotiations last year. Those talks ultimately failed but Congress did agree to increase tax rates on the wealthiest Americans.

The reductions in growth of benefit programs, which would affect veterans, the poor and the older Americans, is sure to anger many Democrats. Labor groups and liberals have long been critical of Obama’s offer to Boehner for including such a plan.

America’s economy is back

By Jonathon Gatehouse - Tuesday, April 2, 2013 at 10:50 AM - 0 Comments

Our latest cover story is actually two stories, comparing the state of the Canadian and American economies. View the companion piece to this story, here.

For more than four decades now, John Sharp has been able to measure the economic health of America by gross output. When times are good, demand for the portable toilets his family business furnishes to construction sites in and around Orlando, Fla., surges. And when things cool off, all he has to do is look out his office window and count the green-and-white plastic huts to calculate how deep the markets are in the dumper. During the housing heights of 2007, his company, Comfort House Inc., had just 500 scattered around its four-acre parking lot. A year later, there were more than 3,000 lined up in neat rows like soldiers.

Over the past five years, Sharp has sold off equipment, cut his staff from 33 down to 11 and dipped deep into his credit line to keep the enterprise afloat. “This recession has been the worst,” says the 71-year-old. “It’s lasted the longest, and it took the biggest cut.” But now, finally, his business’s alimental indicator is showing a real increase, with fewer than 2,000 toilets left on the lot. For the last six months, Comfort House has been turning a profit again, and he’s invested in some new trucks and hired back four workers in anticipation of more to come. Local developers are acquiring land, the architects are busy, and so are the realtors, he reports. “It’s the residential sector that’s coming back. We’re still waiting on commercial,” says Sharp. “But Florida was so high, and then we fell so darned low, I’m happy just to be in the middle.”

It’s a sentiment that’s spreading among America’s bruised and battered consumers and corporations, as an economy—which has been growing sluggishly since the Great Recession came to an official end in June 2009—has suddenly turned vibrant. Job growth, which had languished at around 150,000 per month through last summer and fall, jumped to more than 200,000 in the lead-up to Christmas, and then topped 236,000 in February, the latest figure. (The national unemployment rate dropped from 7.9 to 7.7 per cent, a four-year low.) Industrial production that month rose 0.7 per cent, almost doubling the predicted 0.4 gain. And the last time U.S. factory workers put in longer workweeks than they did in February, they were churning out guns, tanks and bombs to fight the Second World War. Building permits jumped 4.6 per cent, and housing starts are now predicted to exceed one million for 2013, up more than 220,000 from last year. Auto sales have rebounded to pre-recession levels, while retail sales are also ticking up.

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Late night at the Capitol

By The Associated Press - Saturday, March 23, 2013 at 6:28 AM - 0 Comments

WASHINGTON – The Senate laboured into the wee hours Saturday as Democrats pushed their first budget in four years toward passage, calling for almost $1 trillion in tax increases over the coming decade while sheltering safety net programs targeted by House Republicans. The Democrats also would reverse automatic spending cuts that are beginning to strike both the Pentagon and domestic programs.

The nonbinding but politically symbolic measure caters to party stalwarts on the liberal edge of the spectrum just as the House GOP measure is crafted to appeal to more recent tea party arrivals.

Lawmakers plowed through a mountain of amendments, having voted on more than 60 since the chamber began debating the plan earlier this week. As the clock neared 3 a.m. EDT, senators huddled in an apparent effort to determine how many more votes would be needed until they could approve the measure, which appeared inevitable.

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U.S. unemployment applications tick up to 336,000

By The Associated Press - Thursday, March 21, 2013 at 9:27 AM - 0 Comments

WASHINGTON – The number of people seeking U.S. unemployment aid barely changed last week, while the average over the past month fell to a fresh five-year low. The decline in layoffs is helping strengthen the job market.

Weekly unemployment benefit applications rose just 2,000 to a seasonally adjusted 336,000, the Labor Department said Thursday.

Over the past four weeks, applications have dropped by 7,500 to 339,750. That’s the lowest since February 2008, just three months into the recession.

Economists pay close attention to the four-week average because it can smooth out week to week fluctuations. The steady decline in unemployment claims signals that companies are laying off fewer workers. That suggests many aren’t worried about economic conditions in the near future.
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Weekly U.S. unemployment aid applications drop to 332K

By The Associated Press - Thursday, March 14, 2013 at 8:47 AM - 0 Comments

WASHINGTON – Fewer Americans sought unemployment aid last week, reducing the average number of weekly applications last month to a five-year low. The drop shows that fewer layoffs are strengthening the job market.

The Labor Department said Thursday that applications fell 10,000 to a seasonally adjusted 332,000. That pushed the four-week average to 346,750, the lowest since March 2008, just several months after the Great Recession began.

Applications are a proxy for layoffs. They have fallen nearly 13 per cent since November.

At the same time, net hiring has picked up. Employers have added an average of 200,000 jobs per month from November through February, up from about 150,000 a month in the previous four months.

The unemployment rate fell to a four-year low of 7.7 per cent in February from 7.9 per cent the previous month.

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House to vote on politically charged bill preventing Obama from granting welfare waivers

By The Associated Press - Wednesday, March 13, 2013 at 6:37 AM - 0 Comments

WASHINGTON – The House is taking up a politically charged bill that would block the Obama administration from waiving any work requirements in the 1996 welfare reform law.

House Republicans are using the bill to renew a political fight that started during the presidential campaign. They say President Barack Obama is trying to gut work requirements in the law — a claim that is disputed by administration officials.

The House is scheduled to vote on the bill Wednesday, though it has little chance in the Democratic-controlled Senate. The House passed a similar bill last year that died in the Senate.

Last summer, the Obama administration announced it would be willing to grant states waivers of some of the law’s requirements but only if governors can show they can accomplish the same welfare-to-work goals using different methods.

No state applied for a waiver. The White House said they were “deterred in part by inaccurate claims about what the policy involves.”

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White House says House GOP budget wrong course for the nation, math doesn’t add up

By The Associated Press - Tuesday, March 12, 2013 at 11:42 AM - 0 Comments

WASHINGTON – The White House says the new House Republican budget outlines the wrong course for the nation.

White House spokesman Jay Carney says the math in Budget Committee Chairman Paul Ryan doesn’t add up. Carney says it will either raise taxes on the middle class or fail to reduce to the deficit.

The White House is panning the Republican proposal’s spending cuts and Medicare reforms that would require future patients to bear more of the cost.

The GOP proposal sticks to Republican plans to try to repeal so-called Obamacare and cut domestic programs ranging from Medicaid to college grants.

Senate Democrats plan to offer a counterproposal on Wednesday. The White House has not said when Obama will release his budget.

Mary Jo White, Obama’s pick to lead SEC, faces Senate panel

By Sue Allan - Tuesday, March 12, 2013 at 6:43 AM - 0 Comments

WASHINGTON – Mary Jo White, President Barack Obama’s pick to be chairman of the Securities and Exchange Commission, will likely face tough questions Tuesday from senators about her decade of legal work representing some of the nation’s largest banks and corporations.

But after the Senate Banking Committee hearing is over, White is ultimately expected to win confirmation from the full Senate and become the first former prosecutor to lead the top federal regulator overseeing Wall Street.

White would replace Elisse Walter, who has been interim SEC chairman since Mary Schapiro resigned in December.

The Senate panel will also question Richard Cordray, who was re-nominated by Obama to head the Consumer Financial Protection Bureau.

White, 65, would step into the job at a critical moment for the SEC.

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Furlough plans vary widely at federal agencies as $85B in budget cuts begin

By The Associated Press - Friday, March 8, 2013 at 5:37 AM - 0 Comments

WASHINGTON – Federal workers could face seven days of furloughs at the Housing and Urban Development Department, but Homeland Security personnel might see twice that number. At the Environmental Protection Agency, workers would get four-day holiday weekends with a catch — one day would be a furlough day.

Other agencies are avoiding furloughs altogether.

Government agencies vary widely in how they are dealing with $85 billion in across-the-board budget cuts that went into effect last week, according to labour unions that represent federal workers.

“It just depends on their flexibility,” said Patrick Lester, director of fiscal policy for the Center for Effective Government. “If they are largely personnel-driven, there’s no way to avoid personnel-related cuts.”

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Obama nominates Wal-Mart’s Sylvia Burwell as next budget chief

By The Associated Press - Monday, March 4, 2013 at 8:43 AM - 0 Comments

WASHINGTON – President Barack Obama has tapped Wal-Mart’s Sylvia Mathews Burwell as his next budget chief, thrusting her into the centre of Washington’s heated partisan budget battles and is filling vacancies at the Energy Department and Environmental Protection Agency, an official says.

A White House official said Obama will announce Burwell’s nomination to lead the Office of Management and Budget during a White House ceremony Monday morning, a White House official said. If confirmed by the Senate, Burwell would bring more diversity to Obama’s second term Cabinet following criticism that many top jobs were going to white men.

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Republicans call spending cuts modest

By The Associated Press - Sunday, March 3, 2013 at 8:43 PM - 0 Comments

WASHINGTON – The spending cuts are here to stay if you believe the public posturing Sunday.

The Senate’s Republican leader Mitch McConnell called them modest. House Speaker John Boehner isn’t sure the cuts will hurt the economy. The White House’s top economic adviser, Gene Sperling, said the pain isn’t that bad right now.

So after months of dire warnings, Washington didn’t implode, government didn’t shut down and the $85 billion budget trigger didn’t spell doom. And no one has yet crafted a politically viable way to roll back those cuts.

“This modest reduction of 2.4 per cent in spending over the next six months is a little more than the average American experienced just two months ago, when their own pay went down when the payroll tax holiday expired,” McConnell said.

“I don’t know whether it’s going to hurt the economy or not,” Boehner said. “I don’t think anyone quite understands how the sequester is really going to work.”

And Sperling, making the rounds on the Sunday news shows, added: “On Day One, it will not be as harmful as it will be over time.”

Both parties cast blame on the other for the automatic, across-the-board spending cuts but gave little guidance on what to expect in the coming weeks. Republicans and Democrats pledged to retroactively undo the cuts but signalled no hints as to how that process would start to take shape. Republicans insisted there would be no new taxes and Democrats refused to talk about any bargain without them.

“That’s not going to work,” said Sen. Kelly Ayotte, R-N.H. “If we’re going to increase revenue again, it’s got to go to the debt with real entitlement reform and real tax reform when you actually lower rates. … I’m not going to agree to any more tax increases that are going to go to increase more government.”

Sen. Lindsey Graham, R-S.C., said any tax increases were unacceptable.

“I’m not going to do any more small deals. I’m not going to raise taxes to fix sequestration. We don’t need to raise taxes to fund the government,” Graham said.

All of this comes ahead of a new, March 27 deadline that could spell a government shutdown and a debt-ceiling clash coming in May.

Boehner said his chamber would move this week to pass a measure to keep government open through Sept. 30. McConnell said a government shutdown was unlikely to come from his side of Capitol Hill. The White House said it would dodge the shutdown and roll back the cuts, which hit domestic and defence spending in equal share.

“We will still be committed to trying to find Republicans and Democrats that will work on a bipartisan compromise to get rid of the sequester,” Sperling said.

Senate Democrats and Senate Republicans last week put forward alternatives that would have avoided the cuts, but each side voted down the others’ proposals. The House Democrats proposed an alternative but the House Republicans did not let them vote on it.

House Republicans twice passed alternatives last year.

Obama has phoned lawmakers but it isn’t clear to what end; the White House refused Sunday to release the names of lawmakers Obama phoned. Boehner and McConnell said they had a productive meeting with Obama on Friday, but it didn’t yield a deal.

“Well, no one can think that that’s been a success for the president,” said Mitt Romney, Obama’s unsuccessful rival in November’s election. “He didn’t think the sequester would happen. It is happening.”

Obama and the Republicans have been fighting over federal spending since the opposition party regained control of the House of Representatives in the 2010 midterm elections. The budget cuts were designed in 2011 to be so ruthless that both sides would be forced to find a better deal, but they haven’t despite two years to find a compromise.

The $85 billion in cuts apply to the remainder of the 2013 fiscal year, which ends Sept. 30. But without a deal they will continue slashing government spending by about $1 trillion more over a 10-year period.

McConnell spoke to CNN’s “State of the Union.” Boehner was interviewed on NBC’s “Meet the Press.” Sperling appeared on ABC’s “This Week,” NBC and CNN. Ayotte appeared on ABC. Graham spoke with CBS’ “Face the Nation.” Romney was a guest on “Fox News Sunday.”

Spending cuts now in place, Obama and congressional Republicans brace for next fiscal fights

By The Canadian Press - Sunday, March 3, 2013 at 6:53 AM - 0 Comments

WASHINGTON – Severe spending cuts now the law of the land, President Barack Obama and congressional Republicans refused Saturday to concede any culpability for failing to stave off what both parties acknowledged was a foolhardy way to slash $85 billion in federal spending.

The still-fragile economy braced itself for the gradual but potentially grave impact of the across-the-board cuts, which took effect Friday night at the stroke of Obama’s pen. Hours earlier, he and congressional leaders emerged from a White House meeting no closer to an agreement.

Even as they pledged a renewed effort to retroactively undo the spending cuts, both parties said the blame rests squarely on the other for any damage the cuts might inflict. There were no indications that either side was wavering from entrenched positions that for weeks had prevented progress on a deal to find a way out: Republicans refusing any deal with more tax revenue and Democrats snubbing any deal without it.

“None of this is necessary,” Obama said in his weekly radio and Internet address Saturday. “It’s happening because Republicans in Congress chose this outcome over closing a single wasteful tax loophole that helps reduce the deficit.”

The president said the cuts would cause “a ripple effect across the economy” that would worsen the longer they stay in place, eventually costing more than 750,000 jobs and disrupting the lives of middle-class families.

In the Republican-controlled House, GOP lawmakers washed their hands of the mess, arguing that bills they passed in the last Congress to avert the cuts absolved them of any responsibility. Those bills passed with little to no Democratic support and were never taken up by the Senate.

“We’ve done the work and shown that these choices can be made in a responsible, thoughtful way,” said Rep. Cathy McMorris Rodgers of Washington in the GOP address.

Obama was holding out hope that as Americans start feeling the effects of the sequester — the term used for the automatic spending cuts — public pressure will force lawmakers back to the table. Ever wary that such fiscal fiascos could jeopardize the rest of his second-term agenda, Obama vowed in his weekly address to keep pushing reforms on immigration, preschool, gun violence and transportation.

But attention was already turning to the next major budget hurdles, with less than a month to negotiate a plan to fund the government beyond March 27 and a debt-ceiling clash coming in May.

Hopes that a measure to undo the spending cuts could be wrapped into a March deal to keep the government running dimmed Friday when both Obama and House Speaker John Boehner said they’d prefer to keep the two issues separate.

“I’m hopeful that we won’t have to deal with the threat of a government shutdown while we’re dealing with the sequester at the same time,” Boehner said.

Bernanke warns that rate hikes could hurt recovery

By The Associated Press - Saturday, March 2, 2013 at 5:59 AM - 0 Comments

WASHINGTON – Chairman Ben Bernanke is defending the Federal Reserve’s low-interest rate policies and seeking to calm fears that super-low rates risk igniting inflation or rattling investors.

Bernanke said Friday that any Fed move to raise rates prematurely could derail what is still a modest U.S. economic recovery. The central bank’s low-rate policies are intended to encourage borrowing and spending to boost the economy. Higher rates would make borrowing more expensive.

Bernanke said the Fed’s policies mirror what other central banks around the world are doing.

“Long-term interest rates in the major industrial countries are low for a good reason: Inflation is low and stable and, given expectations of weak growth, expected real short rates are low,” he said.

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U.S. consumer spending edged up 0.2 per cent in January

By The Associated Press - Friday, March 1, 2013 at 9:33 AM - 0 Comments

WASHINGTON – U.S. consumers increased their spending modestly in January when taxes rose, but they cut back sharply on major purchases that signal confidence in the economy. Income plunged by the most in two decades, although the decline followed a one-time surge in bonus payments to avoid higher taxes.

The Commerce Department said Friday that consumer spending rose 0.2 per cent in January. The gain was driven by an increase in spending on services, partly reflecting higher heating bills. Spending on durable goods, such as cars and appliances, fell 0.8 per cent. Spending on non-durable goods, such as clothing, was essentially flat.

Income fell 3.6 per cent in January, the biggest drop since January 1993. But it followed a hefty 2.6 per cent rise in December. The December gain reflected a rush by companies to pay dividends and bonuses before income taxes increased on top earners.

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Senate confirms President Barack Obama’s nomination of Jacob Lew for Treasury secretary

By The Associated Press - Wednesday, February 27, 2013 at 9:27 PM - 0 Comments

WASHINGTON – The Senate confirmed Jacob Lew to be Treasury secretary, affirming President Barack Obama’s choice of a budget expert at a time when Congress and the White House are at odds over sharp government spending cuts.

The Senate voted 71-26 to support the nomination.

Lew, 57, had most recently served as Obama’s chief of staff. He succeeds Timothy Geithner, who completed a tumultuous four-year term in which he helped lead the administration’s response to the financial crisis and recession.

He takes over just before automatic spending cuts are set to take effect. He’s likely to take part in any negotiations to reverse the cuts, and also in key budget talks next month to continue funding the government.

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Obama, congressional leaders to meet Friday to discuss looming spending cuts

By The Canadian Press - Wednesday, February 27, 2013 at 11:51 AM - 0 Comments

WASHINGTON – The White House says President Barack Obama will meet Friday with congressional leaders to discuss what to do about $85 billion in mandatory spending cuts.

The top Democrat and Republican in both the House of Representatives and Senate will attend. It’s the first face-to-face meeting between Obama and Republican leaders this year.

The across-the-board cuts are set to kick in on Friday, so the meeting will come after Congress has officially missed the deadline for averting the cuts.

Senate Republican Leader Mitch McConnell says it’s a chance to address ways to reduce government spending. He says Americans won’t accept more taxes as part of a deal to avert the cuts.