AIG 1st-quarter loss narrows to $4.35 billion

Insurance agency AIG reported that it’s losses for the first quarter of 2009 were drastically smaller than those record setting losses they posted in the fourth quarter of last year. This quarter AIG posted a loss of 4.35 billion, this was much better than the 61.7 billion they lost in the fourth quarter of 2008. AIG has received nearly 180 Billion dollars in loans from the federal government in order to stay business. In exchange for the funds, the federal government now has control of approximately 80 percent of the firm.

The improvements made by AIG are just further evidence that the recession may becoming to an end, but that we aren’t out of the woods yet. Also proven by AIG’s reports is that we can now assume the government is going to attempt to be more involved in working with the banking and insurance agencies.

http://news.yahoo.com/s/ap/20090507/ap_on_bi_ge/us_earns_aig

Obama touts $17 billion 'lot of money' budget cuts

President Barack Obama has proposed cutting funding to or completely eliminating 121 federal programs in order to rein in spending by the federal government. Obama compared the cutting of programs to the belt tightening most Americans are doing. President Obama has claimed that his proposed cuts will save approximately 17 Billion dollars.

Republicans have pounced on these proposed cuts by saying they are not nearly enough. A few of the proposed cuts include: tax breaks for oil and gas companies, cutting more then half the benefits for family members of slain police officers. Another proposal is to increase the air fare taxes starting in 2012.

It still remains to be seen how much of an impact these cuts will have on reducing the federal budget. I agree with his decision to start removing tax breaks from larger oil and gas industries; however, I don’t feel raising taxes on airlines or any form of transportation is the best way to raise capital when Americans are already unwilling to travel due to economic constraints.

http://news.yahoo.com/s/ap/20090507/ap_on_go_pr_wh/us_obama_budget

Stress tests find 10 big banks need $75B more

On Thursday, The United States received the eagerly anticipated “stress test” results from 19 of the largest banks in the United States. The findings showed that 10 of the largest banks still need approximately 75 billion dollars to withstand losses if the recession were to take a turn for the worse. The results did show that just like the rest of the U.S. Economy, there is improvement across the board. However, we are not out of the clear yet. Among the 10 banks that could possibly ask more funding are Bank of America, Wells Fargo, Citigroup and Morgan Stanley.

I find the news from this article to be uplifting, and that makes me very optimistic about the health of the banks because some of the banks are no longer requiring additional federal funds, and that the continued support of these banks by the federal government shows that these banks will not fail.

http://news.yahoo.com/s/ap/20090507/ap_on_bi_ge/us_banks_stress_tests;_ylt=Aqn8GiZcAp7NgUiXX6OCX2ms0NUE;_ylu=X3oDMTJtNTAxZW12BGFzc2V0A2FwLzIwMDkwNTA3L3VzX2JhbmtzX3N0cmVzc190ZXN0cwRjcG9zAzEEcG9zAzMEc2VjA3luX3RvcF9zdG9yeQRzbGsDZnVsbG5ic3BzdG9y

Treasury says about $110B left in bailout fund

On Tuesday April 21st, the United States Treasury Department reported that only 109.6 Billion dollars in resources remain in the government’s 700 billion dollar financial rescue fund. So far the United States Government has committed more then 117 Billion dollars to insurance giant AIG, banks such as Citigroup and Bank of America, and auto companies such as General Motors and Chrysler.
An additional 218 billion dollars has also been committed to banks to bolster their capital reserves. The federal stimulus package has also allocated more then 200 billion dollars to more then 500 banks nationwide, with even more banks continually applying for additional federal funding.

http://news.yahoo.com/s/ap/20090421/ap_on_bi_go_ec_fi/us_bailout_fund;_ylt=AnpXU9ubyY7DA5.t5SzMBg2yBhIF

Obama says he'll cut wasteful programs

President Obama announced that he would eliminate dozens of wasteful and ineffective as part of an effort to restore fiscal accountability to the federal budget. Obama’s plan is to cut funds from unnecessary programs and have the government take more of a responsibility for their actions.
"As surely as our future depends on building a new energy economy, controlling healthcare costs and ensuring that our kids are once again the best educated in the world, it also depends on restoring a sense of responsibility and accountability to our federal budget," Obama said.
Due to two large bailout packages, and other subsequent expenditures, the United States has posted a $956.8 billion budget deficit for the first half of the fiscal year. That is three times larger then at this time last year. Obama has made cutting spending one of his top priorities and promises that the spending he has done in the first three months of his Presidency will not continue for the rest of it. "If we're to going to rebuild our economy on a solid foundation, we need to change the way we do business in Washington," Obama said. "We need to restore the American people's confidence in their government - that it is on their side, spending their money wisely, to meet their families' needs."

http://money.cnn.com/2009/04/18/news/economy/obama_address.reut/index.htm?postversion=2009041813

Banking Industry Showing Signs of a Recovery

A little over three months ago, many of the top banks in the United States were on life support. However, over the last couple days many of these same banks are beginning to recover. Recently, JP Morgan Chase, Goldman Sachs and Wells Fargo have all announced that they had huge profits in the first quarter this year. Citi Bank and Bank of America also have been reporting that their profits are up, and that the worst of the recession is over.
Low federal interest rates have caused many citizens to refinance their houses at these better rates, and thus increasing consumer activity. Many analysts are now reporting that the outlook of the housing market is improving, but that we are not out of the woods yet concerning our economic problems.
“We are in the eye of the storm,” Gerard Cassidy, a banking analyst at RBC Capital Markets. “The worst is behind us for housing. For commercial real estate and corporate lending, there is still a big dark cloud.”

http://www.nytimes.com/2009/04/17/business/17bank.html?_r=1&ref=todayspaper

Fed officials suggest worst of recession is over

Today, top U.S. officials offered reassurances that the worst of the economic downturn is now likely over, helped by an unprecedented effort to keep credit flowing. These same officials still however say that the recovery will be slow. When the financial crisis began in 2007, federal interest rates were at 5.25%, those rates have now been slashed down to as low as 0.25% or 0%.
An economic recovery is still reliant on the turnaround of the housing market, which has been pretty bad over the last 16-18 months. The United States and the rest of the world are by no means out of the woods yet, but will recover, it is just a matter of when.

http://news.yahoo.com/s/nm/20090418/bs_nm/us_usa_fed;_ylt=AnTo.j_Manu1be4Uktoz642yBhIF

Stocks end mostly higher ahead of earnings reports

Stocks on Monday finished marginally ahead of the much anticipated first quarter earning reports that will determine whether the United States Economy is actually improving, and if so how much. Early signs have been promising so far as both Wells Fargo and Goldman Sachs Group Inc. both posted very large but unexpected profits. Over the next week quarterly reports from Citigroup and JP Morgan will be released, those two financial companies have been hit the hardest by the recession, but also have helped lead the rally over the last month.One company that continues to struggle is General Motors, who is lining up for a June 1st bankruptcy.
"If you get a couple earnings reports that are better than the worst that people expected then that might help," said Denis Amato, chief investment officer at Ancora Advisors.
If all goes as well as predicted the Stock Market could experience a large rally over the next week, as many of the previously struggling companies post surprising profits after the first quarter. Hopefully, General Motors, with the help of the United States Government, will be able to crawl themselves out of this hole soon.

http://news.yahoo.com/s/ap/20090414/ap_on_bi_st_ma_re/wall_street;_ylt=AoXH33K1tcS6AzzCbltf3mmyBhIF

Obama says stimulus projects under budget

On Monday April 13th, President Barack Obama said that thousands of major infrastructure projects being undertaken as part of the economic stimulus package are currently ahead of schedule and under budget. President Obama has said that as many as 2,000 new road construction projects have been approved since February.
"By the end of next year our investment in highway projects alone will create or save 150,000 jobs, most of them in the private sector," Obama said during an appearance at the Transportation Department to plug his plan.
News like this regarding new construction projects is very good new for the state of the economy as new projects require more employees to be hired. In President Obama’s speech on Tuesday night he will be addressing the economy, and hopefully more news about its slow continual recovery.

http://news.yahoo.com/s/nm/20090413/ts_nm/us_obama_infrastructure;_ylt=AkIeV0pBCa5gYNzmTx3G_qjv5rEF

Surging Wall Street faces earnings season test

After four consecutive weeks of growth by the Dow Jones, this next week will provide the next test determining the overall health of the U.S. economy. Even with less then stellar news coming out lately regarding record job losses and troublesome news about GM and Chrysler, the stock market has remained relatively stable and actually seen some growth. This has actually caused many economic experts to say that the worst is over, but that remains to be seen. The next key test will be when the first quarter earnings reports are released over the nest couple days.
According to economic experts, unemployment will be the last thing to recover, as sales must increase and business owners will increase hours of current employees before they start hiring again. That is why everyone keeps saying that unemployment will continue to rise even with a slight increase in sales.

http://news.yahoo.com/s/afp/20090404/bs_afp/stocksusweekly;_ylt=Av90ajZP.weD5iO1SBbQ5lWyBhIF

Empty Tables Threaten Some Restaurant Chains

As a direct result of the struggling economy, people are cutting back on their expenditures including going out to eat. Restaurants all over the United States are struggling, even the well-known family restaurants including Applebee’s, Red Lobster, and Outback Steakhouse. One of the main contributors to these companies’ struggles include basically the building of too many restaurants. Since 1990, the number of restaurants and bars in the United States has increased 49%, from 361,000 to 537,000. The United States’ population has grown just 23% during that same period of time.
After 16 consecutive years of economic growth, companies now have to face the consequences of their decisions to quickly expand and acquire more assets. Larger chain restaurants including Outback Steakhouse have been forced to make numerous menu changes including offering an increased amount of entrees at new low rates to lure customers and increase sales in order to decrease their more then 300 million dollars worth of debt. However, not all restaurants are struggling as a result of the economy. Fast food chains including McDonalds and Taco Bell have been thriving as a result of their dollar menu items and by offering combo meals at less then five dollars. There is not a doubt that the effect the economy is having is causing a ripple effect felt throughout the United States.

http://www.nytimes.com/2009/04/04/business/04restaurant.html?_r=1&ref=business

Unemployment soars to 8.5 pct.; 13 million jobless

Unemployment in the United States has now reached 8.5%, the highest in more then 25 years. That 8.5% percent translates into about 13 million Americans that are now without a job. Even with the economy beginning to experience slight improvements, Federal Reserve Chairman Ben Bernanke beliefs that the recession may end as early as this fall, the jobless rate is expected to reach more then 10%. However, not all news is bad currently, because the Dow Jones rose for the fourth consecutive week and is now above 8,000 for the first time in more then two months.
Even Americans that have been lucky enough to hold onto their job have not been unaffected by the recession. The average work week for the month of March dropped to 33.2 hours, a record low. Surprisingly, with so many people losing their jobs as a result of the economic climate there has not been one individual industry that is being hit the hardest. Construction companies, factories, retailers and even the federal government cut thousands of jobs. The Federal Government has taken many steps to help curtail this poor economy by slashing interest rates, budget cuts, and the 787 billion dollar stimulus package.

http://finance.yahoo.com/news/Unemployment-soars-to-85-pct-apf-14850511.html

Many top AIG execs agree to return bonuses

By SARA LEPRO, AP Business Writer

            One of the top stories coming out of the economic stimulus package has been how companies receiving additional federal funds would use the money.  However, one company American International Group Inc (AIG) used a percentage of the approximately $170 Billion they received from the stimulus package to award bonuses to employees. The number is said to be about $165 million in bonuses.  After an onslaught of negative public opinion and pressure from the White House, many of the employees have agreed to return their bonuses. According to Yahoo News, 15 of the top 20 bonus recipients have already agreed to return their bonuses.

            One of the main concerns all along regarding the stimulus package was how companies were going to use the bailout money.  The actions of the insurance company AIG is not the first time companies receiving bailout money have used some of the money for purposes other than it was intended.  President Obama and his administration have been very forceful in saying that AIG employees should return the bonuses. So far approximately $50 million of the $165 million worth of bonuses have been returned.  The actions taken by AIG put into question how Americans can trust these companies to ethically and efficiently use this taxpayer money.

 

http://news.yahoo.com/s/ap/20090324/ap_on_bi_ge/aig_bonuses

Existing Home Sales Up 5.1% in February

            Unexpectedly, the number of home sales in the United States rose 5.1% in February .  This increase was drastically higher then what economists predicted. They actually were expecting a decrease in sales rather then an increase.  Many people believe that increase in housing sales is the first step in leading out of the recession.  However, not all news was good news as many of the sales, 40 to 45 percent, were “distressed sales”, meaning that the homes were sold at prices much lower then their previous cost.  “The average price of for a home sold was $165,000, down 15.5% from last year.  In the United States, housing sales have continued to be stronger in the West, with home sales up 2.6% this month and 30.4% over the last year.  In the Northeast, the housing market is still struggling with sales down 14.9% from a year ago.

            Due to the current economic situation in the United States, any slight improvements in the housing market are a great sign for the economy.  With an increase in buying and selling of houses the market will begin to slowly recover and experience increased activity. The good news coming from the housing market caused the Dow Jones to jump more than 400 points.

 

http://www.foxbusiness.com/story/markets/economy/existing-home-sales--february/

            Financial experts say recession ends by year's end

         Yahoo News

            On Tuesday, Financial experts predicted that the U.S. Economy will work its way of the recession by the end of 2009. This good news was followed by their prediction that unemployment will continue to rise at least until 2010, with most experts predicting a peak of about ten percent unemployment.  These same experts also made broad predictions regarding the housing market by saying that “home sales will turn around by midyear and home prices will begin recovering by the end of this year after bottoming out at 35 percent of their original value.”

            With this troubling economy impacting not just the United States, but every country in the world, any news or foresight of good fortune is being taken with a grain of salt. However, with the U.S. stock markets rising some over last two to three weeks, there maybe hope for a quicker end to this recession then expected.

 

http://finance.yahoo.com/news/Financial-experts-say-apf-14734171.html

March 5, 2009

http://news.yahoo.com/s/ap/20090305/ap_on_bi_ge/states_foreclosures;_ylt=ArexJ7ku7ryfQJwrDckqUWKyBhIF

At the end of last year, a record 5.4 million Americans were behind on their mortgage or in foreclosure. This represented almost 12% of American homeowners. This shows how bad the American economy is currently and how it is effecting homeowners nationwide. The recession is apparent in all facets of the economy, especially the housing market.

http://www.nytimes.com/2009/03/06/business/economy/06retail.html?_r=1&hp

Continuing with the economic downturn, retail sales are way-down once again at almost all businesses, excluding discount stores such as Wal-Mart. High end stores, like Saks Fifth Avenue and Nordstroms, are taking severe hits in sales as everyday Americans are pinching pennies and conserving money where they can. Abercrombie and Fitch's sales dropped 30% over the past year. This figure is in high contrast to Wal-Mart which had a 5.1% sales increase. This shows that Americans are still spending money, but that they are being much more thrifty and conservative with their spending habits. The way the economy is heading, this is not a good sign for the stores that are posting record losses and are teetering on bankruptcy.

http://www.latimes.com/news/nationworld/nation/la-na-obama-jobs4-2009mar04,0,4887772.story

President Obama states that his newly signed $787 billion stimulus package will produce approximately 150,000 new jobs for highway and road work/maintenance. The article states that: "The number of jobs that will be created or saved by the highway construction program, Obama said, will exceed the number of jobs lost during the past three years combined by the Big Three automakers -- Ford, Chrysler and General Motors." If this fact is true, that is a good sign for all of the Americans that lost their jobs to these automakers. This is a step in the right direction and it shows that the stimulus package, if successful, will bring the American economy back up.

http://www.nytimes.com/2009/02/27/business/27auto.html?_r=1&hp

This article talks about General Motors and how it is continuing to struggle despite federal bailout money.  In 2007, the company lost $43.3 billion and then lost $14 billion in December 2008 alone.  As part of a plan to save money, GM will cut three of its eight brands: Saturn (by 2012), Hummer (end of March), and Saab (which filed for bankruptcy protection last week in Sweden) and turn Pontiac into a niche brand with fewer models.  According to the article, "G.M. is offering 22,000 of it retirement-eligible hourly workers $20,000 plus a discount voucher worth $25,000 off anew vehicle if they leave by April 1."

This article represents that despite the governments attempt to intervene with the struggling auto economy, the auto companies are still struggling.  In this tough economy, I believe it is only going to get harder if they are forced to cut jobs because not only would the jobs at the company be lost but also the jobs for millions of people in relatable industries, like steel and rubber.

http://news.yahoo.com/s/ap/obama_budget

President Barack Obama presented a multi-trillion dollar spending plan that would raise taxes for the wealthy, cut medicare, and set the groundwork for universal healthcare in the nation. President Obama said the plan would deliver campaign pledges of tax cuts to the middle-class, expand healthcare coverage, and combat the economic crisis.  Along with cutting taxes and extending healthcare, the President has asked for an additional $75 billion to cover the cost of the wars in Iraq and Afghanistan in 2009.

President Obama has begun to make true on his campaign promises and has started to put into effect policies that will make sure his promises will come true.  He plans on using the federal bailout money as a starting point for many of the projects.

http://news.yahoo.com/s/ap/20090226/ap_on_bi_go_ec_fi/home_sales;_ylt=AkJ1ZBZYdzv8MyX9VzwqzPOyBhIF

New home sells reached a record low in January and the average home price is down to $234,000, which is a 9.8% drop from December.  In January, sells fell 5.6% in the Midwest, 6.5% in the South, 28% in the West, and sales rose 12.5% in the Northeast.  Builders are now slashing home construction prices as sky-rocketing foreclosures continue to hurt the market.  To help convince people to continue buying homes, President Barack Obama is planning to spend $75 billion to keep 4 million U.S. homes out of foreclosure.  He is also including an $8,000 first-time home buyer tax credit as part of his $787 billion stimulus package.

The recession has caused the real estate market to continue to decline.  President Obama is attempting to keep houses out of foreclosure as part of his massive stimulus package.