Canada’s currency may extend its biggest annual decline on record, as tumbling crude prices hobble foreign investment in the country’s oil patch, according to the world’s biggest strategists and economists.
The Canadian dollar fell 18 percent this year as a global recession cut demand for commodities, which generate half the country’s exports. Canada’s current-account surplus, the broadest measure of trade, will turn into deficit in 2009, said Toronto- based Scotia Capital Inc., a unit of Canada’s third-biggest bank.
“A scaling back of foreign direct investment is a negative for the Canadian dollar,” said Eric Lascelles, chief economics strategist in Toronto at TD Securities Inc., a unit of Canada’s second-largest bank. “If there is less investment in oil sands, there will be less production and less exporting down the road,” he said, referring to the world’s biggest energy pool outside Saudi Arabia.
Canada’s dollar, dubbed the “loonie” for the aquatic bird on the one-dollar coin, may weaken to C$1.28 by the end of the first quarter from C$1.2221 yesterday, according to the median estimate of 42 analysts and economists surveyed by Bloomberg. It may end 2009 at C$1.24, the poll’s results show. One Canadian dollar buys 82.24 U.S. cents.
Deutsche Bank AG of Frankfurt, the world’s biggest currency trader, forecasts the Canadian dollar will weaken to C$1.30 by the end of 2009, while Zurich-based UBS AG, the second-biggest trader, sees it depreciating to C$1.33.
Bad ‘Signal’
“Foreign companies will be very unlikely to start new projects unless the price of oil rebounds,” said Dustin Reid, director of currency strategy at RBS Global Banking & Markets in Chicago. “It clearly is not a good signal for the Canadian dollar from a longer-term perspective.”
Royal Dutch Shell Plc, based in The Hague, and StatoilHydro ASA, Norway’s biggest oil producer, are among companies that deferred or canceled at least 14 projects this year in Alberta’s oil sands. Oil collapsed more than $100 since July to a low of $32.40 a barrel, less than half the price needed to make oil- sands projects economically viable, according to estimates by the Canadian Association of Petroleum Producers.
A $1 drop in oil prices lowers the Canadian dollar by 0.3 cent against the U.S. dollar, according to analysis this month by TD Securities. Crude is the largest component of the Bank of Canada’s Commodity Price Index, accounting for 21 percent. The Paris-based International Energy Agency, an adviser to 28 nations, said this month that global oil demand contracted in 2008 for the first time since 1983 and cut its outlook for 2009.
Reaching Parity
This year’s decline came after Canada’s currency reached parity with its U.S. counterpart in September 2007 following a 60 percent climb in the prior five years that was fueled by rising commodity prices. Foreign investment in Canada’s energy industry jumped by almost half in that period to C$86.7 billion ($71.4 billion), according to Statistics Canada in Ottawa.
Much of that money was pegged to western Canadian oil sands, the site of 175 billion barrels of proven reserves, according to the province’s Energy Resources Conservation Board online cash advances. Oil-sands projects will be profitable if crude is priced at $95 to $100 a barrel in coming decades, said Ryan Todd, a Deutsche Bank analyst in New York.
“Much of the activity in the oil patch was investment, not production,” said David Watt, a senior currency strategist at RBC Capital Markets in Toronto. “That production is set to start in coming years but recent decisions on mothballing put some risk into that conclusion.”
RBC expects Canada’s dollar to weaken to $C1.31 by mid-2009 before ending the year at C$1.25.
‘Support Level’
Efforts by governments, including an economic stimulus plan being put together by U.S. President-elect Barack Obama, to stem a worldwide recession may bolster the currency, according to Jack Spitz, managing director of foreign exchange at National Bank of Canada in Toronto. He said Canada’s dollar may break through its “support level” of C$1.1980 and rally to C$1.15.
“I’m becoming more bullish on the Canadian dollar as long as equity markets and energy markets stabilize,” Spitz said. There may be “added momentum should Obama underscore recent comments with respect to less reliance on Middle-East oil.”
Strategists at CIBC World Markets, part of Canada’s fifth- largest bank, predicted last week the loonie will strengthen to C$1.18 by mid-year before finishing 2009 at C$1.09.
Political turmoil and falling interest rates may hinder any recovery in the currency.
Prime Minister Stephen Harper’s minority government may fall next month if an opposition coalition votes against his budget, due to be presented in parliament on Jan. 27.
Falling Rates
The Bank of Canada on Dec. 9 reduced the target rate for overnight loans between commercial banks by 0.75 percentage point to 1.5 percent, the lowest since 1958. The central bank will cut the benchmark to 1 percent next quarter, according to the median estimate of 11 economists surveyed by Bloomberg.
Another drawback for the currency is that the country’s bonds are losing their allure. Two-year Canada bonds yield about 34 basis points, or 0.34 percentage point, more than Treasuries, down from almost 100 basis points as recently as October.
Canada’s current-account surplus, which includes investment in the nation’s securities, is already dwindling, shrinking by almost a third between July and September as profits that companies earned abroad fell and exports slowed.
Receipts from outside Canada exceeded payments sent abroad by C$5.64 billion last quarter, down from C$8.21 billion in the previous three-month period, Statistics Canada said Nov. 28.
In 1997 and 1998, the last time the current account was in deficit, the Canadian dollar weakened to C$1.5382 from C$1.3705.
“A deficit can only mean bad things for the currency,” said Carlos Leitao at Montreal-based Laurentian Bank Securities, who was ranked second among the world’s most accurate economists in a survey by Bloomberg News last month. “If oil remains in this range of $40 or even less, the Canadian dollar won’t be going up.”
Stocks rose Wednesday, ending a holiday-shortened session on a high note, as investors picked through a raft of reports on the economy.
The Dow Jones industrial average (INDU) and the broader Standard & Poor’s 500 (SPX) index were both up nearly 0.6% according to early tallies. The Nasdaq composite (COMP) advanced almost 0.2%.
Stocks fell Tuesday after two housing reports showed declines in sales of new and existing homes. A government report also showed the economy contracted in line with economists’ expectations.
Banking stocks advanced with Citigroup (C, Fortune 500) adding nearly 4% and Bank of America (BAC, Fortune 500) up more than 5%. Shares of General Motors (GM, Fortune 500), which have been beaten down recently, rose more than 7%.
Oil prices fell after the government reported an unexpected decline in crude inventories. Prices for U.S. Treasury bonds fell after several auctions earlier this week.
Trading has been light all week with many investors on vacation. U.S. stock markets closed two hours early Wednesday and will remain shut on Thursday for the Christmas holiday.
In addition to light participation, many investors have closed their books for the year and are not planning to make any large moves until 2009.
Still, the market had a full roster of economic reports to digest, including one that showed a spike in jobless claims and another weak reading on personal spending.
"I think we’ll continue to see unemployment rise and continue to see consumer spending drop," said Dean Barber, president of Barber Financial Group in Kansas City, Kan. These declines, combined with a high level of consumer debt, could result in a "prolonged and painful scenario" for the economy, he added.
Barber said he expects the Dow to retest its November lows in the weeks ahead, and that it could bottom out around 5,000 sometime in 2010.
"The market has factored in some bad news, but there’s a lot out there that people don’t really understand yet," he said.
Jobs: Before the opening bell, the Labor Department said weekly claims for unemployment benefits rose more than expected.
New jobless claims rose to 586,000 in the week ended Dec. 20. That’s an increase of 30,000 from the previous week’s revised figure of 556,000, and is more than the 558,000 total forecast by economists.
Wednesday’s report revealed the highest number of jobless claims since Nov. 27, 1982, when initial filings hit 612,000.
Income and spending: The Commerce Department said both personal income and spending decreased in November.
Personal income dipped 0.2% after a modest 0.3% increase in October. The reading was expected to be flat.
Personal spending fell 0.6% versus a decline of 1% the month before cash advance. But the figure was better than the 0.8% decline that economists were expecting.
Durable goods: New orders of durable manufactured goods fell for the fourth month in a row, according to the Census Bureau.
Durable goods orders fell 1% to $1.9 billion in November. Excluding orders related to transportation, new orders increased 1.2%.
Still, the decline was not as sharp as had been expected. Economists had forecast durable goods orders to sink 3.1% after plummeting 6.2% in October - the biggest decline since 2006.
Sam Bullard, an economist at Wachovia Economics Group, said the decline "suggests order growth for durable goods should remain challenged throughout 2009."
Mortgages: As mortgage rates fall, applications for home loans and refinancing activity surged last week, according to the Mortgage Bankers Association.
The MBA’s overall Market Composite Index, a measure of mortgage loan application volume, shot up 48% on a seasonally adjusted basis for the week ending Dec. 19.
The increase was driven by a 62.6% jump in the group’s Refinance Index. But the Conventional Purchase Index also increased 17.7%. The only component of the overall index to fall was the Government Purchase Index, which largely tracks FHA loans, which slipped 3.4%.
Bonds: The benchmark 10-year note fell 3/32 to 114 31/32, and its yield held steady at 2.17%. The 10-year yield dipped below 3% in November for the first time since the note was first issued in 1962.
Lending rates were mixed. The 3-month Libor rate held steady at 1.47%, according to Bloomberg. The overnight Libor edged up to 0.15% from 0.12% Tuesday. Libor is a key bank lending rate.
Other markets: In global trading, Asian markets ended lower with the Hang Seng in Hong Kong falling 0.26%. Major indexes in Europe fell in a holiday-shortened session. The DAX index in Frankfurt was closed.
The dollar fell versus the euro and the yen.
U.S. light crude oil for February delivery was down $1.32 at $37.64 a barrel in New York. Crude prices fell sharply after the government reported an unexpected decline in crude inventories.
COMEX gold for February delivery was up $11.30 to $849.60 an ounce.
Gasoline prices fell overnight to a national average of $1.655 from $1.659 a gallon, according to a survey of credit-card swipes released Monday by motorist group AAA.
All news is bad news in real estate right now. Have you recently bought a house anyway? Send your story and photos to realstories@cnnmoney.com and you could be featured in an upcoming article.
Singapore’s industrial production dropped for a second straight month in November as electronics manufacturers cut output amid the nation’s longest slump in exports since 2002.
Manufacturing, which accounts for a quarter of Singapore’s economy, fell 7.5 percent from a year earlier, following a revised 12.1 percent decline in October, the Economic Development Board said today. The median estimate of 10 economists surveyed by Bloomberg was for a 16.1 percent drop.
Singapore’s economy, already in a recession, may shrink next year for the first time since 2001 as a deepening global slowdown hurts exports, according to Finance Minister Tharman Shanmugaratnam. Overseas sales fell for a seventh month in November and manufacturers such as Stats Chippac Ltd. have cut jobs amid declining orders.
“The collapse in global export demand continued to take its toll on electronics manufacturing,” said Alvin Liew, an economist at Standard Chartered Plc in Singapore. “This points to an extremely challenging fourth quarter for the economy and it seems unlikely for Singapore to attain the government’s forecast of 2 payday loans.5 percent growth in 2008.”
The World Bank predicts international trade will shrink in 2009 for the first time in more than 25 years. Global semiconductor sales will drop 16 percent because of the economic slowdown and lower consumer spending, researcher Gartner Inc. said this month.
Pharmaceuticals
Singapore’s industrial production rose a seasonally adjusted 6.2 percent in November from the previous month, helped by biomedical manufacturing including pharmaceuticals, today’s report showed.
Electronics output plunged 19.4 percent from a year earlier, following a revised 13.3 percent decline in October. Electronics make up about 30 percent of total manufacturing output.
Pharmaceutical production, which accounts for about 22 percent of Singapore’s manufacturing, gained 17.5 percent.
It is widely considered to be a foregone conclusion. The government will commit a breathtaking amount of money — as much as $1 trillion may be required, some say — on an economic recovery package over at least the next two years.
Economists from across the philosophical spectrum have advised President-elect Obama to act boldly to prosecute a war against the economic and financial crises, the speed and depth of which have shocked most experts.
Lawmakers and Obama are already starting to publicly discuss the broad outlines of elements they want in a stimulus package.
But to win a war, it’s a good idea to map out or at least have a sense of the endgame before deploying the troops. That is, lawmakers must think about establishing yardsticks, curbs and deadlines for the money.
Otherwise, there’s a risk that the historic recovery package morphs into a boondoggle that mortgages the nation’s future by adding hundreds of billions to the deficit while creating a hard-to-tame bureaucracy.
Many countries with growing economies have been shrinking the size of their governments, said Harvard economist and stimulus advocate Kenneth Rogoff on CNN’s "Your Money. "And here, we’re blowing it up. That’s a concern over the longer term."
But in the short-term, Rogoff doesn’t see an alternative if lawmakers are to prevent what he characterizes as the worst recession since World War II from becoming even worse. "We could just see something really incredible if they don’t act coherently," he said.
The breadth and time limit of stimulus efforts are two areas that pose potential concerns for stimulus supporters and opponents alike.
Douglas Holtz-Eakin, a former director of the Congressional Budget Office who served as Sen. John McCain’s top economic adviser during the presidential campaign, hopes stimulus money won’t be used as "a down payment on 50 areas. When push comes to shove you haven’t solved anything," he said.
The Obama team is still working out the specifics of the package it wants, but ideas under consideration range widely in nature from energy and infrastructure to state aid and tax cuts to foreclosure prevention, health care and education.
"They can do a lot, but they can’t do everything," said William Gale, the economic studies director at the Brookings Institution. And that’s especially true if they want to get a package in place early next year. "You don’t want to delay getting this done," Gale said.
The complexity of the issues at hand suggests there might be more than one package next year, Gale said. The first might focus on things that can be implemented quickly, such as infrastructure spending, aid to states to help pay for Medicaid and increases in food stamps and unemployment benefits.
Holtz-Eakin believes stimulus is needed, but he is dubious that there are as many stimulative "shovel-ready" infrastructure projects as many governors and others have claimed.
In his view, spending would be best focused on foreclosure prevention and helping households with strained budgets. Holtz-Eakin proposes three measures: buy and write down mortgages held by troubled borrowers; overhaul the unemployment benefit system so that benefits better support jobless workers; and provide a one-year payroll tax holiday for everyone — the payroll tax is the money workers pay into Social Security affordable health insurance.
Dan Mitchell, a senior fellow at the libertarian Cato Institute, doesn’t think any stimulus package can succeed in "priming the pump" of the economy. He concedes, however, that Congress is likely to enact one.
"I want short-term things with an end date," Mitchell said. "The one thing to avoid is any permanent obligation of government spending." As examples he cited costly ongoing programs like President Bush’s Medicare Part D Prescription Drug Plan or permanent refundable tax credits.
Even fiscal watchdogs acknowledge that now is not the time to worry about the effects of stimulus spending on the already record deficit.
The Bush administration said last week the deficit had hit $402 billion in just the first two months of the fiscal year - or nearly what it was for all of fiscal year 2008.
So, massive deficit spending will become a factor, sooner rather than later.
"You really need to have some sort of an exit strategy to move to an agenda of putting the budget in order," Holtz-Eakin said. "How they’ll get the growth rate on spending under control is far from obvious."
It may not be obvious but Obama has cited deficit control as a top priority. "We’re going to be focusing on the budget, to make sure that even as — in the short term, we deal with the potentially $1 trillion-plus deficit that we’re going to be inheriting and we are trying to jumpstart the economy, that we’re also in the medium and long term looking at how we can get on a path of fiscal responsibility and sustainability," he said Thursday.
Another issue: How will success be measured? Obama had originally said he wanted a package that would create or save 2.5 million jobs by 2011. Others have said that’s too small a number to keep the unemployment rate from climbing.
Since the unemployment rate is a lagging indicator, using that as a litmus test could mean the government ends up spending more money than it needs to. Holtz-Eakin hopes success will be measured earlier by leading indicators of the recession’s bottom - which he said should come no later than the fourth quarter of next year. If they don’t, he said, stimulus will not have done its job.
While many influential economists have been saying it’s better to do too much than too little to fight the downturn, no one is advocating that the money be used for projects that aren’t stimulative.
But some of that may be unavoidable. Once Congress puts the economic recovery package through the legislative sausage maker, "it’s unlikely to be pork-free," Gale said.
With any legislation, there is always the weighing of the perfect against the good, and never more so than when time is of the essence.
"If [the Obama administration] has a bill that’s a 90 percent win I can’t imagine they’ll want to derail it," Gale said.
The Federal Reserve may have cut its key short-term interest rate to the lowest level on record, but that doesn’t mean credit will be any easier to get.
The move to lower the fed funds target rate to a range between 0% and 0.25%marked the tenth time the Fed has cut rates in the past 15 months in an attempt to jumpstart the economy.
Generally, the Fed lowers rates when it is concerned about the economy slowing because consumers tend to spend more when the cost of borrowing is cheap. But economists say the problem for consumers and businesses right now is not the cost of borrowing, but the availability of credit.
"Consumers might see lower rates but it’s still hard to get a loan," said Gus Faucher, director of macroeconomics at Moody’s Economy.com. "Banks are taking big hits, and they’re still trying to preserve capital. So they’ll only make loans if you’re a good credit risk."
The federal funds rate is an overnight lending rate that is used as a benchmark to determine the price of a variety of loans, including credit cards, home equity loans, lines of credit and car loans.
Most types of consumer loans are pegged to the prime rate, which is directly influenced by the federal funds rate. Typically, the prime rate is 3 percentage points higher than the federal funds rate. It was 4% before Tuesday’s rate cut; just after the decision, several banks announced they were lowering their prime rate to 3.25%.
In turn, all credit cards with variable interest rates will automatically reset to reflect the lower rate. That is good news for card holders, but expect issuers to counter it by setting rate floors in order to preserve their margins, as well as scaling back consumer credit lines and closing old accounts.
"Banks are trying to mitigate losses," said Robert McKinley, CEO of CardWeb.com, a credit card tracking Web site.
"New credit is going to be a problem," McKinley added. "If you have shaky credit you’re going to be very challenged to find money instant payday loan no telecheck…even people with good credit are going to find it’s not as easy to get credit," he said.
And the same goes for consumers shopping for home equity lines of credit. "Lenders are not jumping up and down to be a second lien holder at a time when home prices are falling and foreclosures are rising," said Greg McBride, senior financial analyst at Bankrate.com.
Those in the market for a new car will certainly find deals, but that’s mostly thanks to slashed sticker prices, not lower interest rates. That’s because auto loans are not overly rate sensitive. For example, despite the Fed rate cuts, the average five-year note for a new car loan is at 7.05%, down from 7.60% a year ago.
"Rates have not gotten significantly lower, but even if they did it wouldn’t have a significant impact on affordability," said McBride.
Plus, even if borrowers can get financing, the difference of a percentage point doesn’t seriously impact affordability. "Nobody is upgrading to a Hummer based on lower interest rates," McBride added.
For many mortgage holders, the cumulative Fed rate cuts will result in lower payments when their variable-rate loans reset in 2009. But there is also a diluted effect: While this is a good time to refinance your existing mortgage, those in the market for a new home will need excellent credit to get a low rate.
"To obtain today’s low interest rates, you need to have a down payment - or equity position in your home in the case of a refi - of at least 10% and fully document your income and your assets," said Keith Gumbinger, vice president of mortgage-rate tracking firm HSH Associates. "If you don’t have good credit, you’re going to have trouble getting financing."
"It used to be, you had to prove you were alive to get a mortgage," he added.
Despite the recent rout in oil prices, the government expects crude to shoot back up over the long term. That is expected to result in a drastic drop in oil imports and a greater use of renewable energy.
Oil imports - which currently make up 60% of all the oil consumed in the U.S. - should drop to about 40%, the Energy Information Administration said in its long-term energy outlook on Tuesday.
The drop will largely be the result of higher oil prices encouraging conservation and an expanded use of home-grown biofuels.
In making its predictions, EIA used an average crude price of $130 a barrel in 2030. That price is nearly double the projections for 2030 made last year - $70 a barrel.
Although the report was not meant to predict oil prices, EIA analysts say increased demand and limited access to new supplies will push crude prices up in the long term, despite crude’s recent plunge.
The upward revision in price is a major shift in the government’s long-term views on oil supply and demand. Limited access to new oil sources - particularly in OPEC countries - is a major reason why prices should increase.
"People are becoming aware of the fact that conventional supplies of oil outside of OPEC are quite limited," said Robert Kaufmann, director of Boston University’s Center for Energy & Environmental Studies. "It’s getting harder and harder to tell the story that oil prices will remain low forever."
EIA’s higher price estimate could give ammunition to policymakers seeking a big push into alternative fuels, or those seeking a more hawkish foreign policy, or both, said Kaufmann.
He said non-OPEC production peaked in 2004, and OPEC countries are expected to provide a greater share of the world’s oil going forward.
But OPEC has little incentive to increase its ability to pump oil. The cartel has seen the world is willing and able to pay over $100 for oil, and many OPEC countries have become accustomed to revenues generated from those high prices. For them, the higher the price the better - so long as it doesn’t kill the global economy or spur a mass shift away from oil easy pay day loans.
EIA’s price revision is in-line with predictions made earlier this year by the International Energy Agency (IEA), a similar group to EIA that has a more global focus.
The IEA drastically lowered its long-term world oil supply forecast this spring - from nearly 120 million barrels a day to maybe 100 million per day by 2030 - citing access to resources as a major concern.
In making its predictions, EIA does factor in the growth of supplies from "nonconventional" oil, like oil from tar sands or biofuels made from plants. It also makes its projections based on current policy, which does not include things like laws restricting greenhouse gas emissions, which could potentially drive up the cost of fossil fuels.
Higher oil prices, combined with some government mandates, are expected to yield a boost in renewable energy use as well.
Renewables should account for 21% of all energy used in the U.S. by 2030, the agency said, up from about 15% currently. Last year EIA said renewable use would remain flat at 15% in 2030.
Under current policies, EIA predicts energy-related carbon dioxide emissions will slow in the years ahead, but will increase about 7% by 2030. Last year the agency said carbon dioxide emissions should grow by 15% by 2030.
Most climate scientists say the world needs to cut its carbon dioxide emissions by about 80% by 2050 if it is to avoid the worst effects of global warming. During the presidential campaign, President-elect Barack Obama pledged to cut U.S. emissions by that amount.
The EIA estimates that if the country were to cut its greenhouse gas emissions by 40% in 2030, electricity prices would rise by about 10% due to the costs of switching from cheap coal to more expensive wind or natural gas sources to produce electricity. The agency does not have projections for an 80% reduction by 2050.
Bankruptcy filings rose 30% during the government’s 2008 fiscal year, which ended Sept. 30, according to figures released Monday by the Administrative Office of the U.S. Courts.
Total bankruptcy filings increased by 241,724 cases, or 30%, to 1.04 million in the 12 months between Oct. 1, 2007, and Sept. 30, 2008.
For the three months ended Sept. 30, total bankruptcies rose nearly 34% to 292,291, up from 218,909 in the same period last year. Fiscal fourth-quarter filings were up 60% from 182,973 in the previous quarter.
Non-business filings totaled just over 1 million for the year, up 30% from the 775,344 non-business filings in fiscal 2007. Business filings rose 49% to 38,651, up from 25,925 business filings in the previous 12-month period.
"The dramatic spike in both personal and business bankruptcies reflects an economy in distress," Samuel Gerdano, executive director of the American Bankruptcy Institution, said in a written statement.
Still, the 1.04 million filings for the 12 months ended in September are fewer than the 1.12 million filings the government fielded two years ago, for the 12 months ended in September 2006.
Bankruptcy filings surged in 2006 as businesses and individuals raced to file before the implementation of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 payday loans with no faxing.
Total filings dropped nearly 28% in fiscal 2007 as the 2005 act, which made it harder for individuals to receive Chapter 7 bankruptcy protection, went into effect. But this year’s tough financial environment ratcheted filings back up: Chapter 7 filings rose 40% to 679,982 in the 12 months that ended Sept. 30.
Chapter 7 bankruptcy is designed to give individual debtors a "fresh start" by discharging many of their debts. Under Chapter 7, a filer’s assets - minus those exempted by his or her home state - are liquidated and given to the creditors who are first in line for repayment. Any debts that remain are cancelled.
Another type of individual bankruptcy, Chapter 13, requires debtors to pay back their debts over time. Chapter 13 filings rose 14% this year to 353,828, up from 310,802 a year earlier.
Filings for Chapter 11 bankruptcy, which is aimed at assisting struggling corporations or partnerships, rose 40% to 8,799 from 5,888.
Oil prices fell Friday as investors responded to uncertainty surrounding the government’s proposed bailout of the auto industry.
U.S. crude for January delivery slipped $1.70 to settle at $46.28 a barrel.
Prices had fallen to as low as $43.32 earlier in the session after Senate Democrats and Republicans failed to reach a compromise on a $14 billion bill, which would have provided emergency loans to General Motors and Chrysler.
In an effort to reinforce automakers, the White House said it would consider using cash set aside as part of the $700 billion financial system bailout to offer loans to automakers.
"If they don’t come up with something, you’re not only going to lose a lot of direct jobs, but it will cascade to all the suppliers," said James Williams, energy economist with WTRG Economics in Arkansas. "This will ripple through the economy from Michigan on south."
An automaker bankruptcy would be "too big of a body blow to the markets," said Tom Orr, head of research for brokerage Weeden & Co. "They can’t just let them fail. I think it would be disasterous."
Job loss risk: Investors worry that the failure of one or more of the big automakers could weigh heavily on the economy of the United States, the world’s largest oil consumer, which has already seen job losses spike to the highest level in decades.
"Anything that’s bad for the economy is bad for crude oil prices," said Williams.
The auto industry employs about 2 million workers, according to the Center for Automotive Research guaranteed approval payday loans. That total includes GM (GM, Fortune 500), Ford (F, Fortune 500) and Chrysler workers, as well as dealers and workers at parts manufacturers.
On Thursday, the Labor Department reported that the number of Americans applying for state unemployment benefits rose to a 26-year high last week.
OPEC cuts: Oil prices came off their lows in afternoon trading as investors were also anticipating a large production cut from the Organization of Petroleum Exporting Countries, an international trade cartel whose members produce about 40% of the world’s oil.
The price of crude oil, which has fallen more than $100 a barrel, or nearly 70%, since hitting a record high of $147.27 in mid-July, has been weighing heavily on many producers who rely on oil profits to support their local economies.
"They are desperate to get the price of oil up," said Orr, adding that he thinks "they’re going to do it in one shot with the hope that they can hold [oil] to $40."
OPEC President Chakib Khelil told the Associated Press earlier this week that the oil market could expect to see a "severe" cut in production levels in order to bolster prices.
Some analysts have said the group could cut production by as much as 3 million barrels a day.
The group is scheduled to meet Wednesday to make a production decision.
Delta Air Lines said Tuesday it will get an immediate $1 billion boost in liquidity as the result of the extension of a credit card agreement with American Express.
In a statement, Delta (DAL, Fortune 500) said the immediate $1 billion boost comes from a purchase of SkyMiles. The airline said it will receive an additional $1 billion from contract improvements through 2010.
Customers of American Express (AXP, Fortune 500) will get expanded options to book travel on the airline as part of the deal. The financial services company will also expand its merchant acceptance into more places in the Midwest.
Tuesday’s agreement between the companies is a multiyear extension of their existing partnership, which has been in effect since 1996.
Delta merged with Northwest Airlines in October car insurance quotes. By late 2009, the airline plans to merge its Northwest WorldPerks frequent flyer program with SkyMiles, according to Delta.
Earlier this month, the airline said it plans to cut overall flight capacity by 6% to 8% next year due to the global economic recession and weaker demand for air travel. Delta intends to trim domestic capacity by up to 10% while paring international seats by up to 5%.
On Nov. 10, the Federal Reserve reclassified American Express as a bank so it could more easily access government financing. It has reportedly asked for $3.5 billion under the bailout plan.
The economy continues to recede, leaving massive job losses in its wake. But while layoffs are widespread, they are not across the board. Some industries are thriving — and hiring.
On Friday the Labor Department reported that 533,000 jobs were lost in November, which puts the year-to-date layoff total at a whopping 1.9 million. And with the unemployment rate now at 6.7%, job seekers face the worst job market in 15 years.
But it’s not all doom and gloom: A range of industries are posting gains in employment figures. Here’s a look at them:
Education. With more people out of work and considering new careers, interest in degree programs, certifications and additional training has never been greater.
"Obviously some people will be out of work and see that as a chance to get additional education," said Dean Baker, director of the Center for Economic and Policy Research in Washington, DC, which will provide support - and jobs - to those in the field.
The education industry already added 9,800 jobs in November, the Labor Department said in its monthly report issued last week, and "there’s still a wide range of opportunities available," according to Janette Marx, senior vice president of Ajilon Global, professional staffing firm. "It runs the gamut in the education field" beyond teachers and professors, she added.
In addition to greater demand for educators, also lending support to the sector is government financing, according to Baker. "Education will be an area that governments will try to protect because there’s a lot of political support," he said.
Health services. With an aging population and greater demand for care, health services is also adding jobs in a down market.
"The healthcare industry continues to be the healthiest sector in the U.S. job market," said Diana Fitting, vice president for staffing company Adecco. "The Baby Boomer generation is aging and it’s helping to keep healthcare growing."
Even in the midst of the economic fallout, healthcare employment grew by 34,000 jobs in November. Over the past 12 months, healthcare has added 369,000 jobs, according to the Labor Department said fast pay day loans.
"Throughout 2008 the industry has continued to add thousands of new jobs each month despite the broader labor market turmoil — and this is one trend we don’t see ending any time soon," Fitting said.
At the Columbia University School of Nursing’s Entry to Practice Program, applications are up 50% from last year. Mary Mundinger, dean of the school, credits the sharp uptick to the promise of relatively lucrative job opportunities and flexible schedules in an otherwise dour job market.
Options also abound at pharmaceutical companies, biotech firms and medical-equipment companies, said John Challenger, chief executive of global outplacement firm Challenger, Gray & Christmas.
In fact, healthcare products and pharmaceuticals were two of only nine industries that announced hiring plans in November, according to Challenger’s latest job cut report.
Accounting. It’s no surprise that accounting is gaining momentum as well. "This is our busiest time in terms of recruiting because we’re gearing up for tax season," said Saran Johnson, human resources manager at Marcum & Kliegman, a New York-based accounting and consulting firm.
Johnson said overall "hiring has remained steady, while other business are cutting back or letting go," making accounting even more attractive to job seekers.
Especially in a recession, "accounting is a great field," Challenger said. "Companies are trying to cut costs and not over spend, that puts more importance on good financial controls which requires accountants."
In addition, with financial firms under intense scrutiny and regulation in high demand, there will likely be an increase in auditing firms going forward, added Lee Pinkonitz, associate professor at Georgetown University McDonough School of Business.
"There is always a need for mission-critical roles like accounting," added Kimberly Bishop, vice chairman of Chicago-based executive search firm Slayton Search Partners.
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