Tuesday PM April 29th, 2008
by: Ed Mayberry
A closely watched index shows that U.S. home prices fell by 12.7 percent in February versus last year, with 17 of the 20 metro areas reporting record annual declines. The Standard & Poor's/Case-Shiller Home Price Index of 20 cities also showed Tuesday that home values in ten cities plunged by double digits led by Las Vegas and Miami. Only Charlotte, N.C., posted a positive return year-over-year. All 20 metro areas have declined for six straight months. The narrower ten-city index set a record monthly decline of 13.6 percent.
A research firm says the number of U.S. homes heading toward foreclosure more than doubled in the first quarter from a year earlier. Falling property values and lack of financing have left many homeowners powerless to prevent homes from being auctioned. RealtyTrac says the hardest-hit states include Nevada, Florida and California. Nationwide, nearly 650,000 homes received at least one foreclosure-related filing in the first three months of the year. That is up 112 percent from the same period last year. All told, one in every 194 households received a foreclosure filing during the quarter. Foreclosure filings increased in all but four states. The most recent quarter marked the seventh straight quarter of rising foreclosure activity.
Between a worsening job market and rising inflation concerns, consumer confidence has taken another hit over the past month. The Conference Board says its Index of Consumer Confidence slipped to a five-year low this month. The gauge fell to 62.3, down 3.6 points from March. Lynn Franco of the group's Consumer Research Center says rising gasoline prices are “heightening concerns.” Damaged consumer confidence is seen as indicating poor prospects for spending. Consumer spending accounts for two-thirds of the nation's economic activity. The index is at its weakest since March 2003, just ahead of the U.S. invasion of Iraq.
It’s not soon enough to stop the rise in gasoline prices, but crude prices are lower. A monthly update from the Energy Department shows falling demand for finished petroleum products and for gasoline. The report suggests that high prices are cutting American's appetite for fuel. In addition, analysts expect a weekly report due Wednesday will show domestic crude supplies are on the rise. At the pump, the national average price of a gallon of unleaded gas rose 0.4 cent to a record of just under $3.61 a gallon. That's according to a survey of stations by AAA and the Oil Price Information Service.
The Federal Reserve has begun a two-day policy-setting session. When it releases its statement on Wednesday, it's expected to announce a-quarter point rate cut. That's a far cry from the reduction of three-quarters of a point announced in March. The Fed has been reducing rates since September, amid housing, credit and financial problems that are dragging down the economy. Many economists also believe the Fed could signal that it's ready to pause with rate moves for a while. With rising food and energy costs, experts note that the Fed must also be mindful of its mandate to battle inflation.
Dell has announced plans to lay off 250 workers in Ireland as part of its global cost-cutting move. The approximately 4,500 employees at Dell's two bases in Ireland were told--when they arrived for work--about the layoffs expected to begin in July. Round Rock-based Dell is Ireland's largest exporter and its biggest technology company. Dell, since expanding to Ireland in 1990, has developed a computer-assembly plant in Limerick and a support unit in suburban Dublin. These cutbacks are only the latest since Dell unveiled plans in May 2007 to cut 8,800 jobs worldwide.
Whole Foods Market says federal securities regulators recommend no action against the Austin-based supermarket chain over its chief executive's anonymous postings on financial news Web sites. That's the word from the organic and natural foods retailer in a Friday filing with the Securities and Exchange Commission. Last July, Whole Foods disclosed that the SEC and company directors were investigating postings by CEO John Mackey. From 1999 to 2006, Mackey anonymously touted Whole Foods stock and suggested that rival Wild Oats Markets might fall into bankruptcy. Last year, Whole Foods bought Wild Oats for $565 million. The internal investigation at Whole Foods was completed in October with a board vote of confidence in Mackey's leadership team. Mackey apologized for the postings.