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Economy News - part 4

US Senate Presses China to Increase Yuan’s Value

US Senate Presses China to Increase Yuan’s Value

ECONOMY

  • US Senate passes bill punishing China for currency policies
  • Value of yuan has appreciated by 5% in past year
  • Critics cite slow growth of yuan as giving China an unfair advantage in global marketplace

The US Senate has voted to advance a bill (S.1619) that would impact China's currency policies, effectively forcing China to raise the value of the yuan, or renminbi (RMB).

If passed, the bill will allow the US to enforce tariffs within 90 days on imports from another country found to be subsidizing exports by devaluing its currency. Under these criteria, the bill would allow American businesses to seek duty on imports from China.

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Apple Struggling in Indian Smartphone Market

Apple Struggling in Indian Smartphone Market

ECONOMY

  • iPhone accounts for just 2.6% of Indian market
  • Shipments to India fewer than to Norway in Q2
  • Slow development of 3G networks damaging to iPhone sales

Apple is struggling to make iPhone sales take off in India, the world’s second-largest mobile phone market.

The emerging Indian economy attracts leading tech players from all over the world and has some 602 million smartphone subscribers. But the number one smartphone manufacturer has been unable to mirror the dominance it has shown elsewhere throughout the world.

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Consumer Spending Slows With Drop In Personal Income

Consumer Spending Slows With Drop In Personal Income

ECONOMY

  • Personal income fell $7.5 billion in August, disposable income down $5 billion
  • Wages and salaries fell $12 billion in August, after a $24 billion rise in July
  • Knock-on effect of falling wages sees savings rate fall 4.5%

Personal income fell close to $7.5 billion, with disposable personal income (DPI) down $5 billion in August while personal consumption expenditure (PCE) rose almost $23 billion.

Though the August dip represents a 0.1% overall decline in personal income, in July the figure rose more than $17 billion. DPI rose almost $14.5 billion in the same month and PCE was up by close to $77 billion. The dip in real disposable income in August was 0.3%, higher than the 0.2% decline in July.

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China's PMI Suggests

China's PMI Suggests

ECONOMY

  • HSBC index 49.9% since August, contraction likely
  • CFLP index shows four-month export high despite demand concerns
  • Global PMI falls to 50.1%, growth forecast reduced to 4%

The HSBC purchasing managers' index (PMI) was 49.9 in September and has remained under 50 for the past three months, indicating a contraction in the manufacturing sector.

The HSBC PMI is a reading of small Chinese firms, while the Chinese Federation of Logistics and Purchasing (CFLP) PMI reads the larger, state-owned companies.

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Overview: Debt Crisis in Europe

Overview: Debt Crisis in Europe

ECONOMY

  • Greek debt of €340 billion creates uncertainty for Germany
  • Germany's unemployment drops below 2008 levels
  • EESC President supports Eurobonds, further EU integration

Europe's sovereign debt crisis has been spreading throughout Euro zone nations, leading to the bailout of three countries.

Italy has become the latest casualty of the recent European downgrades outbreak, as leaders struggle to swiftly resolve the debt crisis. As Ireland, Greece, Spain, Cyprus, and Italy deal with their ratings cut, the future of the Euro seems more uncertain. The nations that have endured the most these past two years are those who have been downgraded and bailed out.

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Macy’s Holiday Hiring to Make a Merry Christmas for Jobseekers

Macy’s Holiday Hiring to Make a Merry Christmas for Jobseekers

ECONOMY

  • Macy’s to hire 78,000 seasonal staff, 4% more than 2010
  • Macy’s forecasts 4% to 4.5% sales increase in Q3 and Q4
  • Kohl’s and JC Penney holiday hiring on a par with 2010

Retailer Macy’s is to hire 78,000 holiday workers, 4% more than the 2010 holiday season, encouraged by rising sales figures. The company forecasts a year-on-year increase of between 4% and 4.5% in same-store sales for the last two fiscal quarters this year, partly boosted by sales around Thanksgiving and Christmas.

Workers will be based at department stores Macy’s and Bloomingdale’s and also support the retailer’s online business at its warehouses and call centers. Though this staffing measure is primarily a seasonal measure, the company says certain positions may well lead on to permanent positions. Macy’s is a big employer, with 170,000 workers, mostly employed on a full-time basis.

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Real Estate Update: New Home Sales Hit 6-Month Low

Real Estate Update: New Home Sales Hit 6-Month Low

ECONOMY

  • New home sales fall 2.5% to annual rate of 295,000 units
  • Median price for new homes down 8% to $209,000
  • Midwest the only region reporting growth, sales up 8%

New home sales in the US fell to the lowest point in six months, hitting close to 2.5% for a yearly total of 295,000. The median new home price for August 2011 fell almost 8% from the same month last year, marking a drop unseen since July 2009.

After the most dramatic fall in prices in a two-year period, homebuyers are seeking the cheaper option of buying distressed homes or previously owned homes with lower prices due to foreclosures.

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IMF Lowers Global Growth Forecast to 4%

IMF Lowers Global Growth Forecast to 4%

ECONOMY

  • Uneven growth between developing and developed nations
  • Growth forecasts for Euro zone down from 2% to 1.6%
  • US economic growth projections down from 2.5% to 1.5%

The International Monetary Fund has adjusted its global growth outlook for 2011 and 2012 from 4.3% and 4.5%, respectively, to a two-year 4% growth rate.

The IMF, which consists of over 187 nations, says in its latest edition of the World Economic Outlook report: “Global activity has weakened and become more uneven, confidence has fallen sharply recently, and downside risks are growing.” The IMF estimates a decline in this year's growth for developing nations from its original prediction of 6.6% to 6.4%. It also adjusted next year's forecast for developing economies from 6.4% in June to 6.1%.

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Obama Announces $3 Trillion Debt Plan

Obama Announces $3 Trillion Debt Plan

ECONOMY

  • Debt plan to increase tax for wealthy, reduce health costs
  • Plan to cut corporate loopholes, end Bush tax cuts
  • CBS poll: 56% agree with Obama's debt proposal

Obama is promoting a new debt plan aimed at cutting the US deficit by more than $3 trillion over the next 10 years. The debt reduction package calls for nearly $1.5 trillion in new taxes that target the upper class.

The plan also promotes the cutting of Medicare and Medicaid benefits by over $580 billion and includes savings from the withdrawal of US troops from Iraq and Afghanistan equaling $1 trillion. Obama's proposal does not call for any changes in Social Security and the age of eligibility for Medicare.

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Bank of America to Cut 30,000 Jobs, Reduce Costs by 18%

Bank of America to Cut 30,000 Jobs, Reduce Costs by 18%

ECONOMY

  • CEO announces "Project New BAC" to cut costs by $5 billion, cut jobs by 10%
  • Goal is to restore investor confidence and raise company efficiency ratio to 55%
  • Investitgations cause 48% stock drop this year

Bank of America Corp. CEO Brian Moynihan says the bank plans to cut costs by $5 billion and slice over 30,000 jobs - or 10% of its workforce - in the largest single job cut this year.

BAC stock rose 1% on September 12 to $7.05 following the announcement.

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