The Arizona Cardinals well get some high-profile home games next season — including contests against the Dallas Cowboys, Denver Broncos and Oakland Raiders.
The Cardinals’ 2010 regular season schedule lineup is set in terms of teams but dates and times and what kind of national games the Cards will be play will be determined later this year. The Cardinals will also host the New Orleans Saints, Tampa Bay Buccaneers and games against NFC West foes (San Francisco 49ers, St. Louis Rams and Seattle Seahawks).
High-profile teams such as the Cowboys, Broncos and Raiders all have strong followings in the Phoenix sports market, which should insure quick sellouts for those games and push up ticket prices next year free business cards.
The Cardinals have sold out all their home games since moving from Tempe to Glendale’s University of Phoenix Stadium in 2006.
The Cards' road games include visits to San Diego, Minnesota, Atlanta, Kansas City, Carolina and the NFC West rivals.
The NFL playoffs start this weekend and include a 2:30 p.m. Sunday game between the Cardinals and Green Bay Packers that will be televised by Fox.
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Question: How do REITs work? And is it prudent to have them in a diversified retirement portfolio? –M. C., Indianapolis, Indiana
Answer: After going from rock stars of the investing world during the real estate boom to candidates for a VH1"Where Are They Now" episode the last two years, REITs are generating some interest again.
Gee. Could it have anything to do with the fact that, after slumping badly in 2007 (-17.8%) and 2008 (-37.3%), REITs have been on a bit of a roll again with a year-to-date return of more than 25% through mid-December?
Well, whatever has spurred your interest, the answer to your first question is that REITs, or real estate investment trusts, are essentially companies that own and operate income-producing properties that could range from office buildings to hotels to malls to apartment buildings or a combination of these or other facilities.
Since you can buy many REITs just like stocks, investing in them allows you to gain exposure to the real estate market without the hassle of having to buy, manage and sell actual bricks and mortar. And because for tax reasons REITs must distribute 90% or more of their taxable income to shareholders annually as dividends, many investors looking for steady income from their investments also gravitate toward REITs.
As for whether it’s prudent to include REITs in a diversified retirement portfolio, I’d say the answer depends on why you’re buying them.
If you’re considering REITs now because you think their recent gains might be a prelude to another real estate feeding frenzy, I would urge extreme caution. Much of the REIT rebound this year is what you might call a "relief" rally. Things were looking so bad both in terms of property values and availability of financing in the commercial real estate market earlier this year that many REITs were knocked down to Armageddon prices. As investors came to believe that maybe conditions weren’t quite so horrendous and that the correction in REIT values had perhaps been overdone, REITs enjoyed a nice little pop.
But the residential and commercial real estate markets still face daunting challenges. That’s not to say that REITs don’t have the potential to deliver decent returns from here. Indeed, some have been able to raise capital that may allow them to pick up properties at bargain-basement prices. I think it would be foolish, though, to buy into REITs expecting them to retrace their recent trajectory.
But if you want to invest a portion of your retirement savings in REITs as part of a long-term strategy to improve your portfolio’s performance by enhancing its diversification, then I’d say yes, it could be prudent to find a place for them quick guaranteed personal loans. That’s because research shows that adding a small helping of REITs to an already diversified portfolio may be able to slightly boost returns without increasing volatility.
Be aware, however, that this approach assumes you’ll invest a modest portion of your assets in REITs and that you’ll hold them during good and bad periods. And to get the full benefit of the additional diversification they offer, you must be willing to rebalance periodically so REITs continue to account for the same percentage of your portfolio that you set originally.
That means you’ll probably be selling off part of your REIT stake after years in which they’ve soared (like 2003 and 2004), and adding to it after lousy years (like 2007 and 2008). If you don’t have the discipline, or the stomach, to do this, then adding REITs probably isn’t such a hot idea.
Keep in mind too that while REITs’ dividends can be a plus for investors looking to draw income from their retirement portfolio, those dividends can be cut in hard times. Some REITs did exactly that during the financial crisis. What’s more, a December 2008 "revenue procedure" from the IRS gave REITs the option of paying out up to 90% of their dividends in stock rather than cash this year. I think it’s fair to say most income investors would prefer hard currency to more shares of stock. It’s unclear whether, one way or another, REITs will have access to that option again in the coming year.
You should also know that, unlike payouts from most companies, REIT dividends do not generally qualify for the 15% maximum tax rate for qualified dividends. So if you do opt for REITs, you may want to hold them in a tax-advantaged retirement account such as an IRA or 401(k).
All things considered, though, I think REITs can still play a role in a well-rounded retirement portfolio. But unless you know how to analyze the prospects for individual REITs, I’d recommend investing in them through a mutual fund or ETF that owns a diversified portfolio of REITs. You can find both on our Money 70 list of recommended funds.
Bottom line: If you want to make REITs part of your long-term investing strategy for your retirement savings, go ahead. Just be sure to take a prudent approach, as I’ve outlined.
Private equity shop Cerberus plans to float gun-maker Freedom Group soon. It had better hurry. President Barack Obama’s victory sent weapon sales — and the valuations of firearms producers — shooting upward. Falling backlogs hint sales could plunge. The U.S. gun bubble may backfire.
Two sparks set off this speculative burst in the gun business. First, fears of economic calamity inspired sales of weapons — Sturm, Ruger’s 30 shot autoload SR-556 rifle is useful according to the company for shooting varmints and for "personal defense", presumably pesky biped varmints.
Second, gun collectors feared a Democratic president would restrict gun ownership. After all, you can’t buy the SR-556 in blue-state strongholds California and Massachusetts.
There’s plenty of anecdotal evidence of mania in the sector. Retailers reported ammunition shortages. Gun show attendance overflowed. Firearms factories are running flat out.
Meanwhile, insiders are preparing for a slowdown. Smith & Wesson diversified into security systems. Cerberus’ decision to sell may be indicative of a top — the durability of recent demand is indeed listed as a risk factor in Freedom Group’s prospectus.
The figures are more damning. Total U.S. firearm sales should be around $3 billion this year. That’s twice to three times as much as is typically spent according to estimates derived from Treasury excise taxes. Background checks over the past 12 months, which are a leading indicator of gun sales, were 50% higher than the levels reported during the middle years of the decade.
Naturally, rising sales lit a fire to stocks of gun makers and sellers. Armaments manufacturers Smith & Wesson (SWHC) and Sturm, Ruger (RGR) saw their stocks rise 115% and 85% respectively since the election last November. Hunting superstore Cabelas (CAB) has risen 70%.
This bubble may already be deflating. Smith & Wesson’s backlog hit $268 million earlier this year and shrank to $177 million last quarter due to cancellations and fewer orders. Considering it only stood at $50 million in April 2008, the backlog could have much further to fall. Sturm, Ruger reported roughly similar figures.
This could prove painful for all involved. If sales fell to more typical levels of recent years, up to two-thirds of U.S. gun sales could disappear. And they could fall further. There are somewhere between 200 million and 300 million fireable guns (estimates vary widely) already in the U.S. Firearms have a very long lifespan if properly treated.
Gun buyers may well decide their now-stuffed racks don’t need more company for a few years.
More than a year before stock markets crashed in the fall of 2008, Paul Dau noticed a steep drop in the number of customers entering his furniture store on Manchester Road in Ellisville.
Instead of whole-room makeovers, they might buy a few pieces of furniture. As time went on, even those purchases dwindled.
By the end of 2008, sales were off 18 percent. As 2009 started, the numbers got worse.
"There were evenings I didn’t sleep well," said Dau. As the fourth-generation of his family to run Dau Home Furnishings, he determined long ago not to see it close on his watch.
He cut his own pay. Then did it again. And once more in April.
"You do what you have to do,” he said.
But increased traffic and sales in the past few months are raising the optimism of some furnishings dealers, including Dau, who thinks he might soon be able to restore at least part of his salary.
"I do feel confident that we’ve bottomed out and we’re turning," he said.
It’s been a dreary decade for the home decor business.
"Ever since 9/11, it’s been in a spiral," said Jackie Hirschhaut, vice president of marketing for the American Home Furnishings Alliance, the nation’s largest trade association for furniture manufacturers.
Then came last year’s market meltdown.
People put off purchases and delayed projects. Nationally, sales by furniture and home furnishing stores totaled $7.7 billion in June, down more than 10 percent from last year and almost 20 percent from June 2007.
"For many mainstream consumers there’s just a lot of uncertainty," Hirschhaut said. "They may be working now, but there are no guarantees."
Changing customer habits forced many businesses to find new strategies to survive.
In addition to his pay cuts, Dau trimmed inventory by almost 20 percent, slashed advertising by nearly a third and reviewed every contract, from building maintenance to snow removal. Because he didn’t want to cut his 18-member staff, Dau used warehouse employees instead of contractors to trim bushes, wash windows and perform other duties. He cut back some full-time positions to part-time jobs and didn’t replace two employees who left.
"What hits you most is concern for all these families," he said of his employees. "They need their incomes to run their households. That’s the scary thing weighing on you."
Brook Dubman, who owns Carol House Furniture stores in Valley Park and Maryland Heights, said that despite a small decline in traffic and sales in the wake of the recession he’d also avoided laying off any of the company’s 140 employees.
"We didn’t change the way we did anything,” he said. "I think that helped us do better."
Customers often linger longer over decisions to buy and make smaller purchases, but Dubman said that traffic and sales in August were up substantially over last year and that September started off well.
"Our Labor Day weekend was gang busters,” Dubman said. "I’m pretty optimistic that we will be consistently better."
If not for his wealthier clients, Alan Richardson wonders if he’d still be in business payday loans online.
The owner of English Living, situated on Washington Avenue in downtown St. Louis, said that since the first of the year the entry-level home buyers and younger home owners who used to be a substantial part of his customer base have all but disappeared.
"The only thing that kept us going well through that was the high-end … very-upscale clients … that are spending a lot of money on their home," Richardson said. "They were our biggest contributors through some pretty tough times."
Although he said sales were "exceptionally slow" in July and August, Richardson saw an increase in traffic that has translated into sales in September.
"In the first ten days of this month we did as much as we did in all of July, and that’s unusual," Richardson said.
But he’s not ready to declare the dark days over.
"We’ve had slow downs before," he said. "The strange thing about this one is you’ll have days you think it’s starting to turn and then it all stops again."
Bruce Bernstein bought a 39-year-old company a few months before the 2008 crash. He immediately sought to re-brand Sunshine Drapery and Interior Design as up to date and offering the highest-quality products.
While still offering sales, the company eliminated the 85 percent discounts the previous owners promoted. Bernstein also updated what he called the company’s "industrial looking" website and reached agreement with a furniture chain to allow Sunshine displays in their stores and to refer business to each other.
He trimmed his fabric inventory, cut hours and laid off and brought back some of his 60 or so employees as the sewing workload required.
Sales the last three months are running about two percent ahead of last year, he said.
"If I had continued on the same route as the previous owner … I don’t know if we would be getting the same business,” he said.
Not everyone struggled through the downturn.
In Belleville, Mueller Furniture Company saw a double-digit increase in sales last year and is on pace to do the same this year.
Owner Lynwood Mueller credited Scott Air Force Base, two nearby hospitals and area school districts, among others, for providing a steady supply of customers. Mueller said much of his merchandise was American made, a point the store emphasizes in its marketing. "People seem to respond to that," he said.
Mueller said that if anything, he’d increased his advertising and promotion in the recent downturn and emphasized customer service. "When times are tough, I think people appreciate that more," he said.
It has helped the family business endure difficult days in the past. Mueller’s grandfather opened the store just two years before the stock market crashed in 1929 and plunged the country into the Great Depression. When the younger Mueller entered the business in the mid-1970s, Belleville was home to 11 furniture stores, he said. One moved. The others closed.
"We’re a survivor," he said.
After two years of pumping money into the financial system to keep the economy afloat, Fed Chairman Ben Bernanke will have to reverse the process or risk an opposite problem: inflation.
After much anticipation, he announced in July the Fed’s "exit strategy" from its vast intervention, declaring it will happen "in a smooth and timely manner."
It’s reassuring that Fed officials are aware of the inflation risk, but their program is unlikely to succeed. Much research shows that it takes about two years for anti-inflation policy to work. That means the Fed needs to start now and stick with it.
I do not doubt the Fed’s ability to control inflation; however, history warns that we should be skeptical of the Fed’s willingness to sustain the program when pressured to abandon it by so many powerful forces: Congress, the Obama administration, the business community, and labor unions.
Sustaining the program requires accepting a temporary medium-term increase in unemployment and interest rates and maintaining a degree of independence that this Fed has not shown.
I am skeptical too about the adequacy of the program that the chairman proposed. The Fed has to remove most of the remaining $700 billion increase in bank reserves that it supplied in the past year before the banks use them to increase money growth.
The Fed has two responses.
One is that many of the reserves will disappear as banks and others repay the special-purpose loans that followed the Lehman bankruptcy last September. While the Fed’s balance sheet has started to shrink, much of that reflects reduced demand for credit because of the weak economy — and it won’t bring about the needed increase in long-term rates.
The second part of Bernanke’s program depends on a power the Fed acquired recently. It can now pay interest on bank reserves, so it claims that banks will willingly hold more reserves to earn interest instead of lending. But how much more will banks hold? Surely less than the $500 billion or $600 billion of excess reserves.
Once the economy recovers, banks will start to lend to their customers and attract new ones instant cash advance. The Fed must be willing to let lending and bond rates rise as banks reduce their reserves. Many influential voices will complain that letting rates rise will prolong the recession.
This problem repeats the experience of 1966-67, 1969-70, 1973-75, and other times. Outside pressures on the Fed increased when the unemployment rate reached about 6.5% or 7%, well below its current or prospective level. That ended the anti-inflation commitment.
There is only one exception: the Volcker disinflation of 1979-82. Paul Volcker was the most independent chairman in the Fed’s modern history. When President Carter interviewed him, Volcker told the President that he would follow a less inflationary policy than his predecessors. To his surprise, Carter said, "That’s what I want." The change reflected a major shift in public opinion. For the first time the public told pollsters that inflation, which reached 17% at one point, was the most serious economic problem the country faced.
In the 1980 presidential election, the public chose Ronald Reagan, who promised to end inflation. Unemployment rates rose above 10% and shortterm interest rates reached 20% during the disinflation. But in less than two years inflation fell to about 4%. Gradually we entered a long period of stable growth, mild inflation, and short recessions that lasted until 2006.
Are the Obama administration, Congress, and the public willing to tolerate high nominal interest rates and higher unemployment? Very unlikely. The chairman has stated "at some point … as economic recovery takes hold, we will need to tighten monetary policy."
But since he and his colleagues don’t see that point being reached anytime soon, by the time we get there it may well be too late.
Allan H. Meltzer is the Allan H. Meltzer University Professor of Political Economy at Carnegie Mellon and the author of A History of the Federal Reserve.
The U.S. trade gap narrowed unexpectedly to $26 billion in May to the lowest reading since November 1999, as exports rose and imports shrank, government data on Friday showed.
The Commerce Department said exports increased 1.6% to $123.3 billion, while imports declined by 0.6% to $149.3 billion.
Analysts polled by Reuters had expected the trade deficit to widen to $30.2 billion in May. The trade gap in April was revised to $28.8 billion from a previously reported $29.2 billion deficit.
May’s import level was the lowest since July 2004 and the 10th straight monthly decline, providing further evidence that the recession-mired United States has diminished as a source of demand for the rest of the world.
The auto sector has been hard hit in the economic slowdown and May imports of automotive vehicles and parts slipped to $10.2 billion, the lowest level since March 1996, while auto exports were the lowest since July 1998 cash advance no faxing.
The monthly deficit on goods trade with China grew to $17.5 billion from $16.8 billion in April and was the largest with any single country.
But the U.S. trade deficit with other big trading partners declined, falling to $2.8 billion with the European Union in May, for the lowest reading since March 1999, and retreating to $1.9 billion with Japan, which was the lowest since February 1984.
Imported oil cost $51.21 a barrel in May, up from $46.60 in April. The value of crude oil imports in May declined only slightly to $13.4 billion, despite a sharper decline in the quantity of oil actually imported, to 262 million barrels from 293 million in April, the Commerce Department said.
Four men at the Cargill Meat Solutions plant in Dodge City have been indicted on charges of aggravated identity theft and using false documents to gain employment in the United States.
The indictments claim all four men were citizens of Mexico, unlawfully working in the United States and had stolen Social Security numbers to get their jobs, according to a release from Acting U.S. Attorney Marietta Parker’s office.
According to court documents, the indictments of the four men consist of:
• Alejandro Cruz-Lopez possessed a Cargill Meat Solutions employee identification card with his picture and another person’s name, a Blue
Cross/Blue Shield card, two Delta Dental insurance cards, a UFCW union identification card with his picture and another person’s Social Security number, three Cargill pay stubs with a false name on them, and two Kansas identification cards with photos and a false name.
• Ramiro Santos-Carreto possessed a Cargill Meat Solutions identification card with his picture and another person’s name, a Cargill health insurance card, two Delta Dental insurance cards, a UFCW union identification card with his picture and another person’s Social Security number, an Arkansas identification card with his picture and another person’s name, and a Cargill Treatment and Work Restriction Record with a false name on it used car loans.
• Rogelio Gomez-Bernardino possessed a Cargill Meat Solutions employee identification card with his picture and another person’s name, three Cargill health insurance cards, two Blue Cross/Blue Shield cards, two Delta Dental insurance cards, a UFCW union identification card with his picture and another person’s Social Security number, and a California identification card with his photo and another person’s name.
• Leonardo E. Leon-Flores possessed a Cargill Meat Solutions employee identification with his photo and another person’s name on it, two
Cargill health insurance cards, a Blue Cross/Blue Shield card, two Delta Dental insurance cards, and a Kansas identification cared with his picture and a false name.
In each case, agents with the U.S. Immigration and Customs Enforcement office obtained employment forms containing Social Security numbers belonging to someone else.
If convicted, the defendants face a maximum penalty of 10 years in federal prison without parole and a fine of up $250,000 for possessing the false documents and a mandatory two-year sentence (running consecutive to other sentences) and up to $250,000 in fines on the aggravated identity theft.
Massachusetts is the state best positioned for growth when the current economic turmoil recedes, according to the 2008 State New Economy Index released Tuesday.
Washington, Maryland, Delaware, New Jersey, Connecticut, Virginia, California, New York and Colorado rounded out the top ten.
The study, issued by the nonpartisan think tank Information Technology & Innovation Foundation (ITIF),measures how effectively states operate in order to compete nationally and globally. It notes that states should be focused on whether their economies are well positioned for robust growth in the next decade, pointing out that innovation is central to state economic success.
"We had to go back a full year to get data, but I do think these results will, to some extent, be able to predict how each state will do in the current economic turmoil," said Dr. Rob Atkinson, president of the foundation.
"In recessions, there are higher levels of entrepreneurship because people who are laid off will use that opportunity to start a business," he said. "We won’t be in this predicament forever. States that foster risk-taking and treat this time as an opportunity will be in a better position when they emerge - they’ll be growing, instead of replacing the investments they slashed."
Funded by entrepreneurship boosters the Ewing Marion Kauffman Foundation, ITIF considers 29 factors in determining which states are the most - and least - "New Economy." These indicators included, among other things, start-up activity, education, venture capital investment, IPOs, patents and alternative-energy cash loan in one hour.
Those data points were then grouped into five meta categories that the ITIF says embodies the New Economy: knowledge jobs, globalization, transformation into a digital economy, technological innovation capacity and economic dynamism.
"The index is a composite of variables," said Atkinson. "But economic dynamism, which measures factors such as the number of fast-growing gazelle companies and value of IPOs, is more important than, say, globalization or a digital economy at influencing the new economy leadership."
Based on past observation, states that foster startups, particularly fast-track tech ventures, are also those that adapt best in economic downturns and emerge from them with higher standards of living, according to the the survey, which was also released in 1999, 2002 and 2007.
Utah, Massachusetts, Colorado, Georgia and New York placed at the top of the ITIF’s list in the economic dynamism category, while Alabama, West Virginia, Hawaii, South Carolina and Kentucky ranked lowest.
Mississippi, West Virginia, Arkansas, Alabama, Wyoming, Kentucky, South Dakota, Oklahoma, Iowa and Louisiana were seen by the foundation as the least prepared to rejuvinate themselves.
European Central Bank President Jean- Claude Trichet said economic growth will be “particularly weak'' through the third quarter, suggesting policy makers are wary of raising interest rates again to curb inflation.
While the ECB's decision to raise borrowing costs last month was justified by the inflation threat, risks to growth “are materializing,'' Trichet told reporters in Frankfurt today after keeping the benchmark rate at 4.25 percent. “Overall, downside risks prevail.''
The euro dropped more than a cent and bonds rose as investors pared bets on higher ECB interest rates. The bank is concerned that the fastest inflation in 16 years is helping unions push through demands for higher wages at companies such as Deutsche Lufthansa AG, fueling further price increases. At the same time, record energy costs and the stronger euro are strangling growth. The Bank of England today also kept rates unchanged.
Euro-region economic confidence dropped the most since the Sept. 11 terrorist attacks in July and Europe's manufacturing and service industries contracted for a second month.
“The ECB is acknowledging the economic slowdown,'' said Matthew Sharratt, an economist at Bank of America in London. “They're still focused on high inflation but the best way to avoid a policy mistake would be to keep interest rates on hold.''
The euro fell as low as $1.5335, a seven-week low. The yield on the 10-year German government bond fell 9 basis points to 4.25 percent, the lowest since May 23. Bond yields move inversely to prices.
Cuts By Christmas?
Eonia swap contracts, a widely used market gauge of interest- rate expectations, have started to price in rate cuts. The yield on the April contract dropped 15 basis points to 4.16 percent after Trichet's remarks.
“If he was trying to give a neutral, balanced `don't price in rate cuts' speech, then I think he really screwed it up,'' said James Nixon, an economist at Societe Generale SA in London. “The market will be looking for cuts as early as Christmas at this rate.''
Oil prices have retreated 18 percent since reaching a record $147.27 a barrel on July 11 and money-supply growth, which the ECB uses as an indicator of future inflation, slowed more than economists forecast in June.
“Slowly but surely, the arguments for another interest-rate hike are running out,'' said David Milleker, chief economist at Union Investment GmbH in Frankfurt online cash advance http://pay-day-home.com.
`No Bias'
Trichet said the ECB has “no bias'' on interest rates. He removed a reference from his introductory statement to “moderate, ongoing growth,'' and said the bank will have a better idea of the economic outlook when it gets new staff forecasts in September.
In June, ECB staff projected growth would slow to about 1.8 percent this year and 1.5 percent in 2009. The economy expanded 2.7 percent in 2007.
Credit Suisse Group today cut its forecast for euro-area growth to 1.3 percent in 2008 and 0.8 percent in 2009 from 1.8 percent and 1 percent respectively.
Societe Generale economists estimate gross domestic product shrank 0.5 percent in the second quarter after growing 0.7 percent in the first. By contrast, the U.S. economy expanded 0.5 percent in the three months through June. The Federal Reserve this week left its key rate at 2 percent.
Still, inflation in the 15-nation euro region accelerated to 4.1 percent in July as oil prices soared to a record. The ECB aims to keep the rate just below 2 percent, something it has failed to do every year since 1999.
`Strong Concern'
“The information that has become available since our previous meeting has further underpinned our decision to increase rates in July,'' Trichet said. The ECB will “always do what is needed to deliver price stability.''
The bank raised its benchmark rate by a quarter point on July 3, citing its concern that a wage-price spiral may develop.
Negotiated wages in Germany, Europe's largest economy jumped 3.5 percent in the year through April, the biggest gain in 12 years. In Italy, wage inflation accelerated to 3.6 percent in June. Lufthansa, Europe's second-largest airline, last week agreed to a 5.1 percent raise for ground workers and some cabin crew.
Inflation risks “remain clearly on the upside and have increased over the past few months,'' Trichet said. “There is very strong concern that price and wage-setting behavior could add to inflationary pressure.''
ECB policy makers are “very worried about the risk of a wage-price spiral,'' said Martin van Vliet, an economist at ING Group in Amsterdam. “They've left the door open for a rate hike this year, but I think the chances of that have diminished to below 50 percent.''
Factory orders in the U.S. increased more than forecast in June, propelled by gains in petroleum and chemicals that reflected soaring prices.
The 1.7 percent gain in bookings, the biggest this year, followed a revised 0.9 percent increase in May that was larger than previously estimated, the Commerce Department said today in Washington.
The jump in raw-material costs is hurting profits, causing businesses to limit spending on new equipment. Demand from overseas is helping factories withstand the slowdowns in corporate and consumer spending, giving the economy a lift as the effects of the tax rebates wane.
“These numbers are somewhat inflated by prices, maybe even outside of petroleum,'' said David Sloan, senior economist at 4Cast Inc. in New York. “The underlying picture is fairly flat'' for manufacturing.
Economists forecast factory orders for June would rise 0.7 percent after a previously reported 0.6 percent gain for May, according to the median of 56 forecasts in a Bloomberg News survey. Estimates ranged from a 0.2 percent drop to an increase of 2 percent.
The biggest increase in prices in almost three years eroded consumers' buying power in June, diminishing the boost from the government's tax rebates, a separate report from Commerce also showed. Consumer inflation climbed 0.8 percent, the most since September 2005, the Commerce Department said today in Washington. Spending increased 0.6 percent after a 0.8 percent gain in May.
Ex-Transportation
Excluding demand for transportation equipment, which tends to be volatile, factory orders increased 2.3 percent, the most since April.
Bookings for all durable goods climbed 0.8 percent in June. This figure makes up just over half of the total factory orders. Non-durable goods orders, including those for food, petroleum and chemicals, jumped 2.5 percent after a 1.7 percent gain in May. Demand at petroleum refineries increased 5.6 percent and rose 11 percent at makers of agricultural chemicals such as pesticides and fertilizers.
Factory inventories increased 1 percent, also led by petroleum products, and manufacturers had enough goods on hand to last 1.22 months at the current sales pace, down from 1.23 months in May.
A report last week showed manufacturing stagnated in July. The Institute for Supply Management's factory index fell to 50 from 50.2 in June. Fifty is the dividing line between expansion and contraction. The group's factory orders index slumped to the lowest level in almost seven years and the prices paid measure remained near a 30-year high quick payday loans 24 hour payday advances.
`Significant Recession'
“Were it not for exports at this point, I think I would take the position that manufacturing overall would be in a significant recession,'' Norbert Ore, chairman of the ISM survey, said in a conference call. “But the export market has held up quite well for us.''
The trade deficit narrowed to a $395.2 billion annual pace in the second quarter, the smallest gap in seven years, the Commerce Department said on July 31. Without trade, the economy would have contracted at a 0.5 percent pace from April through June, instead of expanding at a 1.9 percent rate.
Bookings for capital goods excluding defense and aircraft, a proxy for future business investment, rose 1.2 percent in June, today's report showed. Shipments of such goods, which the government uses to calculate gross domestic product, increased 0.7 percent.
Slowing Sales
Akamai Technologies Inc., the largest supplier of software and services to speed up the delivery of Web pages, cut its profit forecast July 30 because of slowing sales. Chief Executive Officer Paul Sagan said the economy may be limiting clients' investments.
Private non-residential investment rose at a 2.3 percent annual rate in the second quarter, the slowest pace since the last three months of 2006, the government said last week. Spending on equipment and software fell at a 3.4 percent pace.
The Federal Reserve said on July 23 that “many'' of its 12 districts had declining manufacturing activity in June and July “although demand for exports remained generally high.'' The Fed also said the economy “slowed somewhat'' and that all of its bank districts reported “elevated or increasing'' price pressures.
The Fed is scheduled to next vote on the direction of its benchmark overnight lending rate between banks at the conclusion of its Federal Open Market Committee meeting Aug. 5. Traders are projecting the central bank will keep the rate at 2 percent.
Reports suggest automobile manufacturing will continue to suffer. U.S. auto sales fell to a seasonally adjusted 15-year low of 12.5 million at an annual rate in July, according to Bloomberg data.
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