CNN Financial News Producer
The Fed today is widely expected to lower its key shot-term interest rate by a half point to 0.5%, the lowest level on record. It would be the 10th rate cut since Sept. 2007 as the central bank continues the most sweeping effort to stabilize the economy in its history. The decision is expected around 2:15 p.m.
Consumer prices plunged in November by the largest amount on record as energy costs posted nearly double the decline of the previous month. The Consumer Price Index - a key reading of inflation - fell 1.7% last month, surpassing the previous record decline of 1% set in October. Both drops were the largest one-month declines on record dating to February 1947, reflecting the effects of the recession gripping the country.
Construction of new homes plummeted in November by the largest amount in nearly a quarter-century, as builders slashed production in the face of an economy in recession. Housing starts fell nearly 19% last month, the steepest drop since March 1984.
Former Wall Street powerhouse Goldman Sachs posted its first loss as a publicly traded company, serving as yet another reminder that no corner of Wall Street has escaped the ongoing financial crisis. The investment bank said it lost $2.1 billion during the fourth quarter - its first loss since it went public in 1999. Rival Morgan Stanley reports earnings on Wednesday.
Stocks on Wall Street opened higher, even after the government reported huge declines in consumer inflation and new home construction and Goldman Sachs posted its massive loss.
Best Buy says the worsening sales environment could force it to lay off employees and significantly slow down new store openings in the US. The nation’s No. 1 consumer electronics chain informed “nearly all” of its 4,000 corporate employees on Monday that they are eligible for a voluntary separation package in order to reduce expenses. Rival Circuit City filed for bankruptcy back in November.
Crude Oil is up about $1 to around $46 a barrel. Prices have been bouncing ahead of the OPEC meeting on Wednesday, when a large production cut is expected. Crude closed down nearly $2 Monday at $44.51/barrel.
Gas prices rose 0.1 cent overnight to $1.661 a gallon. The current national average is now $2.453 below or 59.6 percent off the record high price of $4.114 that AAA reported on July 17, 2008. 2 states have regular unleaded gas prices of $2 and higher. 48 states and the District of Columbia have regular unleaded gas prices below $2.
Change is coming to the Energy Department. President-elect Barack Obama has named Steven Chu, a Nobel-prize winning physicist, to head the agency. The pick suggests we’ll see an Energy Secretary who focuses more on energy than on nuclear weapons, currently the department’s primary responsibility. Chu has called for more research into alternative energy sources and aggressive steps to combat climate change. He’ll be a key player in helping Obama push ahead new energy policies, even as the weak economy threatens such plans.
Bankruptcy filings rose 30% during the government's 2008 fiscal year. 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. But as bad as the numbers are, they’re still better than the 1.12 million filings the government fielded two years ago. Filings surged back in 2006 as businesses and individuals raced to get their paperwork in before the implementation of new, tougher bankruptcy laws.
Cash-strapped consumers may get welcome news Thursday when federal regulators vote to rein in controversial credit card practices. The proposed rules, which have received overwhelming consumer support, prohibit banks from practices like raising the interest rates on pre-existing credit card balances unless a payment is over 30 days late, and applying payments in a way that maximizes interest penalties.
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