June 24th, 2009
03:25 PM ET

Financial Dispatch: Fed sees signs of hope

[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2008/US/12/22/bailout.accountability/art.citi.gi.jpg caption="Bailed out financial giant Citigroup plans to raise the base salaries of its employees."]
Andrew Torgan
CNN Financial News Producer

The Federal Reserve this afternoon held its key interest rate steady at near zero, and said in a statement that although the economy remains weak, there are signs of a recovery.

Policymakers said that the pace of the nation's economic decline is slowing and that household spending is showing signs of stabilizing.

The central bank also said conditions in financial markets have generally improved in recent months, and that while businesses continue to cut back staff and spending, their inventories are coming into line with demand.

Durable goods orders rise

Orders to factories for big-ticket manufactured goods rose sharply for a second straight month in May, and a key indicator of business investment surged by the largest amount in nearly five years.

The Commerce Department said this morning that durable goods orders rose 1.8% last month, far better than the 0.6 percent decline that economists expected.

Orders for non-defense capital goods, a key proxy for business investment plans, jumped nearly 4.8%, the biggest increase since September 2004.

New homes sales dip

Sales of newly constructed homes fell unexpectedly in May and were down almost a third from last-year's levels.

New home sales ticked down 0.6% last month to a seasonally-adjusted annual rate of 342,000, the Commerce Department reported this morning.

Analysts expected the rate of new home sales to rise to 360,000. And from the same month one year ago, sales were down 32.8%.

Citigroup raising salaries

Bailed out financial giant Citigroup says it’s going to raise the base salaries of its employees, although it is not planning to increase their total compensation.

"Retaining and attracting the best talent is very important to the success of Citi and all its stakeholders," Citigroup said in a statement.

The company insisted that total compensation, however, will remain constant - indicating that year-end bonuses and other special payments will be cut when pay is raised.

Gas prices dropping

Gas prices decreased by 7-tenths of a cent overnight to $2.68. That’s the third straight day of declines.

The average price of a gallon of gas is down $1.438 or 34.9% from the record high price of $4.114 that AAA reported on July 17, 2008.

The highest gas prices are in Hawaii ($3.081) and California ($3.022). The cheapest gas prices are in Missouri ($2.487).

Holiday travel dropping

Travel in the U.S. over the Fourth of July holiday weekend will drop 1.9% this year compared to 2008, a casualty of higher fuel prices and economic worries, AAA projected today.

Approximately 37.1 million Americans will travel 50 miles or more away from home during the long weekend, typically the busiest time for auto travel in the U.S., down from 37.8 million last year.

Filed under: 360° Radar • Economy • Finance • Gas Prices
soundoff (9 Responses)
  1. Annie Kate

    I hope this isn't another recession that the recovery is one without any job creation....those type of recoveries don't last long. To me our economy will have recovered when everyone that has lost their job finds a comparable one at a comparable salary – I don't think this will happen soon either. I just am afraid that some of the stats on the economy will enable economists to say we are out of the recession and people will quite paying attention to it and will leave way too many people unemployed. For the unemployed the recession isn't over until they are working again.

    June 24, 2009 at 10:32 pm |
  2. Bruce

    I think we will be back on track when the average two parent household can survive on one income and one parent be available full time for their children. As for single parent households, they should receive enough support to enable the same one full time parent concept. Our children have been left to raise themselves long enough. It's their future and we should do whatever it takes to give them the best possible chance to succeed. Material possessions mean nothing if our children have to pay for them. Support each other and we will overcome these hard times. But, once you recover don't forget about those that have yet to overcome the hard times.

    June 24, 2009 at 7:38 pm |
  3. Sabrina in Las Vegas

    God willing, minimum wage should be what it takes to support oneself with one Fulltime job!

    The level of self sustanance should be fulfilled by working fulltime at minimum wage...not remaining below the poverty line!

    June 24, 2009 at 6:13 pm |
  4. Chandran

    We had the burst of the dot bubble, then we had the burst of the real estate bubble, then the financial market chaos. I guess the health insurance industry would be the next one, unless some body who can see its instability from outside can help the decision makers. If the health industry does not apply critical theory to themselves and stabilize themselves, they would be killing the "goose that laid the golden eggs."

    June 24, 2009 at 4:30 pm |
  5. elisa b

    i at 31 was not aware that the federal reserve have very little if any thing to do with the ferdal govt!! its a bunch of bankers making billions on our misery!!!!!

    June 24, 2009 at 3:58 pm |
  6. SLM

    Actions speak louder than words. If the economy were truly recovering the feds would have raised interest rates. This nearly zero percent for this long is a real bad idea. Watch out, inflation is on it's way!

    June 24, 2009 at 3:50 pm |
  7. earle,florida

    Durable Goods #'s up the 2nd month in a row is fantasic news of a (keep your fingers crossed) recovery. One more month of increases,surely tells of the tide turning. Just think? President Obama's been in office 5+months,and look at the positive changes. Go President Obama!

    June 24, 2009 at 3:49 pm |
  8. JC- Los Angeles

    I have tears of laughter streaming down my face and I have just fallen off my chair from belly laughing after hearing that the "Fed sees signs of hope."

    June 24, 2009 at 3:44 pm |
  9. Farhat Buchh

    I would bring your attention to the brutal rape and murder of 2 women in Kashmir. This is only one instance of a suppression that has been going on for the past 20 years by an army that has been given absolute powers.

    Why aren't human right voilations in Kashmir given the same coverage as in other parts of the world?

    Why can't the US President comment on such voilations with the same moral indignation he is showing now over events in Iran?

    June 24, 2009 at 3:37 pm |