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July 1st, 2009
02:25 PM ET

Financial Dispatch: Jobs & housing remain in focus

[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2009/US/06/14/money.gas.prices/art.gas.pump.cnn.jpg caption="Gas prices decline for 10th straight day"]

Andrew Torgan
CNN Financial News Producer

Reports out this morning show that the job market is deteriorating at a slower pace, but unemployment is expected to remain high for some time.

Payroll-processing firm ADP says private-sector employers cut 473,000 jobs in June, a 2.5% improvement from the revised 485,000 drop in May. That’s more than expected, but the May tally was revised lower.

While the economy has shown some signs of stabilization, unemployment is likely to remain high "for at least several more months," according to ADP. However, the firm said that the pace of the decline in the job market has slowed.

Looking ahead, ADP expects additional job losses of between 800,000 and 1 million by the end of the year.

Separately, outplacement firm Challenger, Gray & Christmas says the number of job cuts announced in June fell for the fifth straight month, after reaching a 7-year high in January.

Challenger said job cut announcements by U.S. employers totaled 74,393 in June, a 33% decline from May. That’s the lowest total since March 2008 and 9% lower than the number of job cuts announced in the same month a year ago.

Housing rebound continues

Home sales continued their modest upward swing in May, according to a closely-watched industry report that rose for the fourth-straight month for the first time in nearly 5 years.

The National Association of Realtors’ Pending Home Sales Index rose 0.1% during the month, and was up 6.7% compared with May 2008. That’s was the first four-month run up in the pending sales measure since October 2004.

But the rise in sales contracts may not yield a like increase in completed sales, according to the NAR’s chief economist, because some contracts are delayed or falling through due to the application of new appraisal rules for many transactions.

Many industry insiders have complained that home appraisals are being too often based on values of foreclosed properties, which sell for significantly less than the homes of ordinary sellers.

Citigroup raises credit card rates

Citigroup has sharply increased interest rates on 13 million to 15 million credit cards it offers through co-branding relationships with retailers like Sears.

The move comes only a few months before new government rules are set to kick in that will make it more difficult for card issuers to raise interest rates and tack on more fees for borrowers.

And Citigroup, which will soon be 34% owned by American taxpayers as part of its latest government rescue, is not alone.

Other big banks, including Bank of America and JPMorgan Chase, have been boosting rates on cardholders ahead of the looming crackdown. Most banks have argued that the higher rates are justified because the only way they can continue to offer credit to consumers is if they are able to make a profit from doing so.

Gas prices decline for 10th straight day

Gas prices dropped 3-tenths of a cent overnight to $2.63. That’s the 10th straight day of declines.

In the last ten days the average price has decreased 6.3 cents, or 2.3 percent. The average price of a gallon of gas is also down $1.484, or 36 percent, from the record high price of $4.114 that AAA reported on July 17, 2008.

The highest gas prices are in Hawaii ($3.135). The cheapest are in Missouri ($2.420).

New Orleans: The fastest-growing city in the U.S.

“The Big Easy” is making a big comeback. New Orleans has steadily won back some of the population it lost in the wake of Hurricane Katrina in 2005, according to a government report released this morning.

New Orleans lost more than half its residents during the deluge. Few large U.S. cities have ever had to cope with a disaster on that scale. Since then, it has been one of the country's fastest growing cities.

Freddie Mac gets another $6.1 billion

Finally, battered mortgage giant Freddie Mac has received $6.1 billion in new funding from the Treasury Department to help offset its mounting liabilities, according to a regulatory filing.

The Federal Housing Finance Agency, which has been operating Freddie Mac since last fall, requested the funds for Freddie Mac after the firm's liabilities exceeded its assets by more than $6 billion, according to the filing with the Securities and Exchange Commission.

Including the new $6.1 billion, Freddie Mac has now received $51.7 billion from the Treasury and has access to an additional $150 billion to help it stay in business.


Filed under: 360° Radar
soundoff (5 Responses)
  1. Annie Kate

    Jobs are really a source of concern; one feels like there is no end in sight to the joblessness. Once you are out of unemployment and you can't find any type of a job, including flipping Burgers, what do you do?

    I'm glad NOLA is growing again but it would have been nice if the NOLA government along with LA state government and perhaps even the federal gov't had met and decided where people could rebuild and where they could not and bought out the areas people couldn't return to.

    The marshlands need to build back up in the coastal regions to help brake storm surges and since the Mississippi doesn't cover enough sediment in the water to do this like it used to (dams along Mississippi get the sediment before it can get to NOLA) the scientists say that blowing a levee in Terbonne or Saint Bernard would help make marshland redevelopment possible. You can't do it though if people are living there and if it doesn't happen hurricanes like Katrina will wipe them out again and again. Since this planning didn't happen, residents are going to get flooded again – all it will take is time and the right storm. Its too bad they can't do it right this time to prevent damage from another storm and more deaths.

    July 1, 2009 at 9:26 pm |
  2. Lisa in CA

    What did anyone think the credit card companies would do knowing that in just a few months regulations would be put in place. OF COURSE they're going to get as much now as they can. Nice to know those lobbyists are going to be reined in ... maybe ... someday ... in a land far far away.

    And those home sales - great, until the next wave of foreclosures for those laid off, still unemployed, loans flip, etc.

    July 1, 2009 at 6:00 pm |
  3. Chris

    Sure theirs nat as many layoffs right now, summer is the most busy time of year. Wait till the seasonal jobs are lost later this fall, the numbers should be dismal.
    With the forclosure moratoriums lifted, please allow 6 full months for eviction and reo listing for "real market" termination. Nevermind the banks mark to ficticous "model". May explain why citi-group is raising rates (read assets) to cover coming losses.
    And while were throwing ever devalued money away lets rebuild that place that will be soon wiped out by another hurricane, just because. Maybe we can slip freddy mac a cool 6bil and no-one will notice.

    July 1, 2009 at 5:34 pm |
  4. Tim Gibson

    So now it is wait and watch to see if the levies hold with the only way out of town is if the government buys you out because of the toxic sink hole know as the most toxic city in the US.

    July 1, 2009 at 5:09 pm |