September 15th, 2009
12:35 PM ET

Financial Dispatch: Clunkers Retail Boost

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Gene Bloch
Managing Editor
CNN New York

We kick off this morning with one of those “green shoots” in the economy: better than expected retail sales; they surged 2.7 percent in August, as the Cash for Clunkers program provided a lift to auto sales. But even without auto sales and auto parts in the mix, retail sales rose a respectable 1.1 percent.

On the less positive side, wholesale inflation as measured by the Producer Price Index surged 1.7 percent last month. Most of that increase however was due to a surge in energy prices. If you strip out food & energy costs, the PPI’s “core rate” edged up just 0.2 percent.

President Obama is talking about the economy today as he addresses GM workers at a GM plant in Ohio; he then travels to Pittsburgh to address an AFL-CIO convention, before making his way to a fundraiser for Sen. Arlen Specter in Philly. Fed Chief Ben Bernanke today is out talking economy as well, going farther than before in saying the recession is “very likely over.” Of course, we know that only the National Bureau of Economic Research can conclude when recessions begin and end. And it doesn’t happen until after the fact.

How effective have the federal government’s efforts been to help consumers? In June, the President called for the creation of a new consumer protection agency to regulate mortgages, credit cards, and other financial products. But not much has happened since then— why not?

And what about the Administration’s efforts to help troubled borrowers stay in their homes? The Treasury Department says only 12 percent of eligible borrowers have had their loans modified under the President’s foreclosure prevention plan, which began in April. Why aren’t loan servicers moving faster? Alison Kosik takes a look in today’s Breakdown.

Is there a trade war shaping up with China? The Obama Administration is increasing tariffs on Chinese-made tires, which could put pressure on U.S. manufacturers overseas and cash-strapped consumers at home. China is calling for talks with the World Trade Organisation over the issue.

We continue our coverage marking the one-year anniversary of the financial crisis (note: Lehman filed for bankruptcy protection one year ago TODAY), and American Morning’s Carol Costello has a terrific interview with a former Lehman VP, Lawrence McDonald. He recently wrote a book about his experience titled "A Colossal Failure of Common Sense, The Inside Story of the Collapse of Lehman Brothers". McDonald sums it up in one phrase: "24,992 people striving hard, making money, and about eight guys losing it." McDonald talks about the corporate culture, how the firm's leaders ignored all the warnings and why he believes Lehman Brothers could have avoided bankruptcy.

And CNNMoney’s Poppy Harlow will interview Warren Buffett today on the recovery, what could go wrong, and what steps need to be taken to prevent a repeat of the calamity. The interview will take place this afternoon at the Fortune’s Most Powerful Women Summit in Aviara, CA. Poppy is there covering it. She’s available live after 230p.

And gas prices are down for a fourth straight day. AAA reports the average price of a gallon of regular unleaded is at $2.563 ($2.56 for grfx), down nine-tenths of a cent from the previous price.

On CNNMoney Today:


Ranking the rescues: Banks, autos, jobs. The collapse of Lehman led to a deeper recession and a litany of government programs to try and end the pain. We rate just how bold and effective the plans have been so far.

Judge rejects Merrill bonus settlement. Bank of America and the SEC are told that a proposed $33 million penalty over Merrill Lynch bonuses is 'neither fair, nor reasonable, nor adequate.'

Ex-Bear Stearns chief sees silver lining in Lehman collapse. Alan Schwartz said the firm's failure spurred policymakers around the world to finally cooperate.


Rx for money woes: Doctors quit medicine. Some physicians, fed up with the costs of their practice, are ready to hang up their stethoscopes and shift careers.

HSAs remain rare, but small businesses have been among their biggest adopters. Advocates are waiting to see if they'll survive the health care reform battle.

Filed under: auto bailout • Economy • Finance • Wall St.
soundoff (3 Responses)
  1. Annie Kate

    I haven't noticed much change at all; people still fretting about their incomes and jobs; jobs scarce but candidates abundant; big business still seems like the only ones helped by all this bailout that the average citizen gets to pay for. If the failure of Lehman Brothers is what caused the bubble to burst financially and it was just 8 people who lost their common sense and drove the business to the brink and beyond, then I hope those 8 realize just how much misery they have visited on their country and its citizens.

    September 15, 2009 at 8:27 pm |
  2. earle,florida

    I have a hard time believing that energy cost could increase the PPI by (1.7 total – 0.2 core =1.5 & 1.5 – 0.4 food=1.1 sub-total) 1.1%,period! Oil has maintained it's trading range of $65-$75 for a year now,so what gives. Finally,....I'd be remiss not to mention Bernanke's revelation that the recession is over today,just a week after his 4 yr. renomination as Fed Chair, how quaint they all are in Washington,...? PS. Who cares what China does regarding Tarrifs,and the WTO! Our trade imbalance is still at approx. 4 to1! Please note,...every country in the world wants to export themselves out of the recession at America's expense.

    September 15, 2009 at 1:59 pm |
  3. Amazing

    No kidding – you give people tax payer provided money to buy a car and you seem surprised that car sales are up!!! Now maybe Obama should give tax payer money for people to buy houses........do you think home sales would surge?

    September 15, 2009 at 12:49 pm |