Tag Archives: U.S. Economy

U.S. plans billions in Afghan funding until 2020

Graffiti is seen on a wall of the Darul Aman palace in Kabul, Afghanistan, June 5, 2016.

By Josh Smith

KABUL (Reuters) – The United States is asking its allies helping with security in Afghanistan to maintain funding for Afghan forces at a cost of nearly $5 billion a year until at least 2020, a top U.S. military commander said on Monday.

The plan extends the international financial commitment for the foreseeable future at a time when Western leaders have been hoping to reduce Afghanistan’s reliance on foreign military aid.

Military commanders are making the pitch for continued funding ahead of a NATO summit in Warsaw in early July, where the alliance’s leaders will discuss support for the Afghan government, which is struggling to contain a resurgent Taliban insurgency.

“There is strong agreement, certainly from the chiefs of defense, that the support for Afghanistan … needs to continue,” Major General Skip Davis told reporters in Kabul.

“I think there is much more consensus on the fact that stemming extremism here, in the region, is a direct contribution to security in the homeland. There’s a willingness to do what it takes.”

Efforts by Western nations to extract themselves from the war in Afghanistan have been frustrated by high levels of violence.

When they gathered at a similar summit in 2012, NATO members and other nations had planned on slowly reducing financial support for Afghanistan as international troops withdrew.

“Obviously, conditions have changed since decisions were made back in 2012 and 2014,” Davis said.

Under the current funding structure, the United States provides a little more than $3.5 billion a year.

Other countries contribute another $900 million to $1 billion, while the Afghan government pays more than $400 million, a share Davis said was expected to grow.

Commanders say that general level of funding is expected to continue for at least four years.

The funding is based on maintaining a goal of 352,000 Afghan soldiers and police. The official roster currently includes about 320,000 members of the security forces, Davis said.

Among the factors that coalition commanders are considering as they recommend funding and troop levels are the high rates of Afghan casualties, their struggles in training new troops and replacing damaged equipment, and the continuing “fragility” of the national government, Davis said.

“Last year was a big signal that the Afghan army and police need some more time,” he said.

“They are resilient, they fought well and they took on leadership, but at the same time, they had some significant challenges and the Taliban proved much more resilient than we expected and less likely to come to the table for reconciliation.”

(Reporting by Josh Smith; Editing by Robert Birsel)

Wall Street falls with oil, worries about global economy

NYSE workers

By Caroline Valetkevitch

(Reuters) – U.S. stocks extended losses into a second day on Friday following another drop in oil prices and rising worries about the global economy ahead of Britain’s referendum on whether to stay in the European Union.

Ahead of Britain’s referendum on June 23, a poll showed those in favor of Britain exiting the EU, or “Brexit,” were well ahead of those who favor remaining. The British pound fell against the dollar.

“The inability of the S&P to even hold key resistance tells you the market is not ready to break out to new record highs,” said Adam Sarhan, chief executive of Sarhan Capital in New York.

“The global economy is weak and it can’t handle any major shocks. If Brexit occurs, that’s a major shock.”

The S&P energy index <.SPNY> was down 2.2 percent, leading sector losses.

At 3:14 p.m., the Dow Jones industrial average <.DJI> was down 165.18 points, or 0.92 percent, to 17,820.01, the S&P 500 <.SPX> lost 25.36 points, or 1.2 percent, to 2,090.12 and the Nasdaq Composite <.IXIC> dropped 77.64 points, or 1.57 percent, to 4,880.98.

Investors around the world swapped equities for less risky assets such as U.S. Treasury bonds and the Japanese yen. Yields on government bonds fell globally, to record lows in some cases, while the S&P financial index <.SPSY> was down 1.5 percent.

Jeffrey Gundlach, chief executive of DoubleLine Capital, said Friday investors are dropping risky assets because of falling global GDP expectations, fueled by China’s slowing growth and the intensifying U.S. presidential race.

Some stock investors are betting on a return of the volatility that marked the first two months of the year. The bounce-back in commodity prices that fueled much of the 13.3-percent rally in the Standard & Poor’s 500 index since its February lows is leveling off.

The CME Volatility index <.VIX>, Wall Street’s fear gauge, jumped 17.6 percent.

Among Wall Street’s few bright spots on Friday was Intel <INTC.O>, up 0.4 percent. Bloomberg reported the chipmaker would replace Qualcomm as an Apple <AAPL.O> supplier for some iPhones. Qualcomm <QCOM.O> was down 2.4 percent.

(Additional reporting by Yashaswini Swamynathan in Bengaluru; Editing by Savio D’Souza and Nick Zieminski)

U.S. posts $53 billion budget deficit in May

WASHINGTON (Reuters) – The U.S. government posted a $53 billion budget deficit in May, a 38 percent drop from the same month last year, the Treasury Department said on Friday.

The government had a deficit of $84 billion in May of 2015, according to the Treasury’s monthly budget statement.

Analysts polled by Reuters had expected a $60 billion deficit for last month.

However, when accounting for calendar adjustments, May would have shown a $102 billion deficit compared with an adjusted $84 billion deficit a year prior.

The current fiscal year-to-date deficit was $407 billion, up 11 percent from a $367 billion deficit at this time last year.

On an adjusted basis, the fiscal year-to-date gap was $413 billion compared with $367 billion at this time last year.

Receipts last month totaled $225 billion, a 6 percent increase from May 2015, while outlays stood at $277 billion, a 7 percent decline from the same month a year ago.

(Reporting by Lindsay Dunsmuir; Editing by Paul Simao)

U.S. jobless claims rise to more than one-year high

Job Seekers at Colorado Hospital Job Fair

WASHINGTON (Reuters) – The number of Americans filing for unemployment benefits unexpectedly rose last week, touching the highest level in more than a year, which could raise concerns about labor market health in the wake of the slowdown in job gains in April.

Initial claims for state unemployment benefits increased 20,000 to a seasonally adjusted 294,000 for the week ended May 7, the highest level since late February 2015, the Labor Department said on Thursday.

Claims for the prior week were unrevised. Economists polled by Reuters had forecast initial claims slipping to 270,000 in the latest week.

Despite last week’s jump, claims remained below 300,000, a threshold associated with healthy job market conditions, for 62 consecutive weeks, the longest stretch since 1973.

A Labor Department analyst said there were no special factors influencing last week’s claims data and no states had been estimated. There was a surge in claims in New York and Michigan in the latest week.

The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, increased 10,250 to 268,250 last week, the highest level in almost three months.

The claims report came on the heels of data last week showing nonfarm payrolls increased only 160,000 in April, the smallest gain in seven months, after advancing by 208,000 in March.

The labor market has been fairly robust despite a sharp slowdown in economic growth in the first quarter. The spike in jobless claims and moderation in employment gains likely do not suggest a deterioration given difficulties adjusting the data for seasonal fluctuations.

A report on Tuesday showed job openings hit an eight-month high in March, with the rate re-testing its post-recession high.

Thursday’s claims report showed the number of people still receiving benefits after an initial week of aid rose 37,000 to 2.16 million in the week ended April 30.

The four-week average of the so-called continuing claims fell 3,750 to 2.14 million, the lowest reading since November 2000.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

Fiat Chrysler Laying Off 1,300 Workers

A new Fiat Chrysler Automobiles sign is pictured after being unveiled at Chrysler Group World

By Bernie Woodall

DETROIT (Reuters) – Fiat Chrysler Automobiles said on Wednesday it is laying off about 1,300 workers indefinitely and ending one of the two shifts at its Sterling Heights, Michigan plant that makes the slow-selling midsize Chrysler 200 sedan.

U.S. sales of the Chrysler 200 were down 63 percent in the first three months of this year from a year earlier, as FCA has de-emphasized sales of the model which had been often sold to rental agencies.

The lay offs will be effective July 5.

The company did not say how long it would continue to make the Chrysler 200. In January, Fiat Chrysler Automobiles (FCA) Chief Executive Sergio Marchionne said the company would cease making the midsize sedan as well as the compact Dodge Dart, unless a partner could be found to keep the production going.

United Auto Workers Vice President Norwood Jewell said in a statement that the move was not unexpected, and expressed optimism that FCA will find jobs for the workers by making more trucks and SUVs.

“FCA is not the only company experiencing a slow market for small cars,” Jewell said. “On a bright note, there is a strong demand for larger-sized vehicles. The company has been planning to increase its capacity to build more trucks and SUVs. I believe that in the long term this move will be a positive one for our members and the company.”

It is one of the largest layoffs at a U.S. auto plant since the 2008-2009 recession, and there is widespread speculation that it will not be the end of production changes among U.S. automakers trying to adjust to consumer tastes that continue to shift from cars such as sedans and hatchbacks to SUVs and pickup trucks.

Workers at the Sterling Heights plant in suburban Detroit will return to work this coming Monday after a 10-week shutdown called to match consumer demand with production, the company said.

In 2015, passenger cars accounted for 44 percent of sales in the U.S. automotive market, down from 48 percent in 2014. The last year cars outsold SUVs and trucks in the U.S. market was 2012, when 51 percent of new vehicles sold were cars, according to industry consultant Autodata Corp.

General Motors Co and Ford Motor Co  in the past year have adjusted to the shift in the U.S. auto market, cutting jobs and production for some models while adding to those of others.

(Reporting by Bernie Woodall; Editing by Phil Berlowitz and Alistair Bell)

Rising U.S. layoffs point to ebbing labor market momentum

WASHINGTON (Reuters) – The number of Americans filing for unemployment benefits rose more than expected last week, suggesting some loss of momentum in the labor market amid a sharp economic slowdown and stock market selloff.

Signs of creeping employment weakness were also flagged by another report on Thursday showing a 218 percent jump in announced job cuts by U.S.-based employers in January. The planned layoffs were concentrated in the energy and retail sectors.

“The future is somewhat darker … the labor market may be past its peak for this cycle. It looks like the labor market has scaled back its rapid advance last month,” said Chris Rupkey, chief economist at MUFG Union Bank in New York.

Initial claims for state unemployment benefits increased 8,000 to a seasonally adjusted 285,000 for the week ended Jan. 30, the Labor Department said.

Still, claims remained below 300,000, a level associated with strong labor market conditions, for the 48th straight week. That is the longest run since the early 1970s.

The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, rose 2,000 to 284,750 last week. Economists had forecast claims rising to 280,000 in the latest week.

The rise in layoffs came amid a slowdown in economic growth. The economy grew at only a 0.7 percent annual pace in the fourth quarter, held back by the headwinds of a strong dollar and faltering global demand.

A downturn in capital spending by energy companies, reeling from a collapse in oil prices, and inventory destocking by businesses are also constraining growth. At the same time, a stock market rout sparked by fears of a global economic slump has caused financial market conditions to tighten.

In a separate report, global outplacement consultancy Challenger, Gray & Christmas said employers reported 75,114 planned job cuts last month, up from December’s 15-year low of 23,622. Last month’s planned layoffs were the largest since July.

Retailers announced plans to eliminate 22,246 jobs from their payrolls, the most since January 2009. The retail cuts were dominated by Walmart <WMT.N>, which announced plans to close 269 stores worldwide. The downtrodden energy sector announced plans to reduce its headcount by 20,246, up from 1,682 in December.

“It remains unclear how much of the deterioration in the data is related to an unfavorable shift in the weather and an increase in layoffs of temporary workers following the holiday season,” said Daniel Silver, an economist at JPMorgan in New York.

In a third report, the Commerce Department reported that new orders for manufactured goods fell 2.9 percent in December, the largest drop in a year, after falling 0.7 percent in November.

The reports came on the heels of weak data on export growth and consumer spending that suggest the Federal Reserve will probably not raise interest rates in March. The U.S. central bank raised its short-term interest rate in December for the first time in nearly a decade.

U.S. stock indexes rose, while prices for Treasuries were mixed. The dollar fell against a basket of currencies, touching a 15-week low against the euro and a two-week low against the yen.

PRODUCTIVITY WEAK

While the claims data has no bearing on January’s employment report, which is scheduled to be released on Friday, as it falls outside the survey period, it fits in with perceptions of a deceleration in the pace of job growth.

According to a Reuters survey of economists, nonfarm payrolls are expected to have increased 190,000 last month after surging by 292,000 in December. The unemployment rate is forecast holding steady at a 7-1/2-year low of 5 percent.

In another report on Thursday, the Labor Department said nonfarm productivity, which measures hourly output per worker, declined at a 3.0 percent rate, the biggest drop since the first quarter of 2014, after rising at a 2.1 percent rate in the third quarter.

The weak productivity data reflected the sharp slowdown in GDP growth during the quarter and an acceleration in the pace of hiring. Nonfarm payrolls rose by an average 284,000 jobs per month.

Productivity grew 0.6 percent in 2015, the smallest increase since 2013, and has increased at an annual rate of less than 1.0 percent in each of the last five years. Economists blame softer productivity on a lack of investment, which they say has led to an unprecedented decline in capital intensity.

In the fourth quarter, unit labor costs, the price of labor per single unit of output, advanced at a 4.5 percent pace, the fastest rate in a year. They rose 2.4 percent in 2015, the largest gain since 2007.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

House of Representatives Rejects Emergency Funding Bills

The House of Representatives rejected three emergency funding bills Tuesday that would have re-opened several federal agencies closed because of the budget impasse.

The bills would have opened national parks and monuments, funded veteran’s benefits and allowed D.C.’s municipal government to continue operating.

Senate Democrats and President Obama both said they would not support the bills had the House passed them.

“The president and the Senate have been clear that they won’t accept this kind of game-playing, and if these bills were to come to the president’s desk he would veto them,” said White House spokeswoman Amy Brundage. “These piecemeal efforts are not serious and they are no way to run a government.”

The House appointed conferees that would participate in a conference committee to craft a bill that would pass both the House and Senate. However, no Democrats have been willing to meet with the Republicans in a conference.