Inheritance of Economic Troubles for Obama

Just after elections Down Jones had two biggest day decline of almost 10 percent on worries about economy which seems to spread to almost every sector.

The Down Jones took away 440 points today bringing its two day decline to 900 as retailers reported weak sales in October as it the weakest decline in 39 years.

Weak sales will continue during holidays as stock market is tumbling, layoffs are on the horizon and consumers are starting to feel the pinch and need to save money.

Wal-Mart Stores Inc. reported that they will cut prices on laptops to toys and start their black Friday sales sooner which will last over next seven weeks. J.C.Penney Co. is also offering extended hours and markdowns of up to 60 percent this weekend.

The drop in sales last month shows that everyone is saving money and spending only on necessities. Weak sale outlook shows that retailers will report gloomy outlook again in the next quarter. Analysts expect no recovery until at least the second half of 2009.

Retail industry which is expected to post its sixth consecutive quarter of profit declines when it reports third-quarter results this month. Holiday shoppers will be careful in spending money this season and even with savings offered by many retailers analysts suggest consumers still will be looking at their wallets and spending only as necessary.

Luxury stores were hit hard as shoppers cut back on designer clothing. Nordstrom posted a 15.7 percent drop, Saks Inc., which operates Saks Fifth Avenue, recorded a 16.6 percent drop. American Eagle Outfitters Inc. announced a 12 percent drop and Abercrombie & Fitch Co. suffered a 20 percent drop.

To more fuel economic problems the number of out-of-work Americans drawing unemployment benefits has surged to a 25-year high. The Labor Department reported Thursday that the number of people continuing to draw unemployment benefits jumped by 122,000 to 3.84 million in late October.

Democrats pushing to include an extension of unemployment benefits in a new stimulus package, which could be taken up this month. Benefits last 26 weeks. Congress approved a special 13-week extension of benefits in June, and the department said about 773,000 people claimed benefits through that program for the week ending Oct. 18.

With economy moving down the scale employers are preparing for the worst by slashing jobs. Government is expected to report additional 200,000 job loss when t releases the October employment report on Friday. The unemployment rate -- now at 6.1 percent -- is expected to climb to 6.3 percent in October.

Auto industry leaders of General Motors, Ford, Chrysler and the president of the United Auto Workers union asked for billions of dollars more in financial aid. Auto sales had declined to its lowest in 17 years and with new $25 billion that automakers want can help them to make payments to health care trust funds that were created as part of labor deal in 2007.

President-elect Obama expressed support for an additional $25 billion in loans on the condition that the money would go toward helping the industry build fuel efficient cars.

US President-elect Barack Obama and Vice President-elect Joe Biden will hold a news conference at 2:30 EST on Friday to address economic problems. Obama, who will inherit the worst financial crisis since the Great Depression, faces pressure to announce his picks for key economic jobs, including Treasury secretary.

Whoever will take the next Treasury job will guide the $700 billion bailout package.

With economic problems many analysts predict that economy will not improve until the end of 2009. Bad news are expected on Friday, when the October employment report is expected to show at least 200,000 jobs were lost last month.

Any negative report coming to Wall Street will turn markets down. Wall Street needs to see some positive reports and it may take some time until bailouts will take affect, but until than new president elect will have his hands full.

Article Source: http://www.ezx-articles.com

Susan Duey represents RateTake Mortgage Loan marketplace. RateTake matches consumers with multiple lenders offering low mortgage rate quotes. RateTake also operates #1 Debt Relief resource center.

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