Thursday, November 10, 2011

Price of Thanksgiving dinner up 13%, biggest jump in two decades

The price of a classic holiday meal for 10 people will hit $49.20, jumping from $43.47 in 2010
Diners might not be in a thankful mood as they sit down in a few days to a Thanksgiving dinner that cost 13% more than it did last year.

The price of a classic holiday meal for 10 people will hit $49.20, jumping from $43.47 in 2010, the American Farm Bureau Federation said Thursday. That's the highest increase since 1990, as the cost of sweet potatoes, rolls, stuffing and even whipped cream spiked this year.

Bad weather, rising commodity prices and other factors have caused a run-up in food and beverage prices over the last few months.

On Nov. 24, a 30-ounce can of pumpkin pie mix will cost 16% more than it did last year, the farm group said. A pound of frozen green peas will be 17% more expensive, while a the cost of a gallon of whole milk will jump 13%.

But the biggest increase will be the turkey -– a 16-pound bird is expected to run about $21.57, or 22% more than in 2010. Economists with the farm group pegged the leap to strong demand in the U.S. and abroad.

"Retailers are being more aggressive about passing on higher costs for shipping, processing and storing food to consumers," John Anderson, a senior economist with the group, said in a statement.

The report, which the federation says is "an informal gauge of price trends around the nation," is the its latest in a series that began in 1986. Back then, a Thanksgiving meal cost $28.74.

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-- Tiffany Hsu
Twitter.com/tiffhsulatimes

Photo credit Credit: Kirk McKoy / Los Angeles Times

Freddie Mac: 30-year mortgage rate back below 4%

Freddie sign - AP - Pablo Martinez Monsivais

The typical rate that lenders are offering on a standard 30-year mortgage is back below 4% for the second time this year, Freddie Mac says.

The rate fell from an even 4% in Freddie's survey last week to 3.99% in the survey released Thursday. The 3.94% recorded in the Oct. 6 report was the lowest in the 40 years that Freddie Mac has been asking lenders across the country about the rate they are offering on the 30-year loan.

The typical interest rate on the 15-year fixed home loan dropped from 3.31% to 3.30% in the latest survey. Borrowers would have paid less than 1% of the loan balance in fees to obtain the loans, Freddie Mac said.

Solid borrowers who shop around often find slightly better rates than those in the survey, and paying additional points upfront to lenders also can lower the rate.

The mortgage rates are a huge boon for home buyers and refinancers with solid credit and income, 20% down payments or 20% home equity -- the kind that would qualify for the loans of up to $417,000 that the survey focuses on.

But they are available at a cloudy time. Foreclosures are rising again, and the rates are scraping bottom mainly because investors are so spooked by the European debt crisis. That has increased demand for U.S. debt securities, still presumed to be a safe haven.

That demand has depressed the yield on Treasury securities, and mortgage rates tend to track Treasury yields. And there is too little in the recent mixed economic news to suggest that inflation could reassert itself in the United States, driving interest rates higher.

"The economy added 80,000 net jobs in October, below the market consensus forecast, but employment gains over the prior two months were revised up by 102,000 and the unemployment rate fell to 9.0 percent, the lowest in six months," Freddie Mac economist Frank Nothaft said. "Factory orders improved in September, yet the expansion in the service industry slowed in October."

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--E. Scott Reckard

Photo: Freddie Mac headquarters, McLean, Va. Credit: Pablo Martinez Monsivais / Associated Press

New unemployment claims fall again in positive sign for job growth

San Francisco job fair

The number of people who filed for unemployment benefits last week dropped again to 390,000, the lowest level since April, continuing a trend that bodes well for job growth.

The number of initial jobless claims was down 10,000 from the previous week's revised figure of 400,000, the Labor Department reported Thursday. The initial figure for two weeks ago was 397,000, but was revised upward.

Still, over the last month, the average weekly number of jobless claims is right at 400,000 -- a key figure that economists say indicates a decrease in the unemployment rate.

"The wheels of the economy are spinning fast enough to put Americans back to work," said Chris Rupkey, chief financial economist at the Bank of Tokyo-Mitsubishi in New York. "The unemployment rate could fall as much as one percentage point over the next year now if these claims data stick at this level."

The government data come after sluggish but steady job growth in October. The economy added 80,000 jobs and the unemployment rate dropped to 9% from 9.1% in September, the Bureau of Labor Statistics reported last week.

The weekly unemployment claims report helped give a bit of a boost to the stock market Thursday amid continued concerns about the European debt crisis. The Dow Jones industrial average was up about 40 points in early trading after Wednesday's big sell off.

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October retail sales rise modestly

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-- Jim Puzzanghera in Washington

Photo: People line up at a job fair in San Francisco on Wednesday. Credit: Getty Images

 

 

Pizza Hut to offer DirecTV at some of its restaurants

Pizza
Some Pizza Hut customers will soon be able to get dinner and TV shows all in the confines of the fast-food restaurant.

NPC International Inc., the world’s largest Pizza Hut franchisee, has started installing satellite TV in hundreds of its Pizza Hut locations across the nation. The Overland Park, Kan., company has partnered with Bulk TV & Internet, a supplier of DirecTV services, to offer diners television programming with their hand-tossed pizza.

Pizza Hut is the latest fast-food chain to offer television and cable service. Last month, McDonald’s announced it was launching the McDonald’s Channel, a digital network that will run local school sports, movie previews and human interest stories.  The venture, which has already rolled out in San Diego, Los Angeles and Las Vegas, will be set up in 800 McDonald’s restaurants in Southern and Central California in the next few months.

NPC International operates 1,152 Pizza Hut franchises 28 in states. The company expects the installations to be completed by the end of next year.

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-- Angel Jennings

Photo: Mario Liberati loads his plate with pizza at a Carson-area Pizza Hut restaurant. Credit: Michael Edwards / Los Angeles Times

Is Europe on the Verge of a Depression, or a Great Inflation?

Simon Johnson, the former chief economist at the International Monetary Fund, is the co-author of “13 Bankers.”

The news from Europe, particularly from within the euro zone, seems all bad.

Today’s Economist

Perspectives from expert contributors.

Interest rates on Italian government debt continue to rise. Attempts to put together a “rescue package” at the pan-European level repeatedly fall behind events. And the lack of leadership from Germany and France is palpable – where is the vision or the clarity of thought we would have had from Charles de Gaulle or Konrad Adenauer?

Perspectives from expert contributors.

In addition, the pessimists argue, because the troubled countries are locked into the euro, no good options are available. Gentle or even dramatic depreciation of the exchange rate for Greece or Portugal or Italy is not in the cards. As a result, it is hard to lower real wages so as to restore competitiveness and boost trade. This means that the debt burdens for these countries are likely to seem insurmountable for a long time. Hence default and global financial chaos seem likely.

According to the September 2011 edition of the Fiscal Monitor of the International Monetary Fund, 44.4 percent of Italian general government debt is held by nonresidents, i.e., presumably foreigners (see Statistical Table 9), on Page 72). The equivalent number for Greece is 57.4 percent, while for Portugal it is 60.5 percent.

And if you want to get really negative and think the problems could spread from Italy to France, keep in mind that 62.5 percent of French government debt is held by nonresidents. If Europe has a serious meltdown of sovereign debt values, there is no way that the problems will be confined just to that continent.

All of this is a serious possibility – and the lack of understanding at top European levels is deeply worrisome. No one has listened to the warnings of the last three years. Almost all the time since the collapse of Lehman Brothers has been wasted, in the sense that nothing was done to put government finances on a more sustainable footing.

But perhaps the pendulum of sentiment has swung too far, for one simple and perhaps not very comfortable reason.

There is no way to have just a little debt restructuring for Italy. If Italian debt involves serious credit risk – an end to the view that government debt has “no credit risk” and is a “risk-free asset,” with zero probability of default – then all sovereign debt in Europe will need to be repriced downward.

Will Germany will remain a safe haven? Even that is far from clear. According to the I.M.F., gross government debt in Germany will be 82.6 percent of gross domestic product at the end of this year (Statistical Table 7 of the Fiscal Monitor, on Page 70; the net government debt number for 2011, in Statistical Table 8, on Page 71,is 57.2 percent). Reports of German fiscal prudence have been greatly exaggerated.

German policy makers and the German public will not do well in the event of a major sovereign-credit disaster. Credit would tighten across the board. German exports would plummet. The famed German social safety net would come under great pressure.

There is an alternative to a decade of difficult austerity. The Germans could agree to allow the European Central Bank to provide “liquidity” support across the board to the troubled governments.

Many things are wrong with this policy – and it is exactly the kind of moral hazard-reinforcing measure that brought us to the current overindebted moment. None of us should be happy that Europe – and the world – has reached this point.

Among others, the bankers who bet big on moral hazard – i.e., massive government-backed bailouts – are about to win again. Perhaps the Europeans will be tougher on executives, boards and shareholders than the Obama administration was in early 2009, but most likely all the truly rich and powerful will do very well.

But if the German choice is global calamity or, effectively, the printing of money, which will they choose?

The European Central Bank has established a great deal of credibility with regard to keeping inflation at or close to 2 percent. It could probably offer a great deal of additional support – through creating money – without immediately causing inflation. And if the bank is providing a complete backstop to Italian government debt, the panic phase would be over.

None of this is a lasting solution, of course. Europe needs a proper fiscal center – much as the United States needed in 1787 and got under Alexander Hamilton’s policies from 1789. When he became Treasury secretary, the United States was in default and the credit system was almost completely broken. Some centralized tax revenue and control over fiscal deficits are needed.

Silvio Berlusconi stood in the way of all this. Other European leaders would not trust him to tighten Italian fiscal policy. But if he is really gone from power – and we should believe that only when we see it – there is now time and space for Italy to stabilize and, with the right help, find its way back to growth.

Of course, if the European Central Bank provides unconditional financial support to Italian, or other, politicians who refuse to bring their deficits under control, we are heading for another Great Inflation.

Sorry, there is no euro break-up plan – yet


Reports of plans for a breakup of the euro are premature

Reports of plans for a break-up of the euro are premature


Very quickly, I have grave reservations about the Reuters story claiming that top German and French officials have had "intense consultations" on plans to reshape or "prune" the currency bloc, reducing it to a manageable core.


The Brussels press corps do not believe it. Nobody seems to know which German official is briefing behind the scenes that "you’ll still call it the euro, but there will be fewer countries."


The claims do not remotely reflect the stated position of Chancellor Merkel and President Nicolas Sarkozy. Merkozy might like to see Greece tossed to the wolves. That is a different matter.


There is a drive for a core Europe or "Avant-Garde" that pushes ahead with closer union, but that is mostly directed against the UK and other members of the awkward squad. Reuters seem to have conflated two separate issues.


The reality is that EU leaders are still unwilling to contemplate an orderly break-up of monetary union, or to deploy the system’s dwindling reserve of credibility to prepare for this traumatic moment.


To the extent that the Reuters story catches one vein of thought in EU capitals, it is about forcing weak states to leave EMU. This is the worst possible outcome. It can only set off a chain reaction, ultimately engulfing France. At that point the whole eurozone would spiral into a catastrophic depression – if it is not already. Germany itself would be ruined.


My own proposal – like that of Hans-Olaf Henkel, the former head of Germany’s BDI industry confederation – has long been for a radically different kind of break-up. Germany and its satellites should leave, bequeathing the euro, the ECB and other EMU institutions to a Latin union led by France. The euro debt contracts of the south would remain intact. (It is crucial that France stays in the southern bloc, otherwise the instant devaluation of the south would be too great, and France’s banks would blow up on Italian debt)


If conducted skilfully, the revalued Teutonic Thaler could be held by exchange and capital controls at a 30pc premium for long enough to stabilise the two systems. Ultimately each side would get what it wants: Germany could enjoy the stronger currency it needs; the south would restore labour competitiveness without having to go through a decade of grinding deflationary slump. This itself would reduce the risk of defaults. I suspect that within five years, the Latin half would prove to be the more dynamic bloc.


Obviously Germany, Holland etc would have to recapitalise banks to absorb the shock of 30pc FX losses on their Club Med bonds. The banking system might have to be nationalised. So what? This would be much cheaper than the trillions now needed to prop up EMU’s rotten edifice. It addresses the core problem of north-south currency misalignment within EMU that lies behind the whole crisis. Unfortunately, neither Berlin nor Paris seem ready to think along these lines. It would require a complete purge of the political elites in both countries.


Given this strategic fact – and given the risk that Europe will take us all hurtling into disaster – the authorities must instead step up to the plate and deploy the ECB as a lender of last resort to halt the debt spiral. (Yes, the ECB may be incapable of playing this role, since it has no sovereign indemnity. That is a risk. All possible outcomes are by now fraught with danger.)


This must be backed by a broader switch away from 1930s Laval-Bruning liquidationist and contraction policies. There is no justification for allowing real M1 deposits to contract across most of the eurozone – and to plunge in the south – as has occurred over recent months. For a monetarist central bank, the ECB is remarkably insouciant about money.


The EU must slow the pace of fiscal contraction and launch a monetary blitz to lift the south out of chronic depression. A 5pc nominal GDP growth target for euroland for as long as it takes would do the trick. I believe central banks have the capability to deliver such result.


Let me be clear, this is not my preference. It would better for greater Germany to leave EMU. But given the evidence so far that Germania has no intention of taking such a course, it must instead drop its opposition to the sort of radical reflation stimulus so obviously needed to save monetary union and avoid a savage slump.


What Germany cannot continue to do is to refuse to leave EMU, and refuse to reflate. This is not a policy. The rest of the world is entirely entitled to make its irritation known.



Wednesday, November 9, 2011

For Black Friday, Wal-Mart to open at 10 p.m. on Thanksgiving night

Wal-MartWal-Mart Stores Inc. is planning to get a jump on competitors on Black Friday by opening for the first time ever at 10 p.m. on Thanksgiving night.

The world's biggest retailer revealed its Black Friday plans more than two weeks before the actual day, giving shoppers plenty of time to mull over lists. The shopping kickoff will begin with deals on toys, home and apparel items at 10 p.m. on Thanksgiving day, followed by electronics specials at midnight. Additional deals would be available throughout the weekend.

The discount chain follows other retailers in pushing the opening time earlier on Black Friday, the traditional kickoff to the crucial holiday season. But many others, including Target Corp., Macy's Inc. and Kohl's, have chosen to open at midnight.

“Our customers told us they would rather stay up late to shop than get up early, so we’re going to hold special events on Thanksgiving and Black Friday,” said Duncan MacNaughton, chief merchandising officer of Wal-Mart U.S.

The company has already held on Saturday a sale with items at prices traditionally found on Black Friday.

Among the Black Friday specials announced were men's Wrangler jeans for $9.97 a pair, Bratz and Barbie dolls for $5 each and an Xbox360 with Kinect gaming console for $199.99 (plus a $50 Wal-Mart gift card).

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--Shan Li

Photo: A shopper outside a Wal-Mart store in Rosemead. Credit: Don Bartletti / Los Angeles Times

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