MORE BAD US JOB NUMBERS EXPECTED TODAY AS ECONOMIC STIMULUS PACKAGE STALLS IN SENATE - More than 500,000 people are losing their jobs every month in the US. That is impetus enough for US President Barack Obama's $900 billion economic stimulus package. The key points of the package include tax cuts worth almost $240 billion, $72 billion in welfare benefits and well over $500 billion in job creation investments. The package is stalled in the US Senate as of last night, but there are hopes it may be passed today.
Peter Morici, a Professor of Economics at the University of Maryland, says the minority in the Senate can chose to hold up the passage of the bill - if it wants to - if it has at least 40 votes. The Republicans in the Senate want the bill to have more tax cuts and less spending on 'liberal social programmes' like extending welfare benefits, more medicare spending and insurance for part-time workers. Mr Morici predicts that today's US unemployment figures will see another 500,000 job losses in the month of January, on top of similar numbers in November and December. He says the country is losing jobs at a pace not seen since the Great Depression of the 1930s.
The Professor explains that it may take some time to see the immediate benefits of the stimulus plan. 'It takes time to spend money, even in the US,' he states. However, he adds that tax rebates will be made relatively quickly, which should make it into people's pockets by the second or third quarter. He predicts the economy will see some tangible benefits in the fourth quarter of the year. He explains that tax rebates don't have the same grip that actual government spending has, and that money won't be seen in the economy until next year.
Professor Morici says he does not expect to see the US economy - or the world economy - firing on all cylinders for some time to come. He says the stimulus packages being introduced by governments all over the world will give the country's economy temporary lifts, but then they will drift back again. Unless two or three big problems - the trade imbalance between China and some other Asian exporters with the rest of the world, the broken banks and coming up with alternatives to petrol cars so we are not all importing so much oil from the Middle East - the world economy will not return to full health.
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MORNING BRIEFS - In a trading statement, property company Blackrock International says its net assets per share are expected to amount to slightly more than 25 cent a share by the end of December. It said this was a very disappointing outcome, which represents a decline of about 36% over the year.
*** A brainstorming session on how to survive and even prosper during the recession gets underway at Dublin Castle this morning involving representatives of the different business interests working out of the Irish Financial Services Centre. The get-together is being facilitated by the Department of the Taoiseach and will explore options for insurance, asset management, banking and other financial services located in Dublin.
*** There is much attention today on whether and what shape the Government's €8 billion euro recapitalisation of Bank of Ireland and AIB Group will look like. Yesterday, Minister for Finance Brian Lenihan told the Dail to expect a decision in a matter of days rather than weeks.
*** Aer Lingus says its total passenger numbers decreased by 6.4% in January 2009 compared to January 2008. 64.6% of seats were filled on short haul flights, down 1.5 points on January 2008. However, the long haul load factor was 63.8%, up 2.4 points versus January 2008
**** British Airways today reported a net loss of £127m sterling in the first nine months of its 2008-2009 financial year.
*** On the currency markets, the euro is worth $1.2707 US cents and 86.9 pence sterling.
