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Consumer Credit Falls to Record Low in March; GM Burns Through $10.2 Billion in First Quarter; Commercial Mortgage Delinquencies Soar to 11-Year High; Retailers Report Better-Than-Expected Sales in April; FBI Will Add More Agents for White-Collar Crime; Boeing Loses Dream Deal
Consumer credit in the United States fell by a record $11.1 billion in March after the jobless rate reached its highest level in a quarter century and banks made it harder to get loans in an effort to firm up their balance sheets. Consumer credit fell by $2.55 trillion, almost three times more than forecast and the most since records began in 1943, according to a Federal Reserve report released yesterday (Thursday) in Washington. “When you have record job losses, you have to expect record declines in spending and economic activity in general,” Richard Yamarone, chief economist at Argus Research Corp. in New York told Bloomberg.
General Motors Corp. (NYSE: GM) said it burned through $10.2 billion in the first quarter as it tapped into federal bailout funds to survive a sharp decline in global sales that overwhelmed its cost-cutting efforts. Revenue dropped by almost half to $22.4 billion as the company cut production by about 900,000 vehicles and worked to run down costly inventories in the United States and Europe. Chief Financial Officer Ray Young said there was evidence consumers were scared away from GM cars and trucks because of concern the automaker was headed for bankruptcy, Reuters reported.
Delinquencies on commercial mortgages in the U.S. jumped to the highest levels in over 11 years in April as scarce credit made it difficult for landlords to refinance loans, Bloomberg reported, citing a report from property research firm Trepp LLC. About 2.45% of loans are now 30 days or more behind in payments, more than five times the year-ago number said the report. “It’s about as bad as it’s ever been,” said Thomas Fink, a Trepp senior vice president. “I don’t think we’re done yet. Where it’s going to top out, I don’t know, but we’re not done.”
Nearly two-thirds of U.S. retailers posted better- than-expected monthly sales results for a second straight month in April, giving fresh evidence that consumer spending is warming up. Most retailers reported April sales at stores open at least a year that topped Wall Street estimates and a handful said their first-quarter results, which start landing next week, will be better than expected. "Overall, you are seeing some signs of a return to discretionary purchases throughout different areas of retail," Barclays Capital PLC (NYSE: BCS) analyst Robert Drbul told Reuters.
The U.S. Justice Department's proposed budget calls for adding more FBI agents to investigate mortgage fraud and white-collar crime, Attorney General Eric Holder said on Thursday. In prepared testimony to a Senate appropriations subcommittee, Holder said the proposed $26.7 billion budget includes a 3.8% increase from the previous year for combating financial fraud for fiscal 2010, Reuters reported. Increased funding would be used for "additional federal prosecutors, civil litigators and bankruptcy attorneys to protect investors, the market, the federal government's investment of resources in the financial crisis and the American public," he said.
Boeing Co. (NYSE: BA) lost a deal for 25 of its 787 Dreamliners, the biggest order cancellation yet for the plane, meaning the giant jetmaker now has lost one more contract this year than it has won. The scrapped deal, valued at about $4.44 billion, takes Boeing’s cancellations in the first four months to 59, versus 58 purchases, according to data published today on the Chicago-based company’s Web site, Bloomberg reported. Airbus SAS (NYSE: SPR) said earlier it has 11 net orders after signing 30 agreements and losing 19. The 787 remains Boeing’s best-selling new plane ever, with 861 contracts remaining. The jet, built mostly of composites, has suffered four delays because of defects, parts shortages and redesigns and is due to fly by the end of next month before entering service in the first quarter of 2010.