Bush signs bill aimed at boosting economy

NEW YORK - President Bush on Wednesday signed the $170 billion economic stimulus package passed by Congress last week.

Bush, saying that Americans are "concerned about our economic future," said he believes the stimulus package will provide a "booster shot" for the economy.

The government hopes the measure, which will send most Americans tax rebate checks by May, will either prevent a recession or make one relatively brief.

The package also includes tax breaks for equipment purchases by businesses, as well as payments to disabled veterans and some senior citizens. The bipartisan measure moved through Congress at relative break-neck speed, going from initial discussions to enactment in less than four weeks.

The package will pay most individual taxpayers $600 and $1,200 for married taxpayers filing joint returns as long as they are below income caps of $75,000 for individuals and $150,000 for couples. There is also a $300 per child tax credit.

Spending on plastic cards slows

Latest figures from APACS, the UK payments association, show that spending on plastic (credit/debit cards) over the Christmas period reached £32.2 billion, with £5.4 billion spent online. Up 4% on the 2006 figures, the figure marks the slowest year on year increase over the same period for credit and debit card spending for 4 years.

The increase was due to the rise in spending on debit cards, which grew by 6.8% to £20.9 billion, although this was less than half of the increase between 2005 and 2006 (15.3%).

Credit card spending at Christmas fell for the second year running - £11.3 billion in December 2007 compared to £11.4 billion for the same period in 2006. There was a decrease of 2.8% in the volume of credit card transactions, down from 197 million transactions for December 2006 to 192 million transactions in 2007.

Overall spending on plastic cards accounted for 64% of total retail sales. There were 690 million plastic card transactions in December 2007, only 3.2% more than during December 2006. This equated to 263 transactions per second throughout the month, compared with 250 in December 2006.

Sandra Quinn, of APACS, says that despite talk of a slowdown once again we spent record amounts last Christmas. However, the increase on 2006 spending was just 4%, which compares to increases of just under 9% over the last couple of years. Worth pointing out too is that credit card spending fell for the second year in a row.

"This trend highlights what we have been seeing over the past few years with people increasingly opting to use their debit card rather than credit card; reflecting that people are thinking more carefully about whether they can afford to borrow," says Quinn.

Bank of England Reduces Bank Rate by 0.25 Percentage Points to 5.25%

The Bank of England’s Monetary Policy Committee today voted to reduce the official Bank Rate paid on commercial bank reserves by 0.25% points to 5.25%.

The prospects for output growth abroad have deteriorated and the disruption to global financial markets has continued. In the United Kingdom, credit conditions for households and businesses are tightening. Consumer spending growth appears to have eased. Although the substantial fall in the sterling exchange rate is likely to promote re-balancing of total demand, output growth has moderated to around its historical average rate and business surveys suggest that further slowing is in prospect. These developments pose downside risks to the outlook for inflation.

CPI inflation, at 2.1% in December, was close to the 2% target, but higher energy and food prices are expected to raise inflation, possibly quite sharply, in the coming months. And the lower level of sterling will boost import costs. The impact on inflation should begin to fade later in the year, but measures of inflation expectations are currently elevated. These developments pose upside risks to the outlook for inflation further ahead.

Given this outlook for inflation, some slowing of demand growth, by reducing the pressure on capacity, is likely to be necessary to return inflation to target in the medium term. The Committee needs to balance the risk that a sharp slowing in activity pulls inflation below the target in the medium term against the risk that elevated inflation expectations keep inflation above target.

Against that background, the Committee judged that a reduction in Bank Rate of 0.25 percentage points to 5.25% was necessary to meet the 2% target for CPI inflation in the medium term.

Bank of England cuts key interest rate

LONDON - The Bank of England cut interest rates by a quarter of a percentage point to 5.25% on Thursday, its second cut in three months as it attempts to shore up confidence in Britain's slowing economy.

The trim had been widely anticipated by analysts who had expected the central bank's monetary policy committee to set aside conflicting concerns about accelerating inflation

Bank of America barely stays profitable

NEW YORK - Bank of America, stung by a $5.3 billion mortgage-related writedown, reported a steep drop in quarterly results Tuesday that fell short of expectations.

The Charlotte, N.C.-based company said its net income plunged 95 percent to $268 million, or 5 cents a share, from $5.26 billion, or $1.16 a share, a year earlier.

Revenue fell 31 percent to $12.67 billion from $18.48 billion in the 2006 period.

The results, which included the company's purchase of LaSalle Bank, were much worse than analysts had anticipated. The company was expected to report a profit of 18 cents a share on revenue of $13.24 billion.

JPMorgan: Profit decline, $1.3B writedown

NEW YORK - JPMorgan Chase & Co., the second bank this week to post dismal results, reported a decline in quarterly earnings Wednesday after suffering a $1.3 billion subprime-related hit.

The company said net income fell 34 % to $3 billion, or 86 cents a share, during the fourth quarter. The company earned $4.5 billion, or $1.09 a share, in the same period last year.

JPMorgan Chase was expected to earn 93 cents a share for the quarter ended in December, according to analysts surveyed by earnings tracker Thomson Financial.

Revenue rose 7 percent to $17.4 billion from $16.2 billion in the year-earlier period, beating estimates of $17.05 billion.

The company also reported a $1.3 billion writedown in the company's investment banking arm, due to the decline in value of its subprime holdings, which include complex instruments known as collateralized debt obligations.

Chairman and Chief Executive Jamie Dimon said this segment of the business, which saw its profits plunge 88 percent in the quarter to $124 million from $1.01 billion a year ago, faces continuing uncertainty.

JPMorgan has weathered tightening credit conditions better than rivals Merrill Lynch (MER, Fortune 500) and Citigroup (C, Fortune 500), which posted a record $9.8 billion fourth-quarter loss Tuesday and took a giant $18.1 billion write-down.

Last quarter, JPMorgan reported a rise in profit, beating Wall Street estimates, even as its investment banking business was hurt by turmoil in the global credit markets.

Wells Fargo's earnings dip 38%

SAN FRANCISCO - Wells Fargo Inc., one of the nation's largest banks, said Wednesday that fourth-quarter earnings fell 38 %, hurt by a charge to cover fallout from the subprime loan crisis.

Net income fell to $1.36 billion, or 41 cents per share, in the October-December period from $2.18 billion, or 64 cents, a year ago. The latest quarter included $1.4 billion in losses on home equity loans in the fourth quarter, as borrowers in California and the Midwest struggle to make mortgage payments as many rates reset higher.

The charge was previously announced and is less than many of the bank's peers, at which similar writedowns are expected to total more than $65 billion in the quarter, as the subprime lending debacle guts balance sheets.

The company's non-performing loans rose to 0.7 % of total assets, an increase of 35 percent from last year.