The U.S. unemployment rate rose to a 25-year high of 8.1 percent in February as employers, buckling under the strain of a severe recession, axed 651,000 jobs, government data showed on Friday. Adding to the gloom, a combined 161,000 more jobs were lost in January and December than previously believed, the U.S. Labor Department said in its monthly nonfarm payrolls report. Since the recession started in December 2007, the economy has shed 4.4 million jobs, with more than half of that number lost in the last four months alone. A total of 12.5 million people were unemployed in February, the Labor Department said.
Consumer borrowing rose unexpectedly in January after three months of declines, but the small increase did not shake economists’ views that borrowing will remain weak this year as mass layoffs persist amid the recession. The Federal Reserve said Friday that borrowing increased at an annual rate of $1.76 billion in the first month of the year. Economists expected borrowing to decline at a rate of $5 billion. The small gain came mainly from the category that includes credit cards, which rose at a 1.2 percent rate in January after dropping 9.5 percent in December. The category that covers auto loans rose 0.6 percent after a smaller 0.1 percent rise in December. The increases were attributed to the stronger performance of retail sales which posted a 1 percent rise in January, the best showing in 14 months. While that increase was unexpected, analysts noted that it was still modest and followed a six-month decline. Consumer spending accounts for about 70 percent of U.S. economic activity, and borrowing fell at an annual rate of $7.48 billion in December after a $9.13 billion drop in November. The December figure was slightly larger than previously reported while the November number was smaller.
Gold prices plowed higher Friday amid a gloomy jobs report and ongoing uncertainty about the future of the financial system. Energy and agriculture futures also enjoyed moderate gains. Investors looked to the precious metal as a safe bet once again as selling continued on Wall Street for much of the day. Gold is often used as a safe-haven investment in times of economic turmoil. (GLD)
Commerce, Ga.-based Freedom Bank of Georgia was closed by regulators Friday, marking the 17th bank failure of the year, the Federal Deposit Insurance Corporation said in a statement. Lavonia-based Northeast Georgia Bank has assumed all of the failed bank’s deposits, the FDIC said. As of March 4, Freedom Bank of Georgia had roughly $173 million in assets and $161 million in deposits. The FDIC estimated the cost of Freedom Bank’s failure to its deposit insurance fund will be $36.2 million.
General Motors Corp. shares fell to their lowest point in more than 75 years Friday, as investors fretted that the ailing automaker may be forced to file for bankruptcy protection despite government help. GM shares hit a low of $1.27 in late morning trading before rebounding to close down 41 cent, or 22 percent, at $1.45. GM said in a statement Friday that it has not changed its intention to avoid a bankruptcy filing, and that an out-of-court restructuring remains its best option to survive the worst auto sales climate in 27 years. (GM)
Following the lead of other major banks, Wells Fargo & Co. said Friday it will slash its dividend by 85 percent to shore up its capital base. The bank, which is still digesting the acquisition of Wachovia Corp., said cutting its quarterly payout from 34 cents a share to 5 cents would result in $5 billion in annual savings. Wells Fargo also disclosed improved mortgage lending figures for the first two months of the year and said it hoped to pay back $25 billion in government rescue funds as soon as possible. It also said it has identified ways to save an additional $2 billion a year. (WFC)
Shares of Apple fell about 4 percent Friday after an analyst said sales of Mac computers and the iPhone were coming in below expectations. (AAPL)
Whole Foods Market Inc. will sell 13 stores to resolve the Federal Trade Commission’s challenge of its $565 million purchase of Wild Oats Markets, the company said Friday. Whole Foods is putting 12 Wild Oats stores and one Whole Foods store up for sale in Arizona, Colorado, Connecticut, Missouri, New Mexico, Nevada, Oregon and Utah. (WFMI)