Economy

Fed Officials Saw `Substantial' Risk to Economy Last Month as Rate Slashed Federal Reserve policy makers saw “substantial” risks to the slumping economy last month as they cut the benchmark interest rate to a record low and pledged to expand emergency loans if necessary.

Service Industries in U.S. Shrank Less Than Economists Forecast Last Month The U.S. economy ended the year in a steep decline, with factory orders, home sales and service industries all contracting further, reports showed today.

U.S. Factory Orders Fall Twice as Much as Forecast as Companies Cut Costs Orders placed with U.S. factories in November fell twice as much as forecast, signaling businesses are cutting back on investments as the recession deepens.

Pending Home Resales in U.S. Decline 4%, Worse Than Economists' Forecasts Fewer Americans signed contracts to buy previously owned homes in November as credit markets seized up and a deteriorating labor market signaled the housing slump will extend into a fourth year.

European Inflation Slows, Increasing Scope for ECB to Lower Interest Rates Europe’s inflation rate fell to the lowest in more than two years in December as oil prices plunged and consumer spending slumped, increasing the scope for the European Central Bank to reduce borrowing costs further.

Fed Aims to Narrow Spread Between Consumer, Corporate Rates and Treasuries Federal Reserve officials are focused on driving down the spreads between U.S. Treasury yields and consumer and corporate loans, after cutting the main interest rate to almost zero failed to revive lending.

U.K. House Prices Fall Most Since at Least 1991, Consumer Optimism Drops U.K. house prices had the biggest drop since at least 1991 last year and consumer confidence slumped as banks rationed credit and homebuyers shunned the property market, Nationwide Building Society said.

Constancio Says ECB Prepared to Prevent Inflation Staying `Well Below' 2% European Central Bank council member Vitor Constancio said the ECB is prepared to reduce borrowing costs further to prevent inflation slowing “significantly” below its 2 percent ceiling.

Foreclosure Sales Tripled in First 10 Months of 2008 as Banks Dumped Homes Foreclosure sales in the 25 largest U.S. metropolitan areas almost tripled in the first 10 months of last year as rising unemployment and falling home values made it tougher for homeowners to sell or refinance their mortgages.

Bank of Portugal Predicts Economy Will Shrink 0.8% in 2009 as Exports Fall Portugal’s economy will contract this year for the first time since 2003 as its main export markets weaken and Portuguese consumers rein in their spending.

U.S. Dec. Service Industries Contracted for Third Month: Table of the Day Following is a summary of U.S. non- manufacturing conditions from the Institute for Supply Management.

Fed Watch

Fed Officials Saw `Substantial' Risk to Economy Last Month as Rate Slashed Federal Reserve policy makers saw “substantial” risks to the slumping economy last month as they cut the benchmark interest rate to a record low and pledged to expand emergency loans if necessary.

Fed Aims to Narrow Spread Between Consumer, Corporate Rates and Treasuries Federal Reserve officials are focused on driving down the spreads between U.S. Treasury yields and consumer and corporate loans, after cutting the main interest rate to almost zero failed to revive lending.

Fed Officials Endorse `Big Stimulus' to Pull U.S. Economy Out of Recession Federal Reserve officials, after taking the historic step of cutting the benchmark interest rate to as low as zero, are calling for greater government spending to help revive the U.S. economy.

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