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Productivity in the US non-farm-business sector grew at an annual rate of 9.5% in Q-3 Y 2009, the biggest quarterly gain in six years, the US Labor Department reported Thursday. The Q-3 reading for productivity, the amount of output per hour of work, was also better than the 6.4% gain that economists had estimated. Employers’ unit labor costs, or costs of wages and benefits for each unit of output, plunged at an annual rate of 5.2%. The US economy rose at a pace of 3.5% in Q-3 after four consecutive quarters of contraction, a strong signal that the worst recession since the Great Depression is over. Productivity is considered the Key ingredient needed for rising living standards because it allows companies to pay their workers more without having to raise the price of their products, which fuels inflation. Read more

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US new home sales dropped in September as the government’s tax credit for 1st time home buyers is about to expire, according to official data released on Wednesday. The Commerce Department said sales decreased 3.6% to a seasonally adjusted annual rate of 402,000 from the downwardly revised 417,000 in August, and slumped 7.8% from a year ago. The September data were much lower than most economists’ forecast of 440,000 units. It was also the 1st decline since March. The median sales price in September was down 9.1% to US$204,800 from US$225,200 in Y 2008. Analysts said the housing market remained fragile, with the country’s unemployment rate staying high and consumers reluctant to spend. With the US$8,000 tax credit program for 1st time home buyers set to expire on Nov. 30, home builders and economists are worried that house selling will plunge after the deadline, further hurting the fragile real-estate market. The US Congress is considering extending the tax credit through March 2010 and gradually phasing it out over the rest of next year. It is widely expected that the tax credit will be extended by the Congress.

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The US economy now appears to have grown at its strongest rate in 2 years during Q-3, rebounding from a steep downturn that began in December 2007, according to survey of top economists released Saturday. Private economists polled October 5-6 for the Blue Chip Economic Indicators October survey said gross domestic product grew at an annualized rate of 3.2% in the Q, up 0.2 percentage point from what they estimated a month earlier. GDP shrank in Q-2 at a 0.7% annual rate. Q-3 growth was fired by a rebound in personal consumption expenditures, the first increase in residential investment since the final quarter of 2005, and a reduced rate of business inventory reduction, the survey said. Read more

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Consumer credit in the USA fell by a 5.8% annual rate in August to US$2.46T, the Federal Reserve reported Wednesday. The US$12B dollar decrease, much worse than the US$7.5B decline that economists forecast, followed a record cut of US$19B in July, or a 9.1% annualized drop. For August, consumer credit in revolving loans, a category that includes primarily credit card debt, plunged by 9.9% at an annual rate. Demand for revolving credit used to finance cars, vacations, education and other things, meanwhile, was down 1.6%. The strength in consumer borrowing will continue to be weak as job layoffs are rising, according to economists. The Labor Department reported last week that the unemployment rate rose to 9.8 percent in September, the highest in 26 years. Many economists believe the rate might hit double digit next year.

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In China the Government owns the Banks; the bankers do not own the Government. China’s stimulus plan is working better than in the US and the UK because the government is using the banks for public ends, rather than allowing the banks to use the government for private ends. In the USA, the banks are the most powerful lobby on Capitol Hill; they own the Government.

The USA is spending trillions of greenbacks to bail out its banking system, leaving its economy to languish, as China, now called a “miracle economy,” decoupled from the rest of the world, is maintaining a phenomenal 8% annual growth rate. That, by the way, is being questioned by lots of Pols, commentators, economists and other talking heads, as they ask how that growth is possible, when other countries relying heavily on exports have suffered major downturns and remain in the doldrums. Read more

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Gold futures on the COMEX Division of the New York Mercantile Exchange closed higher on Wednesday as crude oil jumped sharply upon unexpectedly plunging oil inventory. Silver finished lower, but platinum rose. Gold price for December delivery climbed US$5.60, or 0.6%, to finish at US$944.80 oz. The Energy Information Association reported on Wednesday that US Crude Oil in storage for the week ended Aug. 14 fell by 8.4M bbls. This is much lower than economists’ expectations of a 1.3M bbl increase. Sparked by the tightened oil stockpile, benchmark Crude Oil for September delivery soared US$2.47, or 3.6%, to US$71.66 bbl by the end of Gold floor trading time. Worries on inflation helped the yellow metal metal regain strength and close the session higher. In the currency markets, the Dollar index, a gauge measuring the greenback’s value against six major currencies, stood at 78.438, down from the intra-day high of 79.225 in the morning session. A weaker US$ is considered to boost Gold’s demand as the dollar-denominated yellow metal becomes cheaper. December silver finished at US$13.909 oz, down 8.6 pennies. October Platinum rose US$9.30 to US$1,241.40 oz.

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