Mixed economic data
The US Commerce Department said consumer spending rose 0.6 percent in January, better than the 0.4 percent gain that economists had expected. However, the increase is expected to be fleeting given all the problems facing the economy.
Personal incomes rose 0.4 percent in January, partly reflecting the cost-of-living adjustments provided to millions of Social Security recipients. The personal savings rate surged to 5 percent, the highest level since 1995 as consumers continued to sock away more of their incomes amid the deepening recession.
The Commerce Department reported that overall construction spending dropped 3.3 percent in January, the fourth straight monthly decline.
"January construction spending dropped more than twice the consensus. December and November spendings were revised down hugely, by a total of 3.3 percent, so the net numbers were much worse than expected," said Ian Shepherdson, Chief US Economist at High Frequency Economics, an economic research group.
"The scope for further declines is huge, given the boom of recent years, and we expect nonresident construction to fall 40 percent from peak to trough," he added.
The US factory sector weakened in February but the pace of decline eased, a survey by the Institute of Supply Management (ISM) showed.
The ISM said its manufacturing index edged up to 35.8 percent from 35.6 percent in January. It was the 13th month of decline and still far below the 50-percent level that separates expansion and contraction.
Merrill Lynch cut its 2009 global GDP growth forecast again on Monday in its latest research report.
"We have reviewed our forecast for global real GDP growth in light of the available data and revisited the case for a (shallow) economic recovery later this year and in 2010. The outcome is a further decline in the forecast from 0.1 percent to -0.4 percent in 2009 and from 3.4 percent to 3.1 percent in 2010," the report said.
Global sell-off
Stocks plummeted around the world on Monday after billionaire investor Warren Buffett expressed his concern over economy.
In a letter to shareholders, Buffett said that he's certain the US economy "will be in shambles throughout 2009" and "that conclusion does not tell us whether the stock market will rise or fall."
In Asia, Tokyo's Nikkei 225 stock average dropped 3.8 percent to 7,280.15, while Hong Kong's Hang Seng lost 3.9 percent. In Europe, stocks in Britain, France and Germany lost more than 3 percent respectively.
Crude prices plunged on Monday as investors lost confidence in the deteriorating global economy. Light, sweet crude for April delivery fell US$4.61, or 10 percent, to settle at US$40.15 a barrel on the New York Mercantile Exchange. In London, Brent crude fell US$4.14, or about 9 percent, to US$42.21 on the ICE Futures exchange.
The dollar rose against a basket of major currencies, with the US Dollar Index up 0.79 percent at 88.861.
(Xinhua News Agency March 2, 2009)
