The cost of living in the U.S. was little changed in November as gasoline prices dropped and food expenses cooled, supporting the Federal Reserve’s view that inflation will remain in check.
The stable reading for the consumer-price index followed a 0.1 percent decline in October, a report from the Labor Department showed today in Washington. So-called core prices that exclude food and energy rose 0.2 percent, more than forecast, reflecting higher medical care and clothing costs.
Companies like Target Corp. and J.C. Penney Co. are stepping up promotions during the holiday season to lure customers facing 8.6 percent unemployment and stagnant wages, signaling any price increases will be limited. More stable inflation gives Fed policy makers leeway to take additional steps to boost growth should the world’s largest economy falter.
“Retailers will be inclined to do more discounting,” said Jacob Oubina, a senior U.S. economist at RBC Capital Markets LLC in New York, who projected prices would be unchanged. “Inflation will crest around here. This will give the Fed more comfort in terms of implementing further monetary policy.”
Stocks rose on optimism the European Union will meet a Dec. 19 deadline for funding a crisis-fighting package. The Standard & Poor’s 500 Index climbed 1 percent to 1,228.25 at 10:05 a.m. in New York.
Euro-Area Exports
Euro-area exports fell 1.9 percent in October, led by declines in Germany and Spain, data today showed, as the region’s economy slid toward a recession. European car sales fell in November by the most in five months, the Brussels-based European Automobile Manufacturers Association said. Ireland’s economy shrank 1.9 percent in the third quarter, the most in more than two years, according to separate figures.
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Bank Failures Cost U.S. $88 Billion
Using a secret enforcement tool, federal regulators in 2005 tried to limit the growth of Vineyard Bank, which was making commercial real estate loans in Southern California at almost double the rate of its peers.
The limit was a secret even to new regulators who took over the bank’s supervision in 2006 and never found out about it, according to a report prepared by the U.S. Treasury Department’s Office of Inspector General in July 2010. Vineyard, based in Corona, California, kept growing.
Its loans eventually soured and it failed in 2009, costing the fund that insures customers’ deposits an estimated $470 million. More than 400 such failures since 2007 have cost the fund, which is fed by banks and backstopped by taxpayers, an estimated $88 billion. That volume shows the need for more transparency in bank regulation, which is largely conducted in the dark, said Paul Atkins, a former Republican commissioner at the Securities and Exchange Commission.
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Monti’s Cuts Win Support in Confidence Vote
Italian Prime Minister Mario Monti won broad support for 30 billion-euro ($39 billion) emergency budget cuts in a confidence vote that will speed passage of his plan to spur growth and reduce Europe’s second-biggest debt.
The Chamber of Deputies voted 495 to 88 in favor of the government, with both former Prime Minister Silvio Berlusconi’s People of Liberty Party and the Democratic Party backing Monti. The premier will address the lower house at 7 p.m. in Rome before another vote on the plan, which will then pass to the Senate for final approval on Dec. 23.
“The margin he’s got today reminds people that he has a strong mandate for the changes that the bond market wants to see and that the rest of Europe is demanding,” said Peter Chatwell, a fixed-income strategist at Credit Agricole SA (ACA) in London.
Monti has said the measures, which include an overhaul of the pension system, the reinstatement of a levy on primary residences and proposals to boost growth and fight tax evasion, will help protect Italy from the debt crisis and bring down record borrowing costs. The Treasury had to pay 6.47 percent to sell five-year debt on Dec. 14, the most in more than 14 years.
