US sees no holiday cheer; Russia, China warn of grim 2009

US sees no holiday cheer; Russia, China warn of grim (严酷的) 2009

Wed Dec 24, 4:11 pm ET
WASHINGTON (AFP) – US data Wednesday offered few signs of recovery from the economic malaise (一种普遍的不安或压抑情绪) while Russia and China issued stark warnings about the impact of the financial crisis on their countries.

Crude oil prices fell to fresh four-year lows as markets bet on a deep downturn.

In Washington, the Commerce Department reported personal income contracted 0.2 percent in November from the previous month while consumption expenditures shrank 0.6 percent, in a further sign of consumer retrenchment as Americans prepared for the Christmas holiday.

But Ryan Sweet at Economy.com said that because prices are falling, real, inflation-adjusted spending increased 0.6 percent -- "its first increase since May and its largest in two years," which he called "encouraging."

"The increase in real spending is a positive for fourth quarter real GDP (gross domestic product), which could post its largest decline since the early 1980s," he added.

"That said, the increase in real spending is due to declining prices as opposed to stronger consumption. Therefore, real spending is sending a false signal on the strength of underlying consumption."

On the labor front, a separate report showed new US weekly jobless claims rose by 30,000 over the past week to 586,000.

"The jobless claims data show further significant weakening in the economy last week," said John Ryding at RDQ Economics, who predicted a rise in unemployment to 7.0 percent for December.

A top official in Moscow warned that the crisis could spark popular unrest after a Kremlin economic aide said Russia next year would have its first budget deficit since the 1998 financial crisis.

Japan meanwhile approved a record-high budget aimed at avoiding the worst effects of the crisis.

"We need to take unprecedented measures when in an extraordinary economic situation," Japanese Prime Minister Taro Aso said at a news conference after his cabinet backed the new 980 billion dollar budget.

"Japan cannot evade this tsunami (海啸) of world recession. But by taking bold measures, we aim to be the world's first to come out of recession," he said.

On oil markets, light sweet crude for delivery in February shed 3.63 dollars to close at 35.35 dollars a barrel on the New York Mercantile Exchange, the ninth consecutive drop in prices.

On London's InterContinental Exchange (ICE), the price of Brent North Sea crude for February delivery fell 3.75 dollars to settle at 36.61 dollars a barrel, the lowest since July 2004.

Analysts said the declines were driven by worries about a global recession that saps (消耗) energy demand.

"The economic data remains decidedly weak," said John Kilduff at MF Global.

The low price spells bad news for Russia, the world's second-biggest producer after Saudi Arabia.

"The (budget) deficit is caused by the fall in oil prices, above all," Kremlin economic aide Arkady Dvorkovich was quoted as saying.

Oil prices reached record highs of more than 147 dollars a barrel in July.

Commenting on the worsening situation, Deputy Interior Minister Mikhail Sukhodolsky warned that unpaid wages, the threat of layoffs and unpopular government anti-crisis measures "may aggravate the protest mood."

China's top economic planner also warned of "great challenges" ahead.

The head of the National Development and Reform Commission, Zhang Ping, told parliament that "grave risks" lay ahead for the government's economic goals if China did not manage to stimulate demand and maintain export growth.

Economists have warned that the global downturn could mean that China will end 2008 with its weakest economic growth for nearly two decades. China has not posted annual growth of less than 7.6 percent since 1991.

In a sign of the times in Germany, Europe's biggest economy, poodles (狮子狗), terriers (一种灵敏的小猎狗) and sheepdogs (牧羊犬) queued up for rations (发粮：散发定量的粮食) in the country's first soup kitchen for pets in the German capital.

The soup kitchen was opened in October and offers free food for pets belonging to pensioners (靠补助金生活的人) and the growing ranks of Berlin's unemployed.

Julia Raasch, who heads the soup kitchen, said: "We've already signed up nearly 400 people. And our stocks are dwindling (逐渐减少：逐渐地减少直到所剩无几) fast."