U.S. consumer borrowing up in January
WASHINGTON -- Consumer borrowing rose at a slightly faster pace in January as borrowing on credit cards rebounded after a slowdown in December.
Borrowing increased by $17.05 billion in January after a $15.36 billion December gain, the Federal Reserve reported Thursday. The increase reflected acceleration in borrowing in the category that includes credit cards, up $2.57 billion, after a modest $939 million December gain. Borrowing for auto loans and student loans remained strong, rising by $14.47 billion in January after a $14.42 billion December increase.
The increases pushed overall consumer borrowing to a record $4.03 trillion, compared with $3.84 trillion in January 2018. Consumer borrowing is followed closely for signs it provides of consumers' willingness to borrow to support spending. Consumer spending accounts for 70 percent of economic activity.
The government reported last week that the overall economy, as measured by the gross domestic product, grew at an annual rate of 2.6 percent in the October-December quarter. That was a slowdown from growth rates of 4.2 percent in the third quarter and 3.4 percent in the third quarter of last year.
The Fed's monthly report on consumer borrowing does not cover home mortgages or any loans secured by real estate such as home equity loans.
-- The Associated Press
30-year mortgage rate rises to 4.41%
WASHINGTON -- U.S. long-term mortgage rates rose modestly this week, but they remain slightly lower than they were a year ago.
Mortgage buyer Freddie Mac -- the Federal Home Loan Mortgage Corp. -- said the average rate on the benchmark 30-year, fixed-rate mortgage increased to 4.41 percent from 4.35 percent during the prior week. The average was 4.46 percent a year ago, but rates climbed for much of 2018 and peaked at nearly 5 percent in early November.
The average rate this week for 15-year, fixed-rate loans rose to 3.83 percent from 3.77 percent during the prior week
Mortgage rates often move in sync with the interest paid on 10-year U.S. Treasury notes. Rising rates in 2018 suppressed home sales, but the lower levels in recent months point to the possibility of sales gains this year.
-- The Associated Press
Pot use prompts Musk security review
WASHINGTON -- The Pentagon is reviewing Elon Musk's federal security clearance after the billionaire's marijuana toke on a California comedian's podcast in September, according to a U.S. official.
Musk has refiled his SF-86 security form, which requires a federal employee or contractor seeking a clearance to acknowledge any illegal drug use over the previous seven years, according to the official, who asked not to be identified. The entrepreneur has a secret-level clearance because of his role as founder and chief executive officer of Space Exploration Technologies Corp., which is certified to launch military spy satellites.
SpaceX's day-to-day operations are run by President and Chief Operating Officer Gwynne Shotwell. The company has won contracts for national security space launches since Musk's podcast incident, including one for three launches on Feb. 19 for $297 million.
But the refiling and review underscore the continuing ramifications from the chief executive officer's decision last year to smoke marijuana on the podcast, which quickly went viral.
-- Bloomberg News
Court rules in workers' comp pot case
CONCORD, N.H. -- A labor appeals board was wrong to determine that workers' compensation insurance can't reimburse an employee for the cost of medical marijuana, according to a New Hampshire Supreme Court decision released Thursday. But the court left unresolved whether an insurance company can be prosecuted for it under federal law.
The court ruled in favor of reimbursement for chemical company worker Andrew Panaggio, 59, who hurt his back at work and was approved by the state Health Department to participate in the therapeutic cannabis program in 2016. He used the medical marijuana to treat the ongoing pain and sought reimbursement through workers' compensation, but his insurance carrier denied it on the grounds it wasn't necessary.
He sent the case back to the board, which found therapeutic cannabis "medically necessary" for him. But it still denied payment because "possession of marijuana is still a federal crime" that could expose an insurance carrier to criminal prosecution. The court said the board didn't cite any legal authority or identify a federal statute in its decision.
-- The Associated Press
PG&E asks for judge's OK to pay bonuses
PG&E Corp. is asking a bankruptcy judge for permission to award as much as $235 million in performance bonuses to thousands of its workers after canceling similar incentive payments last year.
PG&E wants court approval for its short-term incentive plan that covers employees who, under the 2019 plan, would be awarded bonuses if the San Francisco utility meets performance goals tied to safety and financial performance, according to a filing Wednesday. Senior executives wouldn't be eligible for the incentives, PG&E said. The company estimated a total bonus target of about $235 million, but listed an "aggregate maximum payout" of about $350 million.
Employee compensation has become a bone of contention in PG&E's bankruptcy case, pitting wildfire victims and utility customers against labor unions.
-- Bloomberg News
U.S. productivity increases 1.9% in 4Q
WASHINGTON -- U.S. productivity grew at a rate of 1.9 percent in the fourth quarter, a slight improvement over the third quarter. Labor costs rose 2 percent, the strongest gain since the beginning of 2018.
The Labor Department reported Thursday that the result from the October-December period was slightly better than a 1.8 percent rise in the third quarter. For the full year, productivity rose 1.3 percent, a small improvement from a 1.1 percent gain in 2017. It was the best showing since a 3.4 percent productivity surge in 2010.
Productivity is the amount of output per hour of work. The strong showing in 2010 had followed a 3.5 percent surge in 2009. Those two strong years were the exceptions in the current nearly 10-year long recovery. Productivity overall has been extremely weak, and economists consider boosting productivity growth as the key challenge facing the U.S. economy.
-- The Associated Press
Business on 03/08/2019
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