March, 2008

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Monthly Features Seven Economic Indicators Recent Economic News Major Index Twelve Month Charts Mid Month and Recent Updates IRS "Dirty Dozen" IRS rebates won't be taxed by the Federal government, but look out for your state taxes Monthly Magazine Special Economic Stimulus Letters Reach Mailboxes in March Q and A regarding the economic stimulus payments The lies we tell ourselves about money President proposes to extend tax free withdrawals from IRAs Update IRS Warns of New E-Mail and Telephone Scams Using the IRS Name; Advance Payment Scams Starting You can accidentally disinherit your heirs News Sources Past Issue Archive

News Stories

Phishing Scams, Frivolous Arguments Top the 2008 "Dirty Dozen" Tax Scams
Topping this year's list of scams is phishing, which encompasses numerous Internet-based ploys to steal financial information from taxpayers. New to the "Dirty Dozen" this year is a scheme, which IRS auditors discovered, that relates to unreasonable and/or excessive fuel tax credit claims. Tax schemes can lead to problems for both scam artists and taxpayers. Tax return preparers and promoters also risk significant penalties, interest and possible criminal prosecution. The IRS urges taxpayers to avoid these common schemes:

1. Phishing Phishing is a tactic used by Internet-based thieves to trick unsuspecting victims into revealing personal information they can then use to access the victims' financial accounts.
2. Scams Related to the Economic Stimulus Payment Some scam artists are trying to trick individuals into revealing personal financial information that can be used to access their financial accounts by making promises relating to the economic stimulus payment, often called a "rebate."
3. Frivolous Arguments Promoters of frivolous schemes encourage people to make unreasonable and unfounded claims to avoid paying the taxes they owe.
4. Fuel Tax Credit Scams The IRS is receiving claims for the fuel tax credit that are unreasonable.
5. Hiding Income Offshore Individuals continue to try to avoid paying U.S.taxes by illegally hiding income in offshore bank and brokerage accounts or using offshore debit cards, credit cards, wire transfers, foreign trusts, employee leasing schemes, private annuities or life insurance plans.
6. Abusive Retirement Plans The IRS continues to uncover abuses in retirement plan arrangements, including Roth Individual Retirement Arrangements (IRAs).
7. Zero Wages Filing a phony wage- or income-related information return to replace a legitimate information return has been used as an illegal method to lower the amount of taxes owed.
8. False Claims for Refund and Requests for Abatement This scam involves a request for abatement of previously assessed tax using Form 843, "Claim for Refund and Request for Abatement."
9. Return Preparer Fraud Dishonest tax return preparers can cause many problems for taxpayers who fall victim to their schemes.
10. Diguised Corporate Ownership Some people are going as far as forming domestic shell corporations in certain states for the purpose of disguising the ownership of a business or financial activity.
11. Misuse of Trusts For years, unscrupulous promoters have urged taxpayers to transfer assets into trusts.
12. Abuse of Charitable Organizations and Deductions The IRS continues to observe the misuse of tax-exempt organizations.

IRS Watches Scams That Fall Off the List While the IRS has seen a decline in the occurrence of some of these scams, other problems, such as abuse of the American Indian Employment Credit and misuse of structured entity credits, continue to be areas of concern. The absence of a particular scheme from the Dirty Dozen should not be taken as an indication that the IRS is unaware of it or not taking steps to counter it.
3/13/08 IR 2008-41

IRS rebates won't be taxed by the Federal government, but look out for your state taxes
Those who receive a stimulus rebate will not have to pay federal taxes on it, but don't spend too freely because you may end up having to pay state taxes, depending on where you live. In addition, the IRS has the right to divert your rebate to pay past due taxes. The rebates from the Internal Revenue Service are part of an economic stimulus package approved by Congress and signed by President Bush earlier this year. The law stipulated that these sums cannot be taxed federally. However, John Roth, a senior tax analyst at business law information provider CCH, said the federal law has no impact on state tax codes and practices. Each state sets its own tax law. To date none of the 50 states have passed legislation that would allow them to tax the Federal rebate. But the states still have time. Laws that would effect the upcoming rebates on 2007 Federal taxes could be passed by the states later in the year, Roth said.
3/6/08 AP in the Boston Herald

Special Economic Stimulus Letters Reach Mailboxes in March
More than 130 million American households will begin receiving Internal Revenue Service letters next week reminding them to file a 2007 tax return in order to receive a 2008 economic stimulus payment. The mailings by the IRS will begin the first week in March and continue throughout the month. The informational notice, titled Economic Stimulus Payment Notice, alerts people that they may be eligible for a one-time stimulus payment of up to $600 ($1,200 married filing jointly) starting in May. There also is a $300 per child payment for qualifying children younger than 17. The notice is informational and does not seek any financial information. The main mailings, which will take place in three weekly batches, will go to taxpayers who filed a tax return last year.
IRS Newsletter IR-2008-028

Q and A regarding the economic stimulus payments
Here are several selected Q and A's. For the complete article, please visit the IRS website.
Q. What do I need to do to get an economic stimulus payment?
A. All you need to do is file a federal income tax return for 2007. Even if you are not otherwise required to file a tax return, you must file a 2007 return in order to receive a payment this year. Although some filers, such as high-income filers, will not qualify for a stimulus payment, most will. You do not need to calculate the amount of the stimulus payment. If you qualify, the IRS will automatically figure it and send it to you.
Q. How do I find out if I am eligible?
A. Most people with a 2007 net income tax liability will qualify. This includes most people who get tax refunds. Net income tax liability is the amount shown on Form 1040, Line 57 plus the amount on Line 52. For 1040A filers, it is the amount on Line 35 plus the amount on Line 32. For Form 1040EZ filers, it is the amount on Line 10. Some higher-income taxpayers will not receive a stimulus payment or will receive a reduced payment.
Q. When will I receive my stimulus payment?
A. The Treasury Department will start sending out payments in early May.
Q. Will my stimulus payment be included in my regular tax refund? Will the checks or direct deposits come at the same time?
A. No and no. There will be two payments. You will receive one payment for your regular tax refund and later you will receive a separate stimulus payment.
Q. I have not yet filed my 2007 tax return. Can I still qualify for a stimulus payment in 2008?
A. Yes, but you must file a 2007 tax return. The IRS encourages you to file a return even if your income is low or much of your income is tax-free. File your return, if possible, by the regular April 15 deadline. If you file after April 15, with or without a tax-filing extension, your payment will be delayed. If you qualify for a payment, you can insure that you get it by filing your return by Oct. 15, 2008.
Q. Is my stimulus payment taxable?
A. No. You will not owe tax on your payment when you file your 2008 federal income tax return. But you should keep a copy of the IRS letter you receive later this year listing the amount of your payment. In the event you do not qualify for the full amount this year but you do next year, you will need to have the letter as a record of the amount you previously received.

• I could die tomorrow, so I'll live for today. This immature attitude justifies actions of the buy-it-now and pay-for-it-whenever class. It's the primary excuse for not saving money.
• I work hard, I deserve it. This is akin to a 4-year-old throwing a tantrum in a toy store crying ''Gimme, gimme.'' While it is true that many Americans are overworked and that you have to treat yourself occasionally, self-gifting is more prominent today because of advertising pitches to buy things ''because you deserve them.'' You also deserve to live out a retirement that doesn't include regular helpings of Alpo.
• I don't have a head for numbers. This is the excuse given for not paying attention to personal finances. But managing money doesn't require complicated mathematics. Consumers now have a plethora of free online tools to help with all sorts of financial planning. Be happy to do smart things with your money, if they aren't the absolute best you can do.
• I'm too busy to compare prices or manage money. This might be true for a small fraction of people, says Karp, but mostly it's a lie. Shutting off the TV one night a week will provide most people plenty of time to manage their finances.
  Marshall Loeb Of MarketWatch, February 21, 2008 in The Morning Call, Allentown, PA

President proposes to extend tax free withdrawals from IRAs -
The Pension Protection Act of 2006 provided an exclusion from gross income for otherwise taxable distributions from a traditional or a Roth IRA made directly to a qualified charitable organization. The exclusion may not exceed $100,000 per taxpayer per taxable year, is applicable only to distributions made on or after the date the IRA owner attains age 70 1/2, and is effective for distributions made in taxable years beginning after December 31, 2005 and before January 1, 2008. The exclusion applies only if a charitable contribution deduction for the entire distribution would otherwise be allowable under current law, determined without regard to the percentage-of-AGI limitation. No charitable deduction is allowed with respect to any amount excludable from income under this provision. The Administration proposes to permanently extend this exclusion, effective for distributions made in taxable years beginning after December 31, 2007.
2/14/08 Budget of the United States Government Fiscal Year 2009

Update - Senate Signals Support for Expanding IRA Rollover to Include Life-Income Gifts
The Senate approved its fiscal year 2009 budget resolution (S. Con. Res. 70). The resolution includes language that calls on Congress to reinstate the IRA Charitable Rollover, which expired on December 31, 2007, and expand the provision to allow for life-income agreements, including charitable gift annuities, charitable remainder trusts and pooled income funds. This language was added to the budget resolution by an amendment from Senator Byron Dorgan (D-ND) and was co-sponsored by Senators Olympia Snowe (R-ME) and Blanche Lincoln (D-AR). The amendment was agreed to in the Senate by unanimous consent. The language added to the budget resolution by the Dorgan amendment is a significant development in NCPG's efforts to retro-actively extend the IRA Charitable Rollover and expand it to include life-income gifts. In particular, the Dorgan amendment is recognition of the role that planned giving can play in encouraging philanthropy by all Americans.
3/15/08 NCPG Mail

IRS Warns of New E-Mail and Telephone Scams Using the IRS Name; Advance Payment Scams Starting
The Internal Revenue Service today warned taxpayers to beware of several current e-mail and telephone scams that use the IRS name as a lure. The IRS expects such scams to continue through the end of tax return filing season and beyond. The IRS cautioned taxpayers to be on the lookout for scams involving proposed advance payment checks. Although the government has not yet enacted an economic stimulus package in which the IRS would provide advance payments, known informally as rebates to many Americans, a scam which uses the proposed rebates as bait has already cropped up. The goal of the scams is to trick people into revealing personal and financial information, such as Social Security, bank account or credit card numbers, which the scammers can use to commit identity theft.
IRS Newswire 1/30/08

You can accidentally disinherit your heirs
By all accounts, Anna Nicole Smith loved her baby daughter Dannielynn. She shielded her from the media, provided her with constant care and surrounded her with every comfort. She also accidentally disinherited her. Here's how: In a will executed in 2001, Anna Nicole placed all of her assets in a trust and named her son Daniel by name (rather than by the more inclusive term "my issue") as sole beneficiary. When Daniel predeceased his mother, the trust legally lapsed for want of a living beneficiary, since Anna Nicole had failed to name a contingent beneficiary for Daniel. Then, because she failed to update her will to include Dannielynn before her own untimely demise at age 39, her sole surviving child was accidentally disinherited. As a result, Anna Nicole's estate -- including the fortune she may someday be awarded from the estate of her late husband, Texas oil billionaire J. Howard Marshall II -- will likely pass through the laws of intestacy -- that is, as if she had died without a will.
12/4/2007 Jay MacDonald Yahoo Finance

Here's how you can accidentally disinherit your loved ones:

THE ECONOMY: SEVEN INDICATORS - From CNN Money (as of 3/25/08)

The Indicator	What It's Telling Us	Next Update
Consumer Confidence	Lowest in 35 years	Apr 22
Retail sales	Below expectations - weak growth	Apr 14
Leading Economic Indicators	Grinding to a halt	Apr 17
Manufacturing Activity (ISM)	Weak growth	Apr 1
Industrial Production	Industrial output drops 0.5%	Apr 21
Job Growth	Worst in five years	Apr 4
Inflation (CPI)	Under control - for now	Apr 16

Recent Economic News

Home Prices and Consumer Sentiment Slide - 3/25/08 NY Times
Home prices across the country continued to fall in January at record rates while one measure of consumer confidence reached a five-year low, sending Wall Street shares down in early Tuesday trading. The value of single-family homes plummeted 10.7 percent in January compared with a year earlier, as measured by the Case-Shiller index, a closely watched survey of 20 major metropolitan regions. It was the steepest year-over-year decline since the index began eight years ago, and economists said the slump was probably worse than at the height of the last housing recession in the early 1990s.
The decline in housing prices has been compounded by a general sense of gloom about the economy. Confidence among consumers unexpectedly fell this month to 64.5 from 76.4 in February, as measured by an index created by the Conference Board, a private research group. A value of 100 represents confidence in 1985. Economists surveyed by MarketWatch had expected a March reading of 73.3. According to MarketWatch, expectations hit a 35-year-low.

Home resales up first time in seven months - 3/24/08 MarketWatch
Boosted by a record decline in prices, the U.S. housing market showed signs of stability in February, with sales of existing homes rising modestly for the first time in seven months and inventories falling, the National Association of Realtors reported Monday.
Resales of U.S. homes and condos rose 2.9% to a seasonally adjusted annualized rate of 5.03 million, ahead of the 4.85 million pace expected by economists surveyed by MarketWatch.
It's the strongest sales pace since October. Sales are down 23.8% compared with a year ago.
Inventories of unsold homes fell 3% to 4.03 million, representing a 9.6-month supply at the February sales pace. Inventories are not seasonally adjusted, but a decline from January to February is unusual, the Realtors said.

Factory Index Slips in March - 3/20/08 Reuters in the NY Times
Factory activity in the Mid-Atlantic region shrank for the fourth consecutive month in March, a survey showed Thursday, expanding the evidence of a recession even though the rate of retrenchment lessened. The Philadelphia Federal Reserve Bank said its business activity index was at minus 17.4 in March compared with minus 24.0 in February. February's result was the lowest since minus 29.6 in February 2001, just before the American economy entered the last recession. This marks the longest streak of contraction in the index for five years, dating back to the February-to-May stretch of 2003 that coincided with the start of the Iraq war. Economists polled by Reuters had forecast a reading of negative 18.3. Any reading below zero indicates contraction in the region's manufacturing sector. The 58 estimates in the Reuters poll ranged from minus 22.0 to negative 5.0.

Economy 'grinding to halt,' leading data say - 3/20/08 MarketWatch
The U.S. economy may be "grinding to a halt," the Conference Board said Thursday, reporting that the index of leading economic indicators fell 0.3% in February for a fifth-straight decline. The coincident indicators -- the best overview of the current economy -- have been flat for three straight months, the private research group said. The leading indicators are designed to forecast economic activity six to nine months ahead. The last time the leading index fell for five straight months was in early 2001, at the beginning of the last recession.

Jobless Claims Hit a Two-Month High - 3/20/08 AP in the NY Times
The number of newly laid-off workers filing for unemployment benefits rose last week to the highest level in nearly two months, providing more evidence that the weak economy is hurting the labor market. The Labor Department said Thursday that applications for jobless benefits totaled 378,000 last week. That was an increase of 22,000 from the previous week and was a far bigger jump than had been expected. The four-week average for new claims rose to 365,250, which was the highest level since a flood of claims caused by the 2005 Gulf Coast hurricanes.

Rates on long-term mortgages fall - 3/20/08 MarketWatch
Long-term mortgage rates dropped sharply this week, while adjustable-rate mortgages barely budged from last week's averages, according to Freddie Mac's weekly survey released Thursday. The 30-year fixed-rate mortgage averaged 5.87% for the week ending March 20, down from last week's 6.13% average. The mortgage averaged 6.16% a year ago. The 15-year fixed-rate mortgage averaged 5.27%, down from 5.60%. The mortgage averaged 5.90% a year ago. But adjustable-rate mortgages moved little. Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 5.56%, down from 5.58% last week. The ARM averaged 5.91% a year ago. And 1-year Treasury-indexed ARMs averaged 5.15%, up just slightly from their 5.14% average last week. The ARM averaged 5.40% a year ago.

U.S. Housing Starts Up - 3/19/08 Forbes.com
Builders seem to have been in better shape in February than producers. Housing starts were much better than expected in February falling only 0.6%, to a rate of 1.065 million, annually. This was well above the expected 1.7% fall, and 995,000 rate. Applications for building permits fell 7.7%, to 978,000, in February, which was lower than the expected 2.2% fall, to 990,000, from a rate of 1.01 million units, a month earlier. Most economists expected the number to be well under a million by now, and February's starts were very strong. The big news was the significant upward revision for the previous month.

Fed cuts rates by 75 basis points - 3/18/08 MarketWatch
The Federal Reserve Board, battling Wall Street's biggest crisis since the Depression, slashed its key lending rate by 75 basis points Tuesday to jumpstart the sagging economy and boost confidence in the U.S. financial system. The central bank's action, which drops the federal funds rate target down to 2.25% from 3% -- its lowest level since December 2004 - was the latest in a series of extraordinary moves by the Fed carried out in the last week against a background of turmoil and crisis. The Fed said the size of the rate cut was enough to promote growth, but left the door open to future cuts. Wall Street had expected the central bank to cut rates by a full percentage point, which would have been the largest cut since 1982.

Core inflation higher at wholesale level - 3/18/08 CNNMoney
Inflation at the wholesale level met most estimates in February, the Labor Department said Tuesday, but core inflation, which excludes food and energy, rose more than expected. Wholesale prices rose 0.3% last month, in line with the 0.3% expected by a consensus of analysts polled by Briefing.com. Minus food and energy, wholesale inflation rose 0.5%, an increase from the 0.4% reported for January. Analysts had predicted an increase of just 0.2%. The Labor Department's Producer Price Index is a key measure of price inflation. Economists polled by MarketWatch were expecting a 0.2% increase.

Industrial output drops 0.5% - 3/17/08 AP in CNNMoney
Industrial output fell in February by the biggest amount in four months, providing yet another gloomy assessment of the economy's health. The Federal Reserve said Monday that output at the nation's factories, mines and utilities dropped by 0.5% in February, the biggest decline since a 0.6% fall last October. It was a far weaker reading than the slight increase of 0.1% that many analysts had been expecting. It served to underscore the severity of the current economic slowdown.

Fed cuts discount rate - 3/16/08 MarketWatch
The Federal Reserve on Sunday cut the rate on direct loans to commercial banks by a quarter-point and said it will allow primary dealers to borrow at the rate in exchange for a broad range of investment-grade collateral. In a statement, the central bank also extended the maximum term of discount-window loans to 90 days from 30 days.

Consumer sentiment slips in March to 16-year low - 3/14/08 MarketWatch
U.S. consumer sentiment slipped in March, but not as much as expected, according to media reports Friday. The University of Michigan/Reuters consumer sentiment index dropped to 70.5 in March from 70.8 in February, above the 69.0 expected by economists. It's the lowest in 16 years. The current conditions index improved to 84.6 from 83.8. The expectations index fell to 61.4 from 62.4, also the lowest since early 1992.

Prices Held Steady in February - 3/14/08 NY Times
Consumer prices held steady in February as the cost of gasoline declined, an unexpected dose of good economic data that opens the door for more aggressive rate cuts by the Federal Reserve. But the relief may be short-lived: oil prices soared to record levels in early March, putting more pressure on consumers' pocketbooks as they muddle through the economic downturn. Still, the flat reading on the Consumer Price Index was a welcome development after several months of steadily building price pressures. Consumer prices, seasonally adjusted, were unchanged in February, and the closely watched core index, which excludes the prices of volatile food and energy products, also stayed flat. Economists surveyed by MarketWatch were expecting the CPI to rise 0.2% in February as well as the core rate.

Retail Sales Post Unexpected Drop - 3/13/08 AP in the NY Times
Consumers, battered by plunging home prices and a credit crunch, stayed away from the malls in February, pushing retail sales down by a larger-than-expected amount. It was another worrisome sign that the country could be falling into a recession. The Commerce Department reported Thursday that retail sales fell by 0.6 percent last month, far worse than the 0.2 percent increase that analysts had been expecting. The weakness was widespread with sales of autos, furniture and appliances all down. It marked the second time in the past three months that retail sales have taken a tumble. Sales had fallen by an even bigger 0.7 percent in December, the largest drop in six months, as the nation's retailers suffered through a dismal holiday shopping season. Sales posted a modest 0.4 percent gain in January. Consumer spending is closely watched because it accounts for two-thirds of total economic activity. Many economists believe that the country will suffer a mild recession in the first half of this year as the economy is unable to withstand the blows from a prolonged slump in housing, record-high energy prices and a severe credit crisis brought on by soaring mortgage defaults. MarketWatch - The figures were weaker than expected by Wall Street economists, who forecast no change in retail sales.

Foreclosures up 60% in February - 3/13/08 CNNMoney
Foreclosure filings nationwide jumped 60% in February compared with the same month last year, but they decreased slightly versus January, according to a report released Thursday. RealtyTrac, an online marketer of foreclosure properties, said 223,651 homes got hit with foreclosure filings last month, which include default notices, auction sale notices and bank repossessions. 46,508 of those were lost to bank repossessions, which more than doubled over last year. The report also indicated that foreclosure filings in February fell 4% compared with January, similar to a 6% decrease that occurred during the same time-span in 2007.

Trade Deficit Up as Imports Hit Record - 3/11/08 AP in the NY Times
The United States' trade deficit grew larger in January as imports -- including crude-oil prices -- zoomed to all-time highs. The latest snapshot of trade activity, reported by the Commerce Department on Tuesday, showed that the country's trade gap increased to $58.2 billion. That was up from a trade shortfall of $57.9 billion in December and was the highest since November. Imports of goods and services climbed to a record high of $206.4 billion in January. The United States' voracious appetite for imported crude oil, where prices skyrocketed to the loftiest on record, figured into the increasing demand for overall imports. The trade gap widened even as exports of U.S.-made goods and services totaled a record high of $148.2 billion in January. The declining value of the U.S. dollar, relative to other currencies such as the euro, is helping to make U.S.-made goods cheaper and thus more attractive to foreign buyers. Economists were expecting the trade deficit in January to be a bit larger -- growing to around $59 billion.

Economists see US avoiding recession - 3/11/08 AP in Yahoo Finance
The U.S. economy will suffer as the slumping housing market eats away at job creation and consumer spending, but the nation should avoid slipping into a recession this year, according to a new economic report. A recession could still happen though, if the credit crisis that has stifled the housing market deepens, preventing consumers from buying big-ticket items like cars and businesses from spending on equipment, according to the quarterly Anderson Forecast by the University of California at Los Angeles. The forecast anticipates job growth remaining sluggish in 2008, with the U.S. unemployment rate rising to 5.5 percent by the end of the year. The February rate was 4.8 percent. The forecast expects the economy to post gross domestic product growth of about 1.5 percent this year, rising to about 3 percent growth in 2009. GDP grew 2.2 percent in 2007, the weakest showing in five years. The no-recession forecast runs counter to the outlook among many economists and financial pundits, who contend the economy has already started to shrink amid rising unemployment, job losses, record oil prices, and the lingering effects of the housing and credit crises.

Fed to Make $200 Billion Available To Lenders - 3/8/08 Washington Post
The Federal Reserve took strong action yesterday to restore order to frazzled lending markets while a new report showing unexpected job losses underscored the toll that credit markets are taking on the economy. The world's financial plumbing is so clogged that the central bank sees a need for new steps to clean it out to prevent severe damage. Mounting panic in the credit markets is making it harder for Americans to get mortgages and is increasing the rates they must pay on credit cards and auto loans. Even solid businesses are finding it difficult to raise money to expand. The nation shed 63,000 jobs in February, the Labor Department reported, the second straight month of losses and the worst monthly decline since March 2003. The construction and manufacturing industries continued to shed positions, as they have for months, but the decline broadened to include big job cuts by retailers and temporary help services. Forecasters had expected a modest employment gain, and the weak numbers prompted many top economists to conclude that the U.S. economy is now in recession. The Fed said it will make $200 billion available to financial institutions in an effort to ease a crisis of confidence that is making it harder for families and businesses to borrow money.

Jobs Plunge Worst In Five Years - 3/7/08 Forbes.com
Friday was filled with worrisome economic roadsigns. February witnessed a plunge in U. S. consumer confidence in the economy and a similar fall in employment. Also, the Federal Reserve stepped in before the reports to announce a big expansion of its face-saving term auction facility for banks, suggesting trouble ahead. The announcement from the Bureau of Labor that nonfarm payrolls declined by 63,000 in February is an ominous sign. The decline in jobs is the biggest since March 2003. Analysts surveyed had expected payrolls to grow by 25,000, versus a loss of 17,000 jobs in January. The U.S. unemployment figure actually edged down, to 4.8%, from 4.9% a month earlier. Wall Street economists surveyed by Thomson had predicted the unemployment rate would rise to 5.0% in February.

Nonfarm Payrolls Drop Precipitously, Indicating Slowness - 3/7/08 forbes.com
The U.S. Bureau of Labor Statistics reported that February nonfarm payrolls declined sharply, by 63,000. This was well below economists' consensus estimate of a modest gain in jobs outside the agricultural sector. The unemployment rate eased to 4.8%. This is just another signal of weakness in the economy. Meanwhile, the Labor Department report said the country's unemployment rate ticked down to 4.8% in February, from 4.9% in January. (MarketWatch) Economists were looking for a gain of about 20,000. (CNN Money) Economists were looking for a gain of about 25,000.

Confidence in the U.S. economy sank to a new a low of 33.1 in March, a drop from 48.5 in February. Recession concerns, high energy prices and trouble in the housing sector were the major considerations. It's the worst reading since the index started in 2002. In response, the Fed announced Friday morning an expansion of the term auction facility to $100 billion, a way of making liquidity available to banks in need.

U.S. weekly jobless claims fall 24,000 to 351,000 - 3/6/08 MarketWatch
Initial filings for state unemployment benefits fell to their lowest level since late January in the latest week, the Labor Department reported Thursday, even as continuing claims rose to their highest level in more than two years. Initial claims for the week ending March 1 fell by 24,000 to 351,000, hitting their lowest mark since Jan. 19. Continuing claims climbed by 29,000 to 2.83 million during the week ending Feb. 23. That was the highest since Sept. 24, 2005.(Reuters in the NY Times) Economists were expecting initial jobless claims to fall to a seasonally adjusted 360,000 for the week ended March 1, from 375,000 the prior week, revised up from 373,000.

Household net worth falls 3.6% in 4th quarter - 3/6/08 MarketWatch
The net worth of U.S. households fell by $533 billion, or a 3.6% annual rate, in the fourth quarter of 2007, the first time total wealth had fallen since late 2002, the Federal Reserve reported Thursday. For all of 2007, household net worth rose 3.4% to $57.7 trillion, the slowest growth in five years. After the effects of inflation are included, real net worth fell for the year. Household borrowing rose at a 5.6% annual rate, less than half the debt growth seen during the credit boom years in 2003 through 2005.

Economic Downturn Expands Countrywide - 3/6/08 Washington Post
The economic downturn, which started in the handful of states where the housing market was in the worst shape, is spreading to almost every corner of the country and to a wide variety of industries, according to a Federal Reserve report released yesterday. The trouble is showing up in such disparate ways as weaker demand for staffing services in New England, lower trucking volume in Ohio and surrounding states, and a resistance to spending money on capital projects by financial institutions on the West Coast. That assessment is based on the "beige book," a compilation of anecdotes from businesses around the country gathered by the Fed's 12 regional banks. The previous report, in the middle of January, found signs of weakness in certain states and industries but described a U.S. economy that was generally holding up. House

Democrats ponder second stimulus - 3/5/08 thehill.com
House Democratic leaders started publicly floating the idea of a second economic stimulus package Wednesday, though they stopped short of committing to introducing legislation. House Speaker Nancy Pelosi (D-Calif.) hosted an economic forum with high-profile Democratic economists. As they paraded in front of the cameras afterward, Pelosi quickly pointed out that the event closely resembled an earlier forum in December. Pelosi considers the December forum the provenance of the economic stimulus package that passed in February. And the economists she invited told them that more economic stimuli should be considered. The first stimulus package was made possible by a bipartisan agreement remarkable for its speed and lack of animosity. But on Wednesday, Republicans threw cold water on the idea of a second stimulus, saying Democrats' ideas cost too much and Congress should wait to see whether the first stimulus works.

Consumers back in shopping mode - 3/6/08 CNNMoney.com
A surprising rebound in February sales gave retailers a much-needed respite after a very difficult winter sales season that had pointed convincingly to a pullback in consumer spending. Part of last month's sales strength, which came on the heels of broad-based softness in December and January, was in part because of "pent up demand," said one analyst reflecting on the weak numbers in December and January. Early refund checks from 2007 income tax returns were probably also contributing to consumers wallets, he said.

Filings for Bankruptcy Up 18% in February - 3/5/08 NY Times
Americans filed for bankruptcy in growing numbers in February, buckling under the combined weight of rising energy prices, a weakening housing market and sky-high personal debts. An average of 3,960 bankruptcy petitions were filed per day nationwide last month, up 18 percent from January and up 28 percent from a year earlier, according to Automated Access to Court Electronic Records, a bankruptcy data and management company. February was the busiest month for filings since Congress overhauled the bankruptcy law in 2005. Bankruptcy experts said the rise was particularly worrisome because those changes made filing for bankruptcy more complicated and expensive.

Service sector stronger-than-expected - 3/5/08 AP in the NY Times
A stronger-than-expected reading on the health of the service sector and figures on worker productivity calmed some fears about the frailty of the economy. The Institute for Supply Management reported activity in the service sector declined in February, though the decrease wasn't as steep as Wall Street had feared. The ISM index of non-manufacturing activity came in at 49.3. Analysts had expected a reading of 46.5, according to Dow Jones Newswires.

Unexpected Drop in Private-Sector Jobs Reported - 3/5/08 Reuters in the NY Times
U.S. private employment fell unexpectedly for the first time in nearly five years in February, according to a private report on Wednesday that dealt another blow to an economy teetering on the brink of recession. The fall of 23,000 jobs compares with a downwardly revised 119,000 jobs added in January, according to the report by ADP Employer Services. February's fall was the biggest drop since April 2003. The ADP report was expected to show 20,000 new private-sector jobs in February, according to the median of estimates from 30 economists surveyed by Reuters.

In sign of contraction, U.S. Feb. ISM falls to 48.3% - 3/3/08 MarketWatch
The U.S. manufacturing sector contracted in February, the Institute for Supply Management reported Monday. The ISM index fell to 48.3% in February from 50.7% in January. Readings under 50% indicate more firms are contracting than expanding. Economists surveyed by MarketWatch expected the index to fall to 47.5%. The new orders index fell to 49.1% from 49.5%. The production index fell to 50.7% from 55.2%. Seven of 18 industries were growing in February.

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