Finance Blog number 1

Thousands of Americans learn a painful lesson in banking every day: Waiting for a check to clear and then getting access to the money from a bank doesn’t mean the check has really cleared.

Take Harry Smith of New York, who responded to an ad on Craigslist.com for an office assistant. A woman e-mailed him and said her British company was starting to sell its product in the United States, but was having trouble with dealing with checks from customers. She needed someone to collect the checks and then send the money to her company.

It was a commission job — deposit the checks, wait for the funds to become available at his bank, then send cash to her, minus 10% for Smith.

After Smith checked out what seemed like a legitimate company on the Internet, he started receiving checks totaling several thousand dollars and deposited them in his account. When his bank released the funds, he sent cash to an address outside the country.

But after a few weeks, his bank notified him the checks he had deposited had actually been returned, and that he owed the bank all the money he had withdrawn.

Smith has not heard from his business partner since and doesn’t even know who she really is. He still owes his bank money, is unemployed and doesn’t know what action the bank might take against him.

What happened to Smith is one example of a wide range of fake check scams carried out in the United States every year. A Consumer Federation of America survey estimates that 1.3 million Americans have been the victim of a fake check scam, with an average loss of $3,000 to $4,000 per consumer.

How they try to get you: The most common scams are fake sweepstakes or lotteries, phony government sponsored grants, and fraudulent work-at-home opportunities, the survey says. The scams follow the pattern of the so-called Nigerian Internet scams, which often involve accepting transfers of money that become obviously phony when it’s too late.

On Wednesday, the Consumer Federation launched a campaign to combat check scams. Many consumers don’t know they are responsible if they deposit a bad check, said Susan Grant, the federation’s director of consumer protection. She said its survey shows an alarming level of misinformation among consumers. And the problem includes money orders and cashier’s checks.

The survey shows 59% of respondents in the survey incorrectly thought that, when you deposit a check or money order, your bank confirms it is good before allowing you to withdraw the money. That number goes up to 70% among adults age 18 to 24. More than 40% of those surveyed also incorrectly think that the person who gave you the bad check must pay back the bank payday loan.

American consumers are mostly unfamiliar with the time needed to process checks and money orders, say consumer watchdogs. Government banking rules mandate that money from deposits become available within one to five days.

However, it can take weeks, especially with foreign checks or money orders, for the originating institutions to get the checks or money orders back and determine that they are counterfeit. When that happens, scam victims are in for a rude surprise.

Publishers Clearing House, which runs legitimate sweepstakes, warns consumers that scammers might claim that you are being given an advance on a prize, but that some fee, tax or other payment needs to be sent before you get the jackpot. That’s the heart of the scam, and it’s something that a real sweepstakes will never ask for, say legitimate companies.

On the rise: Consumer protection groups, state attorneys general, the Federal Trade Commission and government bank regulators warn consumers that the number of fake checks, money orders and even cashier’s checks being used to scam victims is increasing.

The bottom line: "There’s no legitimate reason why anyone who wants to give you a check or money order for something would ever ask you to send money anywhere in return. It’s as simple as that," said Grant of the Consumer Federation of America.

Smith said he suspected that his part-time job was not on the up and up, but didn’t know about fake check scams. He’s not sure how he will pay back his bank, but hopes his story will help keep other people from becoming victims.

The Consumer Federation of America’s tips against fake check scams:

– Never agree to pay to claim a prize.

– Never agree to pay for grants from the government or foundations.

– Never agree to cash checks and send the money somewhere as part of a job working from home.

– Never agree to wire money to anyone you have not met in person and known for a long time.

– If it seems suspicious, consult your state or local consumer protection agency, the Federal Trade Commission, the U.S. Postal Inspection Service or another trusted source.

– Remember that there is no legitimate reason why anyone who wants to give you a check or money order would ask you to send money anywhere in return. 

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U.K. house prices unexpectedly jumped by 1.2 percent in May in a sign the property market slump is easing, Nationwide Building Society said.

The average cost of a home rose to 154,016 pounds ($245,701) after declining 0.3 percent in April, the mortgage lender said in a statement today. Economists predicted a drop of 0.9 percent, according to the median of 14 forecasts in a Bloomberg News survey.

Consumer confidence matched the highest level in 11 months in May as people became more optimistic that they can weather the recession, GfK NOP said in a separate report today. Prime Minister Gordon Brown’s government still predicts that Britain faces its worst recession since World War II this year as the mortgage squeeze extends the housing market’s slump.

The report is “further evidence of some improvement in housing market conditions over the last few months,” Martin Gahbauer, Nationwide’s chief economist, said in the statement. “Although the short-term trend in house prices has clearly improved from where it was at the beginning of the year, it is still too early to say that the market is turning definitively.”

Home values fell 11.3 percent from a year earlier in May, compared with a 15 percent drop in April, Nationwide said paperless payday loans. Mortgage approvals rose in April, the British Bankers Association said earlier this week.

GfK’s index of sentiment stayed at minus 27 in May, the same as in April, which had the strongest reading in 11 months, the market researcher said in a statement.

Dearth of Property

A lack of supply of properties for sale on the market may help explain this month’s gains as home sales still remain close to record lows, Nationwide said.

Rising unemployment may still curb the housing market’s recovery. U.K. house prices may keep falling for the rest of this year as more Britons lose their jobs, Nationwide’s finance director, Mark Rennison, said on May 27.

“If the supply of homes onto the market does increase, the recent moderation in the pace of house price falls may not be sustained,” Nationwide’s Gahbauer said. “In the current downturn, the combination of rapidly rising unemployment and tight access to credit implies that the last of the price declines has probably not been seen yet.”

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In the midst of a struggling economy, the Small Business Administration is hoping to create jobs and generate wealth in hard-hit urban communities by boosting small-business growth through its Emerging 200 initiative.

The six-month program, which launched last year and began its second session a month ago, aims to provide training to small-business owners in 15 major metropolitan areas that have experienced flat or negative job growth rates in recent years. Initially intended to train 200 entrepreneurs per session, the program has attracted enough interest that around 215 companies have been accepted for 2009.

The project’s goal is to provide talented entrepreneurs with the skills and contacts they need to grow their companies and create more jobs in their communities.

"We know that small business can play a role in economic recovery," said Jack Bienko, the SBA’s deputy director for entrepreneurship education.

Each participating E200 business must be headquartered in an inner city, generate $400,000 or more in annual revenue, and be at least three years old. The group’s business owners attend classes every other week, which are hosted by officials from local SBA branches or by partner organizations such as chambers of commerce. On the off weeks, the attendees gather for peer-group sessions, at which smaller groups of four or five participants collaborate on class homework and discuss the ups and downs that their businesses face.

At the end of the six-month program, E200 participants walk away with a written, three-year growth plan - a helpful document to have handy for entrepreneurs looking for business loans or investors.

Drafting such a plan helped Yashoda Naidoo, owner of Annapurna’s World Vegetarian Caf

New Zealand’s Finance Minister Bill English deferred tax cuts to curb the budget deficit, prompting Standard & Poor’s to raise the country’s credit rating outlook.

The cash deficit will widen to a record NZ$12.52 billion ($7.7 billion) in the year to June 30, 2011, from NZ$8.46 billion this year, the government said in Wellington today. The economy will start growing in 2011 after a 1.7 percent contraction in the 12 months to March 31, 2010.

The New Zealand dollar rose after S&P increased the outlook on the AA+ foreign-currency rating to stable from negative, saying the budget will support the nation’s fiscal position. English, 47, who had promised income-tax cuts for 2010 and 2011 to help win last year’s election, also suspended payments to the nation’s pension plan, while maintaining spending to buoy an economy in its worst recession in three decades.

“It’s ‘mission accomplished’ for the budget,” said Stephen Toplis, head of research at the Bank of New Zealand Ltd. in Wellington. “They wanted to get the rating agencies off their back and assure them they had things under control.”

Standard & Poor’s said in January it may downgrade New Zealand’s rating, a move that Prime Minister John Key said this week would add about 1.5 percentage points to interest rates.

“The fact they have viewed the budget positively reversed that threat,” English said after the S&P decision. “New Zealand households and businesses would have ended up paying higher interest rates.”

Currency Gains

New Zealand’s dollar rose to 61.80 U.S. cents at 5:35 p.m. in Wellington from 61.62 cents before the budget was released. The currency has gained 23 percent in the past three months. The fixed payment made to receive floating rates on two-year debt dropped to 3.57 percent from 3.66 percent yesterday.

Gross sovereign debt is forecast to peak at 43 percent of gross domestic product by 2017 from 18 percent in the year ended June 30, 2008. Debt will fall to about 37 percent of GDP by 2023.

English said that without the policy changes, New Zealand’s debt would have risen to 70 percent of GDP by 2023.

“Because the starting point for the debt ratios is low, a rising trend for the next several years does not necessarily threaten the government’s rating,” Steven Hess, an analyst at Moody’s Investors Service, said in a statement. Moody’s said the nation’s Aaa credit rating and stable outlook is unchanged.

Bond Sales

The government will sell NZ$8.5 billion of bonds in the year ending June 30, 2010, to help finance the deficit. About NZ$50 billion of bonds will be offered over the next four fiscal years payday advance.

New Zealand succumbed to recession in the first quarter of 2008, earlier than most of its trading partners, as a drought curbed farm production and the central bank raised borrowing costs to cool a housing-market bubble.

Over the previous nine years the economy had expanded at an average pace of 3.6 percent, benefiting from rising prices for the dairy products that make up 20 percent of its exports.

The economy is now being buffeted as the worst global recession since the Great Depression hurts prices for milk, lumber, fish and lamb and deters tourists, whose spending accounts for about 10 percent of GDP.

Fonterra Cooperative Group Ltd., the world’s largest dairy exporter, yesterday cut its milk-price forecast 12 percent and said U.S. export subsidies are “bad news for our farmers.”

Export Revenue

The drop in export revenue has helped to push the current account deficit to 8.9 percent of GDP, as the nation spends more than it earns.

S&P cut the outlook on the nation’s AA+ long-term rating to negative in January, citing concern that the current account deficit would put pressure on the nation’s growth and fiscal performance and saying the government needed a “credible medium-term fiscal plan.”

The debt outlook should be “sufficient for anyone, including the rating agencies,” English told reporters. “At the heart of this budget are steps to future-proof the government’s financial position.”

The government has “struck the right balance” between borrowing to support the economy and outlining a plan to reduce debt, English said. He forecast the current account deficit would fall to 5.4 percent of GDP by March, 2011.

Deferred Tax Cuts

Deferring tax cuts will save NZ$900 million a year, English said. Payments to the National Superannuation fund of about NZ$2 billion have been suspended and may not be revived for as long as 11 years, he said.

Reviews of government spending freed up about NZ$2 billion over the next four years, including NZ$454 million in the period to June 30, 2010, he said.

“There will be ongoing restraint in future spending,” English said, adding that there will be a NZ$1.1 billion cap on spending increases.

Basic welfare, pension and student entitlements were unchanged and the government has boosted spending on prisons, roads, schools and houses. It also plans to spend NZ$323 million over four years to insulate and heat as many as 180,000 homes.

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The U.S. recession will probably end in the third quarter, a survey of business economists showed, even as rising joblessness indicates the recovery will be weaker than previously estimated.

The world’s largest economy will begin to expand next quarter, according to 74 percent of economists in a National Association for Business Economics survey. Compared with NABE’s February poll, growth will be slower and unemployment will be higher in the second half of this year and through 2010.

Government stimulus spending and Federal Reserve efforts to thaw credit markets are helping pull the economy out of the worst slump in half a century, the survey said. While housing is stabilizing, the economists predicted consumer spending will be restrained by a deteriorating labor market as job losses continue for the rest of the year.

“There are emerging signs that the economy is stabilizing,” Chris Varvares, president of the group and of Macroeconomic Advisers LLC in St. Louis, said in a statement. Still, the recovery may be “considerably more moderate than those typically experienced following steep declines,” he said.

The economy will shrink at a 1.8 percent annual rate from April to June, and then grow at a 0.7 percent pace in the next three months, the survey showed. Growth will accelerate to a 1.8 percent rate by the final quarter.

Spending to Fall

Consumer spending, which accounts for about 70 percent of the economy, may fall 0.4 percent this year, compared with a 1.3 percent drop forecast in the prior poll. Purchases will increase 2.1 percent next year, less than estimated in February.

The NABE survey, based on the median forecast of a panel of 45 economists, was conducted from April 27 to May 11.

Signs of a U.S. recovery coincide with evidence that the first global recession since World War II is easing. German investor confidence rose to the highest since 2006 in May and the Bank of Japan last week raised its view of the economy for the first time in almost three years fastcash.

Policy measures by central banks and governments “have assisted in reviving trust in the financial markets and the real economy,” Deutsche Bank AG Chief Executive Josef Ackermann said yesterday. “We can already see first positive signs.”

In the U.S., nine of every 10 survey participants said the Fed’s new credit facilities improved borrowing conditions, and 55 percent said the programs also benefited markets that were not directly targeted. At the same time, nearly half the economists said credit was still hard to get.

Home Sales

Home sales may reach a bottom by mid-year, according to 72 percent of the panelists, and more than six in 10 predicted housing starts will hit a trough by that time. The survey showed home prices have further to fall, with 40 percent of the respondents forecasting the declines will continue into 2010 or later.

Payrolls will decrease by an estimated 4.5 million in 2009, pushing the unemployment rate to 9.8 percent by year-end, almost a percentage point higher than the previous estimate of 9 percent, the survey showed. Job gains next year will help reduce the jobless rate to 9.3 percent by the end of 2010.

The outlook for business investment this year also soured compared with the February survey, reflecting sharper pullbacks in spending on equipment, software and facilities, and a bigger reduction in inventories. Economists in the survey also predicted corporate profits will decline 16 percent this year.

The cost of living will fall and worker productivity will improve this year, the NABE report showed. With inflation in check and unemployment rising, Fed policy makers will keep the benchmark interest rate close to zero until the second quarter of next year, at which time a series of increases may push the rate to 1.25 percent by year-end.

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Malaysia’s central bank may refrain from cutting interest rates for a second straight meeting, betting the economy is recovering after contracting last quarter for the first time since 2001.

All 20 economists surveyed by Bloomberg News expect Bank Negara Malaysia to hold its overnight policy rate unchanged at 2 percent in the decision due at 6 p.m. today. The central bank may report tomorrow that gross domestic product shrank 3.9 percent in the first quarter from a year earlier, according to the median estimate of 16 economists.

Asian policy makers, who have slashed borrowing costs and pledged more than $950 billion of stimulus plans, have started saying their economies may be past the worst of the deepest global recession since the Great Depression. Bank of Japan Governor Masaaki Shirakawa said last week the region’s largest economy is improving after a record first-quarter contraction.

“Assuming economic activity picks up as we move forward, Bank Negara will probably not see the need to cut rates further,” said David Cohen, head of Asian economic forecasting at Action Economics in Singapore. “An expected turnaround in global export demand” will support a recovery in the second half of the year, he said.

Malaysia’s 1.5 percentage points of interest-rate cuts since late November and the government’s 67 billion ringgit ($19 billion) of public spending, loan guarantees and other measures should help the economy resume growth in the second half after a “marked contraction” in the first six months, Governor Zeti Akhtar Aziz said May 9.

Stimulus Spending

Zeti refrained from lowering Malaysia’s benchmark interest rate last month after cutting it in the three previous meetings. Prime Minister Najib Razak, whose coalition has lost three of four regional elections this year, has unveiled two stimulus plans and allowed more foreign ownership of banks and services companies to spur growth as exports of Intel Corp. computer chips and IOI Corp payday loan. palm oil tumbled.

Singapore’s government said last week the economy shrank less than initially estimated in the first quarter and the nation may have “hit the bottom” of its worst recession since independence in 1965. Thailand’s central bank unexpectedly kept interest rates on hold last week, and South Korea has left borrowing costs unchanged for three months.

“Right now the assessment is there will be an improvement in the second half of the year, especially in the fourth quarter,” Zeti said in a May 9 interview with Bloomberg Television. “Unless that assessment changes, then the current rate is the appropriate rate.”

‘Resuming Growth’

Malaysia’s ringgit has strengthened 2.6 percent since Bank Negara held rates steady on April 29.

Still, a worse-than-expected slump in exports early this year will force policy makers to lower the country’s full-year economic forecast, Zeti said. Southeast Asia’s third-largest economy will “definitely” shrink more than 1 percent in 2009, Second Finance Minister Ahmad Husni Mohamad Hanadzlah said today. The central bank currently predicts a contraction of 1 percent or growth of that much at best.

“Malaysia’s economy may observe a contraction for the first three quarters of the year before resuming growth in the final quarter,” said Patricia Oh, an economist at TA Securities Holdings Bhd. in Kuala Lumpur. “Should there be anticipation for future economic weakness ahead, there is room for further interest-rate reductions” as inflation eases, she said.

Inflation slowed to a one-year low of 3 percent in April as transport and communications costs fell amid slowing growth. Malaysia’s $187 billion economy grew 0.1 percent in the fourth quarter from a year earlier, the least in seven years.

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While their biggest customers may continue to wallow in recession into 2010, the oil-producing nations of the Persian Gulf are again luring foreign investment and looking for places to park their own wealth.

Crude prices that have stabilized above $50 a barrel mean the Middle East’s oil-rich economies are likely to pull out of the global financial crisis sooner than the rest of the world. Saudi Arabia, the largest Arab economy and the world’s biggest oil exporter, is attracting renewed interest from investors including leveraged-buyout firm KKR & Co. Qatar and Abu Dhabi have returned to international capital markets.

Stock markets are rallying across the region, led by Saudi Arabia, whose Tadawul All Share Index ended last week up 26 percent for the year to date, after tumbling 56.5 percent in 2008.

“The expected resilience of oil prices puts the Gulf countries in a relatively privileged position compared to Europe and the U.S.,” says Eckart Woertz, an economist at the Gulf Research Center in Dubai. “In 2010, that is likely to lead to some resumption of growth, unlike in developed-market economies.”

Crude oil traded at $61.61 a barrel on the New York Mercantile Exchange at 10:33 a.m. in Singapore — up 81 percent from around $34 on Feb. 12. Prices will remain above $50 for the rest of this year and top $60 next year, according to the median forecast of analysts surveyed by Bloomberg.

Providing a Cushion

While that’s still less than half the record $147.27 a barrel reached last July, savings built up during the boom from 2003 to 2008 are providing a cushion for most of the Gulf’s petroleum producers to get them through the worst recession since World War II.

Saudi Arabia’s economy will shrink 0.9 percent this year, according to the International Monetary Fund’s April forecast, while the United Arab Emirates is projected to decline 0.6 percent and Kuwait 1.1 percent. By comparison, the U.S. may contract 2.8 percent, the European Union 4 percent and Japan 6.2 percent, the IMF says.

By next year, the IMF expects the Gulf oil states to resume expanding, with Saudi Arabia growing 2.9 percent and Kuwait 2.4 percent, while advanced economies as a whole have no growth.

As a result, the six states in the Gulf Cooperation Council, which hold 40 percent of global oil reserves, are already luring fresh capital from abroad. The Qatari joint venture of Newbury, England-based Vodafone Group Plc, the world’s largest mobile- phone company, raised about $1 billion last month in the country’s first initial public offering in nearly a year.

Accumulated Surpluses

Gulf oil exporters “have accumulated such big financial surpluses, and with ambitious expansionary fiscal budgets, things will be OK,” National Bank of Kuwait SAK Chief Executive Officer Ibrahim Dabdoub said in a May 14 interview at the World Economic Forum in Jordan. “We have started to see some green shoots here and there.”

International investors have taken notice. A Euromoney investment conference last week in the Saudi capital of Riyadh drew 1,600 participants, including representatives of Bank of New York Mellon, HSBC and Barclays Capital. Saudis in traditional white robes and red-and-white headdresses crowded a five-star hotel along with businessmen in suits from the U.S. and Europe.

Best Prospects

Abu Dhabi, with more than 90 percent of the emirates’ oil, has the best prospects in the region, along with Saudi Arabia and Qatar, the world’s largest exporter of liquid natural gas, says Simon Williams, chief regional economist at HSBC Holdings Plc in Dubai.

By contrast, the picture is a good deal grimmer in Dubai, which lacks the oil reserves of its U.A.E. partner Abu Dhabi and other neighbors. Dubai’s real-estate boom crashed last year, and it will continue to flounder, says Timothy Ash, head of emerging-market economics in London at Royal Bank of Scotland Group Plc free credit report and score.

The second-biggest of seven states making up the U.A.E., Dubai ran up debts of $80 billion and had to cancel projects including a waterfront development twice the size of Hong Kong Island. The traffic jams that clogged roads last year are gone; once-scarce taxis now sit outside residential buildings waiting for fares. Dubai property prices may fall as much as 70 percent from their peak, UBS AG predicts.

Hiring in Dubai

Even in Dubai, though, Emaar Properties PJSC, the U.A.E.’s biggest real-estate developer, says it is hiring 1,600 people for its retail, hospitality and leisure businesses, including three new attractions at Emaar’s Dubai Mall and three new hotels. And in the other Gulf economies, the presence of oil translates into a quickening of prospects.

“There is inherent stability in these markets,” says Emad Mostaque, a London-based Middle East equity-fund manager for Pictet Asset Management Ltd.,which oversees about $100 billion globally. “Next year you will see this region outperform other emerging and global markets.”

Mostaque says he is particularly interested these days in shares of Saudi consumer companies such as Riyadh-based food producer Almarai Co.

KKR is studying Saudi investments as it aims to take advantage of the region’s “most attractive markets,” says Makram Azar, head of Middle Eastern operations. This month, KKR named Ford M. Fraker, former U.S. ambassador to Saudi Arabia, as a senior adviser.

Diminishing Risk

Investors perceive diminishing risk on Gulf-region bonds, according to trading in credit default swaps. The cost of protecting against default by the Dubai government fell to 488 basis points on May 8 from a record high of 977 in February, CMA Datavision prices show. Saudi Arabia’s bond-default risk declined to about 162 basis points last week, from 335 basis points in February.

The apparent end of plans for a Gulf monetary union — the U.A.E. pulled out of the project on May 20 — won’t alter the region’s growth outlook because all the countries in the proposed union except for Kuwait already peg their currencies to the dollar, Woertz says.

In another sign that markets are opening up for Gulf borrowers, Qatar and Abu Dhabi raised $6 billion by selling bonds to international investors last month. Aldar Properties PJSC, Abu Dhabi’s biggest real-estate developer, sold $1.25 billion of 5-year notes May 21, becoming the first such firm in the U.A.E. to issue debt since August.

Sovereign Wealth

Meanwhile, Gulf sovereign-wealth funds, which turned their attention inward to shoring up domestic banks and domestic stock markets, now have an “appetite and cash available for selected strategic acquisitions” abroad, Woertz says.

Saudi Arabia has sovereign assets of around $438 billion, up from $335 billion at the start of 2008, according to estimates by RGE Monitor in New York. Abu Dhabi holds a fund of about $300 billion, and Kuwait has about $210 billion.

In March, Abu Dhabi agreed to buy 9.1 percent of German carmaker Daimler AG for 1.95 billion euros ($2.6 billion). Earlier this month it won approval to buy Nova Chemicals Corp., Canada’s largest chemical maker, for $499 million.

The region’s continued dependence on oil and gas is a “strength, not a weakness” that generates long-term surpluses, says HSBC’S Williams.

“I expect all of the region’s economies to fare well, including Dubai, which has a compelling economic case as the service hub for a rapidly growing and prosperous part of the world,” he says.

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Orders for durable goods and home sales probably rose in April as the worst U.S. recession in at least half a century started to loosen its grip, economists said before reports this week.

Bookings for goods meant to last several years increased 0.4 percent, the second gain in three months, according to the median forecast in a Bloomberg News survey ahead of a Commerce Department report May 28. Combined sales of new and existing homes likely advanced to a 5.02 million annual rate from a 4.93 million pace in March, other figures may show.

Stabilization in housing and manufacturing, the two areas suffering the biggest contractions, will help ease the economic slump. Still, gains will be difficult to sustain in coming months as banks remain hesitant to lend and unemployment climbs, underscoring projections from Federal Reserve officials and private economists that a recovery will be subdued.

“Evidence that the 16-month recession is coming to an end continues to build,” said David Resler, chief economist at Nomura Securities International Inc. in New York. “Home sales and building activity seem to be stabilizing and manufacturing surveys point to smaller production cuts and smaller job losses.”

An increase in orders for durable goods would follow a 0.8 percent drop in March. The Commerce Department’s report may also show bookings excluding transportation equipment fell 0.3 percent last month, according to the Bloomberg survey.

Orders Steady

United Technologies Corp., the maker of Pratt & Whitney jet engines and Carrier air conditioners, last week maintained its profit forecast for the year as order rates stabilized across its divisions since March.

There are some “early signs” of price stabilization in some markets, Chief Executive Officer Louis Chenevert said at a conference May 19, citing benefits from stimulus programs in the U.S. and in China for the Carrier and Otis divisions. Demand at the commercial and business jet aerospace units may have peaked in 2008 and will take several years to recover, he said.

Boeing Co., which saw a gain in bookings last month that probably contributed to the increase nationally, is among companies trying to make it easier for customers to get credit. Its financing arm may tap debt markets for as much as $800 million this year to help clients fund purchases, Chief Financial Officer James Bell said last week no fax payday advance.

Cancellations at Boeing, the second-largest commercial- plane maker and defense contractor, have paralleled new orders this year. The Chicago-based company is cutting 10,000 jobs and reducing or postponing production of some models next year.

Auto Slump

Automakers continue to struggle. Chrysler LLC this month idled its 22 U.S. plants after filing for bankruptcy. General Motors Corp. also has cut output as a bankruptcy deadline looms.

Sales of existing houses, which account for more than 90 percent of the market, rose 2 percent in April to a 4.66 million annual rate from a 4.57 million pace the prior month, according to the survey median. The National Association of Realtors’ report is due May 27.

A day later, Commerce Department figures may show new-home sales increased 1.1 percent to a 360,000 annual rate, the most this year, the survey showed.

Toll Brothers Inc., the largest U.S. builder of luxury homes, said last week signs were beginning to emerge that the worst was over. The Horsham, Pennsylvania-based company said fiscal second-quarter revenue fell 51 percent from the same period last year as banks cut lending and demand sagged.

More Deposits

Deposits from buyers per community rose in seven of the past nine weeks compared with last year, Chief Executive Officer Robert Toll said on a May 20 conference call with analysts. The increase made him “slightly more optimistic,” Toll said.

“We believe the U.S. government’s forceful intervention in the capital markets has begun to restore some confidence that the financial system is on the road to stabilization,” Toll said.

A report tomorrow may show the decline in home prices that began almost three years ago is moderating. Property values in 20 of the largest metropolitan areas probably dropped 18.4 percent in March from the same month last year compared with an 18.6 percent decline in February, economist project figures from S&P/Case-Shiller will show.

The rebound in stocks and easing of the housing slump are helping to make Americans less pessimistic. The Conference Board’s gauge of consumer confidence, also due tomorrow, may rise to 43 for May, a six-month high, from 39.2 last month.

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President Barack Obama said a bailout of states such as California won’t be necessary and that his administration is in talks with state treasurers nationwide to find “creative” ways they can deal with frozen credit markets.

Many states will end up having to make some “very difficult choices” as demands on services rise while tax revenue falls, Obama said in an interview with C-SPAN.

The Democratic president said probably the biggest area in which states need help is in rolling over debt. Obama said his administration is trying to find “creative ways that we can help them get through these difficult times.”

“They are still being affected by some of the freezing in the credit markets,” Obama said in the interview, according to a transcript released by the cable-television network. Obama said “no,” when asked whether he will be forced to help financially strapped states such as California.

California’s top finance officials told lawmakers yesterday that they must slash spending and shore up the budget by the end of next month to prevent the most-populous U affordable health insurance.S. state from running out of cash as soon as July.

Bill Lockyer, the Democratic treasurer who handles the state’s bond sales, said short-term securities can’t be sold without a plan to eliminate a deficit that the Legislative Analyst’s Office says may total $24 billion in the next 13 months. Such borrowing allows the state to meet its obligations until the bulk of tax receipts are collected later in the year. Controller John Chiang, who pays the state’s bills, echoed that sentiment.

“We are experiencing the greatest fiscal crisis since the Great Depression,” Chiang, a Democrat, said during a Sacramento legislative budget hearing.

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China is yet to establish a solid foundation for a recovery in industrial production, the Ministry of Industry and Information Technology said.

The ministry cited faltering export demand, “serious” overcapacity in industries such as steel, and falling company profitability, in a report posted on its Web site today.

Output growth may accelerate to 8 percent this quarter as stimulus spending takes effect and exceed 10 percent for the second half, the ministry said. That compares with a 7.3 percent gain in April and 5.1 percent growth in the first quarter.

A quarter of industrial companies posted losses in the first quarter, and 21 of 39 industries tracked by the ministry said profits worsened for the three months through March 31 from the first two months of this year, the report said no fax payday advances.

The nation’s 72 big and medium-sized steelmakers posted 5.2 billion yuan ($760 million) in combined losses in the four months through April on falling prices and oversupply, the ministry said. About 40 percent of primary aluminum capacity remains idle, it said.

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