Howdy folks-here’s what’s happening this evening:
GDP/SHRINKING ECONOMY-Well I guess you can’t call it good news but maybe we can use the term "less bad". The 5% plus drop that most economists had predicted for the 4th quarter GDP? It ends up being only a drop of 3.8%. Dan Arnall tells us that’s the worst quarterly figure since the first quarter of 1982 (when the drop was 6.4%). And to further deflate any enthusiasm or positive spin on that GDP money, that old spoilsport Arnall brings up the matter of business inventories. Arnall: " The government report is counting a build-up of goods on store shelves as a ‘positive’ contribution to the economy – adding a 1.3% premium to the overall GDP number. But the business inventory gains are really unwanted; the result of goods they ordered before the credit collapse pushed the consumer into a holiday spending nose dive. If you subtracted this, GDP would have fallen by 5.1%."
—WORLD NEWS started off the week with a whip-around from several reporters in various places around the country and ended the week with a similar piece. Tonight, Betsy Stark reported from Montclair, New Jersey, a bedroom community just a short distance from Manhattan. Stark tells us Wall Street’s woes are Montclair’s woes. Stark: "The combination of rising joblessness, decimated 401K’s, and falling home prices has taken a huge bite out of families’ finances and left consumers in lockdown mode." Barbara Pinto reporting from Chicago says that "industries that have driven this region for decades have stalled." Problems in the auto industry, fewer orders for steel, layoffs continuing (Caterpillar, who we talked about in Monday’s whip around laid even more employees off today)-all that adds up to "the steepest drop in business investment in a half century". Laura Marquez reported from San Francisco "where we are facing a grim reality. California isn’t taking in enough money to pay its bills." The answer? The state will suspend some $3.7 billion in payments, including almost $2 billion in taxpayer refunds. Marquez points out that "in these tough economic times, folks are counting on that money to pay bills or buy something new-critical to getting this state’s economy going again."
–The economic fallout has also impacted the nation’s law enforcement. Almost a third of the country’s major police and sheriff’s offices have instituted a hiring freeze. Even more are cutting back overtime and delaying technology upgrades. Pierre Thomas, reporting for WORLD NEWS, says the crisis "threatens to undermine hard fought reductions in crime and may worsen matters in neighborhoods still under siege." Thomas adds "Police departments have traditionally been recession-proof…but not any more."
–And let’s not forget-this is not just a U.S. recession, this is a global recession. Terry McCarthy, reporting for WORLD NEWS from southern China, introduced us to Xiang Zhen Hue. Xizang’s factory shut down "because it had no orders, all because of the US financial crisis". For Xiang, it may mean leaving the big city for good and heading home to the farm. "I don’t want to stay home and work in the fields", Xiang told McCarthy. "The Chinese," McCarthy reports, "have a lot riding on America’s economic recovery."
DASCHLE PROBLEMS-Jake Tapper: "ABC NEWS has learned that the nomination of former Senate Majority Leader Tom Daschle to be President Obama’s Secretary of Health and Human Services has hit a snag-having to do with a free car and driver Daschle used for years without reporting it on his taxes." Tapper reported on WORLD NEWS that Daschle paid the back taxes-more than $100 thousand-after he was selected to be HHS Secretary. It’s unclear whether this is a big deal or not-the White House released a statement after our report tonight which read: " "The President has confidence that Senator Daschle is the right person to lead the fight for health care reform. In preparation for his nomination, Senator Daschle and his accountant identified some tax issues and fixed them. They filed amended return with the IRS and made payments with interest. Senator Daschle brought these issues to the Finance Committee’s attention when he submitted his nomination forms and we are confident the Committee is going to schedule a hearing for him very soon and he will be confirmed."
STIMULUS-Getting the economy going. That’s what the stimulus bill is supposed to do. It’s in the Senate’s hands right now-George Stephanopoulos told Charles Gibson on WORLD NEWS tonight that the bill as it stands now (the House version) has as little Senate Republican support as it did in the House. Stephanopoulos: "Senate Democrats concede they are going to have to make changes to broaden the base of support. You’re going to have a full week of debate with a lot of amendments on the floor." So what’s likely to change in the bill? Stephanopoulos again: "Remove some of the most unpopular spending programs…maybe add some business tax cuts that Republicans have been calling for and number three add some agricultural spending or other aid to small rural states who say they’ve been shortchanged."
STOCK MARKET 2009/CAN ONE MONTH SET THE TONE FOR THE ENTIRE YEAR?-From Dan Arnall: "The first month of 2009 ended with the Dow at 8000, down 8.84% for the month. We’ve had worse months recently (see October’s miserable performance), but this particular red arrow month is worrying some of the folks on Wall Street more than a sour October. Why? In the Dow’s entire 112-year history, January has accurately predicted the year’s direction 75% of the time. So a big loss in January is a bad portent for the year in investing. It gets even worse. In the past 30-years, the Dow’s January performance has been an even greater predictor, matching 26 years, or 87% of the time. AS with everything on Wall Street, it comes with a big Langer-proof disclaimer: PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS."
SALMONELLA INVESTIGATION: Federal health officials have launched a criminal investigation into the salmonella outbreak that has killed at least 8 people and sickened more than 500, many of them children and the elderly. The investigation is being carried out by the Food and Drug Administration’s criminal division, in conjunction with the Justice Department, which is looking into the Peanut Corporation’s businesses practice. White House Press Secretary Robert Gibbs also said that the President will name “in the coming days” a new FDA commissioner to oversee the creation of a “strict regulatory structure to ensure that the type of thing that happened in this case doesn’t happen again.” On WORLD NEWS, Lisa Stark reported that “there were big problems with the plant linked to the outbreak. Today the FDA confirmed that five months before the first salmonella cases linked to [Peanut Corporation of America’s] Georgia plant, a shipment of nuts from the facility…bound for Canada, was rejected by that country as unfit to eat.” The FDA found the shipment contained metal fragments – not salmonella – and the peanuts were destroyed. In independent testing, the plant discovered salmonella in its products, but it was not reported until recently. Federal officials say the plant’s salmonella problems date back to June 2007. (thanks to Marisa Bramwell for this entry)
IRAQI ELECTIONS-Iraq holds provincial elections tomorrow, its first elections since 2005. Polls open this evening at 11pm ET. At stake-Iraqis will pick local councils in 14 of its 18 provinces. Jim Sciutto is there and reporting for all platforms.
–Teddy Davis tells us former Maryland Lt. Governor MICHAEL STEELE was elected chairman of the Republican National Committee. Steele is the first African-American to head the GOP.
–A nasty BUS CRASH late this afternoon on a highway near the Hoover Dam has killed at least 6 people and injured 15. The injured are being taken to Kingman, Arizona and Las Vegas, Nevada hospitals.
–Charlie Herman tells us THREE MORE BANKS HAVE CLOSED bringing to six the number of banks shuttered since the start of the year. MagnetBank of Salt Lake City, Utah, was closed. The FDIC could not find a buyer for them. The other two banks, Suburban Federal Savings Bank (Crofton, Maryland) and the Ocala National Bank (Ocala, Florida), were luckier. The FDIC was able to find another bank to step in and take over those deposits.