Financial thoughts

Pump prices may hit $4 a gallon by early May as U.S. supplies tightened after a series refinery outages reduced gasoline output this week.

The national average rose 2 cents on Friday to about $3.91 for a gallon of regular, according to AAA, Wright Express and Oil Price Information Service. That’s 6 cents more than it was a week ago and more than $1 higher than a year ago.

While gas may hit $4 a gallon across the country within a week or two, many analysts believe it will begin to fall, perhaps by Memorial Day, as more gas becomes available.

Benchmark crude rose 7 cents to $112.93 a barrel in early trading on the New York Mercantile Exchange.

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Japan’s factory production and consumer spending both fell the most on record in March as the earthquake, tsunami and nuclear disasters sent the country’s halting economic recovery into reverse.

The government said Thursday that industrial production plunged 15.3 percent from February after the March 11 earthquake and tsunami devastated Japan’s industrial northeast, crippled a nuclear power station that continues to leak radiation and caused widespread power shortages.

Factory production had been expected to fall sharply due to the disasters, but the drop was worse than the forecast of an 11.4 percent decline in a Kyodo News agency survey of analysts.

The disasters, which killed about 25,000 people, destroyed many factories, causing severe parts shortages particularly for Japan’s powerhouse automakers. Manufacturers including Toyota Motor Corp. and Sony Corp. were forced to suspend production due to the supply crunch and power outages.

The Ministry of Economy, Trade and Industry said production would recover “gradually” from damage caused by the disasters, forecasting a 3.9 percent improvement in April and a 2.7 percent uptick in May.

But Martin Schulz, senior economist at Fujitsu Research Institute in Tokyo, said the government’s forecast was probably overly optimistic.

Even if it held true, it would be months before production reached its already depressed pre-disaster level, he said.

“This is a frustrating outlook,” he said.

Ministry officials said the March decline in the country’s index of output at factories and mines was the greatest since record keeping began in 1953. The previous largest decline was in February 2009, when the global financial crisis that began a few months earlier dragged production down 8.6 percent.

Prime Minister Naoto Kan has said he hopes disaster-recovery spending would help lift Japan out of its 20-year economic decline. China last year overtook Japan to become the world’s second-biggest economy.

The government proposed a special $50 billion (4 trillion yen) budget last week to help finance rebuilding efforts, which officials said would likely be only the first installment of reconstruction funding.

In a separate report, the government’s statistics bureau announced that consumer spending had also seen a record decline in March, falling 8 payday loans with no fax.5 percent from a year earlier.

The previous sharpest decline in the numbers that have been tracked since 1963 was a 7.2 percent dip in February 1974, soon after the 1970s oil shock helped trigger a worldwide stock market crash.

Goldman Sachs Global Economics analyst Norihiko Baba said in a report that a decline of 4 percent to 5 percent had been expected, since spending in March 2010 was especially robust due to tax breaks and discounts available at the time on energy-saving cars and appliances.

The much larger drop implied that the disasters were having a “strong impact” on spending, Baba said.

Kan has urged Japanese consumers to open their wallets as a way to help spur the economy, stressing that the upcoming Golden Week holidays will be a particularly good opportunity to spend.

But Schulz said consumers are unlikely to be in a spending mood amid the out-of-service elevators, dimmed lights and other power-saving reminders of the nuclear energy crisis set off by the disasters.

“Households in Japan after this shock and seeing that the crisis is ongoing will simply not go out and buy a new car or anything this year,” he said.

Separately, the government said the nation’s unemployment rate was unchanged in March from February at 4.6 percent, but the survey excluded the three prefectures hardest hit by the disasters.

The seasonally adjusted figure was better than Kyodo News agency’s average market forecast of 4.8 percent. It was the ninth consecutive month of steady improvements in the nation’s employment picture.

Schulz said the surprisingly upbeat jobs numbers were probably linked to employers’ need to keep workers on their payrolls to help restore damaged supply lines.

But he predicted a sharp downturn in those figures, as the drop-off in consumer spending translates into fewer jobs at hotels, restaurants and shops in Japan’s massive service sector.

The government also reported that consumer prices declined for the 25th straight month. The key consumer price index fell 0.1 percent as deflation continued to weigh on the economy.

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What happens when you cross the world’s largest social network with one of the hottest business models in e-commerce? Facebook wants to find out.

Facebook is launching a deals program Tuesday in five U.S. cities, following on the popularity of Groupon and other services that offer deep discounts _ for example: $50 worth of food at a local eatery for $25.

By allowing small businesses to leverage the Internet while helping consumers score great deals, these group-couponing services have become some of the fastest-growing businesses in the world.

Facebook now wants a part of that. It hopes to exploit its existing networks of friends and family when it begins testing offers in San Diego, San Francisco, Atlanta, Dallas and Austin, Texas.

Many deals sites have a social component. For instance, if you get three friends to buy a LivingSocial voucher, yours is free. Groupon’s offers become valid only after a certain number of people purchase them.

But the deals are circulated to users through email, and the community aspect is secondary.

Facebook is hoping to change that.

“We’re building a product that is social from the ground up,” says Emily White, director of local for Facebook. “All of these deals are things you want to do with friends, so no teeth whitening, but yes to river rafting.”

Starting Tuesday, when Facebook users in the five test markets log into the site, they will see a deals insignia at the bottom of the page.

Clicking on it brings up a list of currently available offers. A user can buy one, click the “like” button to recommend it to others or share the offer with friends through Facebook’s private messaging system. When users purchase or “like” a deal, it shows up in their friends’ news feed.

That means “the discovery of the product can happen in lots of different places,” White says.

To get the program started, Facebook has enlisted 11 companies that already supply deals elsewhere. Restaurant reservation service OpenTable will broadcast offers for local eateries, while online ticket seller Viagogo will market events.

Not all offers involve discounts. Some are experiences people may not otherwise have access to, such as a backstage pass to Austin City Limits concerts, a tour of the Dallas Cowboys’ new stadium, or a children’s sleepover at the California Academy of Sciences in San Francisco with live-snake demos.

In some cases, you’ll get a “friend bonus” _ an additional discount _ if at least one other person in your social network buys a deal.

Leveraging social tools and direct sharing among friends will be “a key to success for daily deal companies” going forward, says Lou Kerner, social media analyst at Wedbush.

This is not the first time a social network has made a foray into disseminating deals. Twitter launched its own daily deal program called Earlybird Offers last year but canceled it after just two months. Last November Facebook launched a product called Check-in Deals that allowed users to “check in” via their mobile phones when they visit certain businesses and in turn receive discounts and other special offers. Location-based social network Foursquare has a similar program.

Offers through Facebook can last anywhere from a day to a week. The social network won’t disclose how much commission it takes. (With Groupon and others, the deal site typically takes up to half the revenue.)

There are hundreds of Groupon copycats willing to accept lower commissions, but many small businesses prefer to partner with larger companies such as Groupon and LivingSocial because they reach more potential customers.

Facebook will bring deals to even more people. While Groupon has 70 million members and LivingSocial has 28 million, Facebook has 500 million people worldwide.

Add to that the fact that many small businesses already have a Facebook presence, and the social network becomes a good fit for daily deals, says Greg Sterling, senior analyst for Opus Research.

As a share of overall Web surfing, visits to group-buying sites grew ten-fold over the past year, according to research firm Experian. LivingSocial had 7 million unique visitors in March, up 27 percent from February, making it one of the 10 fastest-growing websites in the U.S., according to ComScore.

“Groupon and LivingSocial have shown how much demand there is out there,” Sterling says. “Facebook, if they do this right, can have a big hit on their hands.”

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At least seven people were injured when a bomb outside the entrance of a Baghdad church exploded on Easter Sunday, an Iraqi police official said.

The blast took place just yards (meters) from the Sacred Heart Church in Baghdad’s Karradah neighborhood. Shrapnel from the bomb struck the outside of the building, and at least four of the church’s windows were shattered. Shards of broken glass lay on the street in front of the building.

Like many Baghdad houses of worship, the church is surrounded by blast walls to protect it from such attacks.

The officer said no parishioners were inside and services had not been held in the building.

Four policemen and three civilian bystanders were wounded, said the official, who declined to be identified because he was not authorized to brief the media.

Iraqi Christians have faced a recent wave of violence, including an attack last year against a Baghdad church that killed 68 people. Before Christmas services, al-Qaida-linked militants threatened a wave of violence against Christians, forcing many to tone down their ceremonies.

There was no such threat ahead of this Easter Sunday but authorities nonetheless stepped up security in the capital and two main northern provinces where Christians live, tightening hundreds of checkpoints that already dot the streets and snarling traffic for hours online payday loans.

About 700 Christians attended Easter services at Baghdad’s St. Joseph’s Chaldean church where security forces closed off the roads leading to it, laid razor wires and searched all worshippers before entering the church.

“Our life in Iraq is fill of fear,” Father Hanna Saad Sirop told worshippers. “But we have to live in faith and trust … we have to trust almighty God,” Hanna added.

Christians also marked Easter peacefully in the northern cities of Kirkuk and Mosul.

Since the 2003 U.S.-led invasion, Iraqi Christians have suffered repeated violence and harassment from Sunni Muslim extremists who view them as infidels and agents of the West, forcing many of them to flee the country either to the safer northern Kurdish self-ruled region or abroad.

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The Irish economic crisis has not been without its moments of humour.

By way of explaining the plight of Ireland’s crippled banks, which have rendered his nation insolvent, then-prime minister Bernie Ahern tried to divert blame from his government’s lax financial regulation to the global banking panic of 2008. That meltdown was triggered by the collapse of New York investment bank Lehman Brothers Holding Inc.

By the thinnest of margins, Southwest Airlines Co. says it made money in the first quarter despite higher fuel prices.

The airline said Thursday it earned $5 million, or a penny per share. Not counting one-time costs, Southwest met Wall Street’s expectations.

Spending on fuel jumped 26 percent from a year ago, to more than $1 billion, surpassing labor as the airline’s biggest cost.

Revenue rose 18 percent, to $3.10 billion.

Southwest is doing a better job than competitors at handling high fuel prices. Analysts predict that Southwest will be the only one out of the five biggest U.S. airlines to report a first-quarter profit.

Traffic on the discount airline has been growing faster than at bigger rivals, and it has also raised fares several times since December.

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Pulaski Financial Corp.’s profit for the second quarter, $1.1 million, or 5 cents per share, improved from a loss of $4.3 million, or 47 cents a share a year ago, due to lower credit costs and higher net income. Pulaski Financial, the Creve Coeur-based holding company for Pulaski Bank, cited lower credit costs for the improvement in the second quarter that ended March 31, as delinquencies on commercial and residential loans in its portfolio declined.

Net interest income rose 4 percent for the second quarter, to $11.5 million, compared with a year ago.

The bank also reported a slowdown in its mortgage banking operations as the increase in market interest rates during the quarter dampened loan demand.

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I watched Hockey Night in Canada the other night in stunning high definition (HD) and I don

Confidence among U.S. consumers climbed in April from a 16-month low, indicating job gains are helping Americans cope with rising fuel costs.

The Thomson Reuters/University of Michigan preliminary index of consumer sentiment rose to 69.6, higher than forecast, from March’s 67.5 reading that was the lowest since November 2009. The gauge was projected to rise to 68.8, according to the median forecast of 66 economists surveyed by Bloomberg News.

The economy has added jobs for six straight months and the unemployment rate fell in March to a two-year low, helping buttress consumer spending, which accounts for about 70 percent of the economy. At the same time, households may find it harder to cope with higher gasoline and food costs that are straining paychecks.

“It’s encouraging to see sentiment creep up,” said Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. “Consumers are taking the increase in gas prices relatively well. As long as the labor market continues to heal, consumers will continue to spend.”

Forecasts in the Bloomberg survey ranged from 62 to 72. The index averaged 89 in the five years leading up to the recession that began in December 2007.

Consumer Prices

Other reports today showed consumer prices rose in March for a ninth consecutive month on increases in food and fuel costs, while expenses for other goods and services cooled, and manufacturing continued to drive the expansion.

Stocks climbed as the better-than-expected data on confidence and manufacturing bolstered optimism on the economy. The Standard & Poor’s 500 Index rose 0.2 percent to 1,317.24 at 10:24 a.m. in New York. Treasury securities climbed, sending the yield on the benchmark 10-year note down to 3.42 percent from 3.50 percent late yesterday.

The gain in sentiment was foreshadowed by the Bloomberg Consumer Comfort Index, which rose to minus 43 in the week to April 10, the third consecutive increase, as improving job prospects made Americans less pessimistic about the economy and their finances.

The Michigan survey’s index of current conditions, which reflects Americans’ perceptions of their financial situation and whether it is a good time to buy big-ticket items like cars, rose to 82.7 from 82.5 the prior month.

Expectations Improve

The index of consumer expectations for six months from now, which more closely projects the direction of consumer spending, climbed to 61.2 from 57.9.

Consumers in today’s confidence report said they expect an inflation rate of 4.6 percent over the next 12 months, the same as in the March survey and the highest since August 2008.

Over the next five years, the figures tracked by Federal Reserve policy makers, Americans expected a 2.9 percent rate of inflation, down from 3.2 percent the prior month.

The drop in perceptions of future inflation occurred even as fuel costs increased. The average price of regular fuel climbed to $3.82 a gallon yesterday, the highest level since September 2008, according to AAA, the nation’s biggest motoring organization.

A strengthening job market may be helping ease the pain. The economy created 216,000 jobs in March, the most since May 2010, while the jobless rate fell for a fourth straight month to a two-year low of 8.8 percent, Labor Department data showed on April 1.

Consumer Spending

Commerce Department figures this week showed retail sales increased in March for a ninth straight month.

Cincinnati-based Macy’s Inc. (M), the second-largest U.S. department store chain, and luxury retailers Saks Inc. (SKS) and Nordstrom Inc. (JWN) were among companies that reported higher March sales at stores open at least a year, according to company data. Auto demand has also lifted from last year.

“We continue to see good, solid signs of progress despite some of the challenges,” Don Johnson, General Motors Co. (GM)’s vice president of U.S. sales operations, said on an April 1 conference call. “A recovering job market is going to be the most important factor for the U.S. economy at this stage, and we do anticipate that this is going to continue to improve.”

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OTTAWA