Financial Watch

Demand for loans to buy U.S. homes raced to a seven-month high last week in the last hurrah for federal homebuyer tax credits that ended April 30, Mortgage Bankers Association (MBA) data showed on Wednesday.

Home purchase loan applications jumped 13 percent in the week ended April 30 to the highest level since early October, overshadowing a 2.1 percent drop in refinancing demand. Total mortgage applications rose by a seasonally adjusted 4 percent, the trade group reported.

It was the third straight weekly increase in purchase applications, rising almost 24 percent in the month. The share of loan refinancing fell to 51.9 percent of all applications, the lowest since early July 2009, the MBA said.

The U.S. Federal Reserve decided to leave interest rates unchanged, saying the current recovery will not result in rampant inflation, the board announced Wednesday.

The central bank kept the target range for its federal funds at between zero per cent and one-quarter of one percentage point, a record low level for the benchmark rate.

The Federal Open Market Committee (FOMC) — the group that meets concerning interest rates — said the U.S. recovery is still in an early enough stage that increased industrial production will not translate into higher prices any time soon.

Fewer US workers made first-time claims for jobless benefits last week, giving hope that accelerating economic growth would soon translate into job creation, official figures showed on Thursday.

Initial jobless claims fell by 11,000 to 448,000, according to the Department of Labor. Analysts were hoping for a bigger fall, but the decline brought claims to the lowest level in a month.

However, the less volatile four-week average of jobless claims remains elevated and rose last week by 1,500 to 462,500. Economists argue that claims need to fall to the low 400,000 level before US employers will begin adding consistently to payrolls.

A new survey from the American Chamber of Commerce in China indicated that concern is growing among U.S. businesses in the country that protectionist policies are threatening their long-term future in a key market, even while they remain optimistic about an economy that has rebounded strongly from the global recession.

The annual AmCham-China survey of its members—a barometer of sentiment among U.S. investors in China—reflects worries that China’s three-decades-long push for open markets could be stalling, as the government increasingly seeks to favor state-owned domestic enterprises that have spearheaded the economic recovery.

Failing to curb federal budget deficits would do “great damage” to the U.S. economy in the long run, Federal Reserve Chairman Ben Bernanke warned Tuesday.

Bernanke again urged the White House and Congress to come up with a credible plan to reduce the nation’s red ink, which hit a record $1.4 trillion last year.

Failing to do so would push interest rates higher — not only for Americans buying cars, homes and other things — but also for Uncle Sam to service its debt payments, he said.

All that would sap national economic activity and could cause employers to cut back on hiring, Bernanke said.

The Senate is considering legislation to let the federal government set a “cap” limiting the amount of carbon dioxide each business may emit. A company discharging less than its allowance could sell or “trade” its unused portion to another firm that had reached its limit. Hence cap and trade.

This is supposed to reduce the amount of carbon dioxide produced by burning oil, coal and natural gas. Utilities, manufacturing and transportation rely on these fossil fuels and will face heavy taxes. President Barack Obama predicted electricity rates would necessarily skyrocket. Remember, 86 percent of Ohio’s electricity comes from coal-fired power plants.