Evidence that the economic rebound could eventually raise inflationary pressures emerged in a report Tuesday that wholesale prices surged last month. Most economists aren’t worried, though. They think the economy remains too weak for the price increases to last. The Federal Reserve began a two-day meeting Tuesday and is likely weighing the higher-than-expected wholesale inflation. Should inflation pressures mount, the central bank could be forced to start raising interest rates sooner than expected. But Fed policymakers aren’t likely to raise a key rate at the end of their meeting today. The Fed has kept rates at record lows to bolster the shaky economic recovery.
General Motors may kill Saab brand
General Motors’ chairman says that if Dutch luxury car maker Spyker doesn’t buy the Saab brand, GM will let it die a quiet death by the end of the month. Chairman and interim CEO Ed Whitacre Jr. told reporters Tuesday he has “a sense it’s possible” that the Saab sale to Spyker could still go through. “Saab is just about done,” Whitacre said in a meeting with reporters. “If we don’t find a buyer by the end of the month, we’re going to close it.” Government officials in Stockholm said work has begun to secure state-guaranteed loans for a possible sale of Saab, which employs about 4,500 people.
Builder confidence dips this month
Even a holiday gift from Uncle Sam couldn’t brighten the home builders’ outlook in December. The National Association of Home Builders said Tuesday its housing market index fell by one point to 16 this month, reflecting concern that job losses and a slow economic recovery will continue to stifle demand for new homes despite the extension of a federal tax credit for buyers. The latest reading is the lowest since June, when it fell to 15. This was also the first monthly decline since October. The worsening outlook was something of a surprise because it came one month after the industry received a major boost from Congress and the Obama administration in the form of buyer tax credits.
Weyerhaeuser OKs change to trust status
Weyerhaeuser Co. said Tuesday its board has approved a conversion of the forest products giant into a real estate investment trust, letting the company take advantage of major tax benefits. Weyerhaeuser has been under pressure for years to lower its income tax rate — which currently totals 35 percent — by becoming a REIT. The investment trusts distribute at least 90 percent of their taxable income to shareholders as dividends each year, and then can deduct those dividends from corporate taxable income. In many cases, REITS will pay out all of their taxable income and owe no corporate tax at all. “This conversion will position us to be more competitive in our timberlands business,” President and CEO Dan Fulton said.
From Herald news services
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