Wall Street bonuses, a sore point as the government gives billions of dollars in bailout money to the financial industry, have apparently cost former Merrill Lynch &Co. CEO John Thain his new job at Bank of America Corp. Thain resigned Thursday following news that Merrill Lynch had rushed out its year-end bonuses, paying them just before Bank of America completed its acquisition of Merrill and sought $20 billion in additional government bailout money. The company gave no reason for Thain’s departure, but its timing came hours after news reports about the bonuses,
U.S. jobless ranks continue to surge
The number of newly laid-off Americans filing jobless claims and the pace of home construction both posted worse-than-expected results in government data released Thursday, lending urgency to the economic recovery plan President Barack Obama and Congress are scrambling to advance. The latest batch of economic news cemented fears that the recession, already in its second year, will drag on through much of 2009. The reports “paint a bleak economic landscape ahead,” said Stuart Hoffman, chief economist at PNC Financial Services Group. On the layoffs front, first-time applications for unemployment benefits jumped last week by 62,000 to 589,000, the Labor Department reported. That was much more than the 540,000 tally economists expected.
Southwest Airlines post another loss
Southwest Airlines Co. said Thursday that it lost money in the fourth quarter of last year as its fuel-hedging strategy, brilliant when oil prices were rising, lost punch with tumbling energy prices. It was Southwest’s second straight losing quarter after a string of profitable quarters that reached back to early 1991. The discount carrier is responding by cutting capacity 4 percent this year — the first time in Southwest’s 38-year history that it hasn’t planned for growth — and reining in fleet expansion.
Chrysler offers new incentives
Chrysler said Thursday it is rolling out new incentives designed to tempt consumers into its dealerships and drive a much-needed sales boost. The incentive program will offer employee pricing discounts to the general public and additional rebates. The deals are in addition to a zero-percent financing offer the Auburn Hills, Mich.-based company announced last week, after Chrysler’s financial arm received a $1.5 billion infusion from the government’s bailout program.
Canada enters ‘deep recession’
The head of Canada’s central bank said Thursday the country is in a deep recession, but he expects it will be shorter than previous recessions. Bank of Canada Governor Mark Carney said interest rate cuts, a government stimulus package and a weak Canadian dollar could lead to a shorter downturn than recessions in 1981-82 and 1990-92. The bank is predicting three consecutive quarters of contraction for Canadian economic activity, including a 2.3 percent drop in gross domestic product in the fourth quarter of 2008 and a 4.8 percent drop in the current quarter.
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