U.S. economic growth may not top 2 percent this year and a third round of quantitative easing by the Federal Reserve would have little effect, said Martin Feldstein, a professor of economics at Harvard University.
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An accounting change boosted Ford’s fourth-quarter net income, but without the gain the company fell short of Wall Street’s expectations.
Weak sales in Europe and lower production in Thailand eroded Ford’s profits.
Investors punished the stock in pre-market trading, where shares fell nearly 5 percent to $12.14.
Ford earned $13.6 billion in the fourth quarter, due to a decision to move deferred tax assets back onto its books. Without that change, the company’s pre-tax operating profit totaled $1.1 billion, or 20 cents per share, missing analysts’ forecasts of 25 cents.
The company lost money in Europe and Asia in the fourth quarter. But its North American operating profit rose 33 percent to $889 million.
“The quarter was really driven by North America,” Chief Financial Officer Lewis Booth said.
Booth also said November flooding in Thailand, which affected its parts suppliers, had a greater impact than the company expected. Ford lost 34,000 units of production in Thailand and in South Africa, which relies on Thai-made parts. He said the company also saw higher costs for steel and other commodities. Ford spent $2.3 billion more on commodities in 2011 than the prior year, or $100 million more than it had forecast.
Europe’s debt crisis weighed on car sales in that region.
For the full year, the Dearborn-based company made $20.2 billion, or $4.94 per share. Without the accounting gain, it earned $8.76 billion, or $1.51 per share, its highest operating profit since 1999. Full year revenue rose 13 percent to $136.3 billion.
Analysts had forecast full-year earnings of $1.86 per share on revenue of $127.31 billion.
Based on its full-year North American results, Ford said it will make profit-sharing payments of around $6,200 each to its 41,600 U short term personal loans.S. hourly employees. Employees will get their checks in March.
Ford moved $15.7 billion worth of tax credits and other assets off its books starting in 2006 because it wasn’t making money so it couldn’t take advantage of them. The company moved most of them back onto its books in the fourth quarter because it anticipates using them now that it’s profitable.
The change will affect Ford’s tax rates going forward. Ford’s tax rate was 9 percent in 2010 because of the assets that were being held in the valuation allowance account. Ford’s new rate will be closer to 30 percent.
Booth said the change is a strong indication that the company expects to remain profitable. Another is Ford’s decision last month to reinstate a 5-cent quarterly dividend starting in March.
But Booth said the international climate remains turbulent. Ford is trying to hold the line on incentive spending in Europe, but that could cost some sales. He doesn’t expect Asia to be a solid contributor to profits for several more years, as the company tries to expand there. The South American market is also getting more competitive, he said, and Ford’s products there are older than some new entries.
Ford is cutting European production in the first quarter by 36,000 vehicles because of weak sales. It’s also making smaller production cuts in Asia and South America, but is increasing production in North America by 18,000 vehicles.
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Employment grew solidly last month and the jobless rate dropped to a near three-year low of 8.5 percent, offering the strongest evidence yet of an acceleration in economic activity.
Nonfarm payrolls increased 200,000 last month, the Labor Department said on Friday, the most in three months and way above economists’ expectations for a 150,000 gain.
The economy needs to sustain the current pace of job creation to signal a robust recovery is finally under way.
The unemployment rate dropped from a revised 8.7 percent in November, which was previously reported as 8.6 percent. The jobless rate is now the lowest since February 2009.
“This highlights that the U.S. economy is on its way to recovery even as strains in Europe persist,” said David Watt, senior currency strategist at RBC Capital in Toronto.
Stocks index futures extended gains on the data, while prices for Treasury debt fell. The dollar rose against the euro.
Signs the labor market is gaining traction could offer some comfort for the Obama administration, whose economic policies are constantly attacked by the Republicans.
The state of the labor market could determine whether President Barack Obama gets re-elected in November.
The report cemented views that growth in the fourth quarter accelerated after a tepid performance in the first 9 months of the year.
A string of better-than-expected U.S. economic indicators in recent weeks has highlighted a contrast between the recovery in the world’s biggest economy and Europe, which is already widely believed to be in recession and probably faces worse to come.
Though the payrolls count for October and November was revised to show 8,000 fewer jobs created than previously reported, there is no denying the labor market is recovering.
The separate household survey, from which the jobless rate is derived, showed gains in employment and a modest decline in the labor force, helping to lower the jobless rate.
A broad measure of unemployment, which includes people who want to work but have stopped looking and those working only part time but who want more work, dropped to an almost three-year low of 15.2 percent from 15.6 percent in November.
Still, the economy needs even faster pace of job growth over a sustained period to make a noticeable dent in the pool of the 23.7 million Americans who remain either out of work or underemployed since the end of the 2007-09 recession business card design.
With the labor market still far from healthy, the debt crisis in Europe unresolved and tensions over Iran threatening to drive up oil prices, the U.S. economy faces stiff headwinds.
Economists predict the recovery will lose a step early this year after expanding in the fourth quarter at what is expected to be the fastest pace in 1-1/2 years.
This should keep alive the possibility of the Federal Reserve embarking on a third round of asset purchases, or quantitative easing, to spur stronger growth.
GOVERNMENT A DRAG
All the job gains in December came from the private sector, where payrolls rose 212,000 - the most in three months. Government employment contracted 12,000.
For all of 2011, the private sector added 1.9 million jobs, while government employment fell 280,000.
A measure of the share of industries that showed job gains during the month rebounded after falling sharply in November.
There were job gains in construction, where unseasonably mild weather has boosted groundbreaking for new homes. Construction payrolls increased 17,000 after falling 12,000 in November.
Transportation and warehousing also got a boost from the mild temperatures, with employment jumping 50,200.
The bulk of the transportation increase came from the courier and messenger industry, which rose 42,000, probably reflecting gains from online purchases during the holiday season.
Manufacturing jobs rose 23,000, the largest gain since July. Factory employment rose 225,000 last year.
Retail employment rose 27,900 after hefty gains in November as retailers geared for a busy holiday shopping season.
Healthcare and social assistance increased 28,7000 after rising 20,200 in November. But temporary hiring - seen as a harbinger of future hiring - fell 7,500 in December after gaining 11,200.
Even though employment picked up last month, hourly earnings rose a modest four cents, indicating that most of the jobs being created are low paying. The high unemployment rate also means wages cannot grow much.
This is a potentially troubling sign for consumer spending, which has been largely supported by a reduction in savings.
The average workweek rose to 34.4 hours from 34.3 hours in November.
The euro extended its decline against the dollar after French borrowing costs rose at a sale of bonds.
The 17-nation common European currency was 0.9 percent weaker at $1.2832 at 10:08 a easy to get unsecured personal loans.m. London time.
A big earnings miss from Caterpillar wasn’t enough to derail a rally that pushed the stock market up 2 percent for the week.
Caterpillar fell almost 6 percent Friday after its second-quarter results came in below analysts’ expectations. Technology stocks rose broadly following strong earnings from the chip maker Advanced Micro Devices and Microsoft.
The Dow Jones industrial average is closing with a loss of 43 points, or 0 payday loans lenders.3 percent, to 12,681. The Standard and Poor’s 500 index is up 1, or 0.1 percent, to 1,345. The Nasdaq is up 24, or 0.9 percent, at 2,589. Each index finished the week higher.
Rising and falling shares were about even on the New York Stock Exchange. Volume was lighter than average at 3.3 billion shares.
Household Essentials, a Hazelwood-based distributor of ironing boards, hampers and other products for laundry and storage rooms, acquired Cedar Fresh, a cedar storage products manufacturer based in Miami.
Terms of the deal, which closed June 17, were not disclosed.
Cedar Fresh was founded in 1984 and makes cedar drawer liners, hangars and blocks that are designed to protect clothes and linens from moths.
As its strike against local building contractors moves into its fourth week, the St. Louis Bricklayers union plans to ask a federal mediator to step in if the contentious impasse continues when the two sides reconvene on Monday.
Business Manager Don Brown of the bricklayers’ Local 1 blames the stalemate on the St. Louis Mason Contractors Association, which Brown accuses of trying to use the economic downturn to loosen the unions’ grip on local construction projects.
“It’s a tactic that hasn’t been tried here before,” Brown said. “They’re trying to get members to resign from the union. It’s telling guys, ‘You can scab on your own union.’”
Association Executive Director David Gillick denies any attempt to bust the union, citing an alliance between the bricklayers and union contractors dating back a century. At issue, Gillick said, is the association’s belief that the future success of regional construction rests on a fundamental shift in the way unions and contractors do business.
“We choose to be union contractors. They choose to be union bricklayers. But if we don’t change the path we’ve been on, the marketplace will change it for us. It won’t be our choice anymore,” said Gillick.
Len Toenjes, president of the Associated General Contractors of St. Louis, said the split between the two parties exemplified a failed reliance on short-term fixes to the complex task of positioning the region to compete in the post-recession economy.
“In order to attract development, we need to be competitive,” Toenjes said. “But striking a reasonable balance is difficult for everybody. And it’s especially hard when two (organizations) that have been doing business for 100 years are suddenly thrust into the global marketplace.”
The public bickering marks an end to a pledge by the union not to negotiate the terms of its next contract in public. Brown said he broke that agreement in response to remarks Gillick made in an interview ten days ago with Charlie Brennan on KMOX radio.
The bricklayers walked off the job when the five-year contract they agreed to in 2006 expired at midnight, June 1. Approximately 500 members of Local 1 haven’t worked since.
Another 200 have remained on projects, part of an “interim agreement” with a handful of contractors who agreed to honor the terms of a new contract retroactively, assuming a settlement can be reached.
Local 1 also hit the pavement five years ago when talks faltered in a resolution of the 2006 pact. That strike lasted only five days.
What separates the tone of the negotiations in 2006 from 2011, said Brown, is the economic climate.
Compensation and work rules are the primary negotiating points separating the two parties. The association is asking for concessions that would peel back salary and benefits by four percent. Local 1 has balked at the proposal, noting that economy-induced declines in construction already slashed the average annual bricklayer salary to $30,702 in 2010.
The hours worked by bricklayers this year have already dropped 38 percent, Brown said. To the union, taking a salary reduction in a depleted construction market makes no sense.
“Even if we agreed to (a pay cut), there still won’t be any residential work out there, because they just aren’t building homes right now, and they won’t start until the banks start releasing money,” said Brown.
The two sides also can’t get together on a rule change that would increase the allowable weight of bricks lifted by workers from 30- to 40-pound masonry blocks.
Brown, citing a study, said a bricklayer hoisting 40-pound blocks 200 times a day would lift the equivalent of five pickup trucks a week or 2 1/2 fully loaded 747 jetliners over the course of a year.
Gillick maintains the 40-pound lift is consistent with union-regulated rules in other jurisdictions, including those in Illinois.
The union and the contractors are in accord on one aspect of the strike: Without an expedited agreement, current projects throughout the region will soon suffer the consequences of the labor stoppage.
Toenjes says some construction sites are already ’seeing an impact.”
And Gillick cautions the situation is “hitting a critical point” as bricklayers are needed to complement the work of carpenters, ironworkers, sheet metal workers and other tradesmen.
“Their patience is running thin, and they won’t be able to let a project dwindle,” Gillick said of general contractors and clients in the region. “They are going to have to make a decision about whether to bring in a union guy or a non-union guy. And in some cases that is already happening.”
On Friday, Day 17 of the strike, neither Gillick nor Brown was optimistic that an agreement might be imminent.
One measure of the distance separating the two men was Gillick’s reaction when asked if he’d agree with Brown to turning negotiations over to a federal mediator.
His answer: Probably not.
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