Americans cut back on spending, China makes a Hollywood deal and a revved-up U.S. auto industry tops our roundup of the day's top business news stories.
Americans Cut Back on Spending in April
American consumer spending dropped a seasonally adjusted 0.2 percent in April, while income was unchanged, the Commerce Department announced Friday. This is the first decline in consumer spending since last May, and follows a 0.8 percent jump in February and a 0.1 percent uptick in March. Consumer spending drives 70 percent of the economy. The cutback in spending may be tied to higher taxes, including an increase in Social Security taxes, which has reduced take-home pay for nearly all workers, analysts say.
Household Wealth Lost to Recession Yet to be Recovered: The Fed
The typical American household has regained less than half its wealth lost in the Great Recession, according to a Federal Reserve Bank of St. Louis report cited by The Associated Press. A previous Federal Reserve report released in March calculated that Americans had regained 91 percent of their losses. Household wealth plunged $16 trillion from the third quarter of 2007 through the first quarter of 2009. By the final three months of 2012, American households as a group had regained $14.7 trillion, the report said. But when adjusted for inflation and averaged across the U.S. population, the St. Louis Fed, concluded, the average household has recovered 45 percent of its wealth.
More Developments for Netflix: Joining Nasdaq 100 in June
Netflix will join the Nasdaq 100 index on June 6. The Los Gastos, Calif.-based provider of on demand Internet streaming movies, television series and original content, will replace Perrigo Co., a maker of over-the-counter drugs. Perrigo announced last week it was transferring its stock listing to the New York Stock Exchange. As of April, Netflix had a reported 29.2 million U.S. subscribers. Its shared have more than doubled in value so far this year, The New York Times reports. Last week, Netflix debuted new episodes of the cult-favorite TV series, “Arrested Development,” which was cancelled in 2006. On an investor call Thursday, Netflix’s Chief Content Officer Ted Sarandos said the company plans to increase its investment in original content from “less than 5 percent” of its total revenue to up to 15 percent over the next couple of years.
Eurozone Unemployment to Reach 20 Million in 2013
Unemployment across the 17 EU countries that use the euro is on course to hit 20 million this year, The Associated Press reports. Eurostat, the European Union's statistics office, said Friday that the unemployment rate rose to 12.2 percent in April from the previous record of 12.1 percent the month before. A net 95,000 people joined the ranks of the unemployed, taking the total to 19.38 million, the AP report said. The figures find disparities among the bloc countries. While Germany’s unemployment rate is 5.4 percent, there are more than one-in-four people unemployed in Greece and Spain. Italy’s youth unemployment rate is more than 40 percent.
U.S. Auto Industry Getting in Gear
The U.S. auto industry is expected to report sales growth of more than 6 percent in May, Reuters reports. Analysts polled by Thomson Reuters expect an annual sales rate in May of 15.1 million vehicles as American buyers replace their aging cars and trucks. The May forecast would be a welcome rebound from April. The annual sales rate had topped 15 million each month since November before falling short of that benchmark last month. Auto sales each month are an early indicator of economic health, analysts say. The industry is in the midst of its fourth year of recovery from an economic downturn that pushed General Motors Co and Chrysler into bankruptcy in 2009, Reuters noted.
What China Really Wants to Do is Direct
Hollywood studio Legendary Entertainment, maker of The Dark Knight and he The Hangover franchise, signed an agreement Thursday with state-owned China Film Group tin a bid to expand into the growing, but tightly-controlled Chinese movie market, The Associated Press reports. The deal calls for the companies to fund development and production of multiple big-budget films over three years. Each is planned as a U.S.-China co-production, which would allow the bypassing of China's import restrictions that limit the number of foreign movies shown on the country's 12,000 screens to 34 each year. Their first collaborations will be announced in the coming months. China Film Group is an important player because it essentially controls film imports and co-productions, making it an important gatekeeper for foreign studios, AP said.
Federal Program to Aid Distressed Homeowners Extended
The Obama administration Thursday extended its Making Home Affordable program, the principal vehicle for helping distressed homeowners to get mortgage modifications and avoid foreclosure, The New York Times reports. The Making Home Affordable program includes the Home Affordable Modification Program, also known as HAMP. Both will remain in effect through 2015. They were due to expire at the end of this year.