Daily Archives: Feb 14, 2019

People wait in line at a stand during the Executive Branch Job Fair hosted by the Conservative Partnership Institute at the Dirksen Senate Office Building in Washington, U.S., June 15, 2018. REUTERS/Toya Sarno Jordan

WASHINGTON (Reuters) – U.S. retail sales recorded their biggest drop in more than nine years in December as receipts fell across the board, suggesting a sharp slowdown in economic activity at the end of 2018.

The economy’s outlook was further dimmed by other data on Thursday showing an unexpected increase in the number of Americans filing claims for unemployment benefits last week. That pushed the four-week moving average of claims to a one-year high, an indication that job growth was moderating.

There was also little sign of inflation in the economy, with producer prices dropping in January for a second straight month. Moderate inflation and softening domestic demand support the Federal Reserve’s pledge to be “patient” before raising interest rates further this year.

“This suggests that the word ‘patience’ will be in the Fed’s vernacular for some time,” said Jennifer Lee, a senior economist at BMO Capital Markets in Toronto.

The Commerce Department said retail sales tumbled 1.2 percent, the largest decline since September 2009 when the economy was emerging from recession. Data for November was revised slightly down to show retail sales edging up 0.1 percent instead of gaining 0.2 percent as previously reported.

Economists polled by Reuters had forecast retail sales increasing 0.2 percent in December. Retail sales in December rose 2.3 percent from a year ago.

The December retail sales report was delayed by a 35-day partial shutdown of the federal government that ended on Jan. 25. No date has been set for the release of the January retail sales report, which was scheduled for publication on Friday.

The plunge in retail sales came amid a sharp stock market sell-off and drop in consumer confidence in December. The longest government shutdown could also have undercut sales.

Some economists questioned the credibility of the report, arguing that the shutdown could have impacted on the collection of data. But the Commerce Department said the “processing and data quality were monitored throughout and response rates were at or above normal levels for this release.”

Excluding automobiles, gasoline, building materials and food services, retail sales dropped 1.7 percent last month after an upwardly revised 1.0 percent surge in November. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. They were previously reported to have jumped 0.9 percent in November.

December’s sharp drop in core retail sales suggested a moderation in the pace of consumer spending in the fourth quarter. Consumer spending, which accounts for more than two-thirds of the U.S. economy, increased at a 3.5 percent annualized rate in the July-September quarter.

As result of the weak retail sales report, economists slashed their fourth-quarter gross domestic product growth estimates by as much as seven-tenths of a percentage point to as low as a 2.0 percent rate.

Growth estimates could be trimmed further after another report from the Commerce Department showed retail inventories excluding automobiles tumbled 1.0 percent in November, the most since December 2008.

The economy grew at a 3.4 percent pace in the July-September period. U.S. Treasury prices rose on the data, while the dollar fell to session lows against a basket of currencies. Stocks were trading lower.

BROAD WEAKNESS

In December, online and mail-order retail sales dropped 3.9 percent, the biggest drop since November 2008. Receipts at service stations dived 5.1 percent, the biggest fall since February 2016, reflecting cheaper gasoline prices.

There were also declines in receipts at clothing and furniture stores. Americans also cut spending at restaurants and bars. Sales at hobby, musical instrument and book stores plunged 4.9 percent, the biggest drop since September 2008.

But sales at auto dealerships rose 1.0 percent in December and receipts at building material stores gained 0.3 percent.

The outlook for consumer spending, which has been underpinned by a strong labor market and cheaper gasoline, is not encouraging. A report this week from the New York Fed showed the overall debt shouldered by Americans edged up to a record $13.5 trillion in the fourth quarter of 2018.

In a separate report on Thursday, the Labor Department said initial claims for state unemployment benefits increased 4,000 to a seasonally adjusted 239,000 for the week ended Feb. 9.

Economists had forecast claims falling to 225,000 in the latest week. Claims surged to a near 1-1/2-year high of 253,000 in the week ended Jan. 26 and last week’s surprise increase suggested some ebbing in labor market conditions.

The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, rose 6,750 to 231,750 last week, the highest level since January 2018.

In another report on Thursday, the Labor Department said its producer price index for final demand dipped 0.1 percent last month as the cost of energy products and food fell. The PPI dipped 0.1 percent in December.

In the 12 months through January, the PPI rose 2.0 percent. That was the smallest gain since July 2017 and followed a 2.5 percent rise in December. Economists had forecast the PPI edging up 0.1 percent in January and increasing 2.1 percent on a year-on-year basis.

The PPI report came on the heels of data on Wednesday showing consumer prices were unchanged in January for a third straight month.

Reporting by Lucia Mutikani; Editing by Andrea Ricci

    A Border Patrol agent stands on a ranch fence line with children taken into custody in South Texas brush country north of Laredo, Texas, Tuesday, June 6, 2006. According to agents, the children were separated from their families after the Border Patrol apprehended a large group of immigrants that crossed into the U.S. illegally. They spent the next 11 hours in the brush until agents found them. This came a few hours before President Bush visited the Laredo Border Patrol Sector. (AP Photo/LM Otero)

    HOMESTEAD, Fla., SAN FRANCISCO, Calif. (Reuters) – For a growing number of migrant children, this is their first home in America: a sprawling campus dotted with beige buildings, massive white tents and metal trailers, next door to a U.S. Air Force base.

    General view of the Homestead Temporary Shelter for Unaccompanied Children, which is the Trump administration’s largest shelter for migrant children, in Homestead, Florida, U.S, February 13, 2019. REUTERS/Joe Skipper

    The federal government is holding nearly 1,600 migrant children here, at what it calls a “temporary influx” shelter. It has added 250 beds in the last two months and could soon house 2,350 children who crossed the nation’s southern border on their own.

    It is the country’s only such temporary quarters for migrant children, after the closure last month of a similar facility in south Texas, and the only shelter for migrant youths that is run by a for-profit company.

    The site is a topic of heated debate, as immigration advocates and Democratic legislators complain many traumatized children who fled violence and poverty in their home countries are held in an institutionalized setting for too long before being released to sponsoring families who can better care for them.

    Government officials say they are trying to safely release children to family members as fast as they can, and that the facility provides the first experience of stability that the children have had after long and often perilous journeys northward.

    Their arduous journeys are not necessarily over: Some of the children will gain asylum, which can take years; others will be deported.

    As the government seeks to rapidly expand the site’s capacity, it has waived a federal requirement at Homestead meant to ensure children receive sufficient health care. The U.S. Department of Health and Human Services, which cares for the children, previously required Homestead to maintain a clinician-to-child ratio of 1 to 12 to provide mental health services, according to a November 2018 report. But that requirement has been relaxed to 1 to 20, a Homestead program director said on Wednesday.

    The facility sits on federal property, and unlike established children’s shelters, such as smaller group or foster homes that hold migrant children across the country, is not governed by state child welfare regulations designed to protect youngsters from harm.

    On this day, as a steady rain poured down, children wearing clear plastic ponchos walked in single file lines around the grounds, attended by shelter staff. Some waved and yelled greetings in English and Spanish to visiting reporters.

    The Trump administration opened the Homestead site’s doors to media on condition that reporters not interact with children or photograph or record them inside, which they said was to protect children’s privacy.

    For these youths, aged 13-17, school is held in large white tents divided into small classrooms. Their instructors are not required to be certified teachers but must have a bachelor’s degree and speak English and Spanish.

    The younger children sleep in rooms with six sets of bunk beds each. Seventeen-year-olds, who are housed separately, sleep in large, long “bays” with 144 beds each. The older children use toilet stalls in an attached tent.

    In recreation areas near the beds were games of dominoes, Jenga, and Parcheesi. Outside, kids can play soccer, volleyball and basketball on the palm-dotted campus.

    Inspirational slogans and other art work by the children decorate building walls, including a drawing of Martin Luther King, Jr. with the words “I have a dream” written in Spanish. Another sign atop a doorway says, “Through These Doors Walk the Greatest People in the World!” in English.

    The facility was first opened during the Obama administration, but immigration rights advocates say the Trump administration has stranded children there for longer periods by making it more difficult for them to be released to sponsors, usually parents or close relatives.

    They say youngsters have been there for months, one of them for more than eight.

    Officials say the children spend an average of 67 days at Homestead before they are released.

    $750 A DAY

    About 35 miles south of Miami, the facility is run by Comprehensive Health Services, Inc., a private, for-profit company with a growing line of business in housing immigrant children. In a filing with the Securities and Exchange Commission last year, the firm’s parent company, Caliburn International Corp., noted President Donald Trump’s immigration policies were driving “significant growth.”

    It costs approximately $250 per day to house a migrant child at a standard, permanent shelter, said Mark Weber, an HHS spokesman. But at an influx facility like Homestead, the cost is triple that – around $750 per day. It is covered by American taxpayers.

    Democrats in Congress introduced a bill in December that would ban the use of unlicensed temporary emergency shelters for unaccompanied minors, arguing that stays at the shelters can re-traumatize children.

    In 2014, record numbers of children crossed the border and were held at Border Patrol stations in the southwest for days longer than the 72 hours allowed by law, he said. (That limit applies to how long children can be kept in Border Patrol custody – not HHS custody, as at Homestead.)

    A lawsuit filed in January on behalf of migrant children by immigrant rights groups accuses HHS’ Office of Refugee Resettlement of instituting “opaque and arbitrary” bureaucratic hurdles as it processes the release of the children.

    One Guatemalan boy, identified only as E.A.R.R., entered the United States in July 2018 and was held at Homestead for five months, according to the suit. His father applied to be his sponsor in July, and fulfilled myriad requirements set by caseworkers, such as giving the boy a separate room and even moving at one caseworker’s request, the suit alleges. His son was released shortly after the lawsuit was filed.

    “At one point, E.A.R.R. suffered from a headache so severe that he broke out in screams, and was taken to a hospital,” the suit said. “He has become anxious and depressed and has begun mental health treatment and medication.”

    While some of the children detained in federal facilities over the past year were separated from their parents at the U.S.-Mexico border as part of the Trump administration’s “zero tolerance” policy on illegal immigration, most crossed alone, often planning to reunite with a parent or close relative.

    The number of unaccompanied children crossing the border is not out of line with previous years, but children are spending far longer in federal custody, government data show. The average length of stay for migrant children in HHS custody for the first four months fiscal 2019 was 89 days, compared to 60 days in fiscal 2018 and 41 days in fiscal 2017, according to HHS data.

    As of Feb. 13, 11,500 children were in HHS custody, down from a record of nearly 15,000 in mid-December, partly because of a change in fingerprinting policy — but still it was nearly 80 percent higher than a year ago, the data show.

    “We don’t think most of these kids need to be detained at all,” said Mary Bauer, deputy legal director of the Southern Poverty Law Center’s Immigrant Justice Project. “These are kids who have for the most part loving family members who want them.”

    Reporting by Yeganeh Torbati in Homestead, Fla., and Kristina Cooke in San Francisco; Editing by Julie Marquis and Marla Dickerson

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