Consumer credit sets record

Journal Record, The (Oklahoma City), Jan 9, 2002

WASHINGTON (AP) -- Americans increased their borrowing in November by the largest amount on record. A big rise in auto loans spurred by zero-interest rate financing offers led the way.

Consumer credit soared by a seasonally adjusted $19.8 billion in November, or a 14.6 percent annual rate, the Federal Reserve reported Tuesday. The dollar increase was the biggest since the Fed began record-keeping in January 1943 and the percentage increase was the largest since November 1995.

Economists were expecting consumer borrowing to rise, but by a lot less -- around $3 billion to $4 billion during the month.

While consumer confidence rebounded in December, it was down sharply in November. The nation's unemployment rate shot up to 5.6 percent in November and layoffs also rose. But for consumers, the lure of zero-percent financing for cars and heavy discounting on many products was hard to resist, economists said.

"It's apparent consumers haven't been too concerned with softer economic conditions and a weak labor market," said economist Richard Yamarone of Argus Research Corp. "Without the burden of high energy prices and lofty mortgage rates, consumers felt comfortable to borrow briskly."

Demand for nonrevolving credit, including new cars and vacations, soared by $14.4 billion, or at an annual rate of 18.3 percent in November. That came on top of a $14.7 billion advance or a 19 percent rate of increase the month before.

Delphi lays off 150

DAYTON, Ohio (AP) -- Delphi Automotive Systems laid off 150 workers in its Harrison Thermal Systems division because of slowing automotive production. The layoffs at one of the division's two Moraine plants included 100 production jobs and 50 skilled trades jobs, the company said.

"We're trying to adjust our production to our customers' requirements," Delphi spokesman Lindsey Williams said. "And the reality of it is we need fewer employees to meet those requirements."

Williams said orders for air-conditioning compressors have dropped considerably, partly due to the discontinuation of zero-interest financing packages that boosted auto sales after Sept. 11. He said he anticipates "a continued softening" in the auto market.

Troy, Mich.-based Delphi, the world's largest auto parts supplier, has started massive restructuring effort to cut 13,000 jobs by the end of the first quarter.

Motorola cuts executives

CHICAGO (AP) -- Motorola will lay off about 20 percent of its 600 top executives as part of previously announced job cuts, a spokeswoman for the cell phone and semiconductor manufacturer said.

Layoffs at the Schaumburg-based company could begin as early as next week and will be complete before April, Motorola spokeswoman Jennifer Weyrauch said Tuesday. The executive layoffs are part of the job cuts that the company announced Dec. 18, Weyrauch said.

The layoffs will substantially shrink the number of Motorola employees with titles of vice president or higher.

Motorola has reduced its work force by 32 percent -- 42,900 jobs through layoffs and 5,500 through sales of businesses -- since August 2000, when it had 150,000 employees worldwide.

Postal rate hike seems likely

WASHINGTON (AP) -- A deal that would raise mail rates by June 30 seems likely, the chairman of the Postal Service's board of governors said Tuesday. The increase would boost the price of a first-class stamp three cents to 37 cents and raise other rates as well.

"A settlement looks promising," Robert F. Rider said, noting that a majority of major mailers have agreed to accept the proposed rate increase. Rider said he believes those who have not yet accepted the deal will either agree to it or at least will not formally oppose the new rates.

The post office announced plans to raise rates Sept. 11, a complex process that generally takes about a year to take effect.

But because of losses suffered by the agency due to the terrorist attacks and sluggish economy, the post office and major mailers have been negotiating a speedup that would put the rates in effect three months early in return for a promise not to seek another increase this year.

Tiffany holiday sales decline

NEW YORK (AP) -- Tiffany & Co. reported a 2 percent drop in holiday sales, but said that fourth quarter and full-year earnings should be at the upper end of its forecast due to changes in product sales mix and ongoing expense controls.

The high-end jewelry retailer said that net sales from Nov. 1 through Dec. 31 were $472.7 million, down 2 percent below last year's levels. On a constant-exchange rate basis, net sales gained 1 percent and worldwide sales at stores open at least a year, known as same- store sales, were down 2 percent.

"Considering the challenging external environment, we are pleased with these holiday season results, which in total, exceeded our expectations for the season," Michael J. Kowalski, president and chief executive, said in a statement. "While customers continued to exhibit varying degrees of restraint in their holiday spending, there was a noticeable improvement in store traffic as the holiday season progressed."