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Confidence among U.S. consumers fell in June to the lowest level in 28 years as record-high gasoline and rising joblessness rattled Americans.

The Reuters/University of Michigan final index of consumer sentiment dropped to 56.4, the weakest level since May 1980, from 59.8 the prior month. The measure averaged 85.6 in 2007.

Gasoline at over $4 a gallon and rising costs for food are pinching household budgets, just as mounting job losses and falling home values raise stress levels. The report showed the inflation rate that Americans expect over the coming five years held at 3.4 percent for a second month, the highest since 1995.

“There's a whole list of headwinds facing consumers and they're not happy about it,'' Scott Anderson, senior economist in Minneapolis at Wells Fargo & Co., said in a Bloomberg Television interview.

The confidence index was forecast to fall to 56.7, according to the median of 55 economists surveyed by Bloomberg News. Estimates ranged from 55.9 to 60.0.

Earlier today, a Commerce Department report showed consumer spending in May rose 0.8 percent, reflecting rebate checks, following a revised 0.4 percent gain the prior month. Incomes grew 1.9 percent last month, the most since September 2005.

12-Month Inflation

Consumers polled by Reuters/University of Michigan said they expect an inflation rate of 5.1 percent over the next 12 months, compared with a 5.2 percent forecast in the May survey.

The survey's index of consumer expectations for six months from now, which more closely projects the direction of consumer spending, dropped to 49.2, also the lowest since 1980, from 51.1.

A gauge of current conditions, which reflects Americans' perceptions of their financial situation and whether it is a good time to buy big-ticket items like cars, decreased to 67.6 from 73.3.

Consumers are feeling pain at the gas pump payday loans. Regular unleaded gasoline prices reached a record $4.08 a gallon at the pump on June 15, up 34 percent from the start of the year, before dropping a cent in the last two weeks.

The employment outlook also has them uneasy, as the economy has lost 324,000 jobs in the first five months of the year, the worst showing since 2003, according to the Labor Department.

Tighter Credit

Credit is getting harder to obtain, subduing demand for items with bigger price tags. Industry figures showed cars and light trucks sold at an annual pace of 14.3 million in May, the fewest in a decade.

Michael Jackson, chief executive officer at AutoNation Inc., the largest U.S. car retailer, is forecasting weak sales through the end of the year.

“My expectation is we will see a bottoming out in sales later this year,'' Jackson said in an interview June 5 with Bloomberg Television from Fort Lauderdale, Florida.

Spending may grow at an annual rate of 0.8 percent this quarter, down from a 1.1 percent pace in the prior quarter and the weakest since the first three months of 1995, according to the median estimate of economists surveyed by Bloomberg News this month. For the full year, spending will grow at a 1.5 percent pace, the weakest annual rate since 1991, according to the survey.

The bulk of the tax rebates will probably be spent from July through September, giving third-quarter growth a lift, before the economy decelerates again in the last three months of the year, the poll also showed.

The final Reuters/University of Michigan consumer confidence report reflects about 500 responses, compared with 300 households for the preliminary survey published earlier in the month.

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Toyota may scale back its ambitious target of selling more vehicles in the United States this year than it did in 2007, as damage from an economic slowdown and soaring oil prices becomes more fully known.

Surpassing the 2.62 million vehicles the company sold last year in the U.S. - its biggest market - would be difficult, Executive Vice President Tokuichi Uranishi told a shareholders meeting Tuesday, according to Toyota spokesman Paul Nolasco.

The world’s No. 2 automaker announced in December that it was hoping to sell 2.64 million vehicles in the U.S. in 2008 and predicted a 5% jump in global sales to 9.85 million vehicles because of strong sales in emerging markets such as China and Russia.

Toyota Motor Corp. will review its sales targets in July, as it does every year.

Through the first half of June, total auto sales in the U.S. were running at an annualized rate of about 12.5 million vehicles, according to J.D. Power & Associates. It was the lowest level for June in decades and a huge drop from the year-earlier rate of 16.3 million vehicles.

Uranishi projected that total U.S. auto sales could slip under 15 million vehicles this year, Nolasco said.

Last week, Ford Motor Co. (F, Fortune 500) said industrywide sales could drop as low as 14.4 million for the year, which would be the lowest level in 13 years, according to Ward’s AutoInfoBank.

With buyers fleeing to smaller, more fuel-efficient cars, demand has soared for Toyota’s gas-electric hybrid models no teletrak payday loans. Still, their popularity has been unable to fully insulate the Japanese carmaker from a drop-off in sales of larger vehicles.

Toyota announced recently a slowdown in large pickup truck and SUV production at plants in Texas and Indiana.

But the shift in consumer preference has hit Toyota’s U.S. rivals especially hard.

General Motors Corp. (GM, Fortune 500) said Monday that it would further cut SUV and pickup truck production, on top of its announcement earlier this month that it will close four North American plants by 2010. It also plans to offer zero-interest financing to clear out inventories of some 2008 pickup truck and SUV models.

Ford announced cuts Friday at seven pickup truck and SUV factories for the remainder of the year, including the idling of a pickup truck factory in Dearborn for most of the third quarter and the temporary closure of a Wayne pickup truck factory for nine weeks during the summer.

It now plans to produce 475,000 vehicles in the third quarter, 25% fewer than in the same period last year.

Toyota (TM) shares fell 1.51% to $48.63 Tuesday, compared with a 0.6% drop in the Nikkei 225 Stock Average. 

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The current housing market is bleak: home prices and sales are plummeting, foreclosure proceedings are skyrocketing and mortgage rates are on the rise.

When will things be better?

A new study from the Joint Center for Housing Studies of Harvard University, "The State of the Nation’s Housing 2008," finds the country poised to see an increase in housing demand over the next decade.

"The good news is that we still have a growing population," said Nicolas Retsinas, director of the Joint Center for Housing Studies and one of the study’s authors. "As long as you have more households, more people are going to need places to live."

Social trends - people getting married later and divorced more often - are making single-person households the fastest growing household type, the study finds. In addition, a long-term net increase in potential home buyers will be driven by demographic factors: the aging of "echo boomers" into adulthood, an increased life expectancy for baby boomers and projected annual immigration of 1.2 million.

From 2010 to 2020, the number of households in the United States will grow by an average of more than 1.4 million per year, the study finds.

Unsold homes block growth

Still, before the housing market can turn around, it must first work off the record numbers of unsold homes on the market. From 2005 to 2007, the number of new and existing vacant homes for sale rose 46% to 2.12 million.

The nationwide glut of unsold homes has hit the real estate market hard, forcing down sale prices, stemming new construction and leaving millions of homeowners with properties worth less than the value of their mortgage.

In early 2008, the nation had an 11-month supply of unsold new homes and a 10.7-month supply of existing single-family homes, according to the Harvard study. A six-month supply of existing homes is considered a buyers’ market. Reducing the current supply will require price declines, a decrease in interest rates, employment growth, a return of consumer confidence and the revival of accessible mortgage credit.

A reduction in new home construction is another key to decreasing inventory, Retsinas said cash advance today. Privately owned housing starts fell 3.3% to a seasonally adjusted annual rate of 975,000 in May from 1 million in April, according to the Commerce Department.

A sharp drop-off in housing starts has precipitated housing turnarounds in previous bubble-bust cycles, said Karl Case, a Wellesley College economics professor and a co-founder of real estate consulting firm Fiserv CSW. Case also sees long-term growth in the housing market and agrees that immigration and other demographic trends will help fuel a long-term recovery.

"If household formation continues at pace, prices will recover and starts will rise again," Case said.

In the housing bust of the early 1990s, cities with big immigrant populations, like Los Angeles, recovered more quickly than other metropolitan areas, like Boston, with lower foreign-born, said Case.

"Not all immigrants buy houses, but many immigrants buy houses," Case said. "That has a positive effect on the prices in a market."

Regional recoveries

Retsinas said parts of the country, such as the Northeast, with fewer vacant homes could see signs of a recovery in spring 2009. He was less sanguine about markets like the Southwest, where excessive overbuilding at the height of the market means it could take two years or more to sell off excess inventory.

Recovery in the Midwest represents that biggest challenge, because the housing downturn there stems from regional economic problems beyond overbuilding.

"They’re not reacting to an overheated housing market there," Retsinas said. "They live in an economy that is shedding jobs." 

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Singapore’s Neptune Orient Lines, the world’s eighth-biggest container shipping firm, is looking to raise $5-$7 billion in loans, banking sources said on Monday, the clearest sign yet it will bid for Germany’s Hapag-Lloyd.

The merger of the two companies could potentially create the world’s number three container shipping group, behind Danish shipping group A.P. Moller-Maersk (MAERSKb.CO: Quote, Profile, Research, Stock Buzz) and privately-owned Mediterranean Shipping Co.

The talks come as German tourism group TUI (TUIGn.DE: Quote, Profile, Research, Stock Buzz) Chief Executive Michael Frenzel tours Asia to market his company’s container shipping business, Hapag-Lloyd, which analysts value at around $7 billion, including debt.

NOL (NEPS.SI: Quote, Profile, Research, Stock Buzz) has a market value of $3.5 billion and several analysts have said any merger will require the financial support of its major shareholder, Singapore sovereign wealth fund Temasek Holdings TEM.UL.

“This certainly looks like a merger in the works,” said a fund manager at a European investment firm, who asked not to be named because he cannot publicly talk about individual stocks.

Analysts in Germany said the possible financing highlights NOL’s seriousness in pursuing the bid.

“NOL is a potential bidder for Hapag-Lloyd,” said Jochen Rothenbacher, an analyst at German brokerage Equinet cash advance loan no fax. “It should be seen positive for TUI that NOL is in talks to take up $5-$7billion.”

A spokesman for NOL declined to comment, but in April NOL Chief Executive Thomas Held, who is a German national, said NOL was looking at a merger with Hapag-Lloyd as an option for growth. 

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Could turning on the oil spigot put an end to the huge run in the price of oil? Don’t bet on it.

Oil-producing countries are already pumping at full throttle, and there isn’t a lot of spare production capacity that could meaningfully affect global prices.

Over the weekend, Saudi Arabia said it will boost its oil output by 200,000 barrels a day. Despite the promise of more supply, the price of oil spiked higher Monday morning.

The main reason: The added supply won’t be very great, and demand, especially from China and India, has shown little sign of slowing.

"There is a belief that China and India are going to sop up all the extra supply," said Stephen Schork, publisher of the industry newsletter the Schork Report.

The world uses around 85 million barrels of oil a day, so an extra 200,000 is a mere 0.2% boost.

Saudi Arabia is the only country in the world that could quickly pump more oil, and even then it’s only a maximum of about 1 million to 2 million barrels a day.

What’s more, bringing production online from places like the deep water Gulf of Mexico or offshore Brazil will take years, if not decades.

The Saudis have long maintained the world is adequately supplied with oil and these high prices are the result of the falling dollar and investor interest.

In some ways they’re right: No one is waiting 4 hours in line to buy gas, which would be expected if there were shortages.

But traders have taken a long-term view of the oil markets payday loan. They see global demand going nowhere but up, and supplies struggling to stay where they are.

"The market is saying, we don’t care that the Saudis think the markets are well supplied now," said Adam Sieminski, chief energy economist at Deutsche Bank. "It’s the perception there’s going to be a big problem a few years from now."

The International Energy Agency said as much a couple of weeks ago.

The agency, run by developed countries to manage oil stockpiles and study markets as a counter balance to OPEC, said that global oil demand by 2030 will surge to 116 million barrels a day but that global production will struggle to surpass 100 million barrels a day.

The point when demand exceeds supply is when the world will see Sieminski’s "big problem."

Of course, not everyone thinks that will happen. These high prices will cause a big drop in demand or spur new production to come online much faster that people think.

"We know demand has fallen, and more supplies are just around the corner," said Schork. "Clearly, this is not a market driven by fundamentals."

Unfortunately for anyone paying over $4 for a gallon of gas, Schork seems to hold the minority view among oil traders. 

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US Airways Group Inc (LCC.N: Quote, Profile, Research, Stock Buzz) said on Thursday it will reduce its work force by 1,700, or about 5 percent, and will cut more capacity than planned and introduce new fees as the airline industry battles record fuel prices and a weakening economy.

The airline will reduce its fourth-quarter domestic mainline capacity by 6 to 8 percent, having previously planned a 2 to 4 percent cut.

For 2009, US Airways plans to cut domestic mainline capacity 7 to 9 percent from 2008 levels.

The airline will also return 10 aircraft to leasing companies and cancel deliveries of two aircraft.

US Airways said its new fees will include the introduction of a $15 service fee for a first checked bag for many customers from July 9.

“Our industry is profoundly challenged by the dramatic increase in fuel prices, and we must write a new playbook for running a profitable airline in this new and challenging environment,” said US Airways chief executive Doug Parker in a statement.

US Airways said its fuel expense will be about $1.9 billion more in 2008 than it was last year internet payday loans.

VEGAS FLIGHTS CUT 

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The Toronto stock market closed slightly lower today after a spike in oil prices of over $5 took energy stocks higher while financials cancelled out those gains amid growing talk of rising interest rates in Canada, the U.S. and Europe.

Sharply higher crude prices helped send New York indexes sharply lower while investors were further depressed by the latest economic snapshot from the U.S. Federal Reserve.

Toronto's S&P/TSX composite index was down 19.68 points to 14,716.52 after dropping 225 points Tuesday on lower commodity stocks and banks.

The TSX Venture Exchange slipped 10.38 points to 2,638.56.

The Canadian dollar moved up 0.23 cent to 98.04 cents US.

New York's Dow Jones industrial average plunged 205.99 points to 12,083.77.

The Nasdaq composite index fell 54.93 points to 2,394.01 while the S&P 500 index shed 22.95 points to 1,335.49 after the Fed said the economy remained "generally weak" heading into summer due to rising costs for energy and food.

The Fed's new snapshot of business conditions in its so-called Beige Book said "consumer spending slowed … as incomes were pinched by rising energy and food prices." Manufacturing activity, meanwhile, was "generally soft" and the housing market remained stuck in a rut.

"The opening paragraph used descriptives such as softer, weaker, lower, slower, sluggish, modest, stable, little changed to describe activity in the Fed Districts," observed BMO Financial Markets economist Jennifer Lee.

"You know activity is slumping when the most positive word mustered up is `modest', or `stable', or `little changed'."

Oil prices continued to be volatile as the July crude contract on the New York Mercantile Exchange moved up $5.07 to US$136.38 a barrel after losing over $3 on Tuesday.

"I watch these prices change second by second, minute by minute and it leads me to believe there is a whole lot of speculation in that sector – and yet there are other people who are saying no, it's not speculation, there's a shortage of the stuff," said Fred Ketchen, manager of equity trading at Scotia Capital.

"Speculators are the ones, I think, who are to take credit or the blame for exaggerated volatility we're seeing in the price of these futures."

Data released by the U.S. Department of Energy showed oil inventories down by 4.56 million barrels last week – but analysts had expected a much smaller decline of about 1.4 million barrels.

Gasoline stockpiles rose by 998,000 barrels.

The TSX energy sector moved ahead 1.7 per cent with Canadian Natural Resources (TSX: CNQ) up $2.46 to $105.26.

Precision Drilling Trust (TSX: PD.UN) climbed 53 cents to $27.56 after making an unsolicited US$1.61-billion takeover offer for U.S guaranteed payday loan. contract driller Grey Wolf Inc.

The financial sector slipped 1.8 per cent after the Bank of Canada unexpectedly decided on Tuesday to leave its key overnight rate unchanged at three per cent to fight inflation, raising speculation the central bank will start hiking rates in 2009.

And there has been growing talk from central bank officials in the U.S. and Europe that higher energy and food prices will result in higher rates to combat inflation.

Royal Bank (TSX: RY) fell $1.26 to $48.30 and Scotiabank (TSX: BNS) declined 85 cents to $50.17.

Laurentian Bank (TSX: LB) was off 20 cents to $43.30 after DBRS upgraded its deposits and senior debt rating.

U.S. financials were also under the gun with shares in Lehman Brothers down after Merrill Lynch downgraded the investment bank to neutral from buy. The move came a week after Merrill had upgraded the stock – a move it now says was premature, given that Lehman's “business mix is poor for this environment". Lehman shares fell $3.75 to US$23.75.

Bullion prices revived after American dollar strength had prodded gold down almost US$27 an ounce on Tuesday. The August gold contract on the Nymex rose $11.70 to US$882.90 an ounce and the TSX gold sector was flat.

The materials sector rose about 0.8 per cent with Agrium Inc. (TSX: AGU) up $7.77 to $102 after the agriculture-inputs company raised its profit expectations. It now projects second-quarter earnings of US$2.80 to $3.00 per share, up from previous EPS guidance of $1.92 to $2.22.

Potash Corp. (TSX: POT) advanced $2.45 to $227.33.

The information technology sector was up 1.67 per cent, almost solely because of Nortel Networks Corp. (TSX: NT). The company and Alvarion Ltd. (NASDAQ:ALVR) announced an agreement to combine the Israeli company's Wi-MAX products with the Canadian telecom equipment maker's network gear and services. Nortel shares jumped $1.15 to $9.42.

Rising fuel costs continued to pummel transportation stocks – Canadian National Railway (TSX: CNR) fell $2.24 to $50.28 and Canadian Pacific (TSX: CP) eased $2.22 to $65.34.

Elsewhere on the TSX, shares in metals distributor Russel Metals Inc. (TSX: RUS) jumped $1.80 to $29.60 after it said it expects second-quarter earnings per share will beat average analysts consensus forecasts of a 78 cent per share profit by 35 to 45 per cent.

Forzani Group Ltd. (TSX: FGL) fell $1.70 to $14.80 after Canada's largest sporting-goods retailer suffered a first-quarter loss of $2.9 million as sales at stores open a year or more declined 2.1 per cent.

On the TSX, declines beat advances 885 to 697 with 219 unchanged as 407.6 million shares traded worth $8.3 billion.

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Rising food and energy costs are still trickling through the economy, complicating the outlook for inflation, Boston Federal Reserve President Eric Rosengren said on Tuesday.

The central bank still expects prices to trend down as the economy softens, but it is less confident in this outlook because of simmering commodity costs, Rosengren said in a speech in Cape Cod.

“The effects of significant increases in food and energy prices are still feeding through the economy, as are the impacts of appropriately aggressive monetary and fiscal policy responses to the recent financial turmoil,” he said.

The United States has been struggling with twin crises in the housing and financial sectors, developments that have forced the Fed to cut interest rates sharply since September.

Investors now believe the central bank will leave benchmark rates on hold at their current 2 percent level quick payday loan. Tough talk on inflation from a string of Fed officials have also prompted the markets to begin pricing in an eventual rate hike, as early as October.

The economy has barely sputtered forward in the last two quarters. Last week, the government reported a jump in the unemployment rate from 5.1 percent to 5.5 percent, the biggest one-month rise in 22 years.

At the same time, oil prices have reached a record high near $139 a barrel and the average cost of gasoline nationally has surpassed $4 a gallon for the first time. These trends should slow growth, but also put upward pressure on prices.

DON’T BLAME THE BUCK 

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LAURIE NICKLE

Age: 37

Job: Laid-off assembly line worker at truck plant

How long at GM? 4.5 years

Why are you at the blockade? Because GM wants to shut the truck plant after they agreed to give us a new model.

Are you angry, and if so, at whom? Yes. At GM and at the government because they’re taking away our paycheques and, up until now, the government hasn’t done anything to help us.

What’s next for you? I guess I’m going to have to start searching for a job soon. Either looking for a job or going back to school.

STEVE HIENSTRA

Age: 30

Job: Assembly line worker at GM Oshawa truck plant

How long at GM? Almost four years

Why are you at the blockade? I’m losing my job and I’m trying to fight for it and save it.

Are you angry, and if so, at whom? Yeah, I’m angry. Two weeks ago, we agreed to a contract and, two weeks later, they (GM) backed out on us.

What’s next for you? It all depends if they’re able to keep the truck plant. If not: retraining.

JIM BEDFORD

Age: 69

Job: Retired assembly line worker

How long at GM? 25 years before retirement

Why are you at the blockade? I have to support the guys I used to work with and I’m afraid they might try to take away my pension.

What’s next for you? All I can do is see what the union does and take it day by day.

KATHIE FOWLIE

Age: 55

Job: Assembly line worker at car plant

How long at GM? 25 years

Why are you at the blockade? I want to make a statement to our government because they need to step up to the plate and lower the taxes on gas so people can drive whatever vehicle they want.

What’s next for you? What’s next for me is to be here to support this union in any action and any struggle and try to find jobs for our people.

TED LAWRENCE

Age: 42

Job: Assembly line worker at car plant

How long at GM? 23 years

Why are you at the blockade? Because GM lied to us with the bargaining.

Are you angry, and if so, at whom? I’m angry for the community because GM let us down because they lied http://savingpaydayloans.com. We don’t teach our kids to lie, so how can we respect our employer if they lie to us.

What’s next for you? We just keep plugging on.

M. VANDEN HEUVEL

Age: 35

Job: Assembly line worker in car plant

How long at GM? Six years

Why are you at the blockade? I need my job. I’m a single person with a car and a mortgage and I need to keep my job.

Are you angry, and if so, at whom? I’m mad at the company and the government.

What’s next for you? The unemployment line.

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Tyson Foods Inc. said Monday it would "voluntarily withdraw" advertising and labels claiming that its poultry products don’t contain antibiotics, after a federal court issued an injunction stopping the practice.

The world’s largest meat producer said it notified the U.S. Department of Agriculture it would stop using the "raised without antibiotics" chicken label.

Tyson (TSN, Fortune 500) said it asked the USDA, which previously had approved the slogan, to start "a public process to bring more clarity and consistency to labeling and advertising rules" on antibiotic claims.

Tyson had claimed it based the slogan on the absence of any antibiotic believed to affect humans.

"We still support the idea of marketing chicken raised without antibiotics because we know it’s what most consumers want," Tyson senior vice president Dave Hogberg said. "However, in order to preserve the integrity of our label and our reputation as a premier company in the food industry, we believe there needs to be more specific labeling and advertising protocols."

U.S. District Judge Richard Bennett in Baltimore had set a May 15 deadline to stop Tyson from running any of the advertisements. The injunction came after competitors Perdue Farms Inc. and Sanderson Farms Inc. sued, claiming Tyson’s advertising was misleading.

Tyson had appealed Bennett’s ruling, but the 4th Circuit Court of Appeals in Richmond, Va., denied a motion by Tyson to stay the order in May.

Sanderson, based in Laurel, Miss., has argued it lost a $4 million account to Tyson because of the advertising campaign, and Salisbury-based Perdue claims it has lost about $10 million in revenue since last year.

Charles Hansen of the Truthful Labeling Coalition, whose members are Perdue, Sanderson and Livingston, Calif.,-based Foster Farms, had asked the USDA to rescind its approval for Tyson’s labeling http://us-fast-cash-now.com. Hansen did not immediately return a call for comment left at his office Monday night.

After approving the advertising, the USDA later told Tyson that, when it approved the no-antibiotics label, it had mistakenly overlooked additives called ionophores that are used in feed for Tyson’s chicken. Regulators said the USDA’s Food Safety and Inspection Service has a long-standing policy of classifying ionophores as antibiotics. Tyson disagreed, saying the U.S. Food and Drug Administration did not consider them antibiotics.

Tyson’s Hogberg later testified in court that the company spent about $16 million on the original publicity campaign, including about $4 million in promotional materials. Tyson said Monday it has begun designing and ordering new labeling and packaging for its poultry products.

Tyson (TSN, Fortune 500) stressed its decision would not cause any changes in how the Springdale-based company "protects the health of its birds."

"The company does not use antibiotics for the purpose of growth promotion," the Tyson statement read. "On those rare occasions when antibiotics are used to treat an illness, it is on a prescription-basis only to protect birth health."

Tyson is the country’s second-largest chicken producer after Pilgrim’s Pride Corp (PPC, Fortune 500). 

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