Retail sales rise ... Jobless claims top 600,000 again ... Tax breaks for home buying and car buying slashed
* Retail sales popped 1% in January, and 0.9% if you exclude autos. Those readings were better than expectations for readings of -0.8% and -0.4%, respectively. There was some relative strength in categories like food and clothing, as well as gasoline (reflecting higher prices on the month).
* On the other hand, initial jobless claims filings came in at 623,000 against expectations for a reading of 610,000. Last week's number was revised up to 631,000 from the 626,000 previously reported. Continuing claims climbed to 4.81 million, the highest level since the government started tracking in 1967.
* Tax provisions that apply to the housing and auto markets were reportedly curtailed sharply in the House-Senate stimulus negotiations. An $11 billion tax cut for the auto industry was slashed to just $2 billion. Instead of being able to deduct car loan interest when purchasing a new car, buyers will now just be able to deduct state and local taxes.
Meanwhile, a provision targeted at home buyers was slashed from $15,000 to $8,000. That’s not much more than the existing $7,500 credit that’s already being offered ... and that has failed to boost home sales.
Another provision that was going to allow corporations to use losses they’re racking up today to offset profits they earned as far back as five years ago was also cut dramatically. It’ll now be available only to small businesses that generate revenue of less than $5 million a year, according to the Wall Street Journal. The original provision stood to benefit home builders, because they could use the losses they’re generating now to get big refunds on the taxes they paid during the housing bubble.