…As the Economy Continues to Tumble, European Banks Cut Key Interest Rate and Dreamliner Flight Remains Grounded.

Barack Obama: Economy No. 1 Priority
President-elect Barack Obama is not wasting any time before officially taking office Jan. 20, meeting with President George W. Bush at the White House today. Unusually early in the transition process, Obama is meeting with Bush to discuss the dire economy and learn firsthand what awaits him come January.

“We are facing the greatest economic challenge of our lifetime, and we’re going to have to act swiftly to resolve it,” Obama said at his press conference Friday.

Obama promised to make the economy his No. 1 priority and get the nation’s business system back on track, but added the change will not happen quickly.

His first move for recovery is to get Congress to approve an economic stimulus plan that would extend jobless benefits, send food aid to the poor, dispatch Medicaid funds to states and spend tens of billions of dollars on public works projects. If the plan is not approved, Obama promised that, “it will be the first thing I get done as president of the United States,” MSNBC reports.

After the economy, Obama and his advisers will weigh which of his campaign promises to tackle next, be it health care, climate change or energy independence, or address them all at once. They also are conducting an extensive review of Bush’s executive orders, from stem cell research restrictions to oil and gas drilling, evaluating which to keep, which to repeal and which should be amended.

Economy Lost 240,000 Jobs in October
New figures from the Labor Department show employment deteriorating much faster than expected, with 240,000 jobs lost in October and major upward revisions in job-loss figures for August and September.

The unemployment rate jumped to 6.5 percent, a 14-year high, from 6.1 percent in September. The number of unemployed persons increased by 603,000 to 10.1 million. More than 22 percent of all unemployed people have been out of work for six months or longer.

Employment has fallen by 1.2 million in the first 10 months of 2008, with over half of the decrease occurring in the past three months. Over the past 12 months, the number of unemployed persons has increased by 2.8 million, and the unemployment rate has risen by 1.7 percentage points, the Labor Department reported Friday.

Health care and mining were the only sectors to grow in October, as manufacturing jobs shrank by 90,000, construction by 49,000, retail by 38,000 and the financial industry by 24,000.

Experts predict the economy would probably lose several hundred thousand jobs a month well into next year, with the unemployment rate hitting near 8.5 percent by the end of 2009.

The first week of November helped confirm economists’ dire predictions as nearly 15,000 job cuts were announced across several industries. Among the companies slashing jobs: Circuit City, which filed for bankruptcy today, Ford Motor Co. and GlaxoSmithKline.

Europe’s Major Central Banks Slash Key Interest Rates
In an effort to stave off a potentially lengthy economic crisis in Europe, the Bank of England, the European Central Bank and Swiss National Bank all cut their key interest rates on Thursday.

The Bank of England made a larger-than-expected cut of 1.5 percentage points to 3 percent, the lowest key lending rate since 1955. Some London economists believe the interest rate will drop another percentage point before Christmas and decline below 2 percent in 2009.

Following the U.K’s lead, the European Central Bank cut its key rate by 0.5 percentage points to 3.25 percent and the Swiss National Bank took its rate down to 2 percent. Denmark and the Czech Republic also cut down rates to 5 percent and 2.75 percent, respectively.

October the Worst Month for Auto Sales in 25 Years
The U.S. auto industry slumped further in October, with annualized auto sales the lowest in 25 years. Waning consumer confidence and tightened credit drove sales down 31.9 percent last month in comparison to October 2007.

Automakers reported total sales of 838,000 vehicles during October, putting the annualized selling rate — a projection of full-year sales at the current rate — at 10.5 million vehicles that month, according to Ward’s Autodata (via the New York Times).

General Motors led the free-fall with a 45 percent drop in sales, followed by Chrysler at 34.9 percent and Ford Motor Co. at 30.2 percent. Detroit’s Japanese competitors were not immune to the weakened economy either, with Toyota Motor Co.’s sales having dropped 23 percent in October, Honda’s sales plunging 25.2 percent and Nissan’s sales falling by 33 percent.

To help increase sales for 2008, U.S. automakers are starting promotions early or extending current ones.

Running on Fumes, Automakers Seek Help
Struggling U.S. automakers are requesting an additional $50 billion in new loans from Congress to help them survive tough economic conditions and pay for health care obligations for retirees, officials said on Friday.

The Bush administration on Wednesday approved rules for $25 billion in loans to automakers for retooling plants, but the money won’t reach the automakers until next year at the earliest. The administration said earlier today that it was up to Congress to enact any additional aid for automakers. Automakers have been pressing for an additional $25 billion in loans as well as loans from the Treasury or Federal Reserve.

The New York Times reports that House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid “urged the Bush administration on Saturday to consider using the $700 billion bailout for the financial system to aid distressed American automakers, in a prelude to what may become urgent negotiations over additional economic stimulus measures.”

According to Reuters, further calls were made to the Bush administration Sunday to help U.S. automakers, but Democratic and Republican officials said “taxpayers cannot repeatedly support business rescues.”

The Bush administration, which recently denied GM’s request for help to facilitate a possible merger with Chrysler, has not decided whether “it will — or can, by law — expand the bailout initiative beyond banks and other financial services firms.”

U.S. Manufacturers Confidence Continues to Erode
The Commerce Department announced on Tuesday that orders for manufactured goods fell 2.5 percent in September, or $11.2 billion, to $432 billion, due to U.S. and foreign businesses sharply cutting their demand for capital equipment. This decline follows a 4.3 percent drop in August. The drop reflected slackening demand for goods as well as price-related declines in orders for oil and related fuels.

The increase of 0.9 percent for durable goods orders was eclipsed by a 5.5 percent drop in orders of non-durable goods, which include food, clothes and petroleum products. Orders for non-defense capital goods excluding aircraft, considered a good indication of business investment plans, fell by 1.5 percent, following a 2.3 percent drop in August, the Chicago Tribune notes.

The Commerce Department added that the U.S. economy contracted at an annual rate of 0.3 percent in the third quarter and consumer spending fell 3.1 percent in the quarter, its first decline in 17 years and the steepest fall since 1980, the Associated Press reports.

In the latest Manufacturing Index from the National Association of Manufacturers (NAM) and IndustryWeek, 61 percent of small manufacturing firms and just 21 percent of large ones that responded to the third-quarter survey had a positive business outlook for their company.

Boeing Delays 787 Dreamliner Test Flight
Boeing Co., the world’s second-largest planemaker, will delay the first test flight of the new 787 Dreamliner beyond the fourth quarter because of the just-ended machinists strike, Bloomberg reports.

No new time-frame for the flight has been established yet, but the company predicts the plane may fly for the first time in February or March 2009. This may push deliveries into the second quarter of 2010.

The Dreamliner’s delivery to customers has been delayed three times already and was running 15 months late. Japan’s All Nippon Airways said in September that Boeing had told it before the strike to expect the plane in August 2009.

The 57-day strike by the International Association of Machinists and Aerospace Workers, which began Sept. 6, cost Boeing approximately $100 million in lost revenue per day, the Associated Press notes. Machinists began returning to work on Nov. 2, after ratifying a new contract with Boeing the day before. This was the union’s fourth strike in 20 years against the airplane giant and its longest since 1995.