…Capping Pay of Bailed-Out Executives, January Job Losses, Chinese Manufacturing’s Recovery Signs, Automaker Sales and UK Factory Output.

The Stimulus Package So Far
The stimulus package the United States Congress is completing “would raise the government’s commitment to solving the financial crisis to $9.7 trillion, enough to pay off more than 90 percent of the nation’s home mortgages,” Bloomberg News reports.

The bailout so far includes:

• $3 trillion of loans or spending from the Federal Reserve, Treasury Dept. and Federal Deposit Insurance Corporation (FDIC);
• $5.7 trillion more pledged from the Fed, Treasury and FDIC; and
• $800+ billion stimulus package

Bloomberg summarizes:

The $9.7 trillion in pledges would be enough to send a $1,430 check to every man, woman and child alive in the world. It’s 13 times what the U.S. has spent so far on wars in Iraq and Afghanistan, according to Congressional Budget Office data, and is almost enough to pay off every home mortgage loan in the U.S., calculated at $10.5 trillion by the Federal Reserve.

Only about $1.7 trillion of this has been, or will be, voted on (TARP, stimulus and tax cuts/rebates). “The Senate is expected to pass an $827 billion fiscal stimulus bill, which must then be reconciled with a separate $819 billion House version,” says Forbes. Tomorrow the Treasury Dept. is expected to unveil a sweeping plan to use the remaining $350 billion in the government’s Troubled Asset Relief Program. “Total cost,” says Forbes: “at least $1.1 trillion.”

$500,000 Cap on Executive Pay in Bailouts
President Barack Obama on Wednesday moved to put a shorter leash on companies getting government help, including capping the annual pay of top executives of some institutions at $500,000, limiting “golden parachutes” and requiring corporate boards to adopt policies on luxury expenditures such as lavish parties.

“The rules, created in response to growing public anger about the record bonuses the financial industry doled out last year, will apply only to top executives at companies that need ‘exceptional’ assistance in the future,” according to Bloomberg News. “The president and Congress have had to defend billions in aid to banks that continue to provide generous bonuses and luxury perks while posting record losses. Pay caps may provide the political cover the administration needs to deliver additional infusions of capital into the financial sector that may be necessary.”

Yet as last week wore on, it became less clear whether the pay-cut scheme would be effective, or even helpful: The limits aren’t retroactive, meaning firms that have already taken government money won’t be subject to the restrictions (unless they have to come back for more); banks are expected to find loopholes, and the cap may drive “talented” executives away from companies that need them the most.

While some corporate-governance experts say the new rules would force chief executives to be more accountable to shareholders, others warn the moves may escalate tensions between Wall Street and Washington.

Brutal January for U.S. Jobs
January saw 598,000 non-farm jobs shed, the largest payroll loss since December 1974, pushing the unemployment rate up from 7.2 to 7.6 percent, according to the U.S. Department of Labor on Friday.

Job losses were again spread across both manufacturing and services industries, reinforcing the picture of an economy contracting at its fastest pace in decades.

Since the start of the recession in December 2007, payroll employment has declined by 3.6 million, about half this decline having occurred in the past three months.

Manufacturing Decline Slowed In January
Economic activity in the manufacturing sector failed to grow in January for the 12th consecutive month, and the overall economy contracted for the fourth consecutive month, according to the Institute for Supply Management’s latest Manufacturing Report On Business.

According to the ISM survey of supply chain executives, the index of national manufacturing activity registered 35.6 percent in January, “2.7 percent points higher than the [nearly three-decade low] seasonally adjusted 32.9 percent reported in December.” The key gauge of manufacturing “improved for the first time since June, indicating that manufacturing’s decline slowed last month,” the Associated Press reports.

However “consumer spending fell for a record sixth straight month in December as recession-battered households boosted their savings rates to the highest level since May … and construction spending fell for a third month in December,” AP says.

Bloomberg News adds that manufacturing in the U.S. is “offering no sign the economy has hit bottom.” According to the Commerce Department, “personal spending fell 1 percent in December and reported a third monthly drop in construction. Factories are likely to cut back further as the slump in household purchases leaves companies with stockpiles of unsold goods.”

MAPI: U.S. Needs Bold New Strategy to Advance Global Trade Objectives
In response to the stalemate of the World Trade Organization (WTO) Doha Round of multilateral trade negotiations, the Obama Administration has the opportunity to embark upon a new and more effective trade strategy with significant advantages for both industrialized and emerging market nations, according to a new Manufacturers Alliance/MAPI policy review, entitled A New Trade Strategy: From Here to Multilateral Free Trade.

Ernest Preeg, Senior Fellow in Trade and Productivity and report author, assesses the existing Doha Round of trade negotiations within the WTO and finds it “no longer in the U.S. interest, principally because newly industrialized nations, including China, India, and Brazil, are largely exempt from reciprocal reductions in import barriers.”

The Manufacturers Alliance/MAPI proposes “a new trade strategy … which would consolidate the now more than 400 bilateral free trade and other preferential agreements into a multilateral free trade agreement for nonagricultural trade, in parallel with agreements for substantial and more balanced liberalization of trade for agriculture and services.”

Chinese Manufacturing Shows Recovery Signs
“China is considering new steps to boost cooling growth, its top economic official said in comments published Monday, as new data showed manufacturing shrinking further despite surging government spending,” the Associated Press reported last week. Premier Wen Jiabao told the Financial Times there were signs the stimulus was having an effect. “But the latest data suggest China faces more pain, including a government report Monday that some 20 million workers have lost their jobs due to the global crisis,” AP noted.

Data last Wednesday indicates that China’s manufacturing sector might have overcome the worst of the economic crisis, as manufacturing activity for the world’s third-largest economy showed signs of recovering in January. “The government’s purchasing managers’ index (PMI) rose to 45.3 percent in January, up from 41.2 percent in December and a record low of 38.8 percent in November, the state-run Xinhua news agency reported. A reading above 50 means the manufacturing economy is expanding, while a reading below 50 indicates an overall decline.

Automakers See Sales Plunge in January
The automotive industry’s extraordinary meltdown showed no signs of easing in January, with Ford Motor Co., General Motors Corp. and Chrysler LLC posting U.S. sales declines of more than 40 percent.

“Sales by the Big Three U.S. auto makers plunged in January to the lowest levels in decades, raising fresh questions about the future of the companies and the viability of the government’s bailout program,” the Wall Street Journal reports (subscription required). “The automakers blamed sharply lower purchases by fleet operators such as car-rental concerns, as well as the inability of many consumers to obtain car loans.”

Toyota Motor Corp., now the world’s largest automaker, fared only slightly better as the entire global auto industry continues to suffer. Toyota, on the brink of posting its first-ever operating loss, said Friday it now expects to lose $3.9 billion in the fiscal year through March 2009, according to BusinessWeek. “The worst bit of news,” Autoblog says, “is that there’s no light at the end of the tunnel. Sales figures are not expected to improve in the coming months, which could very well lead to another loss next year according to industry experts.”

UK Manufacturing Output Tumbles
British manufacturing output in December fell at the fastest pace in about 27 years, official figures show. “Output tumbled by 2.2 percent in December from November and was down 10.2 percent on a 12-month basis to record the biggest annual drop since 1981,” Agence France-Presse reports.

According to the Office for National Statistics (ONS), United Kingdom production output decreased by 4.5 percent in the fourth quarter of 2008 compared with the previous quarter, and manufacturing output decreased by 5.1 percent in Q4 2008 compared with the previous quarter. The ONS said that a wider measure of industrial production, which includes mining, quarrying and energy, tumbled 1.7 percent in December from November and was down 9.4 percent year-on-year.

In other official data (via RTÉ), the price of goods leaving British factories rose for the first time in six months in January, while input prices climbed 1.5 percent month-on-month. Output prices gained 0.1 percent in January from December and were up 3.5 percent year-on-year.