Plus: U.S. Consumer Confidence Hits 5-month High, GM IPO Nets $13.5 Billion for U.S. Treasury and Unemployment Rises.

U.S. and South Korea Settle on Trade Deal
After years of deliberation, United States and South Korean officials last week settled on a finalized version of a free trade agreement that would eliminate most export tariffs between the two nations and strengthen economic ties between the U.S. and its seventh-largest trading partner.

The new agreement, which is still awaiting congressional approval, is the largest trade pact since the North American Free Trade Agreement was introduced in 1994. According to BBC News, both President Obama and South Korean Trade Minister Kim Jong-Hoon are calling the arrangement a “win-win,” with significant benefits expected for both sides.

“The overall agreement would eliminate tariffs on more than 95 percent of industrial and consumer goods within five years,” the Associated Press reports. “The U.S. International Trade Commission estimated that would increase exports of U.S. goods by at least $10 billion. The deal would also open up South Korea’s vast $560 billion services markets to U.S. companies.”

On Friday the White House issued a statement explaining that the trade pact is expected to increase annual U.S. exports by up to $11 billion and support at least 70,000 American jobs, making it a key part of the effort to “create and defend manufacturing jobs.”

Earlier negotiations had stalled over concerns that the new measures would damage the U.S. automotive industry, but the revised agreement works around these issues by allowing the U.S. to delay lifting a 2.5 percent tariff on South Korean cars for five years, as well as a 25 percent tariff on trucks for eight years.

According to the New York Times, other key measures in the pact include: an exemption for each major U.S. automaker to export 25,000 American-made vehicles per year without meeting certain costly South Korean safety standards; more leeway for American manufacturers to comply with South Korea’s emissions and fuel-economy guidelines; and a safeguard, specific to the auto industry, allowing any tariffs to be re-imposed in the case of a sudden, unexpected surge in South Korean car imports.

U.S. Consumer Confidence Hits 5-month High
U.S. consumer confidence in November rose to the highest level in five months, as the holiday shopping season swung into high gear, according to a key index last week.

The Conference Board said its consumer confidence index rose for the second consecutive month to 54.1 in November, up from a reading of 49.9 in October. Economists were expecting the index, based on a survey of 5,000 U.S. households, to increase to 52, according to a Briefing.com consensus.

“Consumer confidence is now at its highest level in five months, a welcome sign as we enter the holiday season,” Lynn Franco, director of The Conference Board Consumer Research Center, said in a statement.

Although “consumers’ assessment of the current state of the economy and job market” rose “only slightly” from the prior month, their expectations for the next few months improved to the highest level since May, Franco continued.

Consumers were more optimistic about the short-term outlook than in October, as those anticipating an improvement in business conditions over the next six months rose to 16.7 percent from 15.8 percent, while those expecting business conditions to worsen declined to 12.1 percent from 14.4 percent.

“Hopefully, the improvement in consumers’ mood will continue in the months ahead,” Franco continued.

Consumer spending makes up two-thirds of the nation’s economic activity.

GM IPO Nets $13.5 Billion for U.S. Taxpayers
General Motors’ major return to public trading last month netted $13.5 billion for U.S. taxpayers who had footed the bill for the automaker’s rescue from bankruptcy, officials said Thursday.

The U.S. Department of the Treasury said in a statement that it had received $1.8 billion dollars on Thursday in additional proceeds from GM’s initial public offering (IPO) of stock, bringing the overall reimbursement to $13.5 billion.

The underwriters in the offering had a 30-day option to purchase more shares of common stock from the Treasury at the same price to cover over-allotments. The underwriters exercised this over-allotment option in full, generating the $1.8 billion received on Thursday.

In total, the GM IPO reduced the Treasury’s ownership of GM’s outstanding common stock by nearly half, from 60.8 percent to 33.3 percent.

“[The] Treasury has invested a total of $49.5 billion in General Motors,” the statement went on to say. “In October, [the] Treasury announced that it accepted an offer by GM to repurchase $2.1 billion of preferred stock — a transaction that is expected to occur in mid-December 2010.

“With this repurchase and the IPO, taxpayers will have received a total of $23.1 billion from GM through repayments, interest and dividends since the company emerged from bankruptcy in July 2009,” the Treasury explained.

Unemployment Rate Rises to 9.8 Percent
The U.S. private sector added 39,000 jobs in November, well below expectations and significantly fewer than the 172,000 jobs added in October, lifting the national unemployment rate from 9.6 percent to 9.8 percent, the U.S. Department of Labor reported last week.

The gain of 39,000 jobs in the private sector did little to improve overall employment conditions, as local governments continue to shed employees and last month’s additions were too small to reduce the number of unemployed or keep pace with people entering the workforce. November’s unemployment rate was the highest since April.

“The latest snapshot of the labor market cast a pall over what had been a brightening picture of a steadying economy,” the New York Times reports. “In recent weeks, the average number of people applying for unemployment benefits has generally declined. Pending home sales topped forecasts in October, while last month retail sales posted one of the biggest increases in years.”

The largest job gains last month were in temporary services, health care and mining. The manufacturing industry shed 13,000 jobs in November, although manufacturing employment has remained relatively flat since May.

The fact that the unemployment rate has stayed above 9 percent for the past 19 months is particularly worrisome, as the current scale of unemployment may indicate a deeper problem in the country’s long-term economic outlook.

“While the high rate of joblessness is a constant worry for the eight-plus million Americans who lost their jobs during the crisis, policymakers are increasingly concerned about how long the trend has persisted,” the Associated Press explains. “With nearly 40 percent of the jobless unemployed for more than six months, fears are growing that high jobless rates may be more than a temporary result of a brutal recession.”