Another Recovery Plan for the Weakened Economy
The Federal Reserve's latest "beige book," based on economic input from the Fed's 12 regional banks, reveals weakened economic activity across the United States. Nearly all 12 districts note reduced activity for non-financial service industries, with manufacturing slowing in most districts.

The beige book, released on Wednesday, also shows credit conditions remaining tight across all districts, with several districts reporting reduced credit availability for financial and non-financial institutions.

To aid in the recovery and to encourage banks to begin lending again, the Bush administration announced Tuesday that it plans to invest $250 billion in the nation's banks, with nine of the largest banks receiving half of that amount, CNNMoney.com reports. While economic experts believe this will encourage banks to begin lending more freely again, they caution that "the thawing of the credit markets will be a relatively slow process. It will take time before the benefits reach many businesses and consumers."

However, the potential easing of interbank lending rates buoyed confidence to the credit markets and stocks were poised to begin higher on Wall Street today. Whether this optimism holds is yet to be seen.

Incidentally, today is the anniversary of the first trading day after the 1987 stock market crash known as "Black Monday."

Consumer Confidence Down Despite Low Oil Prices
The high fuel prices earlier this year and the recent financial crises together have eroded demand and shoved oil prices down to less than half of its record-high $147 a barrel set this past summer. Spurred by a rise across financial markets on Friday, however, U.S. crude oil prices rose by $2 to $71.85 a barrel, Reuters reports.

The anticipated meeting to be held by the Organization of Petroleum Exporting Countries (OPEC) sometime this week is expected to firm up prices as the group weighs a production cut. If the prices stabilize at around $80 a barrel, "that will amount to essentially a $275 billion stimulus package to the U.S. economy," an analyst with the Energy Policy Research Foundation explains to the Wall Street Journal. That would put nationwide petrol prices at about $3 per gallon.

Stock investors hoped the lower price will give consumers more money to spend, though consumer confidence fell to a record monthly low in October, erasing the recovery inspired by low oil prices. "Confidence is collapsing so that's not good even as you have gas prices falling," Doug Smith, chief economist for the Americas at international bank Standard Chartered in New York, tells Reuters.

The Reuters/University of Michigan Surveys of Consumers said on Friday its index of confidence plummeted to 57.5 in October from 70.3 in September. This comes in conjunction with the already rocky housing market dwindling down to a 17-year low in September. Housing starts fell 6.3 percent last month to an annual rate of 817,000, the lowest since January 1991, the Commerce Department estimated Friday.

Industrial Output Falls Further
Industrial output dropped 2.8 percent in September as Hurricanes Gustav and Ike and a seven-week machinists strike at Boeing Co. strike curbed output, according to the Federal Reserve Board.

Says economist Daniel J. Meckstroth of the Manufacturers Alliance/MAPI to IndustryWeek:

"And if these two events were not bad enough the consumer-led economic recession hit the industrial sector at full force; 17 of the 20 major manufacturing industries posted declining production. The U.S. economy is gripped by recession and, like always, the manufacturing sector is taking the brunt of the decline. We predict continuing losses of manufacturing production through second quarter 2009 before a subnormal recovery begins."

Industrial production decreased at an annual rate of 6 percent for the third quarter, the most since 1991, and manufacturing production fell 2.6 percent in September. The suspension of crude oil and natural gas operations in the Gulf of Mexico due to the hurricanes caused a 7.8 percent drop in the output of mines.

And Then There Will Be Two?
Executives at General Motors Corp. and Chrysler LLC are pushing for a rapid deal before "both automakers are weakened further by the financial crisis and before the presidential election on Nov. 4, when candidates might be more amenable to requests for help," the Detroit News reports (via MarketWatch). Cerberus Capital Management, which controls Chrysler, has been pushing to make GMAC, GM's financing arm, a significant part of the deal, a source familiar with the situation tells USA Today. This has been a sticking point as Cerberus owns more than 50 percent of GMAC and GM refuses to give up its stake.

A deal could be completed within two weeks, according to the USA Today report.

Industry analysts are skeptical of how GM would benefit from the merger, the Associated Press reports, but Chrysler points out that it has about $11 billion in cash that GM may be interested in. With its sales being down 18 percent, GM loses $1 billion in cash monthly.

In contrast to its grim U.S. sales numbers, GM is projected to grow in China's auto sector. China's automotive production is predicted to grow by 7 million units this year.

Banned Chinese Milk Still Being Sold
On Tuesday, Chinese authorities issued an order again to ban all milk produced prior to Sept. 14 by Mengniu Dairy Co. and Inner Mongolia Yili Industrial Group after reports that they were still being sold to students last week. Guangzhou University students say that liquid milk from the two diary giants dated from before Sept. 14 has been sold at a deep discount around campus.

The milk tainted with melamine led to four infant deaths and nearly 53,000 children falling ill. This incident shines a bright light on the Chinese officials' ability to deliver on their promise to clean up the country's dairy industry.

Although the U.S. was not affected by the tainted milk scandal, the U.S. Food and Drug Administration plans to open its first overseas offices in Beijing at the end of this year. "Increasing our presence overseas will provide greater protections to American consumers at home and benefit our host countries as well," Department of Health and Human Services (HHS) Secretary Mike Leavitt says to IndustryWeek.

Last year, the U.S. imported more than $2 trillion worth of products from approximately 825,000 importers. The FDA says it will open offices in India, Europe and Latin America as well.

Jobless Claims Fall
The number of U.S. workers filing new claims for jobless benefits fell in the U.S. Department of Labor's most recent findings. For the week ending Oct. 11, seasonally adjusted initial jobless claims decrease by another 16,000 to 461,000, from a revised 477,000 the prior week.

The four-week seasonally adjusted moving average, considered a better gauge of employment trends because it irons out weekly fluctuations, rose to 483,250 from 482,500 the prior week.