We hope you all had a pleasant holiday respite and New Year's. Now it's back to business. Here's what's happened since last we met.

Troubled Automakers Get Their Lifeline
The U.S. Federal Reserve last week approved a request by GMAC, the troubled financial arm of General Motors Corp., to become a bank holding company. The result of the new status makes GMAC eligible for a portion of the $700 billion bank rescue package, allowing it to tap government bailout funds and emergency loans.

"General Motors received the first $4 billion of a $13.4 billion lifeline from the Bush administration on Wednesday, while Chrysler LLC continued to craft final details with U.S. Treasury officials," the Detroit Free Press reported last week.

GM's installment Wednesday night came "right in time" for the Detroit automaker "to avert a financial disaster" in which it "may have been unable to sustain operations and pay suppliers," the Associated Press reports.

"GM is burning through approximately $33 million a day, based on spending $1 billion per month during the third quarter," according to AP. "That daily amount is likely lower for the fourth quarter as GM has reduced spending on operations, sponsorships, utilities and even office supplies.

"The cash-strapped Detroit company plans to use the money for continuing its operations," AP continues.

Meanwhile, Chrysler on Friday received the $4 billion that the U.S. Treasury had agreed to loan the automaker. In a statement, Chrysler Chairman and CEO Bob Nardelli said he appreciates the Treasury Department's confidence in Chrysler.

"This initial loan will allow the company to continue an orderly restructuring, while pursuing our vision to build the fuel-efficient, high-quality cars and trucks people want to buy, will enjoy driving and will want to buy again," he said.

U.S. Manufacturing Ends 2008 on a Sour Note
The latest Institute of Supply Management (ISM) Report on Business shows that U.S. manufacturing contracted for the fifth consecutive month in December, from 36.2 percent in November to 32.4 percent in December.

This is the lowest reading since June 1980, when the PMI registered 30.3 percent.

A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

The production index for the month stood at 25.5, from 31.5. The new orders index, which hints at future activity, was at 22.7 from 27.9. Hiring contracted, with the employment index at 29.9, compared with November's 34.2.

The decline, which came amid a sharp Asian slowdown and deepening recession in the world's biggest economy, "covers the full breadth of manufacturing industries, as none of the industries in the sector report growth at this time," ISM says.

Chinese Manufacturing Shrinks Close to Recession
The manufacturing sector in China continued to shrink in December, bolstering expectations that the economy will weaken further before any pickup. The Purchasing Managers Index (PMI) issued Sunday by the China Federation of Logistics & Purchasing rose to 41.2 last month from November's all-time low 38.8.

A PMI reading above 50.0 means the manufacturing economy is expanding, while a reading below 50 indicates an overall decline. The December figure represents the third contraction in a row, according to the survey of 700 manufacturers across China.

After output contracted at a record pace in December, China's manufacturing sector is close to a technical recession, Agence France-Presse reports of the new findings.

"China's economy grew 9 percent in the third quarter from the year-earlier period, slower than the 11.9 percent growth in all of 2007," according to the Wall Street Journal (subscription required). Economic-growth data for 2008 and the fourth quarter are expected later this month. Industry, including manufacturing, accounts for more than two-fifths of China's production.

Eurozone Industry Continues to Slump
Factories in the 15* nations sharing the euro saw demand slump in October in the face of recession, according to official European Union data released late last month.

New industrial orders in the eurozone slid 4.7 percent in October from September and plunged 15.1 percent compared with the same month in 2007, according to the EU's Eurostat data agency.

The October 2008 slump followed a drop in new orders in September when they fell 5.4 percent over one month, Eurostat's revised figures indicate.

Meanwhile, in the 27-nation EU, new industrial orders fell 6.3 percent over one month in October and 17.9 percent over one year.

The British economy alone contracted "by more than previously thought during the third quarter of 2008," AP reports of recently revised official figures. "The Office for National Statistics revealed that British gross domestic product (GDP) during the July-September quarter fell by 0.6 percent from the previous three-month period, faster than the previous estimate for a 0.5 percent contraction."

*Note: On Jan 1, 2008, Slovakia became the 16th member of the 10-year-old eurozone.

Holiday Sales Less than Joyous for Retailers
Even extremely steep markdowns and specials before and after Christmas couldn't get consumers to open their wallets without caution.

In the last full week of December 2008, United States retailers' sales declined the most in almost six years, according to a report from the International Council of Shopping Centers and Goldman Sachs Group Inc.

"Sales at stores open at least a year fell 1.8 percent in the seven days through Dec. 27," Bloomberg News reports. "That's the biggest year-over-year drop since February 2003. Holiday comparable-store sales may decline as much as 2 percent, according to the New York-based trade group."

The ICSC's forecast of "a same-store sales drop of as much as 2 percent in November and December is more than its previously projected decline of 1 percent," says Bloomberg. "It would be the largest decrease since at least 1970, when the trade group started tracking shifts from the previous year."

According to the National Retail Federation, the holiday shopping season accounts for as much as 35 percent of annual sales. The Conference Board's Consumer Confidence Index plunged to an all-time low last month, with only a modest recovery expected in the second half of 2009.

Recession to Worsen Without Substantial Stimulus Package
The New York Times is reporting that some analysts are "counting on" the Barack Obama administration and Congress to "come through with a substantial stimulus package, at least $675 billion over two years" to combat the deepening recession. They say the stimulus "will get the economy moving again in the face of persistently weak spending by consumers and businesses."

"But in the absence of that government stimulus, the grim economic headlines of 2008 will probably continue for some time, these forecasters acknowledge," the Times continues.

"Even if the economy begins to right itself by this summer, the recession would still be the longest since the 1930s, which was the last time the government engaged in widespread public spending to overcome the persistent inertia in consumer and business spending,"

Spill Revives Coal Ash Safety Concerns
"A coal ash spill in eastern Tennessee that experts were already calling the largest environmental disaster of its kind in the U.S. is more than three times as large as initially estimated, according to an updated survey by the Tennessee Valley Authority," the New York Times reported the day after Christmas.

On Dec. 22, a breach in an above-ground storage cell allowed 5.4 million cubic yards of toxic waste to spill into the countryside eastern Tennessee. The previous estimate placed the amount at 1.7 million cubic yards of wet coal ash having spilled "when the earthen retaining wall of an ash pond at the Kingston Fossil Plant, about 40 miles west of Knoxville, gave way."

No one was harmed, but residents are worried about the long-term health effects from the ash, which contains potentially harmful contaminants. The waste is largely comprised of ash left over from the coal combustion process.

The Tennessee Valley Authority "has promised to clean up the 1.1 billion gallons of fly ash and muck that flowed out of an elevated ash storage pond," according to the Chattanooga Times Free Press.

"Agency officials said they still don't know how long or how expensive it will be to clean up the 300-plus acres covered with ash. But a much smaller 2005 spill of an ash pond at the Martins Creek Power Plant in Pennsylvania ended up costing the plant's owner, PPL Corp., about $38.5 million in fines and cleanup costs."