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Mortgage applications plunged to a seven-month low last week as demand for home refinancing loans tumbled 30%, data from an industry group showed Wednesday.

The drop does not bode well for the hard-hit U.S. housing market, which has been showing some signs of stabilization, with sales rising and home price declines moderating in many regions of the country.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week ended June 26 decreased 18.9% to 444.8, the lowest reading since the week ended Nov. 21, 2008.

Kenneth Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley, said mortgage rates are just one factor driving potential borrowers.

"Rising unemployment, concerns about job security, potential buyers’ inability to sell their existing homes and problems with appraisals coming in too low are all weighing on demand," he said.

"The government needs to take more aggressive action to bring mortgage rates back down to below 5% as that seems to be a key level for the market," he said.

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 5.34%, down 0.10 percentage point from the previous week, but significantly higher than the all-time low of 4.61% set in the week ended March 27. The survey has been conducted weekly since 1990.

Mortgage rates remained above 5% for a fifth straight week, but were well below year-ago levels of 6.33%.

Thirty-year mortgage rates had mostly been on a downward trend since the Federal Reserve unveiled its plan to buy mortgage-backed debt in late November payday loan. But the Fed met resistance in the bond market in late May and early June.

Treasury yields, which act as a benchmark for mortgage rates, rose sharply during that period. Treasury yields, however, have come down recently, allowing rates to fall.

The MBA’s seasonally adjusted purchase index fell 4.5% to 267.7.

The four-week moving average of mortgage applications, which smooths the volatile weekly figures, was down 9.2%.

Refining activity sinks: The mortgage bankers’ seasonally adjusted index of refinancing applications decreased 30% to 1,482.2, also the lowest level since the week ended Nov. 21, 2008.

Refinancings accounted for 46.4% of applications, down from 54% the previous week and significantly lower than the peak of 85.3% in the week ended Jan. 9.

The U.S. housing market is in the worst downturn since the Great Depression and its impact has rippled through the recession-hit economy, as well as the rest of the world. Economists contend that the economy might not emerge from its slump unless the housing market stabilizes.

The shares adjustable-rate mortgage activity increased to 4.3% in the latest week, up from 4.1% the previous week.

Fixed 15-year mortgage rates averaged 4.81%, down from 4.93% the previous week. Rates on one-year ARMs decreased to 6.52% from 6.54%. 

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The federal government is likely to spend $835 billion this year fighting the crises in the financial system and the economy, according to a new report by the Congressional Budget Office.

That spending represents about 6% of the nation’s gross domestic product.

Of that amount, $340 billion is going toward the Troubled Asset Relief Program, which is being used primarily to bail out banks, insurers and the auto industry. Another $290 billion in 2009 outlays is being used to prop up mortgage giants Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500).

In addition, $187 billion is being used for economic stimulus and relief efforts such as extended unemployment insurance.

As expensive as that seems, the CBO notes that "the current recession has little effect on long-term projections of non-interest spending and revenues."

Not that the country won’t see whopping deficits as a result of the crises that have unfolded in the past year. In fiscal years 2009 and 2010, Uncle Sam will rack up the largest annual deficits as a share of GDP since World War II.

And those annual deficits will, of course, exacerbate the total debt the country has accumulated over time. The agency estimates that federal debt will reach 60% of GDP by the end of fiscal year 2010. That’s well above the 41% recorded for 2008.

But over the long-term, CBO said, much greater pressure will bear down on the federal budget — raising "fundamental questions about economic sustainability." That’s because, barring any changes, federal debt is on track to greatly outpace economic growth over time.

The main culprits are the growth in federal spending on Medicare and Medicaid and, to a much lesser degree, Social Security. The growth rate in spending on those entitlement programs is due to two factors: the growth rate in health care spending and an increasing number of Americans growing old.

Today roughly 5% of GDP is spent on Medicare and Medicaid. By 2035, the CBO estimates, that number will double instant cash loan. The jump in Social Security spending is projected to rise from under 5% of GDP today to 6% by 2035.

The government faces no easy choices in trying to rectify the fiscal problems. CBO notes that if spending continued to grow as expected — and lawmakers raised tax rates to compensate — "tax rates would have to reach levels never seen in the United States."

That, in turn, would seriously compromise the prospects for economic growth and make it harder to repay debt.

And on it goes.

Addressing the situation would require a combination of tax increases, spending cuts and a slowing in the growth rate of health care costs. The longer lawmakers wait, the more painful and sudden the solution will need to be.

Congress is addressing health care reform. That is likely to cost another trillion or so, but it’s a cost President Obama has insisted be paid for.

He has also called on Congress to reinstate what’s called "statutory pay-go" — which would legally require lawmakers to pay for any new programs they propose without borrowing money.

But pay-go wouldn’t be enough to get the federal budget onto a sustainable path, said former CBO Director Alice Rivlin, a senior fellow at the Brookings Institution.

"The biggest threat to future budget solvency is not new legislation. It is the budgetary consequences of legislative decisions already made — both with respect to mandatory spending and the tax code," Rivlin said in written testimony for the House Budget Committee on Thursday.

The Concord Coalition, a deficit watchdog, echoes that call, noting that pay-go is meant to stabilize the deficit rather than reduce it. And lawmakers are still allowed to exempt certain measures from pay-go — meaning they can decide a new expensive program or tax cut need not be paid for. 

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Admitted thief Bernard Madoff will leave his jail cell and be taken under guard to court on Monday morning to hear his punishment for running Wall Street’s biggest and most brazen investment scheme.

A U.S. judge is expected to sentence Madoff, 71, to an effective life term in prison during an emotional court hearing starting at 10 a.m. EDT, in which some of his defrauded investors will describe the shock of losing their life savings.

The swindler, who pleaded guilty to a slew of crimes in the same Manhattan federal court in March, will “speak to the shame he has felt and to the pain he has caused,” said his lawyer, Ira Lee Sorkin, who has suggested a 12-year prison sentence.

“Given the enormous amount of funds he has stolen and the number of victims, the sentence is going to be very, very high,” said Paul Radvany, a law professor at Fordham University in New York and a former federal prosecutor.

The 100 or so letters sent to the judge from customers and what 10 will say at the hearing could have “a great impact” at the sentencing, Radvany said.

Investigators do not know how much was stolen, according to court papers. About $13 billion has been traced to more than 1,300 customer accounts. The trustee winding down the Madoff firm has so far collected $1.2 billion to return to investors.

Prosecutors also say $170 billion flowed through the principal Madoff account over decades and that weeks before his December arrest, the firm’s statements showed a total of $65 billion young persons carinsurance.

The hearing will be held in a ceremonial courtroom that accommodates 250 people. Two other rooms in the courthouse in lower Manhattan are being provided for defrauded investors and spectators to watch on closed-circuit TV.

FAMILY WILL NOT ATTEND

Madoff’s wife Ruth and other family members are not expected to be there. They have not attended any court appearances since his arrest last December.

Madoff’s brother, Peter, and his sons, Mark and Andrew, held executive positions in the brokerage unit of the firm. Their lawyers say they were not aware of or involved in the crooked asset management side.

The judge has allowed Madoff to wear his own clothes at the hearing, instead of the loose-fitting navy blue shirt and pants issued by the jail where he has been held since March 12.

Legal observers expect U.S. District Judge Denny Chin to sentence Madoff to one of the stiffest punishments for a white collar criminal.

“Madoff organized and led this fraud,” the prosecutors said in court papers on Friday arguing for a life sentence. “Numerous clerical employees and others assisted.”

Madoff has said all along he did it on his own and has not named accomplices. Only his outside accountant has been charged. 

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Swindler Bernard Madoff should spend the rest of his life in prison, U.S. prosecutors argued on Friday, citing the “unique scope and duration” of his crimes as the leader of Wall Street’s biggest fraud.

Madoff will be sentenced on Monday after pleading guilty in March to 11 criminal charges including securities fraud, money laundering and perjury in an investment scheme involving tens of billions of dollars.

“Madoff’s crimes were of extraordinary dimensions,” the prosecutors’ memorandum to a Manhattan federal court judge said. “For example, the fraud loss known to date, which is greater than $13 billion, is more than 32 times the baseline level that would carry a sentence of life under the U.S. sentencing guidelines.”

It said about $170 billion flowed into the principal account used by Madoff in his decades-long scheme. It said he bilked thousands of people and caused economic hardship to individuals, charities and for-profit institutions.

“A reasonable sentence in this case would be the guidelines sentence of 150 years, or alternatively, a term of years that both would assure that Madoff will remain in prison for life, and forcefully would promote general deterrence.”

The uncovering of the scheme and Madoff’s arrest in December led to calls for stricter oversight of firms.

Madoff’s lawyer Ira Lee Sorkin declined to comment on the memorandum because he said he had not yet read it.

The government argued that the Madoff case bore no comparison to corporate frauds of recent years such as WorldCom Chief Executive Bernie Ebbers and Adelphia’s John and Timothy Rigas. Ebbers is serving 25 years and the Rigases 12 years and 17 years, respectively payday loans in one hour.

“Madoff’s conduct is unique in its scope and duration,” the memorandum to U.S. District Court Judge Denny Chin said.

It also cited a June 25 letter from counsel for the trustee winding down Bernard L. Madoff Investment Securities LLC saying that Madoff had not cooperated.

“Mr. Madoff has not provided meaningful cooperation or assistance to the Trustee since his arrest,” the letter signed by lawyer David Sheehan said.

Madoff’s lawyer, in papers submitted to the judge this week, argued a sentence of 12 years would be sufficient. Sorkin also asked the judge not to give in to the “mob vengeance” sought by those Madoff defrauded.

Sorkin cited a recent meeting between the jailed Madoff and the inspector general of the U.S. Securities and Exchange Commission as being helpful to regulators. But prosecutors said on Friday the official “had informed the government that Madoff’s information will not ’shape and fortify the future of Wall Street regulation and oversight.’”

The government said statements sent to the court by defrauded investors, showed he “was not only responsible for wiping away the financial resources of many generations within families but also for causing profound levels of stress and emotional injury.”

In its memorandum on Friday and in other court papers, prosecutors said that as of November last year, Madoff’s firm issued account statements that held a total of about $65 billion when in fact he had not bought any securities. 

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One week and counting. An unprecedented number of states have only days left to pass their fiscal 2010 budgets.

At least 19 states are still hammering out their spending plans as the recession wreaks havoc with their finances and sparks fights between governors and lawmakers. If spending plans aren’t approved, state workers may not receive their paychecks and some government offices may shut down.

"A lot of states are coming down to the wire," said Todd Haggerty, research analyst for the National Conference of State Legislatures. "More than what’s typical. The unprecedented economic situation is creating a lot of difficulty this year."

Some 46 states end their fiscal years on June 30 and all but one require balanced budgets be adopted.

States are struggling to close shortfalls totaling $121 billion for fiscal 2010 as the recession decimates tax revenues.

The budget battles have even landed some in court. In Arizona, Republican Gov. Jan Brewer has filed a lawsuit against the Republican-controlled legislature seeking to compel lawmakers to send her the budget it passed on June 4. The lawmakers are holding back until an agreement is reached because she has said she would veto it.

Leaders are at odds over how to contend with a deficit that exceeds $3 billion. The governor has proposed raising taxes, including hiking the sales tax by a percentage point, while the legislators are cutting spending.

Brewer is hoping lawmakers will send her a budget before Arizona has to start shutting down non-essential state services. That would require some major changes since she does not support the current spending plans.

"She doesn’t think much of what’s in them," said Paul Senseman, the governor’s spokesman.

Arizona Senate President Bob Burns is also confident that the two sides will reach an agreement and avoid a government shut down. The two branches are meeting daily, a spokeswoman for Burns said.

In some states, the leaders aren’t even talking. Pennsylvania’s governor and Senate Republicans, who have to close a $3.2 billion gap for the current year, are not negotiating on their budgets.

"There’s been no significant movement on the budget," said Chuck Ardo, press secretary for Gov. Ed Rendell, who is prepared to cancel his African safari in August if the budget isn’t set.

The governor’s $28.4 billion budget seeks to raise the personal income tax rate by half-a-percentage point and draining the commonwealth’s $750 million rainy day fund. Senate Republicans’ $27.3 billion plan looks to cut spending on areas such as education and community revitalization.

Though the states has never passed a budget on time during Rendell’s seven years in office, both sides agree this year is the worst standoff ever paydayloans.

"It’s hard to see how a meeting would be productive given the two very different points of view," said Erik Arneson, communications director for Senate Majority Leader Dominic Pileggi. "At this point, there’s no support in our caucus for a tax increase."

Sending IOUs instead of $$$

If states don’t pass their budgets on time, one of three things usually happens, according to the National Conference of State Legislatures. Lawmakers can pass temporary appropriations measures to keep the doors open and bills paid. Some states have provisions that maintain funding for agencies and services even without a budget.

Sometimes, however, the government faces a shutdown. When Tennessee officials failed to pass a budget on time in 2002, classes stopped at public universities, drivers licenses were not issued and road construction ceased.

Pennsylvania’s Rendell has already said state workers would have to stay on the job without being paid if the budget isn’t approved. Services will start to be affected if the budget standoff continues beyond its typical week’s delay.

Even states that have passed budgets are struggling to close expanding deficits.

California approved its budget in February, but lawmakers and the governor are now locking horns over how to solve a $24 billion shortfall before June 30. The legislature presented a budget proposal last week that includes $11.4 billion in cuts and $2 billion in revenue hikes, but Gov. Arnold Schwarzenegger dismissed it as a piecemeal approach full of gimmicks.

If a budget isn’t passed in coming days, California will run out of cash and be forced to start issuing IOUs, Controller John Chiang said on Wednesday. The state faced a similar situation in February, but at that time it had the option of withholding $3 billion in state tax refunds.

Now, it doesn’t have that cushion. Also, the shortfall is now nearly five times as large, forcing the controller to withhold payments to local governments for social services, private contractors, state vendors, as well as income and corporate tax refunds.

"Next Wednesday we start a fiscal year with a massively unbalanced spending plan and a cash shortfall not seen since the Great Depression," Chiang said. "The state’s $2.8 billion cash shortage in July grows to $6.5 billion in September, and after that we see a double-digit freefall." 

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A severe U.S. recession will bottom out this year, but any recovery will be weak due to anemic markets and shrunken consumer wealth, the Organization for Economic Cooperation and Development said on Wednesday.

“In this environment, a considerable degree of economic slack, especially in the labor market, is likely to persist … bringing inflation to very low rates,” the Paris-based OECD said in a twice-yearly report on global economic conditions.

It estimated that U.S. national output will contract 2.8 percent in 2009 but grow 0.9 percent in 2010.

The OECD urged the Obama administration to push ahead with plans for public-private partnerships to remove toxic assets from banks’ balance sheets, adding that, if necessary, the Federal Reserve should expand the scale of its quantitative easing measures that include buying longer-term U.S. Treasury securities.

It warned that consumer spending was unlikely to rebound because labor markets remain strained, housing and stock wealth has been drained and credit conditions still are tight.

On a positive note, the OECD said a lengthy deterioration in U.S. housing markets “may be approaching an end.” In particular, it said the supply of unsold homes was declining relative to demand, a precondition for recovery.

The OECD noted a major downside risk was that financial markets remain fragile, with mortgage credit in tight supply and banks still under considerable stress.

“Restoration of trust in financial intermediaries and markets is vital for a sustained and strong economic recovery to occur,” it said affordable health insurance in georgia.

In Canada, the OECD said the economy was likely to remain in recession through the third quarter and then begin a mild recovery. It forecast gross domestic product there will shrink 2.6 percent in 2009 and then grow 0.7 percent in 2010.

One advantage that Canada has is that its banks’ balance sheets remained relatively healthy and remained profitable in contrast to many other countries.

“Reasons for their strength include a more conservative lending and borrowing culture, less opportunity for regulatory arbitrage and a more conventional mortgage market with fewer subprime loans and little securitization,” the OECD noted.

In Latin America, the OECD said economic activity was rebounding in Brazil after a slowing in growth during the first quarter and said retail sales had been specially resilient.

“Domestic demand is poised to gather strength in the second half of 2009 on the heels of ongoing policy easing,” the OECD said.

While an “uncertain” global economy poses risks for Brazil and other emerging-market countries, the group said that if Brazilian authorities maintain abundant liquidity in coming months, the country may be poised for a stronger-than-expected rebound from about the middle of this year.

It estimated Brazil’s real GDP will shrink 0.8 percent in 2009, but then grow 4 percent in 2010.

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Forty-eight states and the District of Columbia recorded unemployment rate increases in May, the government reported Friday. One state registered a rate decrease, and one state had no rate change.

Several states and regions posted their highest unemployment rate since the report debuted in 1976.

Over the year, jobless rates were higher in all 50 states and the District of Columbia.

Michigan once again led the nation with a 14.1% jobless rate, up from 12.9% a month earlier, followed again by Oregon at 12.4%, up from 12% in April. Thirteen states have rates above 10%.

Michigan’s 1.2 percentage point increase from April was also the largest jump in the country, followed by Rhode Island’s 1 percentage point hike. Both states are suffering from the devastation in the manufacturing sector. Michigan, in particular, was hit by Chrysler’s plant shutdown early in the month and a series of GM plant closings.

The California, Nevada, North Carolina, Oregon, Rhode Island, South Carolina, Florida and Georgia rates were the highest for those states since the report was first issued.

Vermont recorded no change in its rate, while Nebraska’s rate declined by 0.1 percentage point to 4.4%. Nebraska and North Dakota tied for the lowest unemployment rates in the nation no teletrack cash advance.

The national unemployment rate rose to a 26-year high of 9.4% in May, up from 8.9% in April.

Nonfarm payroll employment decreased in 39 states and increased in 11 states and the District of Columbia in May. The largest over-the-month decrease in jobs occurred in California, followed by Florida, Texas, and Michigan.

The West reported the highest regional jobless rate, 10.1%, followed by the Midwest, 9.8%. The last time any region had a rate of at least 10% was September 1983, when the Midwest posted a rate of 10.1%. The Pacific and South Atlantic regions posted record highs.

The Northeast recorded the lowest rate in May, at 8.3%.

The spike comes a month after the unemployment rate declined in more states — 21 — in April, which bureau officials called an aberration.

"Generally the states are going to follow what’s happening on the national level," said Brian Hannon, economist in the local area unemployment statistics division. 

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The U.S. recession is taking a bite out of national brand loyalty in products ranging from Advil pain reliever and Green Giant frozen vegetables to Jif peanut butter, according to a study released on Monday.

Just four out of 10 brands held on to at least half of their highly loyal customers from 2007 to 2008, according to the study from Catalina Marketing Corp’s Pointer Media Network, which gathers purchasing data at 23,000 stores nationwide.

Retaining customers is a challenge for food sellers in any economy and keeping them in a weak economy can be even more difficult.

Forty-eight percent of highly loyal consumers stayed that way during the study period, while 19 percent reduced their loyalty and 33 percent completely defected to another brand in the same category in 2008, the research showed.

The study defined highly-loyal consumers as individuals who made 70 percent of more of their purchases with a single brand in a given product category.

The study authors said Coca-Cola Classic is one of the nation’s most successful brands. Even so, 25 percent of Classic Coke buyers were less loyal during the study period.

That compares with Procter & Gamble Co’s Crest toothpaste, which saw almost 59 percent of its highly loyal buyers become less committed.

This time around, retailers such as Kroger Co, Safeway Inc and Wal-Mart Stores Inc are aggressively expanding their own private labels business cards online. Those products often cost less than national brands and appeal to consumers looking to stretch every dollar.

The United States officially slid into recession in December 2007, but consumer spending was showing signs of weakening prior to the official start of the downturn.

When asked if the loyalty decline could intensify from 2008 to 2009, Catalina Marketing Vice President Todd Morris said: “It likely could.”

WINNERS/LOSERS

The Pointer study was based on an analysis of the purchasing behavior of more than 32 million shoppers in 2007 and 2008 across 685 leading brands, Pointer said.

Catalina Marketing has a system that selects and prints coupons at checkout based on what a shopper buys. Full study results are available here: here

Other data from the study showed that Wyeth’s Advil suffered a 7 percent drop in high loyals from 2007 to 2008. On the flip side, the number of people who were highly loyal to General Mills Inc’s Cheerios brand rose 6 percent.

J.M. Smucker Co’s Jif peanut butter lost 7 percent of its highly loyal customers from 2007 to 2008, while General Mills’ Green Giant frozen boxed vegetables lost 9 percent.

(Reporting by Lisa Baertlein; editing by Andre Grenon)

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The index of U.S. leading economic indicators probably rose in May for a second straight month, reinforcing signs that the worst recession in five decades may end this year, economists said before a report today.

The Conference Board’s gauge of the economic outlook for the next three to six months climbed 1 percent, according to the median forecast in a Bloomberg News survey. That would match April’s gain and mark the first back-to-back increase since September-October 2006. Other reports may show the manufacturing slump is easing while job losses continue.

The gains in stock prices, consumer confidence and building permits that are propelling the leading index higher bolster forecasts the economy will start growing again in the second half of 2009. Still, mounting unemployment and tight credit mean the recovery will be slow.

“The worst part of the economic decline is behind us,” said Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida. “The economy is still contracting, but is likely to bottom out in the second half of the year” and a “gradual” recovery will begin, he said.

The New York-based Conference Board’s index is due at 10 a.m. Estimates of 55 economists in the Bloomberg survey ranged from a drop of 0.7 percent to a gain of 1.8 percent.

Also at 10 a.m., the Federal Reserve Bank of Philadelphia may report its general economic gauge improved to minus 17 this month from minus 22.6 in May, according to the survey median. Negative readings indicate a contraction.

Jobless Claims

A Labor Department report at 8:30 a.m. may show initial jobless claims rose to 604,000 last week from 601,000 the week before, according to the survey. The number of people on benefit rolls probably jumped to a record for the 20th straight week.

A 6.4 percent gain in the Standard & Poor’s 500 Stock Index in May likely added to the leading indicators gauge same day payday loans. The stock index has soared about 35 percent since March 9 — when it hit 676.53, the lowest level in more than 12 years — amid evidence the worst of the downturn has passed.

Another boost probably came from a May jump in the Reuters/University of Michigan index of consumer expectations six months from now, a proxy for future spending. A preliminary report for June, meanwhile, showed that gauge fell this month.

Seven of the 10 indicators for the leading index are known ahead of time: stock prices, jobless claims, building permits, consumer expectations, the yield curve, factory hours and supplier delivery times.

The Conference Board estimates new orders for consumer goods, bookings for capital goods, and the money supply adjusted for inflation.

Manufacturers

Weekly jobless claims dropped to an average 626,800 in May from 638,250 in April and kept falling in the week ended June 6.

The bankruptcies of automakers General Motors Corp. and Chrysler LLC, as well as parts-makers Visteon Corp. and Metaldyne Inc., may cause more firings. The unemployment rate will touch 10 percent by year-end, according to a Bloomberg survey this month.

Some manufacturers are seeing a turnaround.

While the outlook for business jets remains weak amid the slump, officials at Honeywell International Inc., the world’s largest maker of airplane controls, detect signs of a recovery in some aerospace markets.

“If we’re looking for ‘green shoots,’ there are some out there,” Chief Executive Officer David Cote said this week in a Bloomberg Television interview from Paris.

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The index of U.S. leading economic indicators probably rose in May for a second straight month, reinforcing signs that the worst recession in five decades may end this year, economists said before a report today.

The Conference Board’s gauge of the economic outlook for the next three to six months climbed 1 percent, according to the median forecast in a Bloomberg News survey. That would match April’s gain and mark the first back-to-back increase since September-October 2006. Other reports may show the manufacturing slump is easing while job losses continue.

The gains in stock prices, consumer confidence and building permits that are propelling the leading index higher bolster forecasts the economy will start growing again in the second half of 2009. Still, mounting unemployment and tight credit mean the recovery will be slow.

“The worst part of the economic decline is behind us,” said Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida. “The economy is still contracting, but is likely to bottom out in the second half of the year” and a “gradual” recovery will begin, he said.

The New York-based Conference Board’s index is due at 10 a.m. Estimates of 55 economists in the Bloomberg survey ranged from a drop of 0.7 percent to a gain of 1.8 percent.

Also at 10 a.m., the Federal Reserve Bank of Philadelphia may report its general economic gauge improved to minus 17 this month from minus 22.6 in May, according to the survey median. Negative readings indicate a contraction.

Jobless Claims

A Labor Department report at 8:30 a.m. may show initial jobless claims rose to 604,000 last week from 601,000 the week before, according to the survey. The number of people on benefit rolls probably jumped to a record for the 20th straight week.

A 6.4 percent gain in the Standard & Poor’s 500 Stock Index in May likely added to the leading indicators gauge faxless cash advance. The stock index has soared about 35 percent since March 9 — when it hit 676.53, the lowest level in more than 12 years — amid evidence the worst of the downturn has passed.

Another boost probably came from a May jump in the Reuters/University of Michigan index of consumer expectations six months from now, a proxy for future spending. A preliminary report for June, meanwhile, showed that gauge fell this month.

Seven of the 10 indicators for the leading index are known ahead of time: stock prices, jobless claims, building permits, consumer expectations, the yield curve, factory hours and supplier delivery times.

The Conference Board estimates new orders for consumer goods, bookings for capital goods, and the money supply adjusted for inflation.

Manufacturers

Weekly jobless claims dropped to an average 626,800 in May from 638,250 in April and kept falling in the week ended June 6.

The bankruptcies of automakers General Motors Corp. and Chrysler LLC, as well as parts-makers Visteon Corp. and Metaldyne Inc., may cause more firings. The unemployment rate will touch 10 percent by year-end, according to a Bloomberg survey this month.

Some manufacturers are seeing a turnaround.

While the outlook for business jets remains weak amid the slump, officials at Honeywell International Inc., the world’s largest maker of airplane controls, detect signs of a recovery in some aerospace markets.

“If we’re looking for ‘green shoots,’ there are some out there,” Chief Executive Officer David Cote said this week in a Bloomberg Television interview from Paris.

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