Report says economy to shrink in 2009: The federal budget deficit will hit an unparalleled $1.2 trillion for the 2009 budget year, according to grim new Congressional Budget Office figures. The CBO estimate released today also sees the economy shrinking by 2.2% this year and recovering only slightly in 2010, and the unemployment rate eclipsing 9% early next year unless the Obama administration steps in. CBO’s figures don’t account for the huge economic stimulus bill that Obama is expected to propose soon to try to jolt the economy. At the same time, they do not reflect the full cost of the Wall Street bailout. Obama and Congress are promising quick enactment of the economic recovery plan, which will blend up to $300 billion in tax cuts with big new spending programs and could cost up to $775 billion over the next few years.
U.S. inventories continue to rise: Energy prices tumbled across the board today after a government report showed U.S. oil reserves were much greater than expected, suggesting demand continues to fall. Sweet crude for February delivery plummeted more than 8%, or $4.04, to $44.54 a barrel on the New York Mercantile Exchange after the report was released. The Energy Information Administration said inventories rose of commercial crude oil inventories rose 6.7 million barrels, well beyond the 1.5 million-barrel build expected by analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., can influence market trading.