Real-time data indicate the U.S. economy continues to deteriorate. Income tax withholdings edged up 0.5% year-over-year in the past two weeks and three days and increased 0.4% year-over-year in the past four weeks and three days. Both of these growth rates are well below the three-month average of 1.4%.

Also, the TrimTabs Online Job Postings Index plunged 12.3% in the first three weeks of November to the lowest level since July 2005. Based on our real-time indicators, we estimate the economy is shedding jobs at a rate of roughly 350,000 per month.

Some bullish pundits point to growing amounts of cash on the sidelines--a view that has to ignore the shrinkage of equity and real estate assets as well as the drop in household incomes. What is more important is that consumer cash flow has been collapsing as the economy slumps. In the past eight months, TrimTabs Savings and Investment Flow (TTSIF) totaled $37 billion, down 93% from $502 billion from April 2007 through November 2007. Assuming TTSIF from December 2008 through March 2009 is down 50% from the $300 billion savings flow from the same four months of the previous year, TTSIF in the 12 months ended March 2009 would be less than $200 billion, setting a new multi-decade record low.

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The U.S. float was little changed for the third consecutive week, falling $3.5 billion in the holiday-shortened week ended Wednesday, Nov. 26. Corporate buying remained feeble. New cash takeovers rose to a 10-week high of $950 million, while new stock buybacks edged up to a three-week high of $2.0 billion. On the other side of the liquidity ledger, new offerings rose to $450 million, while net insider selling jumped to a 13-week high of $850 million.

Corporate liquidity is worsening worldwide. On the buy side, large takeovers like BHP Billiton/Rio Tinto, Ontario Teachers' Pension Plan/BCE and Panasonic/Sanyo have been called off, and stock buybacks have hit record lows in Europe and Canada. On the sell side, European banks remain desperate for capital. Banks in Japan and Canada, which had been considered immune to credit market problems, have announced large equity offerings.

New stock buybacks have totaled a mere $11.2 billion in November, the lowest since March 2004. Since Bear Stearns imploded in March, buybacks have been below $30 billion in all but two months. Companies are not confident enough about their prospects to commit large amounts of precious cash to share repurchases.

The bond market is bracing for deflation, yet inflation looks like the greater threat. Our advice: Buy TIPS.

Japan stocks rise on hopes for global economy

Optimism that a prolonged global economic downturn will be averted lifted Japanese stocks Thursday, following an aggressive interest rate cut in China and assurances by President-elect Barack Obama for a swift economic rescue plan.

The benchmark Nikkei 225 stock average added 160.17 points, or 2 percent, to 8,373.39 -- its highest level in more than a week. The broader Topix index rose 1.5 percent to 829.03.

A 1.08 percentage point reduction in China's key one-year lending rate announced late Wednesday -- its biggest rate cut since 1997 and the fourth in three months -- helped boost marine transport, steel and machinery issues by alleviating fears of a slump in China's demand for raw materials.

Mitsui O.S.K. Lines Ltd., the world's biggest cargo shipper, jumped 7.4 percent to 478 yen, and construction machinery maker Komatsu Ltd. advanced 4.4 percent to 1,070 yen.

Overnight, U.S. markets reversed losses after Obama pledged he would have an economic plan on his first day in office. After filling more spots on his economic team, Obama declared: "help is on the way." The Dow Jones industrials rose 2.9 percent to 8,726.61.

Securities companies were among the day's biggest winners, with Nomura Holdings Inc. surging 5.3 percent to 680 yen and Daiwa Securities Group Inc. up 6.3 percent at 473 yen.

Still, investors were reluctant to drive stocks much higher amid ongoing concerns about the yen's strength and the latest terrorist attacks in India, said Mitsushige Akino, fund manager at Ichiyoshi Investment Management in Tokyo.

"The U.S. is spending money right now on measures to boost the economy," he said. "If geopolitical risks rise, like terrorism, then it will probably have to spend even more money in response. Then that will only further weaken the dollar."

Japanese exporters in particular have been hit hard this year by the stronger yen, which reduces profits earned abroad and makes their products more expensive in overseas markets.

Shares of Panasonic Corp. declined 4.7 percent to 1,284 yen on speculation that it planned to slash its profit outlook, which it announced after the market closed. Blaming the "rapid appreciation of the yen," the Osaka-based company now expects net profit of 30 billion yen from its previous forecast of 310 billion yen.

The dollar was trading at 95.15 yen from 95.54 late Wednesday. The euro stood at $1.2887 from $1.2889.

The economy shrank more than expected in the third quarter and home prices fell to levels not seen since early 2004 as the government announced new plans to provide $800 billion to boost consumer spending and home buying.

Treasury Secretary Henry Paulson said key markets for consumer debt such as credit cards, auto and student loans essentially came to a halt in October, and that the new programs are aimed to get lending back to more normal levels.

Meanwhile, data released Tuesday provided further proof the country is almost certainly in the throes of a painful recession.

The Commerce Department's updated reading on the economy's performance showed gross domestic product shrank at a 0.5 percent annual rate in the July-September quarter, weaker than the 0.3 percent rate of decline first estimated a month ago, and the worst showing since the third quarter of 2001.

GDP measures the value of all goods and services produced within the U.S. and is considered the best barometer of the country's economic fitness.

Meanwhile, the Standard & Poor's/Case-Shiller national home price index released Tuesday tumbled a record 16.6 percent during the quarter from the same period a year ago. Prices are at levels not seen since the first quarter of 2004.

In an effort to increase the availability of home loans to borrowers, the Federal Reserve said it will purchase up to $100 billion in direct obligations from mortgage giants Fannie Mae and Freddie Mac as well as the Federal Home Loan Banks. The Fed also will purchase another $500 billion in mortgage-backed securities, pools of mortgages that are bundled together and sold to investors.

The $600 billion effort on mortgages came as the Fed also unveiled a new program to help unfreeze the market that backs consumer debt such as credit cards, auto and student loans.

The program on consumer debt will lend up to $200 billion to the holders of securities backed by various types of consumer loans. Paulson said recently that the government was working on the new program, which will be supported by $20 billion of credit protection provided by the $700 billion bailout fund.

The government, while looking to reduce fear in the credit markets, is eager to see lenders like credit card companies resume more normal levels of lending to help stimulate the economy. Since September, when credit markets first froze, financial institutions have been hesitant to hand over money for fear they won't be repaid.

That, in turn, has made it harder for businesses and consumers to borrow.

Meanwhile, Wall Street was poised to extend its advance to a third day. The Dow Jones industrial average added more than 70 points in morning trading Tuesday.

Meanwhile, the New York-based Conference Board says its Consumer Confidence Index for November was 44.9, up from a revised 38.8 in October. Last month's reading was the lowest since the research group started tracking the index in 1967.

Economists surveyed by Thomson Reuters expected the November reading to slip to 37.9. Still, this month's figure hovers around levels not seen since December 1974, with Americans' views on the economy the gloomiest in decades as they grapple with massive layoffs, slumping home prices and dwindling retirement funds.

Consumers nationwide are reeling from job losses, tanking investment portfolios and sinking home values. They are expected to hunker down further in the coming months, making it likely the economy will continue to shrink through the rest of this year and into 2009, more than fulfilling a classic definition of a recession: two straight quarters of economic contraction.

AP Business Writers Jeannine Aversa, Martin Crutsinger, Tim Paradis and J.W. Elphinstone contributed to this report.

Copyright 2008 Associated Press. All rights reserved. This material may not be published broadcast, rewritten, or redistributed

(CNN) -- President-elect Barack Obama said stimulating the economy is a top priority -- even if it means adding to the nation's growing deficit.

"I think what's interesting about the time that we're in right now is that you actually have a consensus among conservative Republican-leaning economists and liberal left-leaning economists. And the consensus is this: that we have to do whatever it takes to get this economy moving again, that we're gonna have to spend money now to stimulate the economy," Obama told CBS' "60 Minutes" in his first post-election interview which aired Sunday.

"And that we shouldn't worry about the deficit next year or even the year after," he continued. "That short term, the most important thing is that we avoid a deepening recession."

He said his goals would be to restore consumer confidence and re-regulate the financial market. His first legislative goal is to pass an economic stimulus package. He added that the potential collapse of the auto industry would be "a disaster" amid today's economic crisis.

"It's my belief that we need to provide assistance to the auto industry," Obama told veteran correspondent Steve Kroft. "But I think that it can't be a blank check."

The Senate is expected to vote this week on emergency loans to the auto industry, though the measure faces strong opposition from many Republicans. The bill would authorize loans to the auto industry from the Treasury Department's $700 billion fund to bail out the financial services industry.

Detroit auto executives are scheduled to plead their case in public hearings in the House and Senate.

Obama, joined by his wife Michelle, discussed the impact of the election on his family, as well as his priorities, including the economy, the Iraq war and other challenges he faces.

"I will say that the challenges that we're confronting are enormous," he says. "And they're multiple. And so there are times during the course of a given a day where you think, 'Where do I start in terms of moving -- moving things forward?'

"And I think that part of this next two months is to really get a clear set of priorities, understanding we're not going be able to do everything at once, making sure the team is in place, and moving forward in a very deliberate way and sending a clear signal to the American people that we're going to be thinking about them and what they're going through."

Another top priority: "Stamp out al Qaeda once and for all."

"I think capturing or killing bin Laden is a critical aspect of stamping out al Qaeda," Obama said. "He is not just a symbol, he's also the operational leader of an organization that is planning attacks against U.S. targets.

He reiterated his pledge to shut down the U.S. prison camp at Guantanamo Bay, Cuba. Officials close to the Obama team have told CNN that the incoming administration is pondering whether to try some of the Guantanamo Bay inmates in existing federal courts; set up a special national security court to deal with cases involving the most sensitive intelligence information; or release others.

"I have said repeatedly that I intend to close Guantanamo and I will follow through on that, I have said repeatedly that American doesn't torture, and I will make sure that we don't torture, and I am going to make sure we don't torture, those are part and parcel of efforts to regain America's moral stature," Obama said in the "60 Minutes" interview.

Obama, spending the last two weeks with his transition team in Chicago, Illinois, said he'll announce his Cabinet selections "soon." He confirmed that he's spoken to former Democratic rival Hillary Clinton recently, but wouldn't comment on whether she will be a member of his Cabinet.

On a personal note, Obama, sitting next to his wife, said he's still adjusting to "the loss of anonymity" that comes with being the next U.S. president.

"That's something I'll ever get used to, the loss of anonymity, and this is not a complaint, it's part of what you sign up for ... but being able to wonder around the neighborhood -- I can't go to my own barbershop now, I have to have my barber come to some undisclosed location to cut my hair," Obama said.

Michelle Obama said she's not sure whether the reality of moving into the White House has "really sunk in."

"But I remember, we were watching the returns and, on one of the stations, Barack's picture came up and it said, 'President-Elect Barack Obama. ' And I looked at him and I said, 'You are the 44th President of the United States of America. Wow. What a country we live in.'"

Added Obama: "Yeah. Yeah. And then she said 'Are you gonna take the girls to school in the morning?' "

Japan - world's No. 2 economy - in recession

TOKYO (CNN) -- Japan, the world's second-largest economy, is in a recession, government officials announced Monday.

Japan's Cabinet Office confirmed that its economy fell another 0.1% in its third quarter, following a 0.3% drop in the second quarter.

The country's gross domestic product - second to that of the United States - has fallen by 0.4% this year.

Stocks on the Nikkei were trading about 1% higher in Monday morning trading.

Major indexes around the globe have plummeted over the last two months. The Russian stock market has lost 65.5% of its value since the start of the year. Stocks in Japan and the United States have been equally hard hit, falling 42% and 33%, respectively.

In Europe, the pain has been particularly acute. The European Union on Friday officially declared that the 15-nation group had entered into a recession, with its gross domestic product declining 0.2% for the second straight quarter.

Japan's recession announcement was not unexpected. Part of the problem is the strong yen, which skyrocketed in recent weeks as turmoil in the world's financial markets and concerns about a global recession drove investors away from high-yielding currencies such as the euro and the pound. As a result, lower-yielding currencies like the dollar and the yen surged in value because they are considered by many investors to be a safe-haven.

Since Japan is such a big exporter of goods, a more robust yen hurts profits for Japanese firms as sales from abroad get translated back into yen. The more that the yen has climbed, the worse Japan's stock market has performed, which has resulted in a ripple effect on European and U.S. exchanges.

CHINA-ECONOMY/AIRPORTS:China to spend $59 bln on airports by end-2010

State television on Saturday quoted Li Jiaxiang, director of the Civil Aviation Administration of China (CAAC), as saying the money would be used to build 50 new airports and to upgrade or move 90 others.

A statement on CAAC's website, www.caac.gov.cn, gives an even higher total. It says the agency will invest 200 billion yuan in new and existing airports next year and 250 billion yuan in 2010.

China's spending departments have rushed out ambitious plans since the State Council, or cabinet, announced a 4 trillion yuan stimulus plan on Sunday to boost domestic demand.

The central government will finance 30 percent of the package directly and hopes to mobilise the remaining funds from local governments, banks and companies.

It aims to invest 100 billion yuan of the total by the end of this year, of which 34 billion yuan will be spent on rural infrastructure and 28 billion on railways and airports. ($1=6.823 yuan) (Reporting by Alan Wheatley; Editing by Jan Dahinten)

Copyright 2008 Reuters, Click for Restriction

(CNN) -- President-elect Barack Obama is looking forward to Monday's White House transition talks with President Bush and is already examining ways to make a quick impact upon taking office, top Obama aides said Sunday.

"I think it was very gracious of President Bush to invite him so early -- usually it happens a little later in the process," Valerie Jarrett, one of the transition team's co-chairs, told reporters.

"I think because of the daunting challenges that are facing our country, President Bush thought it was important to move forward quickly."

A prominent Democratic source close to Obama said Jarrett is also Obama's choice to be named to take over his seat in the Senate, though Illinois Gov. Rod Blagojevich would have the final say over a replacement.

And John Podesta, the other co-chair, said the talks are likely to cover "a broad range of issues" -- but the slumping U.S. economy is expected to dominate the discussion.

Podesta told CNN's "Late Edition" that Obama will push Congress to enact "at least part" of an economic package before he takes office in January, but said the problems Americans face need short-term and long-term approaches.

"It's clear that we need to stabilize the economy, to deal with the financial meltdown that's now spreading across the rest of the economy. The auto industry is really, really back on its heels," Podesta said.

And Obama's designated White House chief of staff, Rahm Emanuel, said the government needs to consider "fast-forwarding" $25 billion in low-interest loans already approved by Congress to help the Big Three U.S. automakers retool for more efficient vehicles.

"They are an essential part of our economy and our industrial base," Emanuel told CBS' "Face the Nation." He added: "There are existing authorities within the government today that the administration should tap to help the auto industry."

Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi, both Democrats, urged Treasury Secretary Henry Paulson over the weekend to extend the $700 billion bailout of the financial industry to shore up the ailing Ford, Chrysler and General Motors, which have been battered by the credit crisis and poor sales of gas-guzzling sport utility vehicles. But Treasury spokesperson Brookly McLaughlin said Sunday that the department remains focused on the financial sector and restarting stalled lending.

Podesta said Congress could extend unemployment benefits for laid-off workers and provide assistance to states grappling with increased Medicaid costs quickly. But he said efforts to improve schools, expand health-care coverage and wean the nation's energy industry away from imported fuels "need to be tackled together."

And he told "Fox News Sunday" that the incoming administration is conducting an extensive review of Bush's executive orders, looking for quick changes that Obama can make from his first day in office. Watch more on the team's working weekend »

"As a candidate, Senator Obama said that he wanted all the Bush executive orders reviewed and decide which ones should be kept and which ones should be repealed and which ones should be amended, and that process is going on. It's been undertaken," Podesta said.

Podesta said Obama's team will be "looking at -- again, in virtually every agency -- to see where we can move forward, whether that's on energy transformation, on improving health care, on stem cell research."

Podesta said there is a lot the president can do without waiting for Congress, and voters can expect to see Obama do so to try to restore "a sense that the country is working on behalf of the common good."

Bush and Obama are set to meet Monday afternoon at the White House's Oval Office. Watch report from CNN's Kathleen Koch on meeting Monday »

"I'm sure they'll be open and frank, as I'm sure they've always been able to talk to one another," Jarrett said. "So I think it's a good sign for this country that they're having this meeting when they're having it, and we look forward to the days and weeks ahead."

At the same time, first lady Laura Bush will take Obama's wife, Michelle, on a tour of the executive mansion. iReport.com: What's your message for Obama?

Podesta said cooperation with Bush administration officials has been "excellent" since Tuesday's election.

Wall Street heads into another turbulent week with investors set to pore over a government report on retail sales and earnings from Wal-Mart Stores Inc. to get a better reading on the consumer.

There are growing signs that the deepening economic slowdown has caused Americans to tighten their purse strings. There was fresh evidence of this past week when retailers posted the worst October same-store sales in 35 years -- and analysts believe the upcoming holiday shopping season could be among the slowest in decades.

With consumer spending driving more than two-thirds of the U.S. economy, investors will be paying close attention to earnings outlooks for some of the nation's biggest retailers. Wal-Mart, the nation's biggest retail chain, will post results on Thursday. Kohl's Corp., JCPenney Co., Macy's Inc., and Abercrombie & Fitch Co. are scheduled to release reports as well.

Investors will get an overall picture of consumer spending on Friday when the Commerce Department releases its October retail sales index. The closely watched gauge is expected to show sales dropping 1.2 percent for the month after falling 1.2 percent in September. Excluding the battered automobile industry, sales are expected to have fallen 0.9 percent.

The market, still trying to recover from October's devastating losses, will likely zigzag as investors react to these reports. This has been the pattern during the past few weeks, with major indexes swinging from one extreme to another in capricious trading.

Many analysts believe this volatility is part of a bottoming-out process. The real test is to see in the coming days if investors have already priced in the potential for negative news or if fear of a protracted recession will trigger another stream of selling.

"The news is going to be really bad, and that shouldn't be a surprise to investors," said Peter Cohan, principal of Peter S. Cohan & Associates. "But, I'm feeling uncomfortable that the market is a daily mood ring for the economy. The small investors are largely out of the market, and what you end up with is a small number of very large players making decisions."

Cohan pins the volatility on hedge funds, pension funds, and big university endowments unloading stocks to raise collateral and scooping up undervalued stocks to seize opportunity. He believes this will eventually result in a more stable trading environment that will lure retail investors back, and add stability to major indexes.

Hedge funds could come to center stage this week if they receive another wave of redemption requests from investors. The upcoming Nov. 15 deadline for redemptions could cause further instability in the market, Cohan said.

Wall Street had enjoyed its biggest Election Day rally in history last Tuesday, but could not cling to those gains. This was followed by a two-day loss of about 10 percent in the major indexes, including a 929-point drop in the Dow, as investors turned their focus once more to the economy's woes.

For the week, the Dow Jones industrial average and broader benchmarks such as the Standard & Poor's 500 index lost about 4 percent after surging 10 percent or more the week before. Technical analysts are keeping a close eye on all the data this week, with continued concerns that the Dow will test its Oct. 10 intraday low of 7,882.51.

Stock futures trading early Sunday evening showed a slightly positive start for the markets. S&P 500 futures gained 0.83 percent, while Nasdaq 100 futures rose 0.66 percent.

There are a number of other reports on tap that might give more insight into the economy. On Thursday, Wall Street gets readings on the labor market and trade deficit, followed by a look at consumer sentiment on Friday. Trading on Tuesday could be more subdued with the bond market and some banks closed due to Veterans Day.

Additionally, investors are watching for developments with General Motors Corp., Chrysler and Ford Motor Co. after the automakers met with Congressional leaders last week to secure financial help.

Democratic leaders in Congress asked the Bush administration on Saturday to provide more aid to the struggling auto industry, which is bleeding cash and jobs as sales have dropped to their lowest level in a quarter-century. House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid said in a letter to Treasury Secretary Henry Paulson that the administration should consider expanding the $700 billion bailout to include car companies.

"We must safeguard the interests of American taxpayers, protect the hundreds of thousands of automobile workers and retirees, stop the erosion of our manufacturing base, and bolster our economy," Pelosi, D-Calif., and Reid, D-Nev., wrote.

Even more news might be generated out of Washington with the possible selection of a new Treasury secretary by President-elect Barack Obama. He has already identified that the economy is the new administration's biggest priority, and a Treasury pick could lift stocks.

Among those being considered for the post include former Treasury Secretary Lawrence Summers, Federal Reserve Bank of New York President Timothy Geithner, and former Federal Reserve Chairman Paul Volcker.