ECONOMIC GRIMNESS – AT 9:20 A.M. ET:  New economic news is grim, contradicting the optimism oozing from a president who hasn't had a press conference since July.  First report:

WASHINGTON (AP) -- Retail sales fell in December as demand for autos, clothing and appliances all slipped, a disappointing finish to a year in which sales had the largest drop on record.

The weakness in consumer demand highlighted the formidable hurdles facing the economy as it struggles to recover from the deepest recession in seven decades.

The Commerce Department said Thursday that retail sales declined 0.3 percent in December compared with November, much weaker than the 0.5 percent rise that economists had been expecting. Excluding autos, sales dropped by 0.2 percent, also weaker than the 0.3 percent rise analyst had forecast.

For the year, sales fell 6.2 percent, the biggest decline on records that go back to 1992. The only other year that annual sales fell was in 2008, when they slipped by 0.5 percent.

The 0.3 percent decline in December was the first setback since September, when sales had fallen 2 percent. Sales posted strong gains of 1.2 percent in October and 1.8 percent in November, raising hopes that the consumer is starting to mount a comeback.

Second report:

MIAMI (AP) - A record 2.8 million households were threatened with foreclosure last year, and that number is expected to rise this year as more unemployed and cash-strapped homeowners fall behind on their mortgages.

The number of households that received a foreclosure-related notice rose 21 percent from 2008, RealtyTrac Inc. reported Thursday. One in 45 homes were sent a filing, which includes default notices, scheduled foreclosure auctions and bank repossessions.

In December, more than 349,000 households, or one in 366 homes, were hit with a foreclosure-related notice. That represents a 14 percent spike from November and a 15 percent jump from December 2008.

Third report:

WASHINGTON (AP) -- The number of newly laid-off workers requesting unemployment benefits rose more than expected last week as jobs remain scarce amid a sluggish economic recovery.

The Labor Department said Thursday new claims for unemployment insurance rose by 11,000 to a seasonally adjusted 444,000. Wall Street economists polled by Thomson Reuters expected an increase of only 3,000.

COMMENT:  If this continues, the political fallout can be profound.  Unless the president can show an economic turnaround by the November elections, he'll be hosting a huge going-away party for many Democrats in Congress.  I don't know if they can take their health care with them.

And something else:  In the midst of all this, Wall Street firms are about to announce mammoth bonuses, some in the tens of millions of dollars.  Even pro-business writers are beginning to register their disgust at this obnoxious display by men who seem to live in an amoral alternative universe.  There may simply come a point where we have to save capitalism from the capitalists.  It's happened before.  There's a small group that never seems to learn words like "decency," "fairness" and "proportion."  What's remarkable is that some of the firms involved are the same ones that the American people had to bail out last year.

The distinguished Felix Rohatyn, a statesman of Wall Street, once worried that the stock market was becoming nothing more than a casino.  He was right.  He'd be more right today.

January 14, 2010