Economy in Crisis: GM Posts $3.3B Losses In 1st Quarter

This will mean more job losses which will make the recession worse:

General Motors Corp. struggled to a $3.3 billion first-quarter loss, due in part to a weak U.S. market, a strike at a major supplier and plummeting sales of sport utility vehicles and pickups.

The loss reported Wednesday for the January-March period, which amounted to $5.74 per share, also reflected one-time charges. It was much larger than the company's loss of $42 million, or 7 cents per share, in the same quarter a year ago.

GM said a two-month strike at American Axle and Manufacturing Holdings Inc. has cost it $800 million and 100,000 vehicles. The strike has affected 30 GM plants.

GM's loss included a $1.45 billion charge to reflect a change in the value of GM's interest in GMAC Financial Services and $731 million to increase GM's liability in Delphi Corp.'s ongoing bankruptcy.

Excluding the one-time items, GM lost $350 million, or 62 cents per share, beating Wall Street's expectations. Analysts surveyed by Thomson Financial had expected a loss of $1.60 per share.

GM's total revenue for the quarter was $42.7 billion, down from $43.4 billion a year ago. GM said revenues were up 20 percent outside North America thanks to strong growth in China, Russia, Brazil and India, but were impacted by the slowdown in North America and losses at GMAC.

Did I mention that bad economic news affects consumer confidence:

Soaring gas prices and weaker job prospects made Americans gloomier about the economy in April, sending a widely watched measure of consumer sentiment to a five-year low, a private research group said Tuesday.

The New York-based Conference Board said that its Consumer Confidence Index, which had plummeted in March, fell again to 62.3 in April, down from the revised 65.9 last month and 76.4 in February. While the reading was a little better than the 61.0 expected by analysts, the index remains at its weakest point since March 2003, when it registered 61.4, ahead of the U.S. invasion of Iraq.

"This continued weakening suggests that not only has the feeble level of growth in the first quarter spilled over into the second quarter, but the economic conditions may have slowed even further," Lynn Franco, director of the Conference Board Consumer Research Center, said in a statement. "And not only are lackluster business and job conditions eroding confidence, but rising gasoline prices are undoubtedly heightening concerns."

The Present Situation Index, which measures shoppers' current assessment of economic conditions, dropped to 80.7 in April from 90.6 in March. The Expectations Index, which measures the outlook over the next six months, was little changed at a depressed 50.1, compared to 49.4 in March.

Eroding consumer confidence foreshadows weakening consumer spending, which could further hurt the already deteriorating economy since consumer spending accounts for more than two-thirds of the nation's economic activity.

Investors were unfazed, however, by the fourth straight month of declines in the consumer sentiment reading. In midmorning trading, the Dow Jones industrial average fell 0.32, or less then 0.01 percent, to 12,871.43. Broader markets were narrowly lower.

The downbeat news on confidence came as the widely watched Standard & Poor's/Case-Shiller index showed that housing prices dropped in February at the fastest rate ever, showing that the housing slump is gaining momentum.