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The average gas price in the United States fell below $1.80 a gallon Thursday for the first time since early 2005, according to a daily survey of gas station credit card swipes.

Regular unleaded gasoline lost 1.4 cents to sell at a national average of $1.789 a gallon, down from $1.803 Wednesday, according to motorist group AAA.

Gas prices have fallen for 78 days in a row, with the national average plunging more than $2 a gallon. Prices are down 56.5% from the record high of $4.114 a gallon touched on July 17.

The national average gas price last hit $1.789 was Jan. 12, 2005.

Gas remains above $2 a gallon in only 3 states, according to AAA.

The average price in Alaska, the most expensive state, was $2.74 a gallonge, while the average price was $2.627 in Hawaii, and $2.145 in New York. Gas was cheapest in Missouri, where it sold at an average price of $1.553 a gallon.

Diesel: The price of diesel fuel, which is used in most trucks and commercial vehicles, has also fallen along with gasoline online payday loans.

The price fell 1.8 cents Thursday to a national average of $2.722 a gallon, according to the AAA survey.

Diesel prices have fallen more than $2 a gallon as well, down from a record high of $4.845 on July 17.

Ethanol: Meanwhile the price of E85, an 85% ethanol blend made primarily from corn, turned higher, gaining 1.2 cents to $1.578 a gallon on average, AAA reported.

E85 can be used in place of regular gas in specially configured "flex-fuel" vehicles, but is not readily available in some states.

The AAA figures, compiled by Oil Price Information Services, are state-wide averages based on credit-card swipes at up to 100,000 service stations across the nation. Individual drivers may see lower fuel prices in different areas of each state. 

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Economic conditions deteriorated further across the nation, according to the Federal Reserve’s latest snapshot, suggesting the U.S. central bank may continue to lower interest rates in the near future.

"Overall economic activity weakened across all Federal Reserve districts," the Fed said Wednesday in the December edition of its Beige Book, a report on current economic conditions.

While the weakness was widespread, the St. Louis district, which encompasses Littlerock, Ark., Louisville, Ky. and Memphis, Tenn., showed slight improvements in commercial real estate and labor.

Among the main drivers were a deterioration in vehicle sales, weak consumer spending, further contraction of lending and a noticeable decline in manufacturing activity.

The report said retailers are preparing for a "relatively slow holiday sales season," as consumers shy away from big-ticket purchases amid the weak economy.

Falling home prices took a toll on real estate markets in most districts. But weak home sales remained at stable levels, according to the report.

Credit conditions remain tight, with several districts reporting increases in loan delinquencies and defaults, "especially in the real estate sector," the report said.

Commercial real estate weakened broadly, worsening from declines reported in October’s Beige Book. Half of the 12 districts indicated that commercial real estate projects were being postponed or canceled, citing tight credit conditions.

Labor market conditions remained weak, with nearly half of the districts reporting current and future layoffs.

At the same time, the report indicated that price pressures continued to ease in most districts. Prices for energy, fuel, many raw materials and food fell, reversing course from the previous report.

Many economists say falling prices, while a sign of economic distress, give the Fed more leeway when it comes to further interest rate cuts.

Falling prices remove some of the threat posed by inflation, which is a by-product of lower interest rates.

The Fed’s next policy meeting is scheduled for Dec. 15-16. Last month, the Fed cut its benchmark rate by a half percentage point to 1%. The Beige Book is released two weeks ahead of the Fed’s meetings.

Fed chairman Ben Bernanke said Monday that additional interest rate cuts are "certainly feasible," though he added that the central bank does not have much more to trim.

District 1 - Boston: Overall economic conditions deteriorated with some retailers in the district indicating that sales fell below year ago levels.

The district’s labor market remains under pressure. One staffing company contact offered this grim assessment: "Everybody’s spooked. There’s no hiring going on at all."

One bright spot: home sales in the New England region declined modestly or rose versus previous months. But the slight improvement reflects deals that were done 40 to 65 days earlier, according to the report.

District 2 - New York: Business conditions weakened substantially in the district as manufacturing activity declined and job losses increased.

The report said a growing number of businesses plan to curtail capital spending in the months ahead.

Bankers reported tightening credit standards and increasing delinquencies.

Both residential and commercial real estate markets softened.

District 3 - Philadelphia: The economy in this district remains weak and businesses expect further deterioration cash advance payday loans.

Declines were reported in retail sales, manufacturing activity, residential and commercial real estate markets.

Still, bank loan volume increased during November, even as credit quality deteriorated.

District 4 - Cleveland: The ailing Midwestern economy suffered marked declines since the last Beige Book.

Falling factory output, declining construction activity and an anemic job market were chief among the economic challenges facing the district.

District 5 - Richmond: As with other districts, weak retail sales topped the list of economic ills in the Richmond area.

Other soft spots include: diminished manufacturing activity, increased job cuts, declining construction activity and a weak commercial real estate market.

District 6 - Atlanta: Economic activity in the district was hampered by declines in retail sales and tourism, as consumers cut back on discretionary spending.

A large number of foreclosed properties drove down home prices in the district.

Tight credit and a soft labor market also added to the district’s economic malaise.

District 7 - Chicago: Businesses in the district expressed concern about the duration of the current downturn as economic conditions continue to deteriorate.

The district was plagued by anemic consumer spending, a weak labor market, declines in construction activity and tight credit.

Additionally, heavy precipitation hampered agricultural activity in the district.

District 8 - St. Louis: While the overall economy the eighth district declined, there were some areas of improvement.

A contact in the commercial real estate business said upcoming construction of several facilities related to wind energy has improved the outlook for the sector.

The labor market in the district experienced layoffs in the manufacturing sector. But certain businesses in aerospace, auto parts, food and primary metal manufacturing indicated plans to expand facilities and hire new workers.

District 9 - Minneapolis: Contraction in the district’s economy was caused by waning consumer spending, declining manufacturing and construction activity.

On the bright side, the energy sector was mixed. Oil and gas exploration continued and new wind energy farms were built. Also, agricultural conditions improved since the last report.

District 10 - Kansas City: A slowdown in commercial real estate market intensified in the district.

Consumer spending and manufacturing activity declined as credit conditions tightened.

Most business contacts in the district expressed little optimism about economic activity going forward, the report said.

District 11 - Dallas: Weakness in the district was broad-based as manufacturing and staffing activity declined sharply.

Housing market conditions worsened significantly amid reports of buyers walking away from their new homes, forfeiting their deposits. Rising foreclosures pushed down home prices.

District 12 - San Francisco: The district’s economy contracted amid declines in retail sales, manufacturing and commercial real estate.

Home sales increased in certain areas where buyers scooped up foreclosed properties at rock-bottom prices. But overall residential real estate sales remain weak and demand for commercial real estate fell.  

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Finland may lower its economic-growth forecast for next year as the euro region as a whole is already in a recession, Finance Minister Jyrki Katainen said.

“It is possible that our growth rate will come down,” Katainen said in an interview today at a meeting of European finance ministers in Brussels. “There is a growing risk” that “the growth rate is going to be less than 0.5 percent” in 2009.

Finland will publish its next economic forecast in the middle of December, Katainen said. The European Commission last month forecast 2009 expansion of 1.3 percent for Finland, down from an estimated 2.4 percent this year.

The government in Helsinki has put forward economic incentives totaling 1 credit score.2 percent of gross domestic product, including tax cuts and increased spending. Across the European Union, policy makers are struggling to coordinate 200 billion euros ($254 billion) in stimulus measures announced by the EU last week.

“We have been in a good situation so far because public finances are in a good shape and our banking sector seems to be quite healthy,” Katainen said. Finland may implement additional and “temporary” stimulus measures, especially in construction, he said.

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The U.S. once exported jobs. Now, it is exporting unemployment.

America’s deepening recession, which has cost 1.2 million jobs so far this year, is taking a heavy toll overseas. Shrinking consumer demand for imports and less need for outsourcing by U.S. companies are idling workers at Germany’s Porsche SE and Chinese businesses that make toys for Mattel Inc.

Economists say worldwide unemployment may increase to a two-decade high as trade and investment ties that have developed during 20 years of globalization magnify the impact of the U.S. contraction. Without buoyant economies elsewhere in the world to act as buffers, a longer, deeper slump in the labor market is likely.

“In the same way that we were supporting economic activity when we were growing rapidly, the recession in the U.S. is going to be a drag on the global economy and is going to reduce employment in our trading partners,” says Lewis Alexander, chief economist at Citigroup Inc. in New York.

The U.S. Department of Labor may report Dec. 5 that the jobless rate jumped in November to a 15-year high of 6.8 percent and employers reduced payrolls by 320,000, according to economists surveyed by Bloomberg News.

That would bring job losses for 2008 to 1.5 million. “Millions” more may follow in 2009 “if we do not act swiftly and act boldly,” President-elect Barack Obama said at a Nov. 24 press conference. He aims to create 2.5 million new jobs in his first two years in office.

Not Just U.S.

“This is by no means simply a U.S. story,” says David Hensley, director of global economic coordination at JPMorgan Chase & Co. in New York, who expects unemployment to increase in both developed and emerging-market nations.

Worldwide, the jobless rate may rise above 7 percent by 2010 after remaining between 5 percent and 7 percent for two decades, says Kathleen Stephansen, chief global economist for Credit Suisse Holdings USA Inc. in New York.

“The global pie is shrinking rapidly, and when that happens, there is simply not enough business to keep everyone employed,” she says.

Unemployment in Germany, the world’s largest exporter, may start to creep higher after declining for 32 consecutive months, the longest slide since reunification in 1990.

“Improvements in the German labor market will come to an end in 2009 at the latest,” Michael Huether, head of the Cologne-based Institut der Deutschen Wirtschaft, a business- sponsored economic institute, told reporters in Berlin Nov. 24.

German Job Losses

Germany’s BASF SE last month announced plans to idle 80 factories around the globe after customers in the auto, construction and textile industries reduced orders. The world’s largest chemical company, which gets a fifth of its revenue from North America, plans to eliminate more than 1,000 jobs and reduce work hours for 20,000 employees, about one-fifth of its labor force.

Heidelberger Druckmaschinen AG, the world’s largest printing-press maker, plans to cut as many as 2,500 jobs, or 13 percent of its workforce, to offset declining demand. The Heidelberg-based company gets about half its sales from outside Europe, including 16 percent from North America.

Volkswagen AG and Porsche said last week they are each temporarily suspending production at their largest plants in coming weeks. Porsche said in a Nov. 26 statement that sales of its trademark 911 sports car in the U.S., the model’s largest market, “can hardly be reliably calculated.”

Euro Region

Unemployment in the 15-nation euro region rose to 7 payday loans.7 percent in October from a low of 7.2 percent in February. It will reach 8.3 percent next year, the International Monetary Fund forecasts.

The Organization for Economic Cooperation and Development, which includes the world’s richest economies, said in a report last week that it expects the number of people out of work in its 30 member nations will rise to 42 million in 2010 from 34 million now as “the financial turmoil that erupted in the United States” has “rapidly spread to the rest of the world.”

Europe and Japan “are at the beginning stages of what we think will be a severe labor-market adjustment,” says JPMorgan’s Hensley.

In Japan, the slump is hurting part-time and contract employees, a growing class of workers who don’t benefit from Japan’s lifetime-employment contracts.

Temporary Workers

Toyota Motor Corp. will cut half its 6,000 temporary workers by the end of March in response to the global decline, which drove U.S. sales for Asia’s largest auto company down 23 percent in October. Electronics-maker Sharp Corp. said last week it’s considering cutting temporary workers at a plant that makes parts for digital cameras and televisions.

Japan’s jobless rate will jump to 4.4 percent in 2009 from 4 percent, the OECD forecasts. Japanese unemployment peaked at 5.5 percent in 2003, when the country was emerging from its last recession.

Also feeling the fallout from the U.S. downturn are manufacturers in low-cost countries such as China, where American companies have turned for manufacturing.

“China’s economy has acutely felt the impact of the financial crisis,” Yin Weimin, head of the Ministry of Human Resources and Social Security, said on Nov 20. “Some enterprises, particularly labor-intensive small and medium-size enterprises, have gone bankrupt or partially shut down their production capacity and, as a result, many people have lost their jobs.”

Toy Exporters

Smart Union Group Holdings Ltd., a toymaker that supplies Mattel and Hasbro Inc., shut last month, putting 7,000 people in Dongguan, in Guangdong province, out of work. Half the nation’s toy exporters have closed this year, and 67,000 enterprises filed for bankruptcy in the first six months, according to government figures.

China’s urban unemployment may rise to 4.5 percent by the end of the year from about 4 percent now and “worsen” next year, according to Yin. The figure doesn’t measure job losses among an estimated 200 million migrant workers who have left their hometowns in the countryside to work in the cities.

“U.S. multinationals are facing harder times and scaling back production in the rest of the world, and at the same time there’s a straightforward contraction of imports into the U.S.,” says Marco Annunziata, chief economist at Unicredit MIB in London. “All this means more job losses, as we’re seeing a slowdown in U.S. growth that will impact everywhere.”

Not since the 1930s have unemployment and economic decline been more closely linked across international borders, says Nobel laureate economist Robert Solow, 84, a professor at the Massachusetts Institute of Technology in Cambridge.

“Normally, business cycles are not in synch around the world, and that helps keep them relatively mild,” he says. Now, “there’s a lot more synchronization, and that contributes to the likely depth of the recession.”

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