Finance news. My opinion.

What if someone comes to your door, trying to sell you a new vacuum cleaner? Will you bite?

If you have a vacuum cleaner that works, you probably tell the salesman to move along and leave you alone.

Some door-to-door sellers have found a way to turn a “No” into a “Yes” by making you believe they’re not selling anything at all. Here’s how it works.

They come to your door wearing a uniform of some kind — such as hard hat, boots and reflective vest — and talking about working with the local gas or hydro company.

They have to make sure your rented water heater is safe and energy efficient. Can they do a quick inspection?

Once they’re in your home, they can say the water heater must be replaced because it’s dangerously unsafe. Or it’s wasting energy, forcing up your utility bills.

You agree to a replacement because you think you’re dealing with someone qualified to inspect water heaters, a licensed technician — not, heaven forbid, a door-to-door salesman.

This scam has gone on for a while. It tends to heat up in the summer months.

Complaints and inquiries about rental water heater agreements jumped into third place on the Ontario consumer ministry’s Top 10 list last year — shooting ahead of motor vehicle purchases and sales.

(Complaints about collection agencies are still No. 1 in Ontario, followed by home renovations and repairs.)

Older seniors are especially susceptible to aggressive water heater pitches. Their adult children often ask me to sort out the bills.

Cheryl Charbonneau, for example, said her mother-in-law had replaced her rented water heater three times since 2009 after being told it was unsafe.

The woman, in her late 70s, didn’t realize each new water heater came with a long-term contract. The salespeople hadn’t told her and she hadn’t read the agreements.

At one point, she was getting bills from three companies at the same time. One company told her she could lose her house if she didn’t pay for 10 years, Charbonneau says.

Melanie Pineda, who contacted me last week, also had a disturbing story. She’s a pregnant mother of three boys under 5.

“A salesperson came to my door, saying his company had been called in by Enbridge Gas to inspect all the water heaters in our neighbourhood because they had rust issues.

“He came downstairs, found rust and told us we needed a replacement as soon as possible. Two days later, a shoddy installer came with a water heater and a young assistant.

“Now we’re left with leaking, a big puddle and a water shutdown. We need water to drink and bathe with. We called for service and we’re waiting.”

The company fixed her water heater later the same day after she contacted the Better Business Bureau. It reduced her contract to five years (from 10), but wouldn’t let her out of the deal despite the alleged misrepresentation.

Enpure Home Comfort, the firm she dealt with, didn’t respond to my email and phone inquiries. Its name came up again when a homeowner told me about a rented water heater that he’d inherited.

Rakesh Kumar Verma took possession of his home on June 7 after negotiating the sale in February. His agreement said the water heater was rented from Direct Energy.

Contemplating a renovation after he moved in, he called Direct Energy to ask about venting. That’s when he heard the tank was returned on June 2.

“The previous owner had signed with Enpure on May 27, since he thought he was dealing with Enbridge. He wasn’t told that a contract was involved.”

Verma is now locked into a 10-year contract unless he pays $1,050 to cancel early. If he keeps it, he has to pay $300 to change to a power-vented unit. And he can’t get a copy of the agreement signed by the previous owner.

Beware of high-pressure tactics by impostors. Ask for photo ID with their name and company affiliation before listening to a word of their pitch.

Finally, call the Ontario consumer ministry with questions or complaints at 1-800-889-9768 or 416-326-8800.

Ellen Roseman writes about personal finance and consumer issues. You can reach her at eroseman@thestar.ca.

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The first week of July is off to a much slower start than the last week of June, when stocks had their biggest gains in two years.

Major indexes were mixed for much of the day Tuesday but dipped in afternoon trading after Moody’s downgraded Portugal’s debt to “junk.” The credit ratings agency cited concerns that Portugal will not be able to meet targets to reduce its deficit due to the “formidable challenges” the country is facing in cutting spending.

Investors have been worried that Europe’s debt problems could slow the global economy and cause a crisis for European banks. “The European debt crisis is going to be with us for a while,” said David Kelly, chief market strategist at J.P. Morgan Funds. “There still is a very big issue out there.”

Trading volume was light as many traders took vacations. U.S. markets were closed Monday for the July Fourth holiday. Many investors are looking ahead to next week, when aluminum maker Alcoa Inc. becomes the first major U.S. company to report quarterly financial results.

Last week, the Dow rose 648 points, its best week in two years, after Nike reported strong earnings and Greece cleared its final hurdle before receiving another round of loans. Automakers also reported that their sales rose 7 percent in June compared with the same month a year ago.

The gains erased nearly six weeks of losses. Prior to last week, stocks had been falling since late April because of concerns about the debt crisis in Europe, weak home sales in the U.S. and slowing manufacturing. By mid-June, stocks had given up most of their gains for the year.

With last week’s rally, the Dow is now down just 1.8 percent from April 29, when it reached a three-year high. The Dow is up 8.6 percent for the year. The S&P 500 index is up 6.4 percent and the Nasdaq composite is up 6.5 percent.

Analysts are optimistic about the corporate earnings reports that will start to come in next week. Earnings from companies in the S&P 500 index are expected to rise 14 percent from the same period a year ago, according to FactSet. Revenue is expected to rise 11 percent.

“There hasn’t yet really been a reason to get concerned about corporate America,” said Randy Warren, chief investment officer of Warren Financial Service. “It’s the rest of the America that’s struggling.”

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New sicknesses are still being reported in the European E. coli outbreak that has killed 39, but Germany’s national disease control center said Friday indications are that the crisis is tapering off.

The number of reported infections in Germany, the epicenter of the outbreak, is now up to 3,408, including 798 people who have developed a serious complication that can lead to kidney failure _ about 100 more overall cases than the day before _ the Robert Koch Institute said.

Still, Robert Koch spokeswoman Susanne Glasmacher said all evidence is that the outbreak remains on the decline.

“It sometimes takes days until we get reports about infected persons,” Glasmacher said. “In general we can say that the number of infected persons is continuing to go down.”

Thirty-eight people have died in Germany and one in Sweden in the epidemic, which was traced last week to sprouts from a farm in northern Germany payday loan.

According to the World Health Organization more than 100 people have been infected in 13 other European countries, Canada and the U.S.

Germany’s health minister has warned that although the outbreak is abating, more deaths are possible.

On Friday, health officials in the Netherlands said a strain of E. coli found on Dutch beet sprouts last week has not been seen before in the country and that researchers sent samples for further analysis to labs in Italy and Denmark.

Nobody appears to have been sickened by the strain, the Dutch Food Safety Authority said.

Dutch Health Minister Edith Schippers said the fresh round of tests will likely take weeks.

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Mike Corder contributed to this report from The Hague

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Falling energy prices cooled inflation in May and U.S. factories rebounded after natural disasters slowed production for the first time in nearly a year.

The latest economic data suggest two of the biggest factors that hampered the economy this spring _ high gas prices and supply disruptions stemming from the Japan crises _ are starting to ease.

Overall consumer prices rose 0.2 percent, the smallest increase in six months the Labor Department said. It was the first drop in energy costs in nearly a year.

Gas prices have fallen since peaking last month at a national average of $3.98 per gallon. On Tuesday, the national average price was roughly $3.69 per gallon. While that is giving motorists some relief, gas prices are still $1 higher than a year ago.

So-called “core” consumer prices, which exclude volatile food and energy, rose by the most in nearly three years last month. Economists say that’s mostly because temporary increases in cotton and other commodities are forcing up costs.

Inflation “is probably now close to peaking,” said Paul Ashworth, an economist at Capital Economics. “While the bigger monthly rise in core prices is a concern, a lot of it was due to temporary factors that could be reversed in the next few months.”

U.S. factories produced more business equipment and construction materials last month, the Federal Reserve said. That boosted manufacturing output 0.4 percent last month, the Federal Reserve said. The gain followed the first decline in 11 months of gains.

Overall industrial production was basically flat for the second month in a row. It was dragged down by a decline in utility activity caused by milder spring weather.

Ashworth said the report confirms that the April decline in factory output was a temporary lull. The March 11 earthquake in Japan created a parts shortage that affected U.S. car makers. And tornadoes in the U.S. slowed factory output in the South. Ashworth said factories are back to increasing production. But the rate of growth has slowed since last year.

“Certainly things have slowed down a bit, but I don’t think it’s a big deal,” Ashworth said. “Things seem to be getting back to normal in Japan, so supply disruptions should ease up and it should unwind itself.”

Economists expect factory output to keep growing in the coming months as Japanese automakers, such as Toyota and Honda, bring production at their U.S. plants back to pre-earthquake levels. Full production likely won’t be restored until fall.

Other reports Wednesday show the economy, for now, is still weak totally free credit score. A survey of manufacturers in the New York region found that activity slowed in June. The New York Federal Reserve’s Empire State index fell to -7.8, down from 12 the previous month. Any reading below zero indicates that the sector is shrinking.

And homebuilders are getting even more pessimistic, according to a report from the industry’s trade group. An index that measures builders’ sentiment fell to 13 in June. That’s the lowest level in nine months and just five points about the record low, reached in January 2009.

Some inflation can be healthy for the economy because it encourages people to spend and invest rather than sitting on their cash. More spending drives corporate growth, which makes businesses more likely to hire people.

But higher food and gas prices have hurt growth this year. Consumers have had to spend more at the grocery stores and to fill their tanks, leaving less money for spending on other goods and services, like appliances, furniture and vacations, that drive the economy.

Federal Reserve Chairman Ben Bernanke has said that the rise in food and gas prices would likely be temporary. The latest readings on consumer and wholesale inflation seem to support that view.

In addition to the drop in consumer gas prices, the government reported this week that wholesale food prices fell in May by the most in nearly a year. Much of that decline resulted from a sharp fall in vegetable and fruit prices. Most economists expect overall food prices to stabilize later this year.

Consumer prices rose 3.6 percent from June 2010 through May 2011, the biggest one-year gain since October 2008. The yearly gain in the index was only 1.1 percent as recently as November.

Excluding the volatile food and energy categories, which account for about 20 percent of the index, core prices rose only 1.5 percent in that same period. That’s below the Federal Reserve’s informal inflation target of about 2 percent.

Autos and apparel drove core consumer prices higher in May. New car prices rose 1.1 percent last month, after rising 0.7 percent in April. Auto dealers have fewer popular fuel-efficient models on their lots because of the supply disruptions. As a result, they are offering fewer deals to boost sales.

Clothing rose 1.2 percent in May, a result of higher cotton prices and increasing labor costs overseas, where most U.S. apparel is made.

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Air France-KLM returned to profit in its latest fiscal year as the rebounding global economy lifted traffic and helped offset a euro1 billion rise in its fuel costs, the airline said Thursday.

Europe’s largest airline by passengers says in a statement it made a euro613 million ($872 million) net profit for the 12 months ending March 31, in contrast to the euro1.6 billion net loss a year earlier when the global economic crisis hammered freight and passenger traffic.

Air France-KLM warned that “uncertainties” including the long term impact of Japan’s earthquake, crises in the Middle East and Africa and elevated fuel prices could weigh on its performance this year. The airline forecast an operating profit higher than the euro122 million it made last year.

Air France-KLM had warned in February that it would miss a targeted improvement in its operating profit due to security issues in North Africa as well as weaker-than-expected revenue in the fourth quarter driven by overcapacity by rivals.

The airline’s fourth quarter earnings were hurt by the Japan earthquake as well as the unrest in the Middle East and Africa. Passenger operations lost euro367 million in the quarter, the airline said, while its freight business lost euro9 million.

In March a French judge filed preliminary manslaughter charges against Air France and jet manufacturer Airbus in connection with the June, 2009 crash of Air France Flight 447 from Rio de Janeiro to Paris. The accident killed 228 people and was the worst in Air France’s history. Last month investigators found the jet’s wreckage on the Atlantic floor nearly 4,000 meters down and successfully brought up the jet’s flight data recorders, which investigators are now examining in a bid to finally discover what caused the accident.

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Home improvement retailers are evolving to meet the needs of budget-conscious consumers stuck in homes they can’t sell.

Home Depot Inc. is focusing more on low-priced items and Lowe’s Cos. on improving customer services such as outdoor equipment repair _ changes dictated by the companies’ first-quarter results, which show customers holding onto their cash until it’s the right time to spend.

Home Depot, the largest U.S. home improvement chain, said Tuesday that its revenue edged down 0.2 percent to $16.82 billion for the quarter that ended May 1, missing Wall Street’s $17.06 billion estimate. Lowe’s, which reported quarterly its earnings Monday, saw its revenue drop 2 percent.

Weather is critical to both chains, and the spring selling season _ their second-biggest in revenue after summer _ typically prompts a flurry of seasonal purchases of plants, patio furniture and barbeque grills. But harsh conditions blanketed most of the nation for much of the first quarter, and shoppers stayed indoors.

So Home Depot and Lowe’s, knowing their customers will come in for spring products once the weather improves, are working now on new ways to keep them coming back. Home Depot raised its full-year earnings forecast, but Lowe’s dampened its outlook.

Home Depot executives said during a conference call Tuesday that their chain is beefing up offerings like paint and soft-sided tool storage as maintenance and repair _ instead of major renovations _ remain at the forefront of consumers’ minds.

Homeowners have plenty of cause for caution, with new-home construction down in April and U.S. homebuilders worrying the housing market won’t recover this year. Shoppers all but abandoned big-ticket projects during the recession.

Home Depot Chief Financial Officer Carol Tome said in an interview with The Associated Press that her company is offering a variety of cost-conscious options, such as cabinet re-facing, for customers who still want to upgrade their kitchens. This price-conscious approach helped contribute to a 1.5 percent increase in the dollar amount of the average transaction at Home Depot for the quarter. At Lowe’s, the average receipt was nearly flat.

Lowe’s Chairman and CEO Robert Niblock also said during a Monday conference call that rising gas prices are pushing consumers to shop at whichever store is the most convenient.

Based on store count, that would put shoppers in Home Depot more often. Lowe’s had 1,751 stores in the U.S., Canada and Mexico as of April 29, dwarfed by Home Depot’s 2,245 retail stores in all 50 states, the District of Columbia, Puerto Rico, U.S. Virgin Islands, Guam, 10 Canadian provinces, Mexico and China.

To combat the convenience factor, Niblock says Lowe’s is differentiating its services and products and opening new stores in targeted locations. Lowe’s said Monday that its first-quarter net income fell 6 percent.

Home Depot’s Tome said, however, that it is too early to draw a correlation between gas prices and customer traffic. And her company said Tuesday that its net income rose 12 percent to $812 million, or 50 cents per share, up from $725 million, or 43 cents per share, a year earlier. That beat the 49 cents per share that analysts surveyed by FactSet expected on average.

Mooresville, N.C.-based Lowe’s lowered its full-year outlook to $1.56 to $1.64 per share on a revenue increase of about 4 percent, implying revenue of about $50.79 billion. It previously forecast earnings of $1.60 to $1.72 per share on a 5 percent revenue increase.

Home Depot, based in Atlanta, increased its fiscal 2011 earnings forecast and now expects to earn $2.24 per share, up from $2.20. It kept its revenue forecast at 2.5 percent growth from 2010, when it took in $68 billion, implying revenue for 2011 of $69.7 billion.

Wall Street predicts earnings of $2.30 per share on revenue of $69.72 billion.

Shares of Home Depot gained 27 cents to $37.25 by early afternoon, while Lowe’s stock lost 2 cents $24.82.

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A Moscow tax official who approved a fraudulent $230 million tax return in 2007 has bought luxury real estate in Moscow, Dubai and Montenegro and wired money through her husband’s bank accounts worth $39 million, a U.S. investor said Monday.

All that was done with an average annual household income equivalent to $38,000, according to documents released by William Browder, an American-born investor barred from Russia.

Browder has been campaigning against Russian corruption since 2009 when his lawyer died a year after being sent to prison. Authorities have not explained why Browder was himself expelled as a security risk in 2005 in the first place.

Browder, who used to head up Hermitage Capital Management in Moscow, a multibillion-dollar fund, is seeking to get justice for lawyer Sergey Magnitsky, who discovered the alleged fraud involving the Interior Ministry.

Magnitsky, who died in prison in 2009 after being charged with tax evasion linked to his defense of Hermitage, had discovered that officers at the Interior Ministry had seized ownership documents for three of the fund’s subsidiaries, then used those documents to register their own people as owners and directors.

They then reportedly filed a tax claim, saying they made a much smaller profit than originally described and asked for a tax return, according to Hermitage.

The $230 million refund was made in one day.

Magnitsky’s former employers, including Browder and Jamison Firestone, the head of the law firm where Magnitsky worked, revealed an array of documents Monday, which they said described the wealth of the tax official allegedly involved in the fraud.

The two are working together to expose the officials they believe are responsible for Magnitsky’s death and the tax fraud. More than a year later, Magnitsky’s death remains uninvestigated.

Browder and Firestone said the family of Olga Stepanova, who headed Moscow’s district tax office No. 28 until January this year, had incurred $39 million in expenses in the past few years.

Copies of bank account statements and property registration papers show Stepanova’s husband, an employee of a small construction firm, wire money through Switzerland’s Credit Suisse to build a $8 million luxury house west of Moscow and buy a vacation home in Montenegro and multi-million dollar properties on the Palm Jumeriah in Dubai in the name of his 85-year-old mother cash advance flexible payments.

These transactions were allegedly made several weeks after Stepanova’s tax office authorized the $230 million tax refund.

Firestone on Monday sent the documents to Russia’s chief investigator and petitioned him to open a criminal probe against Stepanova and her colleagues.

Meanwhile, Browder said in a letter to Switzerland’s attorney general that criminal proceeds from the tax fraud may be held on various accounts in Credit Suisse.

The Interior Ministry has acknowledged the fraud but said it has been unable to locate the funds. The ministry said its officials had no part in the fraud and insisted the tax authorities were also innocent and had simply been deceived by the criminals.

Over the past year, authorities have turned down scores of petitions by Magnitsky’s former employers and human rights groups to investigate the Interior Ministry officials that Magnitsky believed were involved in the tax fraud.

Magnitsky posthumously received a prestigious anti-corruption award from Transparency International, an international anti-corruption watchdog.

Browder told the Associated Press on Monday that the documents came from a person who worked with Stepanova and her partners. Browder would not identify the person.

“This information is so complete and so damning that the Russian government will lose any legitimacy it has left in bilateral relations with the West if it doesn’t act and prosecute the officials who killed Sergei Magnitsky and stole $230 million from their own people,” Browder said.

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On the Web:

http://youtu.be/H7yBOEPYJTc

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Post office raising some prices

The sharpest drop in unemployment in more than a quarter century obscures a simple fact: The jobs market still isn’t working for many Americans.

Some 6.3 million people have been out of work and looking for a job for more than six months. The employment-to-population ratio is lower than it was when the recession ended as companies have been slow to add to payrolls. And big sources of hiring in the past — government, health care and retailing — may not be able to reprise that role in the future as lawmakers limit outlays and consumers curb spending.

“The trends are a little bit scary,” said Nobel laureate Michael Spence, a professor at New York University. “There’s been a break in an important part of the social contract” for many Americans who are finding they can’t get ahead.

Mixed messages from the jobs numbers make decisions more difficult for Federal Reserve Chairman Ben S. Bernanke and his central bank colleagues as they wrestle over monetary policy.

Rising prices and falling unemployment — the jobless rate dropped to 8.8 percent in March from 9.8 percent in November, the biggest four-month decline since 1983 — suggest that the Fed should raise rates from near zero later this year to keep inflation in check, according to Joseph LaVorgna, chief U.S. economist for Deutsche Bank Securities in New York.

He sees yields on Treasury securities rising, with the two- year note hitting 1.25 percent to 1.5 percent and the 10-year- note climbing to 4 percent by the end of the year. They were 0.81 percent and 3.58 percent at 5:16 p.m. April 8 in New York, according to Bloomberg Bond Trader prices.

Depressed Employment

Alan Krueger, a former Treasury official, argues that policy makers shouldn’t be tightening monetary policy in the face of depressed employment and elevated long-term joblessness.

“I would like to see QE 2.5,” with the Fed completing its second round of quantitative easing in June and then buying more Treasury securities thereafter, said Krueger, who is now a professor of economics at Princeton University in New Jersey.

That’s not likely to happen, said Roberto Perli, a former Fed official who is managing director of International Strategy & Investment in Washington. The threshold for additional purchases beyond the $600 billion in QE2 is “very high at this point,” he said. The debate at the Fed instead focuses on how fast to remove the record stimulus the central bank has pumped into the economy.

Fed policy makers agreed at their last meeting that “gains in employment seemed to be on a gradually rising trajectory,” though there was still substantial slack in the labor market, according to the minutes of their March 15 gathering.

No Improvement

For Dan LaRue, a 60-year-old former marketing specialist for JPMorgan Chase & Co., there’s scant sign that the jobs market is getting better.

“The reality of what I’m seeing and what my fellow unemployed coworkers are seeing doesn’t jibe” with reports of an improving labor market, said LaRue, who’s been without a full-time job for more than two years. “It’s kind of ugly out there.”

The New York City resident said he’s borrowing money from his 81-year-old mother to help make ends meet. “I hate it, but thank God she’s there,” he said. “I’m willing to take a pay cut, but I don’t think I’m even being considered.”

The ratio of people employed to the population stood at 58.5 percent in March, down 0.8 percentage point from July 2009 when the recovery began and up just 0.3 point from a 27-year low of 58.2 percent in November 2010, according to data from the Labor Department.

Better Measure

The ratio is a better measure of the jobs market because, unlike the unemployment rate, it isn’t affected by changes in the size of the labor force, said Edward Leamer, a professor of management, economics and statistics at the University of California at Los Angeles.

About half of the fall in the jobless rate during the last four months was caused by Americans who gave up looking for work and left the labor force — a development that he said isn’t something to welcome. “It’s people getting so discouraged that they’re dropping out,” said Leamer, who is also director of UCLA Anderson Forecast.

That number may grow later this year as extended government unemployment benefits run out, Krueger added. To collect those benefits, the jobless must show that they are searching for work, and the longer people are without a job, the less time they spend looking, according to a study of 6,025 unemployed that Krueger conducted with Andreas Mueller of Stockholm University in 2009 and 2010.

Long-Term Unemployment

Some 45.5 percent of those classified by the Labor Department as jobless in March had been without work for more than six months, just off the record high of 45.6 percent set in May last year.

The waning intensity of their searches suggests that they may not be putting as much downward pressures on wages — and inflation — as some macroeconomic models assume, said James Stock, a professor of economics at Harvard University in Cambridge, Massachusetts.

That doesn’t mean the Fed should start worrying about accelerating prices, according to Stock. “We still have a very weak economy,” he said. “Disinflation strikes me as a much greater risk than inflation at the moment.”

Gwen Robbins, a 61-year-old resident of Savannah, Georgia, is a self-styled 99er, so called because her 99 weeks of employment benefits ran out in January. Robbins, an office manager until December 2008, said she’s “applied for probably close to 400 jobs” since then.

‘Giving Up’

“I’m giving up on the private sector,” said Robbins, when asked if she’s continuing her search. Many companies seem more interested in hiring younger applicants, she said, adding that she now is seeking public-sector work with the city.

The jobs-market recovery remains “lackluster,” the International Monetary Fund said in its World Economic Outlook report. The Washington-based lender forecasts that U.S. unemployment will average 8.5 percent this year and 7.8 percent in 2012.

The flaws in the labor market were aggravated by the recent recession but didn’t start there, according to Krueger. The employment-to-population ratio in the last expansion, which began in 2002, never reached the 64.7 percent peak it attained in 2000 during the previous upturn.

Rising income inequality and sluggish wage growth during the last expansion also suggest that the labor market’s troubles are ingrained, Spence said. Average hourly earnings showed little growth from 2002 to 2007 when adjusted for inflation.

Machines Replacing People

Economists posit a variety of reasons for the dysfunction. Spence attributes it partly to globalization, as China and other emerging markets take work Americans once did. Leamer points to technology, with machines replacing people in the production process. For Krueger, some of the fault lies with the U.S. education system and training programs for not providing employees with the skills they need.

The challenges facing the U.S. involve both the quality and quantity of jobs created, Spence said. A study he did with New York University researcher Sandile Hlatshwayo showed that virtually all of the growth in employment between 1990 and 2008 was in the nontradable sector of the economy, which isn’t subject to international competition. Government and health care together accounted for almost 40 percent of the jobs added.

Employment growth in that sector is likely to slow as government spending is restrained, the authors argue in a paper for the Council on Foreign Relations in New York. Value added per person grew 0.7 percent a year in the period studied, which explains why wage gains for these types of jobs were limited, they say.

Bigger Compensation

Value-added in the tradable arena, which includes manufacturing and financial services, grew by an average 2.3 percent a year, allowing these employees to enjoy bigger compensation increases. The sector as a whole added few net jobs, though, as manufacturers in particular moved production overseas, Spence and Hlatshwayo wrote.

The result, according to the paper: growing income inequality as many of the jobs the U.S. created were low-paying ones that added limited value.

“The American dream is being seriously tested right now,” Leamer said. “It’s an emergency for the middle class.”

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Treasuries snapped a four-day decline before a government report that economists said will show U.S. new-home sales in February failed to recoup losses from the previous month.

Traders reduced bets on inflation after figures yesterday showed prices of existing U.S. homes dropped in January. Demand for the relative safety of government debt increased as Japan struggled to avert a nuclear meltdown, the U.S. and its allies bombed Libya, and speculation increased that Portugal will need to be bailed out.

“They will all hurt global economic growth,” said Kei Katayama, leader of the foreign fixed-income group in Tokyo at Daiwa SB Investments Ltd., a unit of Japan’s second-largest brokerage. “Yields will push down.”

Ten-year rates were little changed at 3.31 percent as of 11:43 a.m. in Tokyo, according to Bloomberg Bond Trader. The 3.625 percent note maturing in February 2021 traded at 102 5/8. The rate had climbed 14 basis points in the previous four days.

Purchases of new homes rose 2.1 percent to a 290,000 annual pace, after slumping 13 percent in January, according to the median estimate in a Bloomberg News survey. Home prices fell 3.9 percent in January from a year earlier, the Federal Housing Finance Agency reported yesterday.

The difference between yields on 10-year notes and Treasury Inflation Protected Securities has narrowed to 2.38 percentage points from 2 cash advance no fax.57 percentage points on March 8, which was the widest since 2008. The spread is a gauge of trader expectations for consumer prices over the life of the debt.

Nuclear Plant

Earthquakes rattled Japan’s crippled nuclear plant today. The U.S.-led alliance prepared to direct additional attacks against Libyan leader Muammar Qaddafi’s ground forces.

Portugal’s government may collapse as the country’s parliament votes on budget cuts that have divided lawmakers, JPMorgan Chase & Co. economist Nicola Mai wrote in a note to clients. “This suggests that the sovereign will likely access” the European Financial Stability Facility “in the near term,” London-based Mai wrote.

“There are some risks in the U.S. economy,” said Takuya Yamamoto, who helps oversee the equivalent of $118 billion as a portfolio manager in Tokyo at Diam Co., a unit of Dai-ichi Life Insurance Co., Japan’s second-largest life insurer. Ten-year yields will probably be near current levels by year-end, he said.

The Federal Reserve is scheduled to purchase $6.5 billion to $8.5 billion of debt maturing from May 2018 to February 2021 today as part of its plan to support the U.S. economy, according to its website.

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