US retail sales plunge. The retail industry’s leading trade group blamed a “deep recession, severe winter weather and five fewer shopping days” for a 2.8% drop in 2008 holiday sales — a far worse outcome than the industry expected. The National Retail Federation had originally forecast holiday sales for the combined November-December shopping months to grow 2.2%, which would still have been the weakest pace of gain in at least six years. As it was, it turned out to be the first-ever decline in the measure since the group initiated it in 1995. The two-month holiday period can account for as much as 50% of retailers’ annual profits and sales. — CNN Money

S&P abandons Greece, threatens Spain, Ireland. Standard & Poor’s Ratings Services cut its rating on Greece, five days after warning it may do so, as the country deals with a slumping economy and bulging debt. The one-notch downgrade to A- comes as S&P has warned of ratings cuts for some of the European Union’s weaker members. Spain and Ireland are also among those which have been threatened with downgrades. In Greece’s case, S&P pointed to the need for “necessary reforms of public spending,” noting the government’s ability to improve its budget position through better tax collection and higher property or income taxes is offset by the rising cost of debt servicing and public pressure for additional social spending. — Wall Street Journal

China moves on to the economic podium. China overtook Germany to become the world’s third-largest economy in 2007 after the Chinese authorities revised upwards the figures for growth during that year. China’s National Bureau of Statistics said on Wednesday that the economy expanded by 13 per cent in 2007, a sharp increase from the 11.9 per cent growth rate the authorities had previously stated. With only the US and Japan larger than China, the new figures highlight the rapid transformation that the Chinese economy has undergone during the past 30 years since Mao-era controls were eased, although it is experiencing the toughest period in a decade as a result of the global financial crisis. — Financial Times

Steve Jobs could be really, really sick. Apple chief executive Steve Jobs today announced that he will take a leave of absence as a result of health concerns. “During the past week I have learned that my health-related issues are more complex than I originally thought,” Jobs wrote in an email sent to all Apple employees. He said he intends to return to the company at the end of June. Speculation over Jobs’ health has swayed the company’s share prices over the last year as his increasingly gaunt appearance left some investors worried. The iconic tech leader, who is often viewed as the main driving force for his company’s recent successes, is a survivor of pancreatic cancer. — Washington Post

FT sends Obama back to the drawing board. Last week, President-elect Barack Obama duly unveiled his American recovery and reinvestment plan. Its title was aptly chosen, for Mr Obama spoke, astonishingly, as if the policies of the rest of the world had no bearing on the fate of the US. He spoke, too, as if a large fiscal stimulus would be enough to restore prosperity. If that is what he believes, Mr Obama is in for a shock. The difficulties he confronts are much deeper and more global than that. I have little doubt that his advisers are telling the president-elect just this. The points they are — or should be — pressing on him are these. — Martin Wolf, Financial Times

Peter Fray

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