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American Airlines contributed only $6.5 million of the $100 million that it was supposed to pay into employee pension plans this week.

The underpayment raised tension between the company, which filed for bankruptcy in November, and federal pension-protection officials.

“This is a disturbing development, as the airline has more than $4 billion in cash,” said J. Jioni Palmer, a spokesman for the Pension Benefit Guaranty Corp., which insures certain types of retirement plans. “American’s actions hurt the financial health of the pension plans and undermine the retirement security of American’s workers and retirees.”

American spokesman Sean Collins said, “The company has determined this is the appropriate course of action for the quarterly contribution amount due by Jan. 15, 2012. This action allows the company to preserve cash.”

American and parent AMR Corp. filed for bankruptcy protection Nov. 29 after losing $11 billion since 2001 no fax needed payday loans. The company hopes to reduce debt and labor costs while it reorganizes.

Company executives and lawyers have raised the possibility that American could terminate its pension plans, under which retirees get fixed monthly payments.

PBGC director Joshua Gotbaum has publicly criticized American for even suggesting that it might terminate pension plans. Gotbaum’s agency would take over the airline’s obligations.

The PBGC ran a $26 billion deficit last year, the largest in its history, as the recession and weak recovery caused more companies to eliminate pension plans. Gotbaum has said that taxpayers might have to bail out the agency, if Congress doesn’t raise insurance premiums on private companies with pension plans.

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U.S. factories are roaring back from the depths of the recession, cranking out more machinery, vehicles and energy.

Factory production has surged 15 percent above its lows of 2 1/2 years ago and is helping drive the economy’s recovery.

A jump in manufacturing output last month coincided with other data suggesting that the economy began 2012 with renewed vigor. Wholesale prices are tame. Demand for U.S. Treasury debt should help keep borrowing costs low. Even homebuilders are more optimistic.

Signs “that manufacturing in the U.S. is gaining global market share appears to be growing, and this could be an important dynamic supporting growth in 2012,” said John Ryding of RDQ Economics.

Manufacturing rose 0.9 percent from November to December, the Federal Reserve said Wednesday. It was the biggest monthly gain since December 2010.

Overall output at the nation’s factories, mines and utilities grew 0.4 percent. Warm weather dampened demand for energy produced by utilities.

Over the past year, factory output has risen 3.7 percent. Factories benefited in particular in the second half of 2011 from several trends: People bought more cars. Businesses spent more on industrial machinery and computers before a tax incentive expired. And companies restocked their supplies after cutting them last summer.

The growth has also fueled more hiring. Factories added 23,000 jobs in December, the most since July. That helped reduce the unemployment rate to 8.5 percent, the lowest level in nearly three years.

Among the manufacturers faring better is Steris Corp., which makes sterilization equipment and other medical supplies. Hospitals and drug companies are buying more of the company’s products.

Steris, based near Cleveland, says it has added 250 employees in the past 18 months and is still hiring. It has more than 5,000 employees globally, about half of them in the United States.

Steve Norton, a spokesman, said Steris has benefited from being part of a regional cluster of biomedical firms and research facilities. Some manufacturers in the region that once focused on auto parts are now also making components for medical devices, he noted.

“The Midwest continues to be a manufacturing leader,” Norton said.

Still, Europe’s debt crisis has begun to dampen demand for American exports. That trend, should it continue, could slow manufacturing and threaten growth this year.

That hasn’t happened yet.

December’s gains suggest the industry “is still resistant to the apparent slowdown in growth elsewhere, particularly in Europe,” said Paul Ashworth, chief U.S. economist with Capital Economics.

Businesses are starting to see some relief from high energy and food prices, which should benefit consumers later this year.

The producer price index declined 0.1 percent in December, the Labor Department said payday loans. The index measures price changes before they reach consumers.

“Core” wholesale prices, which exclude food and energy costs, rose more sharply in December _ 0.3 percent. But economists downplayed the increase. They cited temporary factors that had pushed auto prices down in October and November.

Overall, wholesale prices are trending lower. They increased 4.8 percent in December compared with the same month a year ago, reflecting in part the effect of higher oil and other commodity prices. Even so, it’s the slowest annual increase since January and down from 7.1 percent in July.

Falling prices for oil and agricultural commodities have lowered the cost of food and gas. Gas prices have turned upward in recent months, but economists don’t expect that to worsen inflation this year. That’s because prices will likely be lower than last winter and spring, when political turmoil in North Africa and the Middle East sent prices up.

Lower wholesale costs mean manufacturers and retailers face less pressure to raise prices for consumers to maintain profits. That could keep consumer price inflation in check. Lower inflation also gives the Federal Reserve leeway to keep short-term interest rates low and take other steps, if necessary, to boost the economy.

Borrowing costs are likely to stay low next year, especially if U.S. Treasury debt remains in strong demand around the globe. That’s because high demand for Treasurys drives their yields down. Those lower yields, in turn, help keep interest rates down on other loans throughout the economy.

Foreign holdings of U.S. Treasurys rose in November to a record $4.75 trillion, the Treasury Department said. U.S. government debt is still considered among the safest investments. And it has been in high demand as worries about Europe’s debt crisis have intensified.

The dollar has strengthened in recent weeks, particularly against the euro. A stronger dollar makes imports cheaper and helps keep inflation in check.

Lower rates on long-term Treasury debt tend to drive down mortgage rates. So far, super-low home-loan rates haven’t given much life to the depressed housing market. But they have made U.S. homebuilders slightly less pessimistic.

The National Association of Home Builders/Wells Fargo builder sentiment index rose in January for the fourth straight month, to its highest level since June 2007.

The reading remained far below levels that suggest they are optimistic about a turnaround. Homebuilders appear to be drawing optimism from rising interest among would-be buyers _ interest that builders hope will increase sales this year.

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Asian stock markets were mostly higher Tuesday, buoyed by a successful sale of French government bonds and shrugging off data showing that China’s growth is moderating.

Japan’s Nikkei 225 index added 0.6 percent to 8,430.73. Hong Kong’s Hang Seng climbed 1.5 percent at 19,297.77 and South Korea’s Kospi jumped 1.5 percent to 1,886.12.

But shares in mainland China slipped into negative territory after the release of government figures showing that growth in the world’s second-largest economy slowed in the final quarter of 2011 to 8.9 percent, its lowest rate in 2 1/2 years.

For the full year, the Chinese economy grew 9.2 percent, down from 2010’s blistering 10.3 percent.

Still, most key benchmark stock indexes posted gains, buoyed by a strong sale of French bonds on Monday and taking a downgrade of the Europe’s emergency bailout fund in stride.

France easily sold about euro 8 free credit report and score.6 billion ($10.9 billion) of debt with very short maturities, as well as 25-week and 51-week bonds.

On the secondary markets, where the issued bonds are later traded openly, the interest rate on France’s benchmark 10-year bond fell, indicating investors feel France remains a relatively good bet _ and perhaps are paying less heed to ratings agencies.

Still, investor sentiment faced multiple headwinds, including Standard & Poor’s downgrading of the creditworthiness of the eurozone’s rescue fund by one notch to AA+. That could hurt the fund’s ability to raise cheap bailout money to resolve a debt crisis that has dragged on for more than two years.

U.S. markets were closed Monday for a public holiday.

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French President Nicolas Sarkozy says France must have the courage and calmness to make difficult decisions to overcome the financial crisis, in his first public appearance since the country’s credit rating was downgraded.

But Sarkozy avoided any mention Sunday of the loss of France’s prized AAA rating in a Standard & Poor’s review two days earlier.

Instead he issued a rallying call, saying that a united France committed to reform would make it through No teletrak payday loan.

France chooses a new president this spring, and Sarkozy was already behind in the polls before the downgrade.

The loss of the AAA rating was a severe blow to France’s self-image and is expected to hurt Sarkozy’s standing even further.

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The French finance minister said Friday that Standard & Poor’s had stripped the nation of its top-notch credit rating, again throwing Europe’s ability to fight off its debt crisis into doubt.

Speaking on France-2 television, Finance Minister Francois Baroin confirmed that France had been lowered by one notch. That would mean a rating of AA+, the same rating the United States has had since S&P downgraded it last August.

Baroin said France had received a change to its rating “like most of the eurozone,” referring to the 17 European nations that use the euro currency, but there was no confirmation from S&P that any other nation had been downgraded.

A credit downgrade would escalate the threats to Europe’s fragile financial system, escalating the costs at which the affected countries _ some of which are already struggling with heavy debt loads and low growth _ borrow money.

Baroin said the downgrade was “bad news” but not “a catastrophe.”

“You have to be relative, you have keep your cool,” he said. “It’s necessary not to frighten the French people about it.”

S&P had warned 15 European nations in December that they were at risk for a credit downgrade.

Earlier Friday, as rumors of a looming downgrade swirled around the financial markets, the euro hit its lowest level in more than a year and borrowing costs for European nations rose. Stock markets in Europe and the U.S. fell.

The fears of a downgrade brought a sour end to a mildly encouraging week for Europe’s heavily indebted nations and were a stark reminder that the 17-country eurozone’s debt crisis is far from over.

Earlier Friday, Italy had capped a strong week for government debt auctions, seeing its borrowing costs drop for a second day in a row as it successfully raised as much as euro4.75 billion ($6.05 billion).

Spain and Italy completed successful bond auctions on Thursday, and European Central Bank president Mario Draghi noted “tentative signs of stabilization” in the region’s economy.

The downgrades could drive up the cost of European government debt as investors demand more compensation for holding bonds deemed to be riskier than they had been. Higher borrowing costs would put more financial pressure on countries already contending with heavy debt burdens.

In Greece, negotiations Friday to get investors to take a voluntary cut on their Greek bond holdings appeared close to collapse, raising the specter of a potentially disastrous default by the country that kicked off Europe’s financial troubles more than two years ago.

The deal, known as the Private Sector Involvement, aims to reduce Greece’s debt by euro100 billion ($127.8 billion) by swapping private creditors’ bonds with new ones with a lower value, and is a key part of a euro130 billion ($166 billion) international bailout payday advance. Without it, the country could suffer a catastrophic bankruptcy that would send shock waves through the global economy.

Prime Minister Lucas Papademos and Finance Minister Evangelos Venizelos met on Thursday and Friday with representatives of the Institute of International Finance, a global body representing the private bondholders. Finance ministry officials from the eurozone also met in Brussels Thursday night.

“Unfortunately, despite the efforts of Greece’s leadership, the proposal put forward … which involves an unprecedented 50 percent nominal reduction of Greece’s sovereign bonds in private investors’ hands and up to euro100 billion of debt forgiveness _ has not produced a constructive consolidated response by all parties, consistent with a voluntary exchange of Greek sovereign debt,” the IIF said in a statement.

“Under the circumstances, discussions with Greece and the official sector are paused for reflection on the benefits of a voluntary approach,” it said.

Friday’s Italian auction saw investors demanding an interest rate of 4.83 percent to lend Italy three-year money, down from an average rate of 5.62 percent in the previous auction and far lower than the 7.89 percent in November, when the country’s financial crisis was most acute.

While Italy paid a slightly higher rate for bonds maturing in 2018, which were also sold in Friday’s auction, demand was between 1.2 percent and 2.2 percent higher than what was on offer.

The results were not as strong as those of bond auctions the previous day, when Italy raised euro12 billion ($15 billion) and Spain saw huge demand for its own debt sale.

“Overall, it underscores that while all the auctions in the eurozone have been battle victories, the war is a long way from being resolved (either way),” said Marc Ostwald, strategist at Monument Securities. “These euro area auctions will continue to present themselves as market risk events for a very protracted period.”

Italy’s euro1.9 trillion ($2.42 trillion) in government debt and heavy borrowing needs this year have made it a focal point of the European debt crisis.

Italy has passed austerity measures and is on a structural reform course that Premier Mario Monti claims should bring down Italy’s high bond yields, which he says are no longer warranted.

Analysts have said the successful recent bond auctions were at least in part the work of the ECB, which has inundated banks with cheap loans, giving them ready cash that at least some appear to be using to buy higher-yielding short-term government bonds.

Some 523 banks took euro489 billion in credit for up to three years at a current interest cost of 1 percent.

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Bank of England Governor Mervyn King may refrain from adding to emergency stimulus again today as policy makers await new forecasts and the economy showed some resilience heading into 2012.

The Monetary Policy Committee will maintain its 275 billion-pound ($422 billion) bond-purchase target after a meeting in London, according to all but one of 41 economists in a Bloomberg News survey. Citigroup Inc. and Royal Bank of Scotland Group Plc say it will increase the amount next month when current purchases end. The central bank has been buying about 5.1 billion pounds of gilts a week since October.

U.K. services and manufacturing gauges unexpectedly rose last month, signaling the economy gained some strength. Still, Bank of England officials have said the economy is probably stagnating as Europe

Most people on Wall Street will be getting smaller bonus checks for 2011 — except for the elite bankers.

In a year when bonuses are expected to drop between 30% and 40% for the vast majority of those working on Wall Street, the star performers, or roughly the top 10%, will see bonuses at or slightly below last year’s levels.

"Very rigorous tiering of pay has happened in the past, but it’s starting to look like it will be more acute going forward," said John Rogan, head of global banking and markets at the recruiting firm Russell Reynolds.

Tiering essentially means a widening gap in a key source of compensation - bonuses. They’re typically handed out in mid-February but most firms on Wall Street spent last week and this week divvying up bonus pools from shrinking sources of revenues.

The bottom tier may only get "small token bonuses" or even nothing, said Paul Sorbera, president of executive search firm Alliance Consulting.

For the lower performers, banks must weigh whether to commit to layoffs or cut out bonuses, especially when they might actually scale back up if business improves, he explained.

"Everybody’s revenues are under pressure, and everyone is reducing compensation," said Oppenheimer & Co. analyst Chris Kotowski.

By Oppenheimer’s estimates, revenues at Bank of America (, Fortune 500) are expected to be down roughly 16% in 2011 from 2010 when they report next week. And Citigroup’s (, Fortune 500) revenues are expected to be down by 8%, according to Oppenheimer.

For Goldman and Morgan, a year to forget

Still, banks tend to pay a higher proportion of their revenue as compensation during tough times. For example Citigroup paid out roughly 31.1% of its roughly $80.3 billion in annual revenues to its employees in 2009 and 28.1% of its $85.6 billion in 2010. Kotowski estimates that this will jump back to 32.2% for 2011 guaranteed unsecured personal loan.

Many recruiting professionals and executive compensation consultants bet that the average bonus could fall by as much as 40%. That would put the average bonus at about $74,400, which would be the lowest since 2002, based on comparisons with the New York State Comptroller’s study of annual Wall Street bonuses.

Even with a 40% drop, the average Wall Street bonus (not total compensation) remains roughly 50% above the U.S. median household income in 2010 of roughly $40,069 per person.

And Wall Street isn’t ignoring the fact that they need to keep their stars to keep generating revenues.

"Bank still need to worry whether talent will migrate," said Dan Ryan, a financial services partners in the recruiting firm Heidrick & Struggles. "A very small population of stars could see the same bonuses from last year, because banks know that if they pay down significantly they risk their senior relationship managers going somewhere else."

Recruiting experts said that while employment overall on Wall Street will continue to shrink, banks will take this opportunity to seek out frustrated workers to tap new talent.

Most checks are handed over in mid February and in turn early spring is key time for job transitions on Wall Street. "Most banks have a wish list of where they want to upgrade," said Ryan.

Investment banks are on the hunt to bulk up M&A talent in the energy sector as there’s an anticipation of lots of potential 2012 deals in that sector, said Ryan. Financial services bankers will also be in demand, he said.

"People will be defensive and will hold onto their people, but they can’t show shareholders a loss because of bonuses," said Kotowski.

Ah, the slippery compensation slope.  

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China

Employment growth accelerated last month and the jobless rate dropped to a near three-year low of 8.5 percent, the strongest evidence yet the economic recovery is gaining steam.

Nonfarm payrolls increased 200,000 in December, the Labor Department said on Friday. It was the biggest rise in three months and beat economists’ expectations for a 150,000 gain.

The unemployment rate dropped from a revised 8.7 percent in November to its lowest level since February 2009, a heartening sign for President Barack Obama whose re-election hopes could hinge on the state of the labor market.

“The labor market is healing, but we still have a long way to go to recoup the losses we have endured. We may be close to a tipping point where gains can become more self-feeding,” said Diane Swonk, chief economist at Mesirow Financial in Chicago.

A string of better-than-expected U.S. economic data in recent weeks has highlighted a contrast between the recovery in the world’s biggest economy and Europe where the economy is widely believed to be contracting.

The stronger-than-expected jobs data was overshadowed in financial markets by concerns over Europe’s debt crisis, sending U.S. stocks marginally lower. U.S. government debt prices rose and a broad index of the dollar’s value hit a one-year high.

Republican presidential hopefuls have blasted Obama’s economic policies as doing more harm than good.

The latest economic signs, however, could offer him some political protection. Over the course of 2011, the economy added 1.6 million jobs, the most in five years.

The jobless rate, which peaked at 10 percent in October 2009, has dropped 0.6 percentage point in the last four months.

Obama welcomed the employment report and urged Congress to extend a two-month payroll tax cut through 2012 to help sustain the recovery.

“We’re moving in the right direction. When Congress returns they should extend the middle-class tax cut for all of this year, to make sure we keep this recovery going,” he said.

Employment remains about 6.1 million below its pre-recession level and at December’s pace of job growth, it would take about 2-1/2 years to win those jobs back.

Unseasonably mild weather last month accounted for some of the boost to payrolls, contributing to hefty gains in construction employment. Courier jobs also rose sharply, a gain the Labor Department pinned on strong online holiday shopping.

Those jobs could be lost in January and the unemployment rate might rise as Americans who have abandoned the hunt for work are encouraged back into the labor market.

FASTER JOB GROWTH PACE STILL NEEDED

The household survey, from which the unemployment rate is derived, showed most of the drop in the jobless rate was due to gains in employment as the labor force shrank only modestly.

While economists generally regard the payrolls figures from the government’s survey of employers as the most-reliable gauge of hiring, employment as measured by the household survey has now shown five straight months of solid gains.

A broad measure of unemployment, which includes people who want to work but have stopped looking and those working only part time but who want more work, also dropped to an almost three-year low of 15 poor credit personal loans.2 percent from 15.6 percent in November.

All told, 23.7 million Americans are either out of work or underemployed.

With the labor market still far from healthy, the debt crisis in Europe unresolved and tensions over Iran threatening to drive up oil prices, the U.S. economy faces stiff headwinds.

Economists predict the recovery will lose a step early this year after expanding in the fourth quarter at what is expected to be the fastest pace in 1-1/2 years.

This should keep alive the possibility of the Federal Reserve embarking on a third round of asset purchases to spur stronger growth, even though prospects of a further easing of monetary policy were damped a bit by the jobs data.

“The Fed will be watching for further credible evidence that this improving trend is gaining traction because we also went through a better period in the first quarter of last year,” said Anthony Karydakis, chief economist at Commerzbank in New York.

New York Federal Reserve Bank President William Dudley on Friday suggested the U.S. central bank was still leaning toward further policy easing, describing the recovery as “frustratingly slow” and the unemployment rate as “unacceptably high.”

GOVERNMENT A DRAG

All the job gains in December came from the private sector, where payrolls rose 212,000 - the most in three months. Government employment contracted 12,000, with most of the drag coming from the local government segment.

The pace of government job losses is moderating. Some states have been reporting an increase in revenues and states even hired more teachers last month.

For all of 2011, the private sector added 1.9 million jobs, while government employment fell 280,000. A measure of the share of industries that showed job gains during the month rebounded in December after falling sharply in November.

Construction payrolls increased 17,000 after falling 12,000 in November. Mild weather has boosted groundbreaking for new homes. Transportation and warehousing employment jumped 50,200.

The bulk of the rise came from the messenger industry, which added 42,000 jobs, reflecting an increase in deliveries of online purchases made during the holiday season.

Manufacturing jobs rose 23,000, the largest increase since July. Factory employment rose 225,000 last year, sustaining gains for the first time since 1997.

Retail employment rose 27,900, slowing after hefty gains in November as retailers geared up for a busy holiday shopping season. But temporary hiring - seen as a harbinger of future hiring - fell 7,500 in December after gaining 11,200.

Even though employment picked up last month, hourly earnings rose a modest four cents, indicating that most of the jobs being created are low paying.

This is a potentially troubling sign for consumer spending, which has been largely supported by a reduction in savings.

“Firms need to grow wages faster if consumption is to accelerate. There is not a lot of appetite to give raises,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania.

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A report from Federal Reserve Chairman Ben S. Bernanke called the weakness in the housing market a