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U.S. builders trimmed activity for a second straight month in February, pushing construction spending down by the largest amount in seven months. There was widespread weakness with spending on home building, office construction and government projects all dropping.

The Commerce Department reported Monday that construction spending fell 1.1 percent in February after a drop of 0.8 percent in January which was revised down from an initial estimate of a decline of 0.1 percent.

With the back-to-back declines, construction spending stood at a seasonally adjusted annual rate of $808.9 billion in February, just 6.1 percent above a low hit in March 2011 and about one-third lower than the high hit during the housing boom.

The construction weakness over the past two months underscored that the nation’s construction industry is still struggling to emerge from the 2007-2009 recession, a decline that was triggered by a collapse in housing following an unsustainable boom in that sector.

Housing construction was unchanged in February at a seasonally adjusted annual rate of $246.5 billion after a small 0.1 percent dip in January. The weakness last month came from a 1.5 percent drop in construction of single-family homes which offset a 2 percent rise in apartment construction.

Spending on non-residential construction projects dropped 1.6 percent following a 2.3 percent decline in January. The February decline reflected weakness in office construction, hotels and shopping malls.

Government construction dropped 1.7 percent to an annual rate of $281 fast cash without a hassle.6 billion with state and local building projects down 2.1 percent while spending by the federal government rose 1.9 percent..

In February, sales of new homes fell for a second straight month, a reminder that the depressed housing market remains weak despite some signs of improvement.

Sales of new homes fell 1.6 percent in February to an annual rate of 313,000. That is less than half the 700,000 homes that economists consider to be healthy. By contrast, a mild winter and three months of strong job gains have lifted sales of previously owned homes but that support has not benefited the new home market.

Sales of previously owned homes have risen more than 13 percent since July and January and February combined for the best winter of re-sales in five years, right at the start of the housing crisis.

Though new-home sales represent less than 10 percent of the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to the National Association of Home Builders.

Builders are growing more confident after seeing a growing number of people express interest in buying this year. They’ve responded by requesting the most permits to build single-family homes and apartments since October 2008.

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The 17 countries that use the euro should boost their crisis firewalls to at least (EURO)1 trillion ($1.3 trillion) to help the struggling currency union return to growth, the head of the Organization for Economic Cooperation and Development said Tuesday.

Angelo Gurria, the head of the Paris-based international development body, said current commitments to the rescue funds, which are limited to (EURO)500 billion ($664 billion), are not enough to restore market confidence in the eurozone.

“A credible firewall will provide governments with the breathing space they need to focus on revitalizing Europe’s economic growth and competitiveness,” Gurria said in a statement linked to the release of the OECD’s annual report on the eurozone economy.

According to the report, which also spells out a raft of economic reforms for individual countries, vulnerable states may need more than (EURO)1 trillion in aid over the coming two years.

Gurria said eurozone finance ministers should take a decision to boost their bailout funds at their meeting in Copenhagen later this week.

Germany, the bloc’s largest economy, signaled on Monday that it would only support a temporary increase to around (EURO)700 billion ($929 billion) instant payday loans.

But that falls below the recommendation of the International Monetary Fund and the European Commission, the European Union’s executive. It may also not be enough to convince other large non-euro economies, such as China and the U.S., to help in the beefing up of Europe’s defenses by sending more money to the IMF.

International institutions argue that a big and credible bailout fund would restore confidence in vulnerable countries like Italy and Spain and prevent them from actually having to seek help.

Gurria said it could also allow weak economies to focus on kickstarting growth by reforming their economies.

“Europe is stalling,” he said. “It needs to get out of first gear and make growth number one priority.”

However, countries like Germany fear that easy access to financial support could stop countries from implementing reforms.

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A New Jersey company that manages prescription benefits has agreed to pay $2.7 million to settle an investigation into influence-peddling at California’s largest public pension fund, officials announced Friday.

The California attorney general’s office said Medco Health Solutions Inc. also has agreed to change its internal procedures.

The California Public Employees’ Retirement System did not renew a contract with Medco last year after an investigation revealed the company paid more than $4 million to Alfred Villalobos to help secure a prescription drug contract.

Villalobos is a former CalPERS board member who acted as a middleman to help companies gain contracts with the pension fund. The state attorney general has charged him with setting up a system of kickbacks to gain influence with pension fund executives.

California officials sued Villalobos in 2010, and the case is expected to head to trial later this year in Los Angeles. At the same time, federal authorities continue criminal and civil investigations.

Medco spokeswoman Ann Smith said the company is pleased the state investigation affirmed “no wrongdoing of any kind.” She said the review determined no employees violated any rules or Medco’s code of conduct no fax payday loan.

“Our retainer agreement bound Mr. Villalobos to follow all applicable laws and regulations to the work on our behalf,” Smith said.

CalPERS CEO Anne Stausboll said in a statement she was pleased with the settlement, a portion of which will be shared with CalPERS.

Medco provided mail-order prescription drug benefits for approximately 300,000 CalPERS members who were enrolled in the pension fund’s health plans between July 2006 and December 2011. CVS Caremark Corp. is now administering the benefits.

According to the state’s complaint against Medco, the health care company failed to ensure that Villalobos refrained from meeting with CalPERS board members and staff during the competitive bid process.

Under the settlement, Medco agreed it won’t “unlawfully interfere or tamper” with the competitive bidding process of any California governmental agency. It also agreed to a requirement that Medco’s directors review the case and take internal measures to prevent the same problem in the future.

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If you are a local subscriber to multiple daily deal sites, you’ve no doubt received several offers — $5 for $10 or $6 for $12 — for Joe Fassi Sausage & Sandwich Factory.

Every week it seems like another deal from this one-man shop on Sublette Avenue on the Hill pops up in my inbox. This week alone, it had deals running on Groupon and Wedeal. I would venture that this restaurant is, if not the most prolific, then at least one of the most active merchants offering daily deals in the region.

While some businesses may be reluctant or wary of offering these deep discounts, that shop seems to be a true believer.

So I decided to stop in earlier this week and check out the place. It started out as a grocery in 1926 and is now run as a sandwich shop by Tom Coll, the grandson of Joe Fassi.

“I know you hear a lot of bad stories about coupon sites,” he said after fixing a sandwich for a customer. “But it works for me. I have no complaints.”

So just how many deals has he offered?

“Oh my gosh,” he said. “I probably use 14 different sites. You see all those clipboards? That’s how we keep them all straight.”

Coll motioned to a dozen clipboards hanging on the wall behind the cash register. Each one is for a different deal site such as Deal Chicken, Eversave and Urban Dealight. Names of customers who have redeemed the offer are highlighted in a green or yellow marker. A handful of other sites he uses have computerized systems.

So why does he do it?

“We’re just so off the beaten track so we needed to find a way to market our business,” Coll said. “It’s a great way to get your name out there. Someone told me … that you need to brand your name. You do that by being everywhere.”

And this way he doesn’t have to spend much money on marketing, he added.

Since he offered his first deal through Groupon about a year ago, he estimates that he’s sold about 3,000 to 4,000 deals. Most people end up spending more than the coupon value. And about 60 percent of his customers who use the deal come back and pay full price. So overall, sales have increased about 20 percent, he said.

Daily deals may not work for everyone, Coll cautioned no fax pay day loan. You have to do the math to make sure you’re covering your costs. And it may be that it works better for him because he is a small business with fewer overhead costs, he said.

Now that he’s become a deal regular, he fields a lot of calls from other obscure sites around the country wanting to carry an offer for him.

“But you ask them how many emails they have in St. Louis and they’re like a thousand,” Coll said. “That’s not worth the time. But yeah, people come out of the woodwork.”

WE LIKE OUR TACO BELL

Taco Bell’s new “Doritos Locos Taco” — yes, that’s a taco in a shell made of nacho cheese-flavored Doritos chips — has apparently been doing quite well in the St. Louis market.

At least that’s the word from the new owner of about two-thirds of the Taco Bell locations in this area.

Marjorie Perlman, a spokeswoman for Alabama-based Tacala LLC, said the new product’s success is a sign of how well Taco Bell is received in the St. Louis region.

“Folks in St. Louis like to eat out — we like that,” she said. “And it seems like you guys are kind of risk takers when it come to your culinary choices.”

Some critics may take issue with her last point. But I guess she means that St. Louisans don’t just eat burgers — but also are willing to “branch out” to tacos.

Tacala, the largest franchise operator of Taco Bell restaurants in the nation, now owns 61 of the 90 Taco Bell locations in this region, making it the company’s largest market. The company just acquired 34 locations from Yum Brands, which franchises the fast-food chain. And a month ago, it bought Wentzville-based GenXMex Foods’ portfolio of 27 local Taco Bell locations.

“We’re primarily in the Southeast,” Perlman said of Tacala, whose second biggest market is Birmingham, Ala., with 43 stores. “We’ve been wanting to expand for awhile.”

She added that the company plans to invest in the stores it has acquired — remodeling and putting in new equipment where needed.

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The number of Americans claiming new unemployment benefits dropped to a four-year low last week, offering further evidence the jobs market recovery was gaining traction.

Initial claims for state unemployment benefits fell 5,000 to a seasonally adjusted 348,000, the lowest level since February 2008, the Labor Department said on Thursday.

The prior week’s figure was revised up to 353,000 from the previously reported 351,000. Economists polled by Reuters had forecast claims rising to 354,000 last week.

The four-week moving average for new claims, considered a better measure of labor market trends, declined 1,250 to 355,000.

The claims data covered the survey week for March nonfarm payrolls. Claims dropped 5,000 between the February and March survey periods, suggesting another month of solid job gains.

“That’s another indication that the labor market is healing. That’s good news for the March payroll report,” said Gus Faucher, a senior economist at PNC Financial Services in Pittsburgh.

“We are looking at net job growth of 200,000, which will be another good month. On the labor front, we have dug a deep hole but we seem to be digging out of it.”

Employers added 227,000 jobs to their payrolls in February, taking the tally for the past three months to 734,000. The unemployment rate currently is at 8.3 percent, having dropped 0.8 percentage point since August payday loan.

The Federal Reserve has said it expects the jobless rate to “gradually” decline.

U.S. Treasury debt prices fell on the data and the dollar extended gains against the euro. U.S. stock index futures held their losses as investors worried about slowing growth in China.

A Labor Department official said there was nothing unusual in the state-level data and that only two states - Alaska and Minnesota - had been estimated.

The department next week will introduce new seasonal factors for 2012 and revisions for claims data from 2007 through 2011.

The number of people still receiving benefits under regular state programs after an initial week of aid fell 9,000 to 3.35 million in the week ended March 10, the lowest since August 2008.

Despite the improving labor market picture, long-term unemployment remains a major problem and about 43 percent of the 12.8 million out of work Americans in February had been jobless for more than six months.

The number of Americans on emergency unemployment benefits dropped 24,312 to 2.85 million in the week ended March 3, the latest week for which data is available.

A total of 7.28 million people were claiming unemployment benefits during that period under all programs, down 142,499 from the prior week.

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Is the muni party over? Is the hangover about to begin?

Maybe. So, let’s take a look at prospects for one of the favorite investment havens of widows and orphans.

The past year was a lovely year for widows and orphans with money. They made more of it.

Conservative investments – bonds and dividend stocks – outshone sexier choices. And the homeliest wallflower of all, municipal bonds, turned into a star.

Long-term muni bond funds are up an average of 14 percent over the 12 months ending Thursday. Intermediate munis are up almost 10 percent and high-yield munis are up nearly 16 percent, according to Morningstar.

Those topped the one-year returns for the vast majority of stock and bond mutual funds classes. The worm has since turned, however, with domestic stocks showing higher gains over the past three months.

The question now is whether munis have run their course, at least for a while, and whether the risk-shy investor should look elsewhere.

“Few believe you can get the same kind of return as you got last year and the year before,” says Patrick Early, muni analyst at Wells Fargo Advisors, downtown. “If you’ve seen several years of upticks in munis, ask ‘Should I lighten up some?’”

Munis last year prospered on the soothing of fear. The year began just after star analyst Meredith Whitney — she who predicted the Citibank disaster of 2007 — turned prophet of doom for munis, warning of “hundreds of billions” of dollars in defaults on the way.

The muni market is dominated by mom and pop investors, not institutions. Mom and pop followed the prophet and fled for the hills.

Down went muni prices and up went yields in late 2010 and early 2011. A glut of new muni issues hit the market about the same time, pushing prices down and feeding the panic.

That turned out to be a buying opportunity. Whitney’s prophesy did not come to pass, and by mid-year, the panic had faded and munis were on a roll.

Most of the past year’s gain came from price recovery, not interest yield, as Morningstar analyst Miriam Sjoblom noted in a commentary last month. For instance, the Vanguard Long-Term Tax-Exempt fund gained 10.7 percent in 2011. But 60 percent of that was the gain in price, not interest payments.

As price went up, interest yields got skimpier. That fund now has an SEC yield of 2.5 percent (a yield defined by Securities and Exchange Commission). Its intermediate-term sister fund yields 1.8 percent.

It’s hard to imagine yields going much lower, and that limits the upside on price. Looking forward, it would seem that the best investors might expect is that skimpy interest yield. (Of course, muni interest is exempt from federal income taxes.)

Muni investors are risk-shy as a rule, and that’s also reflected in today’s market.

“Super high quality” bonds, such as State of Missouri general obligation bonds are probably overvalued, says Brian Musielak manager of the Commerce National Tax Free Fund in Clayton.

Those looking for higher yields are going to have to crawl out farther on the limb.

“You have to go down in credit quality and take some risk,” says Musielak.

And you may not get much for it. Vanguard’s High Yield Tax Exempt fund yields all of 2.94 percent, using the calculation method blessed by the SEC.

There are other worries as well. Credit rating agencies recently have been downgrading more bonds than they upgrade. That’s a minor negative, considering that muni defaults are still rare events in the investment-grade bond market.

A possible bigger worry involves supply and demand. State and local governments have been shrinking as their tax base shrivels. So, they haven’t launched a lot of new projects that would require bond financing. The supply of new bonds was a third below normal last year.

The dearth of bond supply helped hold prices up and yields down. That will change eventually, although no one is sure when.

Muni investors also share the fear of all bond fund investors – dreaded prosperity. The economy is picking up a bit, and eventually that will mean higher interest rates and lower bond prices.

The Fed predicts it will keep short-term rates near zero until 2014, although that falls short of a promise. The Fed might also use its heft to keep intermediate and long-term rates tame, as it’s done in the recent past.

Still, bond investors should be ready to hot-foot it out if the economic news gets too good.

If, after all that, you’re still interested in Munis, here are some top fund picks from Morningstar.

Among long muni funds: Fidelity Municipal Income, Fidelity Tax-Free Bond and Franklin Federal Tax-Free Income.

Among intermediate-term funds: Morningstar likes Fidelity Intermediate Municipal Income.

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Hong Kong Chief Executive candidate Henry Tang pledged to boost government spending to tackle a widening wealth gap as he sought to reverse a slump in public support ahead of this month

Follow live updates from Marc Saltzman starting at 1 p.m. (EST) as he covers Apple

U.S. stocks recovered quite a bit of lost ground but still finished in the red Monday, following the path of world markets, after China lowered its annual growth target.

The Dow Jones industrial average () lost 15 points, or 0.1%, the S&P 500 () slipped 5 points, or 0.4%, and the Nasdaq composite () decreased 26 points, or 0.9%.

World markets fell Monday, after Chinese Premier Wen Jiabao set a lower target for China’s economic growth, underscoring the need to make the country’s breakneck development more sustainable.

The government is aiming for economic growth of 7.5% in 2012, Wen said — lower than the 2011 goal of about 8%. The Chinese economy often exceeds the official objective; last year it grew 9.2%.

"Even though China only lowered its target by half a percentage point, it’s a telegraph to the rest of the world that the second largest economy is slowing," said Tom Schrader, managing director at Stifel Nicolaus.

American manufacturers importing workers

China’s lower forecast also suggests that the country’s recent steps to ease monetary policy — in an effort to maintain strong economic growth while getting inflation under control — may not be working, said Schrader.

Aluminum-maker Alcoa (, Fortune 500) and Caterpillar (, Fortune 500), which makes construction equipment, were the biggest laggards in the Dow amid worries that slower growth in China could pressure demand for their products.

Trading could be choppy this week, leading up to a big news day on Friday. On the domestic front, investors will get the latest snapshot of the U.S. labor market, with the release of the February jobs report.

In Europe, Friday marks the deadline for private creditors to sign off on Greece’s debt write-down. Greece needs the debt deal to secure its €130 billion rescue package from the eurozone and avoid default.

Lehman Brothers to boost the market?

Stocks closed modestly lower last Friday, with the Dow snapping a two-week winning streak.

World markets: European stocks closed lower. Britain’s FTSE 100 () lost 0.6%, while the DAX () in Germany dropped 0.9% and France’s CAC 40 () shed 0.3%.

Asian markets ended lower. The Shanghai Composite () closed down 0.6%, while the Hang Seng () in Hong Kong lost 1 payday advances.4% and Japan’s Nikkei () dropped 0.8%.

Economy: The February ISM services index rose to 57.3, up from 56.8, which beat expectations.

Washington’s $5 trillion interest bill

Last week, the ISM manufacturing index for February slipped to 52.4, from 54.1 in January, indicating a slowdown in the sector’s expansion.

Meanwhile, factory orders in January decreased 1% — less than the 1.9% decline analysts were expecting. Factory orders rose 1.4% in December.

Companies: IBM (, Fortune 500) shares hit all-time high above $200 share. Citigroup (, Fortune 500) announced that it is exploring possible uses for Watson, IBM’s supercomputer that was famous for beating two human contestants on the game show "Jeopardy" last year.

Online reviews site Yelp () retreated, falling more than 14% after spiking 64% to top $24 a share in their debut on the New York Stock Exchange Friday.

AOL () became the latest advertiser to pull advertising from Rush Limbaugh’s radio show in response to his comments about a Georgetown law student who advocated healthcare coverage for contraception. AOL shares were flat Monday.

BP () shares were higher Monday, after the British oil giant and plaintiffs involved in the legal battle over the Gulf of Mexico oil spill said Friday they reached an agreement. BP estimated it would have to pay about $7.8 billion in the Deepwater Horizon disaster settlement.

Apple (, Fortune 500) said in a post on its website that the tech company has "created or supported" some 514,000 jobs in the United States, either through direct employment, the "App economy" or other means. Shares were down more than 2%, however, ahead of the company’s highly-anticipated iPad announcement Wednesday.

Currencies and commodities: The dollar lost ground against the British pound, the euro and the Japanese yen.

Take advantage of rising gas prices

Oil for April delivery rose 6 cents to settle at $106.75 a barrel.

Gold futures for April delivery fell $5.90 to settle at $1,703.90 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury fell, with the yield rising to 2% from 1.99% late Friday. 

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The ratings agency Moody’s downgraded Greece to the lowest rating on its bond scale late Friday, following a deal with private investors that would see them ultimately lose an estimated 70 percent of their holdings in Greek debt.

Moody’s lowered Greece’s sovereign rating to C from Ca, arguing that the risk of default remains high even a bond-swap deal with banks and other private investors, due to be completed this month, is successful.

It said it would “re-assess the credit risk profile” after Greece issues the new bonds.

Ratings agency Standard & Poor’s took similar action on Feb. 27.

The swap deal aims to cut euro107 billion ($144 billion) from the country’s debt, and would see private investors lose more than half the face value of their Greek bonds in exchange for new ones issued with more favorable repayment terms for the crisis-hit country.

The exchange is an integral part of a second bailout package for Greece by other eurozone countries and the International Monetary Fund.

“Looking ahead, the EU program and proposed debt exchanges will reduce Greece’s debt burden, but the risk of a default even after the debt exchange has been completed remains high,” Moody’s said.

“Moody’s believes that Greece will still face medium-term solvency challenges: its stock of debt will still be well in excess of 100 percent of gross domestic product for many years, the country is unlikely to be able to access the private market once the second assistance package runs out, and its planned fiscal and economic reforms will still face very significant implementation risks.”

Greece has been relying since May 2010 on rescue loans from eurozone partners and the IMF. But despite receiving euro73 billion from its initial euro110 billion bailout and pushing through tough austerity measures in return, the country has consistently missed its reform targets.

To limit a threat to Europe’s single currency, its leaders have agreed to extend the country a second bailout, this time worth euro130 billion ($172 billion), which is accompanied by the debt reduction deal.

So far, the eurozone has agreed in principle to release the first batch of bailout loans to Greece to finance the bond-swap, with the final green light to due till come next week.

But harsh austerity has pushed the country into a fifth year of recession and seen the unemployment rate reach nearly 21 percent.

Earlier Friday, provisional figures from the finance ministry figures showed Greece posting a deficit in January of euro490 million ($652 million), in contrast to last year’s equivalent surplus of euro154 million.

The ministry’s General Accounting Office said revenues during the month were hit by the expiry of a one-off business tax, as well as reduced revenues from consumption.

Revenues in January totaled euro4.87 billion ($6.48 billion). Though a little bit better than the government’s latest target, it’s markedly worse than last year’s equivalent of euro5.12 billion.

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