Tuesday morning headlines

Stocks taking off: First session of the new year gets off to a fast start, with the Dow up more than 200 points.

Positive economic report: A monthly index measuring manufacturing activity beat expectations in December, indicating an improved economic picture. (Calculated Risk)

Villaraigosa defers payments: The mayor, working with the City Council, have delayed paying for police overtime, unused sick time, and an early retirement program, the LAT is reporting.

The next mayor, and possibly the one after that, will inherit the tab. And, as a result of another mayoral initiative, there could be less City Hall cash at that point to pay the bills, because Villaraigosa also wants to eliminate a business tax that generates $439 million annually. Villaraigosa has portrayed his budget decisions as prudent, preserving crucial services in the midst of a major fiscal crisis. Matt Szabo, Villaraigosa's deputy chief of staff and in-house budget advisor, told The Times that his boss fully intends to "hand to his successors a city in the black." But even some of Villaraigosa's allies are questioning whether the public has been misled about the health of the city's finances.

Consumers still cautious: They're selectively spending, but nowhere near the levels needed to get the economy back in gear. From the NYT:

The reasons for the sluggishness are clear: incomes are essentially flat, job growth is modest, and more than 40 percent of the new jobs in the last two years have been in low-paying sectors like retail and hospitality. While consumer spending is not "going to collapse," said Joel Prakken, senior managing director at Macroeconomic Advisers, "there are some headwinds there."

B of A cutting off small biz credit: Customers are being told to pay off their balances all at once instead of making monthly payments - an effort by the bank to raise capital and reduce risk. From the LAT:

Business owners complain that BofA's credit squeeze is abrupt and could strain their small companies and even put them out of business. The credit cutoff is coming at a time when the California economy can't seem to catch a break, and bucks what the financial industry says is a new trend of easing standards on business loans.

Final box office tally for 2011: Rough year for Hollywood: Ticket sales fell 3 percent from 2010, to $10.2 billion, and attendance fell 4 percent. (LAT)

Super Bowl sold out: Advertisers have snapped up all available slots, with each 30-second commercial going for a record $3.5 million. Car companies will be the biggest spenders. (USA Today)