Wednesday PM November 26th, 2008
by: Ed Mayberry, November 26, 2008 3:11:56 pm
President-elect Barack Obama says “help is on the way” for the nation's economy. Announcing two more members of his economic team today at a news conference in Chicago, Obama pledged that he will have an economic plan ready for action on his first day in office. He introduced former Federal Reserve Chairman Paul Volcker to head a new White House advisory board focused on creating jobs and bringing stability to the nation's financial system. Volcker is credited with taming inflation in the 1980s by raising interest rates, though the action also helped send the economy into recession. Obama described the 81-year-old Volcker as “fairly opinionated” and someone who “pulls no punches.” He also introduced University of Chicago economist Austan Goolsbee as the top staff official on the panel. Obama defended himself against critics who accuse him of recycling Clinton administration officials, saying his aim is to create a cabinet that combines “experience with fresh thinking.”
British Prime Minister Gordon Brown says that the UK will host an April 2nd meeting of the group of 20 industrialized and emerging economies on the financial crisis. Brown told lawmakers that president-elect Barack Obama has said he will attend the talks. The G-20 nations and four international organizations met for emergency talks in Washington on November 14th and 15th. Leaders said they needed a summit early next year to check progress on promises to cooperate more closely, toughen supervision of banks and give bigger roles to fast-rising nations.
As the financial crisis was gaining force, Americans cut back on their spending in October by the largest amount since the 2001 terrorist attacks. The Commerce Department reported that consumer spending plunged by one per cent last month, even worse than the 0.9 per cent decline that had been expected. It says personal incomes were up 0.3 per cent last month, slightly better than the 0.1 per cent gain analysts had expected. The big decline in spending in October underscores concerns that the economy is falling into a deep recession. Consumer spending accounts for two-thirds of total economic activity.
Sales of new homes fell in October to the lowest point in nearly 18 years while the median price of a new home dropped to the lowest level since 2004. The Commerce Department says new home sales decreased 5.3 per cent last month to a seasonally adjusted annual sales pace of 433,000 homes, the lowest level since January 1991--another period when the country was undergoing a steep housing downturn. The median price of a new home sold in October fell to $218,000, down seven per cent from a year ago. It was the lowest median sales price since September 2004.
The government says jobless claims fell more than expected last week from a 16-year high, but remain at elevated levels due to the slowing economy. The Labor Department says initial requests for unemployment benefits fell to a seasonally adjusted 529,000 from the previous week's upwardly revised figure of 543,000. That is lower than analysts' expectations of 537,000. Still, the initial claims number remains at recessionary levels. The four-week average, which smoothes out fluctuations, rose to 518,000--its highest level since January 1983, when the economy was emerging from a steep recession.
The University of Texas System is defending its secret meeting to discuss massive layoffs at its Galveston Medical School. The UT System has been under fire from open government advocates over its secret deliberations of the layoffs at the UT Medical Branch in Galveston in the wake of Hurricane Ike. Regents announced on November 12th that 3,800 UTMB employees would be laid off. Those layoffs were discussed at a closed-door session in El Paso that day. That prompted a complaint from the Texas Daily Newspaper Association, which says the private gathering violated the Texas Open Meetings Act. Now, the Austin American-Statesman says regents' lawyers contend the secret meeting was allowed under exceptions to the open meetings law. Hiring and firing decisions can be held in private. UT System lawyers acknowledge that regents may use that exemption only to discuss individual personnel. But they also say “a governing body may also consult with and receive legal advice from its attorneys under the legal issues exception.” Newspaper Association President Gary Borders disputes UT's arguments and says its board will consider the matter next week in Austin.
Orders to U.S. factories for big-ticket manufactured goods plunged in October by the largest amount in two years as manufacturing was battered by the overall economic weakness. The Commerce Department says orders for durable goods dropped by 6.2 per cent last month, more than double the three per cent decline economists expected. The report showed widespread declines throughout manufacturing led by decreases in autos and airplanes.
Back-to-back punches from Hurricanes Gustav and Ike destroyed 60 oil and gas platforms in the Gulf of Mexico. But the Minerals Management Service reports those structures represented only a small percentage of the region's overall production. Before the summer storms, the Gulf of Mexico had about 3,800 production platforms accounting for roughly 25 per cent of domestic oil output and 15 per cent of natural gas. In its final damage assessment, MMS said the platforms destroyed by Gustav and Ike accounted for about one per cent of the Gulf's oil and natural gas production. The MMS also said 31 platforms with extensive damage could take from three to six months to repair. Another 93 with moderate damage could take one to three months to fix. The storms shut down Gulf production for several weeks in late August and September.
Texans hitting the road for Thanksgiving are finding retail gas prices at levels to give thanks for. The weekly AAA Texas gasoline price survey found self-serve, regular-grade gasoline was averaging $1.76 per gallon. That's 13 cents higher than last week. Nationally, the average fell 15 cents to $1.87 per gallon. The most expensive is in El Paso, where it averaged $1.93 per gallon despite a 21-cent drop from last week. The cheapest gas is in Amarillo, where it fell 15 cents from last week to $1.67 per gallon. AAA Texas spokeswoman Sarah Schimmer says the auto club expects 7.8 per cent of all U.S. travel during the holiday weekend to be on Texas roads. Schimmer says 2.5 million plan to be on Texas highways.
AAA estimates about 41 million Americans will make trips of at least 50 miles this week--about 600,000 less than last Thanksgiving. A spokeswoman for the auto club says people are “still really hesitant,” because “the economy is in such bad shape.” But for one carpenter, the drop in gas prices has made a difference. Michael Layman says he moved to Florida three years ago, because there were better job opportunities than in his former home of Michigan. He's making the drive back and says filling his tank is costing less than half what it did a couple months ago.
The president of the United Arab Emirates is downplaying concerns about falling oil prices ahead of an emergency OPEC meeting later this week. The Emirates is one of the world's top oil producers. Sheik Khalifa bin Zayed al Nahyan says fluctuations in the price of crude are nothing new. He says the Gulf nation has lived through periods were prices were below where they are today. The sheik spoke in an interview with Egypt's influential al Ahram newspaper. The Emirates state news agency Wam provided a transcript of the interview. Khalifa says the Emirates is “closely monitoring” oil market dynamics and working with partners in OPEC “to face any negative impacts on the stability of world markets.”
Iraq's self-ruled Kurdish regional government has announced it will export crude oil for the first time next year. A Kurdish oil official, Ashti Hawrami, says the oil will be exported from two fields in northern Iraq to the Turkish port of Ceyhan. He says they will start with 100,000 barrels per day. The number will rise to 250,000 by the end of 2009. The statement says the exports will be coordinated with Iraq's oil ministry. But Oil Ministry spokesman Assem Jihad says the two sides only agreed on technical issues while the export license is still under discussion. The Kurds insist on unilaterally signing contracts with international oil companies. This has raised tensions with the central government in Baghdad.
More restaurants and shops are opening on the Kemah Boardwalk this weekend, in the aftermath of Hurricane Ike. The Aquarium restaurant and Red Sushi and Hibachi Grill, as well as the Boardwalk Bullet rollercoaster are opening on Friday. The C.P Huntington train reopens this weekend. Five other restaurants have already reopened, as well as midway games and shops and the Boardwalk Inn.
The Screen Actors Guild says it will hold its strike vote next month. President Alan Rosenberg made the announcement in an e-mail sent to members, and asked them to give the guild's board the authority to call a strike "only if it becomes absolutely necessary." The vote could take more than a month and requires 75 per cent approval to pass. Mediated talks between SAG and the Hollywood studios broke down. The Alliance of Motion Picture and Television Producers responded to the e-mail by saying the guild failed to explain why it deserves a better deal than other unions that have already settled. The producers also said SAG members will lose more in the first days of a strike than they could ever expect to gain.
The number of rigs actively exploring for oil and natural gas in the United States fell by 75 this week to 1,866. Of the rigs running nationwide, 1,443 were exploring for natural gas and 412 for oil. Houston-based Baker Hughes also reported that a total of 11 were listed as miscellaneous. A year ago, the rig count stood at 1,823. Baker Hughes released the weekly report early because of the Thanksgiving holiday. Texas gained five rigs. Baker Hughes has tracked rig counts since 1944. The tally peaked at 4,530 in 1981, during the height of the oil boom. The industry posted several record lows in 1999, bottoming out at 488.