Thursday PM March 19th, 2009
by: Ed Mayberry, March 19, 2009 9:03:19 pm
New jobless claims fell more than expected last week, but continuing claims set a new record for the eighth straight week and few economists expect the labor market to improve anytime soon. The Labor Department says the tally of initial requests for unemployment insurance dropped to a seasonally adjusted 646,000 from the previous week's revised figure of 658,000. But continuing claims jumped 185,000 to a seasonally adjusted 5.47 million, another record-high and more than the roughly 5.33 million that economists expected.
Only Houston experienced a gain in employment in the 12 largest U.S. metropolitan areas, with a 0.7 per cent increase in jobs. The numbers show jobless rates rose in January in 99.7 per cent of those cities, compared with a year ago. The report is seen as a sign of just how widespread job losses are becoming. By comparison, in January 2008, unemployment rose in only 63 per cent of metropolitan areas. The Labor Department says 14 locales had unemployment rates above 15 per cent, and ten of those are in California. After five years of growth, the number of jobs in the Dallas/Fort Worth area edged down 0.2 per cent in the past 12 months.
Fedex says it plans to cut more jobs and trim wages again. The shipping giant reported its fiscal third-quarter profit tumbled 75 per cent on the weak global economy. The company, often seen as a bellwether for the U.S. economy, said it earned $97 million in the latest quarter. That's compared with $393 million a year earlier. Revenue fell 14 per cent. To further reduce costs, Fedex plans to cut more jobs—although it didn't say how many. It also plans to scale back some workers' hours and wages and trim air and truck capacity. The company said it will not shrink its delivery network in any area. Just three months ago, the company announced broad-based cost cuts including a 20 per cent pay cut for CEO Smith, and other pay cuts. It also froze retirement plan contributions for a year, among other cost-saving measures.
A private sector group's index of leading economic indicators dropped 0.4 per cent in February, continuing its broad decline of the past 19 months. Still, results from the Conference Board's monthly forecast of economic activity were slightly better than expected. The Conference Board also lowered estimates for the previous two months, saying leading indicators rose just 0.1 per cent in January and slipped 0.1 per cent in December. The index is designed to forecast economic activity in the next three to six months, based on ten components that include stock prices and building permits.
Mexico is imposing tariffs of ten to 45 per cent on dozens of U.S. exports, ranging from fruit and wine to washing machines. The move is in retaliation for a U.S. decision to cancel a cross-border trucking program. The new tariffs took effect today and affect about $2.4 billion in annual trade and 89 U.S. products. Assistant Economy Secretary Beatriz Leycegui warned the list could grow unless there's progress toward resolving the trucking dispute. The U.S. was required under the North American Free Trade Agreement to grant Mexican trucks full access to its highways by January 2000. But domestic opposition led U.S. legislators to delay the opening until a pilot program allowing some trucks was instituted in 2007. The U.S. ended that program last week--a move that Mexican Economy Secretary Gerardo Ruiz Mateos called "wrong, protectionist and a clear violation" of NAFTA. The 1994 agreement allows Mexico to introduce retaliatory tariffs equal to the amount of trade lost by the truck ban.
The government is reporting that toxic chemical pollution from industrial plants and factories declined by five per cent in 2007. The Environmental Protection Agency says that industries reported releasing 4.1 billion pounds of toxic pollution into the air, water and onto land in 2007. Despite an overall decline, the EPA says more mercury, dioxin and polychlorinated biphenyls entered the environment. These chemicals remain in the environment for long periods of time and accumulate in body tissues. The report, known as the Toxics Release Inventory, is the first by the Obama administration. Earlier this month, President Barack Obama signed a law a restoring reporting requirements that had been cut by the Bush administration.
The Treasury Department, trying to stabilize the battered auto industry, will provide up to $5 billion in financing to troubled auto parts suppliers. Two Congressional aides briefed on the plan say the funding will be made available from the government's Troubled Assets Relief Program, or TARP. The administration will create a financial entity to provide money for auto parts that large suppliers have shipped to the big three automakers but have not yet been paid for.
The Federal Reserve is expanding a $1 trillion program aimed at jump-starting consumer and small business lending. The Fed says the program will include securities backed by loans or leases relating to business equipment, car-fleet leases and loans extended by mortgage servicers to cover payments missed by homeowners. The program aims to stimulate lending for auto, education, credit card and other loans for consumers and small businesses. Investors can get loans from the Fed and use the money to buy newly issued securities backed by a range of consumer and business debt.
The Senate Commerce Committee has approved President Barack Obama's nominee for commerce secretary. Former Washington Governor Gary Locke won unanimous approval from the commerce panel. Locke is Obama's third choice for commerce secretary. Two other nominees withdrew.
The International Monetary Fund is expecting the global economy to shrink this year for the first time in decades. The IMF is calling on governments to do more to counter the downturn. Specifically, it's urging world governments to relieve their financial systems of distressed assets and free up credit. The fund says G-20 nations should spend the equivalent of two per cent of their gross domestic product on stimulus efforts in 2009 and 2010. Treasury Secretary Timothy Geithner has endorsed that target, while many European governments are resisting the call. The IMF says the world economy will shrink between 0.5 and 1 per cent this year. The fund also says the U.S. economy will contract 2.6 per cent.
A weekly survey shows little change in the average retail price of gasoline in Texas. The weekly AAA Texas survey showed the average pump price of regular self-serve rose by two cents from last week to $1.82 per gallon. That's still well below the national average of $1.93 per gallon, which is virtually unchanged from last week. Houston's average is around $1.80 per gallon. San Antonio had the cheapest gas at $1.77 per gallon--a penny more than last week. El Paso had to most expensive at $1.96 per gallon, down two cents from last week. Auto club spokesman Dan Ronan says gas prices often start to rise dramatically in May with the onset of the summer vacation season. But he says the recession is a still-unknown influence in that pattern.
Sales growth of prescription drugs in the U.S. slowed for the second straight year, with the economic downturn playing a key role, according to IMS Health. Market research firm IMS cites lower demand for less-expensive generic drugs, lagging new product sales, and reduced consumer demand. Sales rose just 1.3 per cent to $291 billion in 2008. Anti-psychotic drugs were the lead sales drivers, followed by cholesterol drugs and treatments for heartburn and related conditions.
Rates on 30-year mortgages plunged this week to the lowest level since January, and are poised to fall further after the Federal Reserve launched a new effort to prop up the flailing housing market. Mortgage finance giant Freddie Mac said that average rates on 30-year fixed-rate mortgages dropped to 4.98 per cent this week. That was down from 5.03 per cent last week. It was the lowest since the week of January 15th, when it was at 4.96 per cent. The rate quotes included in Freddie Mac's survey were taken before the Fed said it will pump $1.2 trillion into the economy in an effort to lower rates on mortgages and loosen credit. That is expected to drive mortgage rates down further.
J.D. Power and Associates says Jaguar has surged to the top of its closely watched vehicle dependability study, tying Buick for the number one spot and dethroning Lexus. J.D. Power says it is the first time Lexus has not occupied the top spot since Toyota's luxury brand was first part of the survey in 1995. Lexus took second place in the study, followed by Toyota's namesake brand, then Mercury, Infiniti and Acura. The annual study measures problems experienced by the original owners of vehicles after three years. By segment, Lexus took three top honors while Toyota brand vehicles swept four.
Houston-based Waste Management plans to build a methane-to-electricity plant at a northwest Arkansas landfill. The company says the plant will generate about five megawatts of electricity--enough to power about 5,000 homes. The plant would be the second of its kind in Arkansas; a similar plant opened in Jacksonville in 2006. Waste Management has 14 landfill gas-to-energy plants that generate enough electricity to power 160,000 homes.
AutoNation is offering to cover up to six months of a customer's car payments if they lose their job. The nation's largest automotive retailer hopes the offer will help ease the minds of potential car shoppers who may have been putting off a purchase because of unemployment fears. The program is being rolled out today at 33 Florida dealerships. Under the program, the Fort Lauderdale, Florida-based company will reimburse customers for loan or lease payments of up to $500 a month for up to six months. In order to be eligible, customers must own the vehicle for at least 90 days before losing their job and be unemployed for at least 30 days. The offer is only good for the first year a customer owns their car.
A landlord is promising two months' free apartment rent if its tenants in Texas, Ohio, Florida and North Carolina lose their jobs. Goldberg says layoffs have become the number one concern for prospective renters. In response, the company's "Layoff Proof Lease" program will begin Saturday. Tenants will qualify after they've signed a 12-month lease and have made three rent payments. Goldberg says when they provide a termination letter or other proof of job loss, they will receive 60 days rent-free, and after that time they may back out of the lease.
Texas has been ranked the top state for job growth and business development for the fourth year in a row by Chief Executive magazine. The survey of 543 CEOs made evaluations based on proximity to resources, regulation, tax policies, education, quality of living and infrastructure. Texas is home to more than 500 Fortune 500 companies than any other state.
The Greater Houston Partnership is establishing representation in Brazil by partnering with Portal Commerce and Logistics, which has experience in the Brazilian trade market. Trade between Houston and Brazil has grown at a compound annual rate of 19.7 per cent since 2000, and Houston is Brazil's sixth largest trading partner. Trade between the two was valued at more than $9.9 billion in 2008.