Thursday PM March 26th, 2009
by: Ed Mayberry, March 26, 2009 11:03:54 pm
Initial jobless benefit claims rose slightly last week, while the number of people continuing to claim benefits set a record for the ninth straight week. The Labor Department says first-time claims for unemployment insurance rose by 8,000 — to a seasonally adjusted 652,000 from the previous week — slightly above analysts' expectations. At the same time, the total number of people claiming benefits climbed to 5.56 million. The figures indicate the labor market remains weak even as some other economic indicators come in better than expected.
The Houston area jobless rate is down a tenth of a point to 6.4 per cent. But Houston lost 6,300 jobs in the past 12 months, according to the Texas Workforce Commission—a year-over-year decline of 0.2 per cent. That means Houston is now losing more jobs than it's creating for the first time in five years. In February, 43,422 Houston residents were receiving weekly unemployment benefits—a 130 per cent increase from February 2008. The Texas unemployment rate is up by a tenth of a per cent to 6.5 per cent. The national rate last month was 8.1 per cent.
The economy shrank at a 6.3 per cent pace at the end of 2008--the worst showing in a quarter-century. The figure on consumer spending from the Commerce Department compares with the 6.2 per cent annualized drop for the October-December quarter estimated a month ago. Economists were bracing for a decline of 6.5 per cent in the gross domestic product.
The Justice Department says a Houston hospital has agreed to pay nearly $10 million to settle allegations it defrauded the federal Medicare program. The settlement resolves claims Methodist Hospital in Houston improperly increased charges to Medicare patients in order to obtain enhanced reimbursement from Medicare. Federal prosecutors say the alleged fraud occurred between 2001 and 2003 and that Methodist improperly inflated charges for inpatient and outpatient care to make its costs for providing such care appear greater than they actually were.
Baylor College of Medicine is temporarily suspending construction of its new facility adjacent to the Michael DeBakey Veterans Affairs Medical Center, according to the Houston Chronicle. Trustees say they will delay construction of the hospital's interior after the exterior is completed in the spring of 2010. The pause in construction for several months allows time to acquire additional philanthropic capital and federal funds. Baylor partnered with St. Luke's after splitting with Methodist Hospital in 2004.
Southwest Airlines has reached a tentative deal that provides raises for its 9,800 flight attendants. The company says the four-year contract was reached with Local 556 of the Transport Workers Union. Negotiations began in May 2008. Southwest Senior Vice President Daryl Krause says the deal would improve pay and benefits. The union says the agreement includes pay raises, an increase in contributions to workers' 401(k) retirement plans and improvements in leave and job security. The union said it made no economic concessions. The agreement will go to employees for ratification in the next few weeks. Results of voting are expected by the end of May. Dallas-based Southwest operates more than 3,300 flights a day and has more than 35,000 employees.
The latest Regional Watch from Alabama-based BBVA Compass for the six-state sunbelt region says new spending and targeted tax cuts in the stimulus plan will help Texas recover from the recession. Bank economists say Texas will see an economic impact of about $16.5 billion from the plan, or about 1.4 per cent of the state's gross domestic product. The state could see a 0.7 per cent gain in GDP this year, rising to two per cent in 2010.
President Barack Obama says job creation in America is difficult in a time of economic hardship and that the work of the future should be in more high-paying, high-skill areas like clean energy technology. Obama was asked at his virtual town hall meeting when people can expect a return of jobs that have been outsourced to other nations. He said the United States has suffered a "massive loss of jobs" because of the deep recession and the turmoil in the financial industry. Obama also said many of the lost jobs in recent years involve work that was done by people getting very low wages and those with limited work skills. He said it will take some time—perhaps through the rest of the year--before vigorous hiring resumes, and that might not happen until businesses see evidence the economy is rebounding.
Rates on 30-year mortgages plunged this week to the lowest level on record after the Federal Reserve launched a new effort to assist the staggering U.S. housing market. Mortgage finance giant Freddie Mac said that average rates on 30-year fixed-rate mortgages dropped to 4.85 per cent this week, from 4.98 per cent last week. It was the lowest in the history of Freddie Mac's survey, which dates back to 1971. The previous record low of 4.96 per cent was set in the week of January 15th. The Fed last week said it will pump $1.2 trillion into the economy in an effort to lower rates on mortgages and other and loosen credit.
As rates on 30-year mortgages fall to their lowest levels on record, President Obama is pointing to refinancing as a lifeline for homeowners being stung by plunging home values. Obama was asked as part of his first online town hall meeting about what help is available to Americans who are still making their mortgage payments but are struggling. He replied that his administration has made it easier for Americans to refinance. He says 40 per cent of mortgages are now eligible for refinancing. And he said homeowners need to take advantage of that. Obama says the number of refinanced mortgages is already starting to go up "significantly." He says it's a way for homeowners to cut their monthly payments.
Vice President Joe Biden says people who collect social security will get a special $250 payment sometime in May. The payments are part of the stimulus bill President Obama signed into law in February. The administration said the measure will help end the recession by creating jobs and putting money into people's pockets. Recipients of supplemental security income, or SSI, also will receive the $250 payment. In all, Biden says nearly 55 million people will receive the extra money. Biden and Energy Secretary Steven Chu also announced plans to spend $3.2 billion on energy efficiency and conservation projects across the country. That money is on top of $8 billion the Energy Department recently released for weatherization and state energy projects.
The World Trade Organization warns that the world is slipping dangerously into protectionism that could strangle a global economic recovery. The WTO's director-general says countries have been erecting new barriers to imports this year through tariffs, subsidies and other measures designed to protect domestic industries. Pascal Lamy says there's no indication that the kind of global trade wars that helped bring on the Great Depression are developing. But he says "the incremental buildup of restrictions" could "slowly strangle international trade" and undercut policies aimed at boosting demand and restoring growth. A 47-page WTO report obtained by the Associated Press lists dozens of government policies that appear protectionist. It praises some leaders, including President Obama, for ensuring that "buy American" provisions in the $789 billion stimulus package comply with international agreements.
Venezuelan President Hugo Chavez says his government will create several state companies to replace oil service contractors now doing business with the country's state-run oil company. Chavez said his administration along with state governments will create "substitute companies" and "eliminate the intermediaries" working with Petroleos de Venezuela. The socialist president said in a televised speech that he opposes having the state oil company continue to contract companies--both domestic and international--to provide services such as maintenance and operating some oil wells. Chavez urged state governors to work with his administration to form "mixed companies" to handle such work.
A Dallas developer will build two large industrial buildings near Pittsburgh International Airport in hopes of making the region a distribution center. Tramwell Crow's work on the Pit International LogisticsCentre is part of the airport's north field site, which includes Dick's Sporting Goods' new headquarters. The buildings will be in a foreign trade zone, in which companies may get imported duties reduced or eliminated. Officials say the 160-acre project will represent about $90 million in private investment. Construction will start in the fall. Airport Authority Executive Director Brad Penrod says while air cargo business has declined because of the economy, Pittsburgh is well-positioned to become a distribution point for the midwest and northeast.
Six Flags Over Texas customers will get to swill beers at the theme park starting Saturday. Across the street, Six Flags Hurricane Harbor customers can buy beer when the water park opens for the season on May 16th. The two parks received a mixed-beverage permit Tuesday. That's after the Texas Alcoholic Beverage Commission ruled an opponent of the beer sales wouldn't get another hearing. Despite the permission to sell liquor, the parks say they plan to sell only beer. A 16-ounce cup will sell for $5.99. Six flags park-goers would have to drink in designated spots and won't be allowed to roam with beers in hand. The park also would halt alcohol sales on days set aside for students, such as Physics Day and Math and Science Day. Opponents of the alcohol sales say beer shouldn't be sold at a place geared toward the youth market. They also think increasing the availability of alcohol could worsen the risk of drunken driving accidents. Six Flags Over Texas already serves liquor at private events at its two catering locations. It also serves alcohol at other parks, including beer and frozen margaritas available at Six Flags Fiesta Texas in San Antonio. The two parks in Arlington are among 20 in the U.S., Mexico and Canada owned by New York-based Six Flags.