Thursday PM April 9th, 2009
by: Ed Mayberry, April 9, 2009 9:04:39 pm
Texas' largest source of state money continues to decline. Comptroller Susan Combs reported that sales tax revenue to the state declined 3.8 per cent in March compared to the same month in 2008. She cited continued weakness in several important sectors, including retail trade, mining and construction. Combs noted that sales tax revenue is up about two per cent year to date, but said further declines are expected. The news comes a week before the Texas House plans to take up the next two-year state budget. Combs' office said the decreasing sales tax is not yet severe enough to lower the projected revenue estimate for the budget being drafted.
The government says the U.S. trade deficit plunged unexpectedly in February to the lowest level in more than nine years as the steep recession pushed imports down for a seventh straight month while U.S. exports managed a small rebound. The Commerce Department said that the deficit dropped a sharp 28.3 per cent to $25.97 billion, the smallest gap since November 1999. It marked the seventh consecutive month the trade deficit has declined as the severe U.S. recession has cut sharply into demand for imported products. The deficit with China fell 31 per cent to the lowest level in three years while the trade gap with Japan dropped to the smallest point in 24 years.
New jobless claims fell more than expected last week, while those continuing to receive unemployment insurance set a record for the 11th straight week. The Labor Department says the tally of initial jobless claims fell to a seasonally adjusted 654,000, down from a revised 674,000 the previous week. Analysts expected claims to drop to 660,000. But the total number of laid-off Americans receiving unemployment rose to 5.84 million, from 5.75 million, the most on records dating from 1967 and higher than analysts expected.
Chemical maker LyondellBasell is cutting 17 per cent of its employees and a third of its contract workers, as it closes 20 offices and research sites and ten or more manufacturing plants. That means 3,000 employees and 2,000 contractors will be terminated, although the Dutch firm has not said how Houston operations would be affected. Facility closures already announced are in Beaumont, Bayport and Chocolate Bayou. A workforce elimination of 15 per cent was announced last November, and the company says the latest moves include those cuts.
Shriners Hospitals, which has provided free care to children since before the Great Depression, is considering closing one quarter of its facilities. The Florida-based group cites declining donations, higher costs and a shrinking endowment. Officials are siphoning $1 million a day from the endowment to balance the budget for 22 hospitals in the U.S., Canada and Mexico. The endowment has fallen from $8 billion to $5 billion less than one year because of the sputtering economy. The group's annual meeting is July 6th through the 8th in San Antonio. About 1,200 Shriners will consider whether a hospital in Galveston--closed after damage from last year's Hurricane Ike--will remain shuttered. The organization will also vote on whether to close hospitals in: Shreveport, Louisiana; Erie, Pennsylvania; Spokane, Washington; Springfield, Massachusetts; and Greenville, South Carolina.
Job growth for business leaders is expected to continue its contraction through the first half of the year, according to ExecuNet's 2009 Executive Job Market Intelligence Report. Recruiters expect search assignments to decrease 14 per cent. But confidence in an economic rebound builds late in the year, closing 2009 down by just four per cent. The recession is not affecting all industries or all companies equally, according to ExecuNet, which polled 5,060 executives and 476 search firm consultants and corporate human resource professionals. And the average executive tenure continues to decline from 3.2 years in 2007 to 2.8 years last year.
Oil and gas exploration and development activity in Texas continued declining for the fourth consecutive month, according to the latest Texas Petro Index from the Texas Alliance of Energy Producers. Economist Karr Ingham says President Barack Obama's plan to repeal tax provisions that have helped domestic producers withstand price swings has exacerbated the downward spiral. And he says capital funds for oil and gas E&P have already been greatly reduced.
The number of rigs actively exploring for oil and natural gas in the U.S. dropped by 38 this week--to reach 1,005. Baker Hughes in Houston reports Texas lost 22 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.
The retail price of gasoline held steady this week across Texas at $1.97 a gallon. AAA Texas reported the nationwide average price rose a penny, to reach $2.05 a gallon. The Dallas area has the most expensive price at the pump in Texas, with an average $2 a gallon. The association says San Antonio had the least expensive gasoline, averaging $1.91. AAA Texas spokeswoman Sarah Schimmer says U.S. demand for oil still remains relatively low, most likely a byproduct of the slow economy. She says inventories of crude continue to build "despite producers efforts to slow production."
All nine AAA Texas offices in the Houston area are teaming up with the Houston Food Bank to collect canned goods through the end of the year. This round of collections will continue through the end of the month.
Even though retailers are still shopping cautiously, there are some signs that the slump in consumer spending is stabilizing. Wal-Mart says its same-store sales rose 1.4 per cent in March. And although Target's sales fell 6.3 per cent, that's still a better performance than analysts had expected. Warehouse operator Costco Wholesale says same-store sales fell more than analysts expected. But the figure rose after adjusting for plunging gas prices and the stronger dollar. Food purchases helped results. Teen retailers The Buckle and Hot Topic both reported higher results than analysts predicted. Hot topic boosted its earnings guidance. Same-store sales are sales at stores open at least a year and are a key measure of a retailer's health.
President Barack Obama says millions of Americans can save money by refinancing their homes and taking advantage of record low rates on fixed mortgages. Speaking at the White House, Obama emphasized that that average rates on 30-year fixed-rate mortgages have dropped to 4.78 per cent. That is the lowest rate on record. The President said "people can really take advantage of this." Obama touted an increase in refinancing nationwide as a sign that federal programs to help homeowners are working. But he warned people to watch out for scam artists. He said if people offering to help people stay in their homes ask for money upfront then "it's probably a scam."
A new study finds that companies that spent hundreds of millions of dollars lobbying successfully for a tax break enacted in 2004 got a 22,000-per cent return on that investment. It suggests that for those who can afford it, hiring a lobbyist can pay dividends. The figures were compiled by professors at the University of Kansas. The study offers a glimpse how the lobbying business works, and why--even as President Barack Obama vows to curb lobbyists' influence--the industry is booming as never before. The report details efforts by hundreds of companies in 2003 and 2004 to push through a one-time tax "holiday" that lowered for a year the tax rate they paid on profits earned abroad. All told, U.S. companies saved about $100 billion in taxes, with pharmaceutical giants Pfizer and Merck, technology titans IBM and Hewlett Packard, and health products maker Johnson & Johnson among the top beneficiaries.
The Federal Reserve says commercial banks and investment firms scaled back borrowing over the past week from its emergency lending program, a hopeful sign that some credit stresses are easing. The Fed says commercial banks averaged $49.2 billion in daily borrowing over the week that ended Wednesday. That was down from $59.7 billion in average daily borrowing logged over the week ended April 1st. Investment firms drew $17.6 billion over the past week from the Fed program. That was down from an average of $19.5 billion the previous week. The identities of financial institutions that borrow from the Fed program are not released. They now pay just 0.50 per cent in interest for the emergency loans.
The on-time performance and baggage handling of U.S. airlines improved in February, while cancellations declined, compared to one year earlier. Details are in figures from the Department of Transportation. Alaska Airlines had the worst on-time arrival rate in February, while Hawaiian Airlines had the best. The DOT says 19 carriers reporting on-time performance recorded an overall on-time arrival rate of 82.6 per cent in February. That's an improvement over both February 2008's 68.6 per cent and the 77 per cent recorded in January of this year. In February, the carriers canceled 1.2 per cent of their scheduled domestic flights. Alaska airlines had the lowest on-time arrival rate in February, at 76.3 per cent. Houston-based Continental Airlines had the third-lowest, at 77.7 per cent. Hawaiian Airlines had the highest on-time arrival rate in February, at 91.2 per cent, while Dallas-based Southwest Airlines had the second-highest, at 88.3 per cent.