Tuesday PM April 14th, 2009
by: Ed Mayberry, April 14, 2009 9:04:51 pm
He's talking about "glimmers of hope" for the economy, but President Barack Obama is also warning that "by no means are we out of the woods." In a speech today at Georgetown University, Obama sought to balance his recent hopeful words on the economy with a sign that he's not ignoring the lingering problems. He also argued that his broad domestic agenda is the path to recovery. The speech came as Obama nears his 100-day mark in office. It's become a traditional marker by which to judge new administrations.
Federal Reserve Chairman Ben Bernanke also says there have been flickering signs that the recession may be easing. The Fed chief mentioned improvements in recent data on home and auto sales, home building and consumer spending. In remarks prepared for students and faculty at Morehouse College in Atlanta, Bernanke says: "`recently we have seen tentative signs that the sharp decline in economic activity may be slowing." Still, Bernanke makes clear that any lasting recovery hinges on the government's success in stabilizing the shaky financial system and easing credit clogs.
Tax procrastinators have one more day to file those federal income tax returns, or seek an extension. And the IRS says if it's been tough financially, failing to file will just make things worse. The IRS says if you owe and don't have the money, contact the agency, which will explain the various options, one of which is installment payments. The IRS says it's critical that taxpayers pay what they can and file one time to at least avoid the penalty for missing the deadline.
Retail sales fell unexpectedly in March, delivering a setback to hopes that the economy's steep slide could be bottoming out. The Commerce Department says retail sales fell 1.1 per cent in March. It was the biggest decline in three months and a much weaker showing than the 0.3 per cent increase that analysts expected. A big drop in auto sales led the overall slump in demand. Sales also plunged at clothing stores, appliance outlets and furniture stores.
The government says that wholesale prices dropped sharply last month as the cost of gasoline and other energy plummeted, fresh evidence that inflation appears to pose little threat to the economy. The Labor Department reported that the producer price index, which measures price changes before they reach consumers, fell by 1.2 per cent, compared to analysts' expectations of no change. The PPI increased 0.1 per cent in February. The report says gas prices plunged 13.1 per cent, the steepest drop since December, while food prices fell 0.7 per cent. Excluding volatile food and energy prices, it says the PPI was unchanged, below analysts' forecasts of a 0.1 per cent rise.
Businesses slashed their inventories for a sixth straight month in February as they tried to cope with a steep recession. The Commerce Department says business inventories dropped 1.3 per cent in February, matching the January decline and close to the 1.2 per cent fall that economists had expected. The sixth straight decline is the longest stretch since stockpiles fell for 15 straight months ending in April 2002, a period that covered the country's last recession.
The Institute of Real Estate Management honored over 1200 commercial building management teams at a Wortham Theater function today for earning the Energy Star label. Nine commercial buildings were honored for earning LEED credentials.
Despite the dismal economy, motorists may want to take to the road this summer. The federal government says gasoline prices are expected to stay relatively low. The Energy Information Administration projected regular-grade gasoline to average $2.23 a gallon during the April-September driving season. The monthly average is likely to peak at $2.30 a gallon. That's still a bargain compared with last summer, when gasoline cost an average of $3.81 a gallon and soared for a time past $4. In recent weeks gas prices have edged higher from their lows in December. Last week, gasoline averaged $2.05 a gallon. The Energy Agency attributed the increases to slightly higher crude oil costs and refiners trying to recoup some profits.
BAE Systems has received a $64.1 million order from the U.S. Army for 500 Family of Medium Tactical Vehicle ten-ton dump trucks, according to the Houston Business Journal. The vehicles will be made at the company's Sealy facility, and deliveries are expected to begin in August. BAE Systems employs more than 2,700 at Sealy and in Houston.
Peterbilt Motors announced the temporary closure of its Madison facility, which has been on a work stoppage due to union contract negotiations. Larry Vessels, the plant manager for the Denton-based heavy truck manufacturer, said due to a failure to reach an agreement with United Auto Workers, the facility has not been producing since June of last year. The Tennessee Department of Labor announced that 390 employees were being laid off. Vessels said most of those employees haven't been working at the plant in the past ten months. Vessels said the company decided to close the plant because of the sagging economy and the reduced demands in the truck market, but the plant could reopen if the market improves.
The nonpartisan Employee Benefit Research Institute finds that only 13 per cent of U.S. workers are very confident they'll have enough money to retire comfortably. Confidence is at its lowest point since the institute's first survey 19 years ago. And there's been a sharp drop in confidence among retirees over the past year. Only 20 per cent say they're very confident about their financial security. Research director Jack Vanderhei thinks the recession is serving as a wake-up call for people who had a false sense of optimism. The survey finds most people are saving more and spending less and are assuming they're going to have to work longer before they retire. But it also shows a degree of financial ignorance when it comes to retirement. More than 40 per cent of people who do not have a defined benefits pension plan at work think they do.
They're great with gas, but micro car crash test results show they don't fare too well in collisions with larger vehicles. The crash tests were conducted by the Insurance Institute for Highway Safety. The tests found that drivers of 2009 versions of the Smart "ForTwo," Honda Fit and Toyota Yaris could face significant leg and head injuries in severe front-end crashes with larger, mid-size vehicles. The institute said the Smart, which weighs 1,808 lbs, went airborne and turned around 450 degrees after striking the C class, which weighs nearly twice as much. Automakers who manufacture the small cars say the tests simulated a high-speed crash that rarely happens on the road. They also said the tests rehashed past insurance industry arguments against tougher fuel efficiency requirements.
A Texas-based meat-processing company plans to open a new manufacturing plant in Nashville that could employ up to 250 people. Jeff Bledsoe, president of Five Star Custom Foods, told the Tennessean they plan to open by late fall and chose Tennessee because of its business-friendly environment. Initially 70 to 100 people will work at the plant, but employment could grow to 250 within three years as a part of an overall investment of $20 million in the company's first expansion outside of its headquarters in Fort Worth. The company, founded in 2000, makes and ships meat products, sauces and non-meat ingredients for food manufacturers and restaurant chains.
Circuit City will auction its brand, trademarks and e-commerce business next month. A federal bankruptcy judge set a May 11th auction and a sale hearing for May 13th. Richmond-based Circuit City has entered a so-called stalking horse agreement with Systemax for $6.5 million plus two and one-half years of payments of a portion of the revenue from the Circuit City Web site. A stalking horse bid is an initial offer for a bankrupt company's assets from an interested buyer chosen by the company. The auction will allow other companies to make bids. New York-based Systemax sells consumer electronics online, by direct mail and in retail stores under the TigerDirect and CompUSA brands. It purchased Dallas-based CompUSA's intellectual property in January 2008.
Fedex says it will permanently remove 14 jets from service as part of an overall plan to reduce capacity amid weak economic conditions. The Memphis-based company will remove the jets — ten Airbus A310s and four Boeing MD10s — by May 31st, along with some excess engines. It will take a $180 million charge for the move. Fedex expects to take delivery of newer, more fuel-efficient aircraft in fiscal year 2010, which begins June 1st. The package delivery company says it still has a "limited amount" of aircraft grounded because of overcapacity. It warned that more cutbacks will result in more charges.
The reconstructed IH-10/I-610 interchange has been named as a finalist in the American Council of Engineering Companies' 43rd annual Engineering Excellence competition. RS&H will accept the award for one of the largest, most complex highway projects on behalf of the Texas Department of Transportation at a gala in Washington, D.C. on April 28th.
A key advertising forecaster is projecting that global ad spending should fall by a 6.9 per cent in 2009, a pace that is worse than expected. The outlook from ZenithOptimedia is down from December's projection for a 0.2 per cent decline this year. The current forecast shows much steeper dips in North America and Western Europe. With trade falling off, the Asia-Pacific region and Central and Eastern Europe are expected to show declines now instead of the previously forecast increases. U.S. ad spending is expected to fall by 8.7 per cent this year from 2008. The prior projection was a drop of 6.2 per cent. ZenithOptimedia says companies are waiting until the last moment to commit to ad spending, which many consider as a discretionary expense.
S3 Entertainment Group in Ferndale says it plans to produce a preteen TV situation comedy called The Wannabes. The company says it will be shot entirely in Michigan. S3 said the show will feature a lot of singing and dancing and will star members of the group Savvy. The company says it's working with The Woodlands-based Stern-Lemaire Productions, which manages Savvy. The Detroit Free Press says the show has been sold internationally, and spokesman Jeff Spilman says a U.S. network deal is expected soon.
EBay Plans to spin off its Internet communications service Skype through an initial public offering. San Jose, California-based eBay expects to complete the IPO in the first half of next year, though it says the timing will be based on market conditions. eBay bought Skype for $2.6 billion in October 2005. It took a major writedown on the business in 2007, essentially acknowledging it had drastically overvalued it. In a statement, Chief Executive John Donahoe says it's clear Skype has "limited synergies" with eBay's online marketplace and with its payment service, PayPal.
More changes are coming to eBay. The online marketplace operator plans to adjust the way sellers list items on its site. announced the tweaks are to become effective in mid-June. Among the changes: sellers will be able to charge various prices for similar products that are sold under one listing--such as different-sized shirts. And now June 15th is the deadline for sellers to add a return policy and handling time to their listings. That rule was originally supposed to take effect last month. The changes are the latest in a long line of adjustments the company has made as it has struggled to improve its online marketplace.