Thursday PM May 28th, 2009
by: Ed Mayberry, May 28, 2009 9:05:04 pm
Officials say a fire at Gallery Furniture that caused up to $20 million in damage is being investigated as an arson. Robert Elder, the special agent in charge of the Bureau of Alcohol, Tobacco, Firearms and Explosives' national response team, said investigators have ruled out all accidental causes of the May 21st blaze at the warehouse at Gallery Furniture. But elder said because the investigation is ongoing, he could not comment on how the fire was started. The store's owner, Jim "Mattress Mack" McIngvale, is among Houston's most successful entrepreneurs and one of its biggest philanthropists.
Texas Attorney General Greg Abbott filed suit today in Houston against the Conn's appliance chain. The state accuses the Beaumont-based chain of failing to honor product warranties, misleading customers about products, false advertising and other deceptive sales practices. In a statement, Abbott says Conn's used "high-pressure sales tactics to deceive customers about their extended service warranties." Court documents state that Conn's sales personnel told warranty purchasers that replacements would be "new, unused" products. The documents state that, in reality, the warranty contract calls for replacement with "refurbished" or "rebuilt" items. The state is seeking civil penalties and a court order to stop Conn's allegedly illegal conduct. A message left with a Conn's spokesman was not returned.
The number of newly laid-off people requesting jobless benefits fell last week, a sign that companies are cutting fewer workers. But the number of people continuing to receive unemployment benefits rose to nearly 6.8 million. That's the largest total on records dating back to 1967. The figures for continuing claims lag behind initial claims by one week. The Labor Department says the number of initial claims for unemployment insurance dropped to a seasonally adjusted 623,000--down 13,000 from the previous week.
A tight job market is translating into a surplus of potential teachers. In record numbers, college graduates are joining the ranks of Teach for America — the program that trains top students to teach in poor communities — more than the program can accept. When school starts next fall, Teach for America will send 4,100 new recruits into classrooms across the country. More than 35,000 graduating seniors applied —an increase of 42 per cent over last year. At Ivy League schools, 11 per cent of all seniors applied. The supply of potential teachers is outstripping demand. States and districts asked for a record number of teachers. Yet for the first time, the organization turned down candidates who met all its rigorous criteria. Interest in becoming a teacher has soared amid the recession, especially in programs that get people there quickly.
Endeavour Highrise has filed for Chapter 11 bankruptcy protection, according to the Houston Chronicle. The developer built the 30-story Endeavour Clear Lake on East NASA Parkway, marketing units from the $400's to $2.5 million. Thirty-eight of the 80 units have been sold.
The government says new home sales were almost flat last month, indicating that the housing market's recovery will likely be a slow and gradual process. The Commerce Department said that sales rose 0.3 per cent in April to a seasonally adjusted annual rate of 352,000. But the increase came from a downwardly revised rate of 351,000 in March. April's results missed the expectations of economists surveyed by Thomson Reuters, who expected a sales pace of 360,000 units. The median sales price fell to $209,700, a 14.9 per cent drop from a year earlier. Sales were down 34 per cent from April 2008.
First-time home buyers and investors snapped up low-priced properties last month. But the National Association of Realtors says the added interest wasn't enough to boost sales of previously owned homes in the south. April's slide was significant because it follows an eight per cent annual drop in March. Low mortgage rates and the economic stimulus package have not been enough to offset job losses and other economic worries. Meanwhile, discounted foreclosures sales kept pushing down prices in much of the south. That's where the realtors say the median sales price slid almost 13 per cent to $148,000. Nationally, April sales of existing homes declined 4.6 percent year-over-year, without adjusting for seasonal factors, while median sales prices fell more than 15 per cent to $170,200. In the Dallas-Fort Worth, the AP-Re/Max report shows April sales dropped 29 per cent year-over-year while median sales prices fell a modest five per cent to $142,000.
An industry report shows that a record 12 per cent of homeowners with a mortgage are behind on their payments or in foreclosure as the housing crisis spreads to borrowers with good credit. The Mortgage Bankers Association said the foreclosure rate on prime fixed-rate loans doubled in the last year, and now represents the largest share of new foreclosures. Nearly six per cent of fixed-rate mortgages to borrowers with good credit were in the foreclosure process. At the same time, almost half of all adjustable-rate loans to borrowers with shaky credit were past due or in foreclosure. California, Nevada, Arizona and Florida accounted for 46 per cent of new foreclosures in the country.
The government says demand for big-ticket manufactured goods soared by the largest amount in 16 months in April, the second increase in the past three months. The Commerce Department says orders for durable goods rose by 1.9 per cent in April, more than four times the 0.4 per cent increase that had been expected. But the government is revising down its estimate for new orders in March to show a drop of 2.1 per cent, a much bigger fall than the 0.8 per cent decline previously reported. Still, new orders have risen in two of the past three months after having recorded six straight declines. Analysts believe this could be signaling that the deep recession in manufacturing may be bottoming out. But they believe a sustained rebound is still some distance away.
Commerce Secretary Gary Locke says an additional $19.5 million in economic developments funds will be used as part of the ongoing recovery efforts along the Texas Gulf Coast. That money is on top of the $20.9 million the Obama administration announced last week for the region that Hurricanes Ike and Gustav devastated last year. Locke says these dollars will enhance the area's competitiveness, improve productivity and create jobs. Nearly half of the money, about $10 million, is for building improvements needed at University of Texas Medical Branch at Galveston's biomedical incubator. Other funds will aid the Port of Orange, the Trinity Bay Conservation District of Anahuac and Nassau Bay.
Saudi Arabia's oil minister says OPEC has decided to keep production targets unchanged. The decision has been made by a meeting of oil ministers of the 12-nation production group. Saudi Oil Minister Ali Naimi told reporters that the minister had decided to "stay the course." The decision appeared due to optimism that improving world economies will boost demand for oil.
President Barack Obama will host the next Group of 20 economic summit September 24th and 25TH in Pittsburgh. White House spokesman Robert Gibbs said Obama offered Pittsburgh as a venue at the conclusion of the group's last meeting in London in April. Many world leaders will already be in the United States in September for a meeting of the U.N. General Assembly in New York. Gibbs says Pittsburg is a city that has experienced its share of economic hard times but is turning that around. He says the president would like to highlight its recovery.
A new report says the average family with health insurance pays an extra $1,000 a year in premiums to pay for health care for uninsured people. The report by the advocacy group Families USA says the average individual with private coverage pays an extra $370 a year because of such cost-shifting. The report found that last year, uninsured people received $116 billion in health care from hospitals, doctors and other providers, but only paid 37 per cent of that amount out of their own pockets. Government programs and charities covered another 26 per cent, leaving about $43 billion unpaid. The report says that made its way into higher premiums. The group calls this a "hidden health tax" and maintains that it's growing. The group says the findings support its goal of extending health care coverage to all the 50 million Americans who are now uninsured. Congress and the Obama administration are working on a plan to do that.
A person briefed on General Motors's plans says the company on Monday will identify the 14 factories it will close as it heads toward an a likely Chapter 11 bankruptcy protection filing. The person says United Auto Workers officials in Detroit have told plant-level union leaders that the company will make the announcement, not the union. The person did not want to be identified because the plan has not been made public. GM has said it soon will identify factories to be closed under its restructuring plan. About 21,000 jobs will be lost.
General Motors says a committee of bondholders has agreed to a sweetened deal to erase some of the automaker's debt in exchange for company stock. The company said in a statement that it offered bondholders ten per cent of the company's stock with warrants to buy up to 15 per cent if they agree to support selling the company's assets to a new company under bankruptcy court protection. The company made the disclosure in a filing with the Securities and Exchange Commission. The filing says if the bondholders didn't agree to support the sale, then the amount of stock and warrants they get would be reduced or eliminated.
Cox Newspapers says it has sold two east Texas daily newspapers. The Atlanta-based media chain said the Lufkin Daily News and the Daily Sentinel of Nacogdoches have been sold to Houston-based southern newspapers. The companies revealed no sale price, but the Lufkin newspaper reports the transaction is expected to close at the end of this month. The Lufkin daily won the Pulitzer Prize Public Service award in 1977 for a series of articles on the death of a local recruit at a U.S. Marine Corps training camp. Southern newspapers also owns the Galveston County Daily News, The Facts in Brazoria County, and the New Braunfels Herald-Zeitung, among other Texas newspapers. Cox still owns the Austin American-Statesman, Waco Tribune-Herald, Longview News-Journal and Marshall News-Messenger.
Cotton producers in the world's largest growing patch are hoping for rain as the Texas south plains planting deadlines approach. Some growers were lamenting how threatening clouds Tuesday night failed to drop much widespread rain, because spring rains are needed to cotton seeds a chance to germinate. Growers in the Lubbock area have until June 5th and counties farther south have until June 10th to plant to be eligible for crop insurance. U.S. farmers expect to plant 8.8 million acres of cotton this year--their fewest since 1983. Growers in Texas, the nation's leading producer, were forecast to plant 4.72 million acres.
Time Warner says its board has approved plans to spin off AOL, the company's lagging Internet unit. The New York Company, which owns 95 per cent of AOL, said it will buy out Google's five per cent stake during the third quarter and spin the unit off to Time Warner shareholders. The long-anticipated move is expected to be completed around the end of the year. AOL and Time Warner combined in 2001 in a deal they said would produce a powerful marriage of content and the Internet. But it produced big losses instead. In a statement, Time Warner chief executive Jeff Bewkes said, "we believe AOL will then have a better opportunity to achieve its full potential as a leading independent Internet company."
Microsoftis rolling out a redesigned Internet search site in the coming days. It hopes to lure more Web surfers than the company's most recent incarnations, Live Search and MSN Search. The new site, Bing, adds touches intended to make everyday Web searching a little less haphazard. Bing also tries to make it easier for people to buy things, book travel and find credible health information. History is not kind even to search innovators. Many companies have tried to improve on the basic format of search results, but Google has remained unstoppable. Microsoft's last effort, Live Search, failed to catch on partly because the company didn't do much to promote it. This time, Microsoft plans a massive ad campaign.
Google is planning to hatch a new species of e-mail and instant messaging. But first the Internet search leader wants the hybrid service to evolve even more with the help of independent computer programmers. The free tool, called "Google Wave," combines elements of e-mail, instant messaging, wikis and photo sharing. Its aim is make online communication more dynamic and simplify the way people collaborate on projects or exchange opinions about specific topics. Google offered the first glimpse of its latest offering during the company's annual conference for software developers. The wider Web-surfing public won't be able to hop on Google wave until later this year.
PC maker Dell says its fiscal first quarter profit fell 63 per cent as the recession crimped computer sales around the world. Dell says earnings sank to $290 million from $784 million. Sales sank 23 per cent to $12.3 billion. Analysts had predicted $12.6 billion.