Friday PM July 24th, 2009
by: Ed Mayberry, July 24, 2009 9:07:24 pm
A minimum wage increase means 70 cents more per hour for the lowest-paid Americans. But, some economists say the added payroll expense could force some small businesses to lay off workers in the midst of rising unemployment. Minimum wage advocates, however, say the wage increase will help keep the working poor afloat. Atlanta resident Marilynn Winn, who earns $6.75 an hour driving cars between auto auctions, worries the pay boost could lead her boss to make job cuts, especially aimed at older workers like herself. Still, she said she'd be grateful for the raise if she gets to keep her job.
Continental Airlines says its Newark hub in New Jersey will feel the bulk of its planned 1,700 job cuts. The Houston-based air carrier reported to the state's Department of Labor and Workforce Development that 1,417 New Jersey-based positions could be affected. The layoffs follow a previous round cutting 500 reservation agent jobs and a voluntary leave of absence for up to 700 flight attendants. Some 310 pilots could also be furloughed in September, including 212 New Jersey-based pilots.
It's going to cost you more to check bags on an American Airlines flight. American said that checking the first bag will cost $20, up from $15, and a second bag will cost $30, up from $25. The change takes effect on domestic-travel tickets bought after August 13th. Elite members of American's frequent-flier program continue to be exempt from the fees. United, Delta, Continental and US Airways recently announced $5 increases in checked-bag fees, to $20 for the first and $30 for the second.
Retail gasoline prices are on the rise around the nation. And that's despite the fact that supplies have risen for six straight weeks. AAA says pump prices have risen over the past three days to a new national average of $2.47 a gallon. Gas is still more than 20 cents cheaper than it was a month ago. It's priced at a major discount to last year, when the national average was above $4.02. But with so much unused gasoline in storage, analysts say prices should be heading even lower. That doesn't seem to matter, with a lot of gasoline futures being bought up on the belief that a number of rosy earnings reports from major corporations hints at coming rebound in demand from consumers. Gasoline futures have rising every day since July 13th.
OPEC says Nigeria has lost its spot as Africa's top oil producer. Nigeria's oil minister blames militants who have increased attacks on oil facilities in the Niger delta. The oil cartel's July report says Nigeria's production dropped 2.46 per cent in June to 1.746 million barrels per day. In June, Angola ramped up production to grow by 2.92 per cent to 1.796 million barrels per day. Nigerian Oil Minister Rilwanu Lukman says output is falling because of attacks by the Movement for the Emancipation of the Niger Delta. Fighters have been attacking oil installations, kidnapping workers and fighting government troops since 2006 in what it calls a protest against poverty in the Niger delta. Nigeria is usually Africa's top oil producer. Angola's output last topped Nigeria's in April 2008.
CNBC has named Virginia its top state for business for the second time in three years. The ranking was based on 40 measures of competitiveness in ten categories, including the quality of its work force, the cost of doing business and its support for innovation. The business channel also cited Virginia's reasonable sales, personal income and corporate tax rates. Since January 2008, Virginia has attracted $6.58 billion in investment and created 30,856 new jobs. Governor Timothy M. Kaine said the recognition demonstrates that the state's efforts are working. Virginia received CNBC's top ranking in 2007, but fell to number two in 2008 behind Texas. The Lone Star State ranked second this year, followed by Colorado, Iowa and Utah.
U.S. Education Secretary Arne Duncan has approved almost $2 billion in federal stimulus money that Texas requested for its public schools. The money will go to school districts for used, at least in part, in a state-mandated $800 bonus for teachers and other professional employees. Governor Rick Perry applied for the money last month, and Texas lawmakers wrote a state budget allocating most of it to school districts with the proviso that it go to a teacher pay raise. Some school districts had been reluctant to budget the money amid questions over whether the allocation would be approved. A spokesman from U.S. Representative Chet Edward said the state will have to reapply for a second part of the request--about $1.4 billion. That was slated to help replenish the permanent school fund, which has taken a hit since the recession started.
The head of a group of fiscally conservative Democrats says negotiations with House leaders on health care have collapsed. Arkansas Democratic Representative Mike Ross who heads the Blue Dogs' Health Care Task Force, told reporters that after a week of talks, the effort to reach agreement between the leadership and the conservative to moderate Democrats fell apart. He said that leaves Energy and Commerce Committee Chairman Henry Waxman of California, without the votes to advance the health care bill out of his committee. However, Waxman has threatened to force a floor vote to break the impasse within Democratic ranks on President Barack Obama's top domestic priority.
President Barack Obama acknowledged the Senate won't make his August deadline for a vote on overhauling health care, and he says, "that's ok." But he added, "I just want people to keep on working." The president says he wants the plan to keep moving forward despite the delay. He says change cannot come quickly enough. He says Washington has delayed action far too long and he wants to sign health care legislation into law by the end of the year.
The Senate has passed a $680 billion defense spending bill just hours after eliminating a jet engine program the defense secretary believes is superfluous. The voice vote eliminated funds for a backup engine for the F-35 next-generation fighter plane. The overall defense bill passed 87-7. Just two days ago, the Senate went along with Defense Secretary Robert Gates' campaign to change the way the pentagon buys weapons by stripping from the bill $1.75 billion to produce more F-22 fighters. The high-tech aircraft eventually will be supplanted by the F-35 as the military's main attack plane. Differences in the House and Senate versions of the bill still need to be worked out.
States and school districts will soon be able to compete for $5 billion in economic stimulus money to enact school reforms sought by President Barack Obama. The $5 billion fund is Obama's big shot at overhauling schools over the next couple of years. The president will use the money to prod states to toughen academic standards and find better ways to recruit and keep effective teachers. To get the money, states will also need to be able to track student performance, and they will need a plan of action to turn around failing schools.
Treasury Secretary Timothy Geithner says he welcomes a debate on how to tighten oversight of the financial system to prevent another economic meltdown but that stakeholders must agree to act quickly. Federal regulators are pushing back against the administration's plan to strip them of their consumer protection duties and establish a separate agency to focus on the mission. In testimony prepared for a house hearing, Geithner defended the plan as the best approach. He said the current system scatters responsibility and is slow to respond because it requires consensus among the various regulators.
House Financial Services Chairman Barney Frank is defending Democrats' oversight of struggling mortgage buyers Fannie Mae and Freddie Mac. At a hearing Friday, the Massachusetts Democrat said the notion that the two institutions have been left "`unbridled" by Democrats is a myth. Frank said Congress will eventually want to change the model of the government-sponsored enterprises. But, he added that Democrats already have imposed major reforms requested by the Bush administration. The administration is expected to release its plan for Freddie Mac and Fannie Mae in February 2010. Republicans want to enforce new restrictions immediately, including winding them down if they aren't financially viable in two years.
Banks trimmed borrowing from the Federal Reserve's emergency lending facility over the past week and cut back on other programs designed to ease the financial crisis, a sign that some credit problems are easing. The Fed says commercial banks averaged $33.7 billion in daily borrowing over the week that ended Wednesday. That was down from $34.5 billion in the week ended July 15th. The identities of the financial institutions are not released. They pay just 0.50 per cent in interest for the emergency loans.
The number of rigs actively exploring for oil and natural gas in the United States rose by 23 this week to 943. Houston-based Baker Hughes reports that of the rigs running nationwide, 675 were exploring for natural gas and 257 for oil. Eleven were listed as miscellaneous. A year ago, the rig count stood at 1,957. The U.S. count is down about 54 per cent since the end of August as weak energy demand has hampered oilfield activity. Oil prices peaked at almost $150 a barrel last July before plunging. On Friday, benchmark crude for august delivery rose 11 cents to $67.27 a barrel on the New York Mercantile Exchange. Texas gained three. 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 a record low of 488 in 1999.
Schlumberger says its second-quarter earnings tumbled 57 per cent as oil and natural gas companies cut back on exploration and drilling. The world's largest oilfield services company said net income for the April-June period fell to $613 million from $1.42 billion a year earlier. Revenue fell 18 per cent to $5.53 billion from $6.75 billion in the year-ago quarter. Analysts expected revenue of $5.46 billion.