Friday PM September 18th, 2009
by: Ed Mayberry, September 18, 2009 4:09:56 pm
The Texas unemployment rate rose to eight per cent for the first time in 22 years. The Texas Workforce Commission says the jobless rate for August was up from 7.9 per cent in July. The state also lost 62,200 nonagricultural jobs last month. The state's unemployment rate last hit eight per cent in November 1987, the dying days of an oil bust that ravaged the Texas economy. Texas was still tracking well below the national unemployment rate of 9.7 per cent. Leisure, construction and manufacturing were the hardest-hit industries last month, losing a combined 35,500 jobs. The ten-county Houston metro statistical area lost 4,000 jobs in August, according to the Texas Workforce Commission. The unemployment rate for Houston, like last month, is 8.4 per cent, compared to 5.2 per cent the same month a year ago. The area sustained a net loss of 95,100 jobs, or 3.6 per cent, from August 2008 to August 2009.
Forty-two states lost jobs last month, up from 29 in July, with the biggest payroll cuts coming in Texas, Michigan, Georgia and Ohio. The Labor Department says 27 states saw their unemployment rates increase in August, and 14 states and Washington D.C. reported unemployment rates of ten per cent or above. Michigan has the highest jobless rate of 15.2 per cent, followed by Nevada at 13.2 per cent, Rhode Island at 12.8 per cent, and California and Oregon at 12.2 per cent each. The jobless rates in California, Nevada and Rhode Island were the highest on records dating to 1976. Nationwide, the unemployment rate rose to 9.7 per cent in August from 9.4 per cent in July.
A city-wide job fair is set for tomorrow at the George R. Brown Convention Center, with more than 1,000 positions available for immediate placement. Private companies and national government agencies will be on hand for on-site interviews. To avoid long lines, it’s recommended that you pre-register at a WorkForce Solutions office.
The year-long recovery from Hurricane Ike in the Galveston area means the loss of some jobs. The Home Depot this week laid off some employees at stores in Galveston County and Houston. The Galveston County Daily News reported that the home improvement retailer blamed a decline on the demand for lumber and other building supplies. Home Depot spokesman Craig Fishel declined to say how many workers were let go, adding that the recession and housing slump had nothing to do with the layoffs. Fishel says demand for rebuilding supplies has leveled off and stores have “adjusted accordingly.” Ike made landfall at Galveston on September 13th, 2008. The Atlanta-based company, on its Web site, says “when weather hits, the Home Depot is here to help.”
The Justice Department is investigating whether former Interior Secretary Gale Norton illegally used her position to steer lucrative oil leases to Royal Dutch Shell. She now works for the company. Shell's U.S. operations are based in Houston. Officials with both departments confirmed the investigation to the Associated Press. Norton couldn't immediately be reached for comment. A Shell spokesperson says the company is aware of the investigation--and declined further comment. The investigation is focused on a 2006 decision by the Interior Department to award three oil shale leases on federal land in Colorado to a Shell subsidiary. Federal employees are barred from discussing employment with a company if they're involved in a decision that could benefit that company. Months after granting Shell the leases, Norton left the agency. Shell later that year hired her as an in-house counsel.
The Dallas-Fort Worth area is set to reach a milestone next month with almost 6,000 homes facing foreclosure, a 34 per cent jump from a year ago. The Dallas Morning News reports that the biggest jump is in Collin County where foreclosure listing service said foreclosure filings are up 61 per cent from October 2008. Loan modification programs which carry over filings from previous months are responsible for much of the increase. Foreclosure listing service president George Roddy said that they're seeing “a lot of reposts” which are “creating an artificial high.” However, the number of homes actually being foreclosed on this year was down 17 per cent during the first six months compared to the same period of 2008.
Southwest Airlines says the board of its pilots' union has voted to send a new tentative contract agreement to membership for a ratification vote. The low-cost carrier's pilots in June narrowly rejected a previous deal. The new proposal is a five-year agreement running through August 31st, 2011. The Southwest Airlines Pilots' Association union and the airline have been in negotiations since their contract became changeable in September 2006. By federal law, labor contracts in the airline industry don't expire but can be re-negotiated at the end of their term.
The House has voted in favor of the biggest overhaul of college aid programs since their creation in the 1960s--a bill to oust private lenders from the student loan business and put the government in charge. The vote was 253-171 in favor of a bill that fulfills an array of President Barack Obama's campaign promises, ending subsidies for private lenders, boosting Pell grants for needy students and paying for community college reforms, among other things. The measure goes next to the Senate, where its fate is a little less certain.
FDIC Chairman Sheila Bair says she is “considering all options, including borrowing from Treasury,” to replenish the dwindling fund that insures bank deposits. She told an audience in Washington that the government doesn't want to stress the banking industry because it is still in the process of recovery. Bair's remarks go beyond what she said just three weeks ago when asked about tapping the Treasury after the fund that insures regular deposit accounts up to $250,000 hit its lowest point since 1992, at the height of the savings-and-loan crisis. Bair says the FDIC board will meet at the end of the month and will likely put out several options, including tapping a Treasury credit line, assessing fees on banks in advance and increasing the fees that banks must pay. The FDIC estimates bank failures will cost the fund around $70 billion through 2013. Ninety-two banks have failed so far this year. Hundreds more are expected to fall in coming years largely because of souring loans for commercial real estate.
As it now stands, time is running out for a federal tax credit which has helped to give the housing market a boost. There have been more than a dozen bills introduced in Congress to prolong the life of the tax credit past the November 30th deadline. Senate Majority Leader Harry Reid has endorsed the idea of extending the credit for an additional six months. The housing market has been devastated in Reid's home state of Nevada. This week, the White House said its economic team is evaluating the credit's impact on home sales and will make a recommendation to President Barack Obama. Treasury Secretary Timothy Geithner said he hasn't “made a judgment yet” on extending the credit. The credit covers up to ten per cent of the home price, or up to $8,000, for first-time buyers.
The Federal Housing Administration says its cash cushion will dip below mandated levels for the first time, but insists it won't need an immediate taxpayer rescue. The agency, a growing source of funds for first-time homebuyers, faces mounting concerns that it will soon need a taxpayer bailout as losses grow from homeowners who lose their jobs and can't pay their mortgages. Federal law requires the agency to have two per cent more cash than its expected losses for the next 30 years. The FHA says a study being sent to Congress in November is expected to show that ratio dipping below required levels for the first time. The agency now insures about 5.3 million mortgages, up from about 4 million three years ago.
Banks have reduced their borrowing from the Federal Reserve's emergency lending facility over the past week. They've also cut back use of other programs designed to ease the financial crisis. The reductions indicate that banks are having an easier time obtaining credit and don't have to rely as much on the Fed for short-term loans. Banks borrow from the fed when they have trouble getting the money elsewhere. At the height of the financial crisis last fall, investors cut banks off and shifted money into safer Treasury securities. Financial institutions hoarded much of their cash, rather than lending it to each other or customers. That lockup in lending worsened the recession, the worst since World War II. Banks also made less use of another program aimed at increasing the availability of short-term financing crucial for paying salaries and supplies.
The number of rigs actively exploring for oil and natural gas in the U.S. increased by 11 this week to 1010. Houston-based Baker Hughes reported that 705 of the rigs were exploring for natural gas and 293 for oil. Twelve were listed as miscellaneous. A year ago this week, the rig count stood at 2,018. Texas added nine rigs. The rig count tally peaked at 4,530 in 1981, during the height of the oil boom. The industry posted a record low of 488 in 1999.