Monday PM November 16th, 2009
by: Ed Mayberry, November 16, 2009 9:11:13 pm
Congressional investigators say the agency in charge of workplace safety needs to do a better job of making sure employers keep accurate records on worker injuries and illnesses. The Occupational Safety and Health Administration is supposed to audit employer records in the most hazardous industries to keep tabs on accident and illness rates. But a report from the Government Accountability Office says inspectors often don't interview workers to verify what's in employer records. The GAO says OSHA shouldn't rely solely on employer data because some companies pressure workers not to report injuries or illnesses. Some health providers also tell the GAO they have been pressured to withhold medical treatment so a company could avoid filing an injury or illness report.
Retail sales rose more than expected in October, but the gain largely reflected a big rebound in auto sales. Sales fell at many other retail stores as consumer spending remains under pressure, raising questions about the durability of the recovery. The Commerce Department says retail sales rose 1.4 per cent last month. Economists expected a gain of 0.8 per cent. But excluding auto sales, retail demand rose 0.2 per cent, half of the expected 0.4 per cent rise. The government also revised the September performance down to show a 2.3 per cent decline, from the 1.5 per cent drop initially reported.
Businesses slashed inventories for a 13th consecutive month in September although the pace of reductions slowed from the previous month. The economic rebound is expected to remain tentative until businesses switch to rebuilding their stockpiles. The Commerce Department says businesses reduced inventories 0.4 per cent in September. That's slightly better than the 0.7 per cent drop economists expected and much improved from a 1.6 per cent decline in August. Sales also fell 0.3 per cent in September, the first setback since May. Still, businesses soon may begin restocking depleted store shelves after more than a year of cuts. If that occurs, factory production will begin to rise on a sustained basis, helping to bolster a broad recovery from the worst recession since the 1930s.
More than 15 million taxpayers could unexpectedly owe taxes when they file their federal returns next spring because the government was too generous with their new making work pay tax credit. The Treasury Department's Inspector General for Tax Administration issued a report saying that taxpayers are at risk if they have more than one job, are married and both spouses work, or receive social security benefits while also earning taxable wages. The tax credit, which is supposed to pay individuals up to $400 and couples up to $800, was President Barack Obama's signature tax break in the massive stimulus package enacted in February. Most workers started receiving the credit through small increases in their paychecks in April.
Vonage has reached an agreement with the Texas Attorney General's Office and with 30 other states, requiring that the Voice over Internet Protocol service implements several customer service improvements. Customers had complained about the system for canceling service after Vonage's free trial period. The VoIP service was found to have charged many customers activation fees, shipping and handling fees, taxes, universal service fees, regulatory recovery fees and emergency 911 fees during free service offers, without clearly disclosing those fees in advance.VoIP service allows telephone voice transmission over a high-speed Internet connection.
The Postal Service reported a net loss of $3.8 billion for 2008, about $1 billion more than the previous year. The loss comes despite a reduction of 40,000 in career employees and billions in cost-cutting measures. Postal chief financial officer Joseph Corbett called the year "one of the most challenging in the history of the Postal Service." The post office has been facing a decline in mail volume caused by the shift to the Internet, as well as the recession, which resulted in a drop in advertising mail. Postmaster General John Potter is seeking permission from Congress to reduce mail delivery from six to five days a week. The agency is consolidating mail facilities, looking to close some offices and looking for new sources of income.
UPS, the world's largest shipping carrier, expects to deliver roughly 22 million small packages on its busiest day this year--projected to be December 21st. UPS, based in Atlanta, said that's about a 40 per cent increase over normal daily delivery volumes. It says that for the entire holiday season--from Thanksgiving to Christmas--it expects to deliver about 400 million packages around the world, up slightly compared to the 2008 holiday season. Peak projections from UPS and rival Fedex are closely watched because they are an indicator of how well the economy is doing, especially in the retail sector. UPS did not make a peak projection last year, nor did it say how many packages it delivered on its busiest day.
A $8.6 million industrial rail park will soon be built in the rural west Texas town of Levelland. Dave Quinn is executive director of the Levelland Economic Development Corporation. He said the 300-acre development will be complete in 2010. Groundbreaking ceremonies were set for Thursday. The project is getting $3.3 million in federal stimulus funds along with $1.5 million of the corporation's cash reserves as well as $4.5 million loan through bonds sold by the city. The corporation will use sales tax revenue it receives monthly to repay the loan. Quinn said the corporation hopes the development will create 1,000 jobs and $100 million in new capital investment over its first 10 years. Levelland is about 330 miles west of Dallas.
Independent oil and gas producer Devon Energy says it will divest its Gulf of Mexico and international assets. Devon expects the divestitures will create after-tax proceeds of $4.5 billion to $7.5 billion. The company plans to use the proceeds to invest in its U.S. and Canadian portfolio and retire debt. The sales will add to earnings, cash flow, production and reserves beginning in 2011, the company says. CEO J. Larry Nichols says the company does not believe the value of the assets are adequately reflected in Devon's stock price. The company expects to begin divesting the properties in the first quarter of 2010 and will complete the divestitures throughout next year. Devon Energy is based in Oklahoma City.
GM says it lost $1.2 billion from the time it left bankruptcy protection through the end of September. But that's a far better report that it has issued in previous quarters. It indicates that GM is starting to turn its business around. GM is also planning to start repaying the $6.7 billion it borrowed from the government. First, there'll be a $1.2 billion payment. And GM says it could pay off the full amount by 2011. That's four years ahead of schedule.
A group of automakers, utilities and battery makers is urging the federal government to make a major investment in electric transportation. A group led by Nissan, Fedex and others are outlining a $124 billion plan over eight years that could make electricity the major power source for cars. The group, called the Electrification Coalition, is urging Congress to pass a series of tax credits and loan guarantees to help bring 14 million electric cars to the road by 2020. Their plan envisions building up the use of electric vehicles in six to eight cities in the short term with the goal of making 75 per cent of all vehicle miles traveled powered by electricity by 2040.
The Federal Reserve is proposing new rules to protect consumers from unexpected costs or restrictions on gift cards. The changes would give consumers at least five years to use gift cards before they expire. Also, service or inactivity fees would be permitted only under certain conditions. Fees could be charged if the consumer hasn't used the card for at least a year, if the consumer is given clear disclosures about them and no more than one fee is charged a month. The new provisions are slated to take effect on August 22nd. The public, industry groups and other interested parties can comment on the proposal, which could be revised before a final rule is adopted. The Fed was directed to take the action under a law Congress passed in May. The Fed says more than 95 per cent of Americans have received or purchased gift cards.
Federal Reserve Chairman Ben Bernanke says the central bank will keep a close eye on the sliding U.S. dollar even as he pledges anew to keep interest rates at record-lows to nurture the economic recovery. In remarks prepared for delivery to the Economic Club of New York, Bernanke engages in a delicate dance. He makes clear Fed policymakers will keep rates at super-low levels. Yet he also is trying to bolster confidence in the dollar without actually raising rates before the budding recovery could handle such a move. Economists say a free-fall in the value of the dollar is remote but can't be dismissed. The low interest rates are needed to encourage American consumers and businesses to spend more and fuel the recovery.
The FDIC fund is expected to be out hundreds of millions of dollars after three banks crumbled last Friday. Regulators have shut down Florida's Naples-based Orion Bank and Sarasota-based Century Bank, and San Clemente, California's Pacific Coast National Bank. That brings this year's total of shuttered banks to 123, the most in a year since 1992. Orion Bank's 23 branches and Century Bank's 11 branches reopened Saturday as offices of IberiaBank. Pacific Coast National Bank's two branches reopened today as branches of Sunwest bank. The closures are expected to cost the deposit insurance fund nearly $1 billion. With home prices tumbling and loan defaults soaring, bank failures have cascaded and sapped billions out of the insurance fund and pushed it into the red. The FDIC expects the cost of bank failures to grow to about $100 billion over the next four years.
Time Warner says it will spin off its Internet business, AOL, as a separate company on December 9th. Time Warner stockholders of record November 27th will receive AOL common stock for every 11 shares of Time Warner common stock they hold. Time Warner was initially purchased by AOL in 2001. The media conglomerate had said earlier this year it would spin off AOL after years of trying unsuccessfully to integrate the two companies.
The 2009 Stevie Awards for Women in Business were handed out last Friday at a presentation at the Marriott Marquis Hotel. Best Entrepreneur in Service Businesses Up to 100 Employees in Advertising, Marketing and Public Relations went to Amberly Allen, president of Direct Innovations. Best Young Entrepreneur went to Melissa Fields Tugwell, founder of PetRays Veterinary Telemedicine Consultants of The Woodlands. Other awards were presented for Best Executive, Mentor of the Year, Fastest Growing Company of the Year and Best Overall Company.
The Dutch government has approved a bill to impose a tax on drivers for every kilometer they are on the road, which it says will reduce traffic jams, fatal accidents and carbon emissions. Beginning in 2012, drivers of an average passenger car will pay €0.03 per kilometer (7 U.S. cents per mile). But annual road taxes and purchase tax for new cars will be abolished, reducing the cost of a new car by 25 per cent. The government says nearly six out of ten drivers will benefit under the system, which shifts the tax burden to people who drive the most and at peak hours. Congestion is expected to be halved and carbon emissions cut ten per cent. Friday's decision said the tax will increase every year until 2018, and drivers of larger cars will pay more.
As December approaches, it may be Christmas tree prices that get trimmed instead of the trees themselves, as supply outstrips demand this holiday season. It takes five to ten years before trees are large enough for the living room, and record-high prices in the early part of this decade persuaded farmers to invest in Christmas trees. That means many of those plants are reaching maturity at a time when consumers are tight-fisted and enticed away by artificial trees. As a result, a seven-foot-tall noble fir that sold wholesale for $25 to $39 a few years ago will fetch maybe half that this Christmas season. In Oregon, the top state for Christmas tree production, one farmer is holding out hope the industry will get a late season boost. Stan Low says he's noticed some retailers have under-ordered toys and are scrambling to get more. Low hopes "maybe the same thing will happen with Christmas trees."