Tuesday PM November 24th, 2009
by: Ed Mayberry, November 24, 2009 9:11:21 pm
A $500 bonus for about 250,000 retired educators, plus some retired state workers in Texas, won't happen because legislators improperly appropriated the funds. Attorney General Greg Abbott issued an opinion that says normal procedures for distributing the $155 million were not followed by the 2009 legislature. Lawmakers can set up one-time payments to retired teachers and state workers. But the ruling says legislators wrongly bypass trustees and sent the $155 million to the comptroller's office, not to state pension funds. Lawmakers earlier this year had said the $500 checks could be provided to the retirees only if the Attorney General's Office decided the funding complied with legal requirements. Representatives of educator groups say they're disappointed.
The Federal Reserve says the unfolding recovery will probably be gradual, as modest growth keeps the nation's unemployment rate elevated over the next several years. Most Fed policymakers say it could take "five or six years" for the economy and the labor market to get back on a path of full health. In updated economic projections, the Fed says the economy's contraction for all of this year won't be as deep as it thought in a forecast released in the summer. That's because the second half of this year is shaping up better than anticipated. Growth next year should turn out slightly better than the Fed previously projected. The Fed says the jobless rate could hover between 8.6 per cent and 10.2 per cent next year.
The economy grew at a 2.8 per cent pace last quarter, as the recovery got off to a slower start than first thought. The government's new reading on gross domestic product wasn't as energetic as the 3.5 per cent growth rate for the July-September period estimated just a month ago. The main factors behind the downgrade: consumers didn't spend as much, commercial construction was weaker and the nation's trade deficit was more of a drag on growth. Businesses also trimmed more of their stockpiles, another restraining factor. The new reading was a tad weaker than the 2.9 per cent growth rate economists expected.
Americans' confidence in the economy improved slightly in November, but they remain gloomy amid a weak job market heading into the holiday season. The Conference Board says its consumer confidence index increased slightly to 49.5, up from a revised reading of 48.7 in October. Economists surveyed by Thomson Reuters expected a reading of 47.7. Economists watch consumer sentiment because spending on goods and services for consumers accounts for about 70 per cent of U.S. economic activity by federal measures.
Home prices rose slightly in September, the fourth straight monthly increases and a clear sign that the housing market's recovery is continuing. The Standard & Poor's/Case-Shiller home price index of 20 major cities rose 0.3 per cent to a seasonally adjusted reading of 144.96 in September. Prices rose month-over-month in 11 metro areas. Industry experts, however, still worry that rising unemployment and foreclosures could stifle the rebound in prices.
Some 1,157 properties in Harris County were foreclosed in November, according to Foreclosure Information & Listing Service, with 3,924 posted for foreclosure, according to information from the Greater Houston Partnership. That's a 40 per cent increase in foreclosures in the county and a 50 per cent increase in foreclosure postings from November 2008. Foreclosures are down nine per cent for the first 11 months of the year, but postings are up 22 per cent. The ratio of foreclosures to postings has fallen, indicating that a growing share of troubled mortgages are being resolved by means other than foreclosure. Statistics are blurred because of programs to forestall foreclosures and from federal moratoria imposed so that properties damaged in Hurricane Rita could be inspected.
Federal officials are fining three airlines a total of $175,000 for their role in the stranding of passengers overnight on an airport tarmac in Rochester, Minnesota, this summer. The Department of Transportation says it fined Continental Airlines and its regional airline partner ExpressJet a combined $100,000 for their part in the stranding of Continental Express Flight 2816 on August 8th. DOT also said in a statement that it has fined Mesaba Airlines, a subsidiary of Delta Air Lines. Flight 2816 was en route from Houston to Minneapolis carrying 47 passengers when thunderstorms forced it to divert to Rochester. The airport closed and a Mesaba employee refused to open the terminal for the stranded passengers.
Beaumont-based Conn's has agreed with the Texas Attorney General's Office to reform its business practices and pay $4.5 million in restitution to its customers. The company was charged last May with failing to honor product warranties and other violations of the Texas Deceptive Trade Practices Act. The state says Conn's used aggressive and deceptive sales tactics to increase its extended service warranty sales for appliances and electronics.
An Amarillo-based utility has announced plans for a $200 million power plant in Hale County. Golden Spread Electric Cooperative, which serves rural areas in Texas and Oklahoma, says the facility will be constructed next year near Abernathy. The proposed gas-fired power plant initially will be capable of generating 170 megawatts of electricity, enough new capacity to serve 55,000 homes at peak loads. Golden Spread President Mark Schwirtz said the unit is needed to meet the growing needs of its 16-member distribution co-ops and to replace expiring wholesale power contracts. He says Golden Spread, a consumer-owned public utility, plans to offset potential rate increases by buying cheaper power from other providers in the marketplace. Schwirtz says the new plant should be operational by 2011.
Interior Secretary Ken Salazar says the government has scheduled 38 oil and natural gas lease sales for public lands next year, including one in Alaska's National Petroleum Reserve. The proposed Alaska sale would be the first in two years in the Alaska Reserve, where environmentalists are seeking permanent protection from oil and gas drilling. Salazar called the planned Alaska sale evidence that the Obama administration is pursuing a balanced approach to energy production, despite criticism from Republicans and some oil and gas companies that officials have not done enough to open up public lands for energy use. Salazar said oil, gas and coal will continue to play an important role in the nation's energy mix, along with wind, solar, geothermal and other renewable sources.
Banks earned $2.8 billion in the third quarter, but loan balances plummeted and the fund that insures their deposits was $8.2 billion in the red. The Federal Deposit Insurance Corporation says while souring loans continued to hurt bank balance sheets, higher operating revenues and a revived market for securities helped make most banks profitable. Profits returned after a $4.3 billion loss in the previous quarter and $879 million in earnings last year. The FDIC's fund that insures bank deposits fell by $18.6 billion, mostly because $21.7 billion was set aside for expected losses on future bank failures. The number of banks on the FDIC's "problem list" rose to 552 from 416 on June 30th, the highest level in 16 years.
Thrifts eked out a $200 million profit in the third quarter, as the number of troubled institutions continued to rise. The Office of Thrift Supervision says the July-September period marked the first profitable quarter since the same period in 2007. The OTS earlier reported a $4 million profit for the second quarter, but later revised it to a $94 million loss. The agency says the number of "problem thrifts" rose to 43 from 40 last quarter. Thrifts differ from banks in that they are required, by law, to have at least 65 per cent of their lending in mortgages and other consumer loans. The nominal profit for the third quarter is $1.3 billion, but $1.1 billion is a one-time gain at a single institution.
The U.S. Postal Service in the Houston area is hiring 175 temporary employees for the holidays. Employees begin work this Saturday at various Houston post office locations. All applicants must apply online.
Houston-based Seismic Metro-Technology is opening a sales and support office in Abu Dhabi, United Arab Emirates. The geoscientific interpretation software firm recently opened new SMT offices in the past 15 months in Moscow, Russia and Calgary, Canada. There are also offices in Croydon (UK), Moscow and Singapore.
San Antonio-based ViroXis is the 2009 Texas Life Science Conference Michael E. DeBakey Award winner for innovation. ViroXis is focused on the development of novel botanical therapeutic products for viral disease. The start-up wants to launch a novel topical product for problematic viral diseases of the skin by 2014. More than 300 entrepreneurs, researchers, communities and venture capitalists gathered for the 6th annual event here in Houston, hosted by BioHouston and the Texas Healthcare and Bioscience Institute. More than 50 Texas companies presented innovative technologies to local and national venture capitalists and investment experts.