Thursday PM December 17th, 2009
by: Ed Mayberry, December 17, 2009 9:12:27 pm
Many consumers are procrastinating on their holiday shopping, and becoming more debt conscious. A Consumer Reports survey has found 40 per cent of Christmas shoppers have not even begun to shop yet, and 13 per cent don't even plan to finish until Christmas Eve. Ed Farrell, director of CR's National Research Center, cautions that a third of shoppers already have found popular gifts like electronics, clothing and toys to be out of stock, "so if you wait, you may not find the item you're looking for." Farrell says those who have been shopping are very bargain conscious--and are looking for more practical gifts. They're also paying in cash more and by credit card less--about $100 less per shopper. And Farrell says most plan to pay off the amount in full when they get the bill.
A private research group says its forecast of U.S. economic activity rose for the eighth straight month in November, signaling the economic rebound will continue next year. The Conference Board says its index of leading economic indicators rose 0.9 per cent last month, up from 0.3 per cent in October. The latest reading beat the 0.7 per cent rise that economists surveyed by Thomson Reuters had expected. The Conference Board says six of the ten indicators it uses for the index increased last month.
A federal judge has scheduled a January 2011 trial date for Texas financier R. Allen Stanford, who is accused of bilking investors out of $7 billion in a massive ponzi scheme. The date chosen by U.S. District Judge David Hittner is earlier than the summer of 2011, which was requested by attorneys for Stanford and three other executives of now-defunct Stanford Financial Group. Prosecutors wanted to go to trial next September. The executives are accused of advising clients to invest in certificates of deposit from the Stanford International Bank in the Caribbean island of Antigua. Authorities say the executives told clients the investments were safe and regulated when they weren't.
The number of newly laid off workers filing claims for unemployment benefits unexpectedly rose last week as the recovery of the nation's battered labor market proceeds in fits and starts. The Labor Department said that the number of new jobless claims rose to 480,000 last week, up 7,000 from the previous week. That was a worse performance than the decline to 465,000 that economists had expected. The four-week average for claims, which smoothes out fluctuations, did fall, dipping to 467,500, the 15th straight decline, viewed as an encouraging sign that the labor market is gradually improving. The four-week average is now at its lowest point since late September 2008, the period when the financial crisis was hitting with full force.
President Barack Obama is applauding a House-passed measure designed to create jobs. The $154 billion measure mixes public works projects with funding for state and local governments. The unemployed would also get continued benefits. Obama says the measure offers "productive ideas to respond to this great need" for jobs across the country. But Obama's proposals to give social security recipients $250 payments, a tax credit for small businesses and for those who make their homes more energy efficient are absent from the legislation. Obama says more needs to be done, adding "inaction is unacceptable." The bill passed on a 217-212 vote, without a single Republican vote. House Minority Leader John Boehner has written the measure off, calling it the "same lousy policies that haven't produced jobs all year." The Senate won't start work on the bill until next year.
The old problem of bosses who don't pay immigrant workers what they're owed appears to be getting worse. Workers' rights centers say wage theft has become the top complaint they're hearing. And immigrants are particularly vulnerable because of fear that employers will call immigration authorities. Authorities say the problem hurts taxpayers too. They say businesses that don't pay workers are unlikely to pay their share of unemployment insurance and workers' compensation funds. Now some states and local governments have begun to tackle the issue on their own. They're getting better at collecting fines and allowing workers to file complaints online. They're also reaching out to community groups to make workers feel safer about speaking up.
A new Zogby-ScoopDaily poll shows that most likely voters want jobs or the economy to be the top domestic priority. Some 31 per cent want jobs to be the top focus, and 26 per cent want the economy to be a priority. Those issues beat out national security, healthcare, the national debt and the environment as priority choices. Younger voters were more likely than those from older generations to say national debt should be the nation's top priority—some 12 per cent of those polled.
Texas retail gasoline prices slipped four cents a gallon this week to settle at $2.46 as millions of travelers get ready to make holiday trips. AAA Texas reported the nationwide average price at the pump also declined by four cents, to reach $2.59. Houston had the least expensive gasoline in Texas this week, at $2.41 a gallon. The state's most expensive gasoline was in El Paso, at $2.58. The association says its recent travel surveys indicate as many as 6.3 million Texans will travel during the Christmas and New Year's holiday periods.
Natural gas prices have jumped after the government reported that supplies fell by the largest amount ever for this time of year as frigid weather chills parts of the Midwest and Northeast. A wintry mix of rain and snow kept heaters cranked on high, consuming large stores of natural gas in some of the country's largest markets like Chicago. Still, the amount of gas in storage remains 14 per cent above the five-year average for this time of year. The natural gas contract for January delivery climbed 35.8 cents, or nearly seven per cent, to $5.82 per 1,000 cubic feet on the New York Mercantile Exchange. Natural gas prices had slumped all year as the economy struggled to pull itself from recession. Supplies finally started falling this month, but only after underground storage caverns were crammed to near capacity.
A Senate panel has approved the nomination of Federal Reserve Chairman Ben Bernanke to run the nation's central bank for another four years. The Senate Banking Committee voted 16-7 to send Bernanke's nomination to the full Senate for consideration. Although the 56-year-old Bernanke appears to have enough votes to win a second term, some Senators are lining up against him. They blame him for not spotting problems that led to the financial crisis, failing to protect consumers and supporting Wall Street bailouts.
Citigroup will suspend foreclosures and evictions for 30 days. It's a temporary break for about 4,000 borrowers during the holiday season. The New York-based bank will halt foreclosure sales and stop evicting homeowners from properties it has already seized. The company projects it will help 2,000 homeowners with scheduled foreclosure sales and another 2,000 that were due to receive foreclosure notices. The suspension will run from Friday through January 17th. It applies only to borrowers whose loans are owned by Citi. Borrowers who make payments to Citi but whose loans are owned by other investors are out of luck. The head of Citi's mortgage division says the company is working on "some long-term fundamental alternatives"' to foreclosure, but has declined to be specific.
The Treasury Department has backed out of plans to sell its 34 per cent stake in Citigroup at this time. The move comes after investors responded tepidly to a massive stock offer by the New York-based bank. Citi said it would sell 5.4 million common shares at a steep discount to raise the cash it needs to repay $20 billion of the $45 billion in government support it received to weather the financial crisis. Citi is selling the common stock at $3.15 apiece, an 8.7 per cent discount to Wednesday's closing stock price. The government paid $3.25 a share for its stake, which means it would have lost ten cents a share in the offering. The Treasury Department has agreed to wait 90 days after the completion of the offering to sell any of the 7.7 billion common shares that it owns. The government has said it plans to sell the entire stake next year.
A report says about 1.7 million homeowners were on the verge of foreclosure in the fall, a looming "shadow inventory" of homes that will come on the market for sale over the next several years and weigh down prices. The study by real estate research firm First American Corelogic provides an estimate of how many bank-owned homes have yet to be put on the market as of September. It also includes borrowers who have missed at least three months of payments and are likely to lose their homes.
Mortgage rates have risen for a second consecutive week. At the same time, the number of homeowners applying for refinancing remained strong. Freddie Mac says the average fixed rate on a 30-year mortgage was 4.94 per cent this week. That's up from 4.81 per cent last week. The average rate on a 15-year fixed mortgage rose to 4.38 per cent from 4.32 per cent last week. Rates on five-year, adjustable-rate mortgages averaged 4.37 per cent, up from 4.26 per cent last week. Rates on one-year, adjustable-rate mortgages rose to 4.34 per cent from 4.24 per cent. The rates do not include add-on fees known as points.
Vice President Joe Biden is announcing the first $182 million in federal stimulus money for 18 projects to expand high-speed Internet networks in rural areas and other underserved communities. Biden spoke at a technologically-advanced manufacturing plant in North Georgia whose business has been held back by the lack of a broadband network in its part of the state. The projects are the first part of a $7.2 billion plan to bring high-speed Internet connections to rural areas, poor neighborhoods and Native American communities. Besides Georgia, other projects in the first set will be in Maine, New Hampshire, Ohio, Arizona and Alaska. Biden told a crowd of workers, business leaders and lawmakers that creating the networks could help businesses compete.
The chief executive officer of Southwest Airlines says the discount carrier would never rule out the idea of acquiring another carrier in order to grow. But CEO Gary Kelly told a Wings Club gathering in New York that it is important to southwest to maintain its point-to-point business model and its ability to manage its fleet, which helps keep costs low. Kelly said Southwest, based in Dallas, will be on the prowl for any opportunities that help it grow. Earlier this year, Southwest made a bid to buy Frontier Airlines out of bankruptcy but withdrew when it could not get an agreement with union pilots over merging the Southwest and Frontier crews. Frontier was bought instead by Republic Airways Holdings.
A pipeline will be rerouted from a Texas panhandle neighborhood where a fiery November 5th natural gas explosion left three people hurt. El Paso Corporation spokesman Robert Newberry said that the updated line in the Bushland area will be "400, 600 feet away from any residence." A statement from its El Paso natural gas unit said the company is working with federal investigators to determine the cause of the accident. The company has determined there was no corrosion involved in the early-morning pipeline rupture. The company found no evidence of a leak before the blast or defects in a weld between a branch connection and the carrier pipe. About 60 people had to be evacuated from Bushland, a town of about 1,500, located 15 miles west of Amarillo.
An internal audit says the Texas A&M athletic department needs to do better when dealing with money. The San Antonio Express-News reports that the 25-page report said the department "requires significant improvement in its financial controls and processes." Auditors from the A&M system concentrated on September 2007 to December 2008. A&M Athletic Director Bill Byrne, in his online column, said auditors found that the department had limited monitoring of, and limited accountability for, daily financial operations. Byrne, who become ad in 2002, says many audit recommendations are now in place or will be shortly. Byrne says he is confident that "our business operations are being conducted effectively and efficiently today." The report notes more than $2.5 million in revenues and expenses were not included in the department's fiscal 2008 statements.