Friday PM January 8th, 2010
by: Ed Mayberry, January 8, 2010 10:01:28 pm
An economist says today's jobless report shows "Main Street doesn't believe there's a recovery yet." Jonathan Basile says people aren't yet out looking for jobs. The Labor Department says the unemployment rate stayed at ten per cent, with a loss of 85,000 jobs last month. Analysts expected a drop of 8,000. Some economists say there's an improvement trend. The economy lost an average of nearly 700,000 jobs in the first three months of last year, compared with 69,000 in the fourth quarter. Economist Nigel Gault says private companies added jobs for the second straight month, but most were temporary workers.
Labor Secretary Hilda Solis says the economy is "in a rough situation." The unemployment rate stayed at ten per cent last month, with job losses ten times greater than expected. Solis says she thinks businesses are reluctant to start hiring because they're waiting to see what new steps the government might take to provide relief. The head of the President's Council of Economic Advisers says real recovery comes in fits and starts, and December was a "fit." Christina Romer tells the Associated Press the number of lost jobs are one-tenth of those a year ago. Romer predicts there will be job growth by the spring.
President Barack Obama says he'll create jobs of the future by building a "robust clean energy sector." Obama announced more than $2 billion in tax credits to add some 17,000 green jobs. The credits, already approved by Congress, are for 183 projects to develop solar and wind power and energy management technologies. Treasury Secretary Tim Geithner says "there is no greater priority" than getting Americans back to work. He said the tax credits will spur the private sector to invest more than $5 billion in green technology. The funding is part of the economic stimulus package Congress approved early last year. Obama is also expected to ask Congress for an additional $5 billion in spending for clean energy manufacturing.
UPS says it will cut 1,800 management and administrative positions to streamline its U.S. package segment. The world's largest package delivery company said that about 1,100 employees will be offered a voluntary separation package as part of the work force reduction. UPS, based in Atlanta, also said it expects to top its previously announced earnings prediction for the fourth-quarter of 2009. UPS will report fourth-quarter earnings next month.
Electronics retailer Best Buy says a key sales figure rose in December as consumers snapped up notebook computers, TVs and mobile phones ahead of the holidays. Sales in stores open at least one year rose 8.2 per cent, compared with a 6.5 per cent drop a year ago. That includes a 9.3 per cent rise domestically and a 3.5 per cent increase internationally. Total sales rose $13 per cent to $8.5 billion. Sales in stores open at least a year are a key retail measure because they track sales in established locations, instead of newly opened ones.
Making a splash at the Consumer Electronics Show underway in Las Vegas: netbooks, tablet PCs and e-books. Steve Koenig is with the Consumer Electronics Association."Netbooks—there was some debate last year whether those devices were a recessionary market play or if they were really here to stay. And our perspective at CEA is that they are definitely here to stay. They fit quite nicely into the quiver of solutions for consumers' portable computing experience. People want to have access to their content and be able to stay connected no matter where they are. It's not always convenient or necessary to carry around your primary notebook. And that's where netbooks come in—they facilitate just enough power and connectivity to allow you to kind of do those things that you might need to do while you're on the go. They're also a great fit for teens who are looking to get their first portable computer. The prices, ranging from $299 up to just under $500 fit most household budgets."
The company behind the MagicJack, the cheap Internet phone gadget heavily promoted on TV, has made a new version of the device that allows free calls from cell phones in the home. It's sure to draw protest from cellular carriers. The new MagicJack uses, without permission, radio waves for which the carriers have paid billions of dollars for exclusive licenses. Ymax , which is based in Florida, said this week at CES that it plans to start selling the device in about four months for $40. That's the same price as the original MagicJack. Like the original MagicJack, it will provide free calls for one year.
Inventories held by wholesalers posted an unexpectedly strong gain in November while sales shot up by the largest amount in ten months, two signs that the economic recovery was gaining traction in the fall. The Commerce Department said that wholesale inventories rose 1.5 per cent in November, a much stronger showing than the 0.2 per cent drop that economists had expected. Sales jumped 3.3 per cent, far better than the 0.9 per cent rise that had been forecast. It marked the eighth consecutive month that sales at the wholesale level have increased and was the largest gain since last January. Economists hope that sustained sales increases will encourage businesses to restock depleted shelves which will in turn mean higher orders to factories and provide support to U.S. factories as they struggle to emerge from a deep recession.
Americans borrowed less for a tenth consecutive month in November with total credit and borrowing on credit cards falling by the largest amounts on records going back nearly seven decades. The dramatic declines raised new worries about whether consumers will cut back further on spending, making it harder for the economy to mount a sustained rebound. The Federal Reserve said that total borrowing dropped by $17.5 billion in November, a much bigger decline than the $5 billion decrease economists had expected.
Texas sales tax revenue continued to decline in December, falling 11.6 per cent from December 2009 levels. Comptroller Susan Combs says the state collected $1.65 billion in sales tax revenue in December, continuing a declining trend dating to February. She says collections are down across most major sectors, including oil and natural gas, construction, manufacturing and retail. Combs says she expects growth to return during the first or second quarter of this year. She sent January allocations of $274 million to Texas cities, down 11.4 per cent from last January. Texas counties received sales tax payments of $24.3 million, down 16.1 per cent from last January.
The cold spell blanketing the deep south has been good news for some fruit growers. Peaches and apples from Louisiana to Georgia have benefited from the chilly weather. Both crops need hundreds of hours in temperatures below 45 degrees during the winter months so that they can bloom. But the effects may be more ominous for producers of citrus, fish and other specialties--depending on how long the cold snap lasts. Alabama catfish producers, for example, could see greater than normal winter kill. The latest round of extreme weather has created worries for some farmers after the drought and drenching rains of 2009. The National Weather Service says it's been nearly 14 years since the area had such a long snap of temperatures in the teens and 20s.
The number of rigs actively exploring for oil and natural gas in the U.S. rose by 31 this week to 1,220. Houston-based Baker Hughes said 781 rigs were exploring for natural gas and 427 for oil. Twelve were listed as miscellaneous. A year ago this week, the rig count stood at 1,589. Texas gained 13 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.