Thursday PM January 21st, 2010
by: Ed Mayberry, January 21, 2010 9:01:00 pm
The government's report of a surprising jump in first-time claims for unemployment aid is serving as a reminder that jobs remain scarce six months into the economic recovery. New claims rose by 36,000 to 482,000. The less volatile four-week average rose for the first time since August to more than 448,000. A Labor Department analyst said much of the increase was due to holiday-season-related administrative backlogs at the state agencies that process the claims. The report also indicated that the number of people continuing to claim regular benefits dropped slightly to just under 4.6 million.
A private research group says its forecast of future economic activity jumped 1.1 per cent in December. The jump in the index of leading economic indicators is a sign that growth could accelerate in the spring. The increase in the Conference Board's gauge was larger than the 0.7 per cent rise that economists had expected. It had been up for nine straight months. Economists expect the country's gross domestic product to have grown 4.4 per cent in the last three months of 2009 as businesses restocked inventories. The leading indicators index is designed to forecast economic activity in the next three to six months. The December reading is a hint of what conditions will be in late spring and early summer.
Houston's office leasing market fell deeper in the red in the fourth quarter, according to Grubb & Ellis. This past year marks the first time in the past six years the office market had negative absorption, caused mainly by companies downsizing and consolidating operations. Many firms have shelved expansion plans until the economy improves. Rents are forecast to continue downward as landlords are forced to offer more concessions in order to attract and retain tenants. Houston's overall vacancy increased to 16.4 per cent during the quarter, as inventory additions and diminished tenant demand combined to increase overall vacancy to a four-year high. The Texas Workforce Commission says Houston's ten-county area lost 88,900 jobs from November 2008 to November 2009—a 3.4 per cent decline on a year-over-year basis.
Texas gasoline prices at the pump have slipped for the first time this year. AAA Texas reports the average retail cost for a gallon of gas declined two cents this week, to settle at $2.60. The nationwide cost also retreated by a pair of pennies, reaching $2.74. Houston's average is currently at $2.57—down three cents from last week. Houston shares with Galveston and San Antonio for the lowest average price in the state. The association survey found El Paso and Beaumont with the most expensive gasoline, at $2.63 a gallon. AAA Texas says demand for gasoline remains historically low and oil prices have seen declines, now hovering below $78 a barrel.
The American Arbitration Association says 21 per cent of General Motors and Chrysler dealers being shut down have appealed the automakers' decision to close them. About 600 dealers out of the roughly 2,800 whose franchises were revoked last year have filed paperwork to go into binding arbitration over the fate of their businesses. GM and Chrysler say they need to get rid of underperforming dealers so the remaining ones can make more money to invest in their businesses. The appeals come under a federal law passed in December that appointed the arbitration association to handle the claims. GM told about 2,000 dealers that their franchises would be phased out by October 2010. Chrysler shed 789 dealers in June.
The Supreme Court has thrown out a law designed to limit the influence of big business and labor unions on elections. In a 5-4 decision, the court overturned two of its own decisions along with the 63-year-old law, ruling that corporations and unions may spend as much as they want to support or oppose candidates for presidents and Congress. However, a ban on direct contributions to candidates remains in place. Critics of the spending limits have argued that they are an unconstitutional restraint of free speech. The court agreed, and in his majority opinion, Justice Anthony Kennedy referred to them as "censorship." But in a strongly worded dissent, Justice John Paul Stevens warned that the ruling "threatens to undermine the integrity of elected institutions around the nation." One Republican attorney who has represented several GOP presidential campaigns says public debates will be "significantly changed" by the ruling and "the loudest voices are going to be corporations and unions."
President Barack Obama is calling for tougher U.S. regulations on banks that would limit the size and complexity of large financial institutions. The proposal would limit banks' ability to engage in high-risk trades. Restrictions would be placed on proprietary trading by commercial banks to separate those institutions from investment banks. Obama said that without these regulations, the financial system will continue to operate under the same rules that led to its near collapse. The announcement comes as Obama renews his calls for financial regulatory reform, which is being negotiated in Congress.
Rates for 30-year home loans have fallen to a shade below five per cent this week but remain above last month's record lows. The mortgage company Freddie Mac said the average rate on a 30-year fixed mortgage was 4.99 per cent, down from 5.06 per cent a week earlier. It was the third-straight weekly decline. The drop comes after interest rates fell in the bond market this week as concerns about the economy increased demand for the safety of government debt, which is closely tied to mortgage rates. Rates for 30-year loans had dropped to a record low of 4.71 per cent in early December, pushed down by an aggressive government campaign to reduce consumers' borrowing costs.
The Bureau of Land Management's quarterly oil and gas lease sale has netted nearly $20.4 million for 34 federal leases in Texas, New Mexico, Oklahoma and Kansas. Fifty-two per cent of the revenue from leases goes to the U.S. government, with the rest going to the state where the mineral lease is located. The BLM says will receive $635,902.08 from Wednesday's sale. The agency says bids for 13 parcels in Texas brought in over $18.8 million.
Target says it will focus on polishing up old stores rather than opening new ones this year. The discount chain will spend $1 billion renovating 340 stores while opening fewer than ten new locations. The renovated stores will offer more groceries. It's also developing smaller stores for urban markets and plans to expand outside the U.S., most likely in Canada, Mexico or Latin America. The chain, based in Minneapolis, has faced tough competition from larger rival Walmart. Customers have turned away from Target's its "Cheap Chic" styles and toward retailers they see as offering lower prices during the recession.
Microsoft says it has fixed security holes in its Internet Explorer browser that played a role in recent computer attacks on Google and at least 20 other companies. Microsoft says it already knew about the problems and was planning to release the fixes in February. The updates affect all versions of the browser. Hackers can lure people to Web pages containing malicious code, then exploit the browser flaw to take over their computers. Attackers in China may have used the flaw to break into e-mail accounts of human rights activists who oppose the Chinese government's policies. Google announced the attacks last week and said it may leave China if the government doesn't stop requiring it to censor search results.
Egypt, Russia, Saudi Arabia and the United Arab Emirates are the first countries to win preliminary approval for Web addresses written entirely in their native scripts. Until now, the Internet domain name suffix--such as ".com"--had to be in Latin characters, even if the parts before it could use other strings. The announcement paves way for the entire domain name to appear in Cyrillic or Arabic by the middle of this year. The countries now have to formally request the suffixes, and the board of the Internet Corporation for Assigned Names and Numbers has to sign off. That's expected now that the ICANN staff has cleared the proposed suffixes to make sure they won't cause technical problems or confusion with an existing domain name.
Continental Airlines suffered a loss of $282 million last year. Analysts had expected another loss in the fourth quarter, but Continental Chairman and CEO Jeff Smisek reported a net income of $85 million for the quarter. Lower fuel costs and higher passenger traffic led to the fourth quarter profit for the Houston-based air carrier. The nation's fourth-largest airline increased passenger traffic by 3.5 per cent in late 2009, even as fourth-quarter revenue declined by 8.3 per cent because high-paying customers have been affected by the recession. Smisek says business traffic is increasing, although the recovery will be slow. Continental and other airlines are making up some ticket revenue decline by raising checked-bag fees.
Southwest Airlines also made money in the fourth quarter and extended its string of annual profits to 37 years. Southwest earned $116 million in the quarter, which was enough to lift the company to a full-year profit of $99 million after it lost money during the first nine months of 2009. Traffic on the nation's largest discount carrier has been rising in recent months while it's been falling on many competitors. Chairman and CEO Gary C. Kelly said a "dramatic" drop in business travel during the recession made this "perhaps the most difficult revenue environment the airline industry has ever faced."