Friday PM January 29th, 2010
by: Ed Mayberry, January 29, 2010 5:01:27 pm
The economy grew for a second straight quarter from October through December, posting a 5.7 percent annual rate, the fastest pace since the third quarter of 2003. The Commerce Department report is the strongest evidence to date that the worst recession since the 1930s ended last year, though an academic panel that dates recessions has yet to officially declare an end to it. The two straight quarters of growth last year followed a record four quarters of economic decline. Still, the growth at the end of last year was primarily fueled by companies refilling depleted stockpiles, a trend that will soon fade. The report also provides an upbeat end to an otherwise dismal year: the nation's economy declined 2.4 percent in 2009, the largest drop since 1946.
Wages and benefits paid to U.S. workers posted a modest gain in the fourth quarter, ending a year in which recession-battered workers saw their compensation rise by the smallest amount on records going back more than a quarter-century. The Labor Department said that wages and benefits rose by 0.5 percent in the three months ending in December. For the entire year, wages and benefits were up 1.5 percent, the weakest showing on records that go back to 1982. The anemic compensation gains have raised concerns about the durability of the economic recovery. The fear is that consumer spending, which accounts for 70 percent of economic activity, could falter if households don't have the income growth to support their spending.
Speaking to House Republicans in Baltimore, President Barack Obama said the American people “don't want us to focus on our job security, but on their job security.” Obama said he couldn't understand why Republicans so fiercely opposed his initial tax cuts and said he doesn't want “Washington to continue to be so Washington-like.” Obama said he wants “a constructive debate.” President Obama acknowledged the administration initially underestimated how high national joblessness would go. He was responding at the GOP retreat to an assertion by Representative Mike Pence that he should have embraced an across-the-board tax cut early in his term. The Republican Conference chairman said that Obama had chosen to rely on targeted “boutique” tax cuts rather than across-the-board relief. Obama defended his strategy but conceded officials mistakenly believed unemployment would go no higher than “the eight percent range.” He also said that many of the jobs were lost in December, January and February of 2009, before he took office or before any of his programs took effect. Obama told the Indiana Republican, “I'm assuming you're not faulting my policies for that.”
President Obama says he is willing to work with Republicans to create a process allowing the president to veto specific parts of spending bills. Obama said every president would love to have the ability to nix lines of the budget. Obama says the line-item veto is something he's ready to work with Congress to make into law. Obama says it would be ideal if both parties showed restraint on spending for pet projects, so the line-item veto wouldn't be needed. Obama says he's amused that members of Congress decry “wasteful spending” outside their districts--but are silent on their own pet projects. He says those so-called earmarks are not unique to either party.
Speaking to workers at Chesapeake Machine Company in Baltimore earlier today, Obama said, “it's time to put America back to work.” He says even though his administration has “stopped the flood of job losses,” much more needs to be done to help the millions of people still out of work. The president renewed his call for tax incentives to create jobs. Obama wants to give companies a tax breaks for increasing staff and for increasing wages or hours for their existing workers in 2010.
President Barack Obama's top economic adviser is welcoming the latest figures showing strong economic growth in the United States, but now is not the time to celebrate. Lawrence H. Summers says that the 5.7 percent increase in growth that came under Obama's economic policies has helped “moved the economy back from the brink of depression.” But he told the World Economic Forum that the figure does not mean that “we are in any position to pop any champagne corks” or be satisfied.
More companies are adding new executive jobs and fewer are eliminating them, according to ExecuNet’s latest Recruiter Confidence Index. Some 64 percent are confident that the executive employment market will improve in the next six months—up ten points from December and the highest confidence registered since May 2008. Almost four out of ten recruiters say hiring will improve by the end of the first quarter.
Treasury Secretary Timothy Geithner says the Senate did the right thing in confirming Federal Reserve Chief Ben Bernanke. Geithner says Bernanke will continue to play, in his words, “a vitally important role in guiding the nation's economy.” Bernanke won confirmation for a second term on a 70-30 vote--the closest vote ever for a Fed chairman. Those who opposed his confirmation blame Bernanke for failing to spot problems leading up to the financial crisis. They accused him of lax bank regulation and criticize him for not cracking down on dubious home mortgage practices. Supporters, however, credit him with preventing the great recession from turning into the second Great Depression.
Toyota says it has figured out how to fix a problem with sticking accelerator pedals and will update employees with details. The company said in an e-mail to workers Thursday night that it presented a remedy to federal regulators. The e-mail obtained by the Associated Press says that plans are being developed on a variety of fronts. AP has learned that Toyota is sending new gas pedal systems to car factories rather than dealerships who want the parts to take care of millions of customers whose pedals may stick. The company says its engineers are working around the clock to fix the problem in eight of its models, including the top-selling Camry midsize sedan. Toyota says accelerators rarely stick. But earlier this week the company halted sales and production of the models. It has recalled at least 2.4 million cars and trucks in the U.S., Europe and China because of the problem.
Consumer Reports has temporarily suspended its “recommended” status for eight recalled Toyota models because of the faulty gas pedal systems that could cause unintended acceleration. The influential publication says it is suspending the rating because the vehicles could be unsafe. The affected models include: 2005-2010 Avalon; 2007-2010 Camry, excluding the Camry hybrid and some other models; 2009-2010 Corolla; 2010 Highlander, excluding the hybrid model; 2009-2010 Matrix; 2009-2010 Rav4, 2007-2010 Tundra; 2008-2010 Sequoia. General Motor's 2009-2010 Pontiac Vibe is also included. All nine have performed well in the magazine’s road tests. The publication says it expects to reinstate the “recommended” tag once the problems are resolved.
Honda is recalling 646,000 Fit hatchbacks worldwide because of a glitch that could cause water to enter the power window mechanism, causing components to overheat. A spokeswoman says the recall affects the 2007-2008 models of the Fit, which is sold in other countries as the Jazz and City. The recall affects Asia, Latin America, Europe, South Africa and North America. About 140,000 vehicles are affected in the U.S. In South Africa, one person was killed last year in a vehicle fire related to the malfunction. The spokeswoman says no injuries have been reported in the U.S. The company will notify customers by mail once it has a solution. For now, customers are being advised to keep their windows rolled up during rain or snow.
The Obama administration says it's moving ahead with new consumer protections for mental health and substance abuse coverage. Starting this summer, most employer health plans will have to treat mental health benefits the same way they handle coverage for physical ailments. That means no separate annual deductibles for mental health care. And the co-payment for visiting a psychiatrist or social worker can't be higher than what's generally charged for going to see a family doctor or medical specialist. Administration officials announced that the new consumer protections will take effect starting July 1st. They would carry out a federal law passed in 2008.
Some universities in Texas followed the national trend during tough economic times with losses in their endowments. The University of Texas System's endowment, the fifth-largest of any university or college system in the country, fell from $16.2 billion in 2008 to $12.2 billion in 2009. The Dallas Morning News reports that Texas A&M System's slid from $6.7 billion to $5.1 billion. Southern Methodist University in Dallas saw its endowment shrink from $1.4 billion to $1 billion. Endowment results were reported this week by the Commonfund Institute and National Association of College and University Business Officers. Texas leaders have asked state-supported universities to submit plans to trim five percent from their state budgets. A compromise means new electronic parking meters in Galveston that replace hundreds damaged by Hurricane Ike will not have to be fed on Sundays.
The U.S. Labor Department has announced that it's recovering more than $1 million in overtime back wages from poultry processor Pilgrim's Pride. The department said the back wages are owed to 798 former and current workers at the Pittsburg, Texas-based company's Dallas processing plant. In a consent decree filed in U.S. District Court in El Dorado, Arkansas, Pilgrim's Pride also agrees to pay for time spent by workers donning and removing work-related gear in all of its U.S. processing plants. The decree says Pilgrim's Pride violated federal law by not paying workers for all hours worked, including time spent putting on and removing protective clothing. Pilgrim's Pride emerged from bankruptcy protection late last month and sold most of its business to the U.S. unit of Brazilian beef giant JBS.
Royal Dutch Shell says it wants to sell off leases it has in three oil plays in Nigeria's restive Niger delta. Shell says its Nigerian unit has reached a deal to sell its 30 percent stake in the leases to Seplat Petroleum Company. Shell did not say how much the deal was worth. The company says the deal will require the approval of the Nigerian government and the national oil company, Nigerian National Petroleum. The company says the lease areas include about 30 wells capable of producing about 50,000 barrels of oil per day, though a pipeline in the area is shut down awaiting repairs from damage it sustained in 2008. Violence by area militants has cut oil production in the west African nation.
Companies behind a proposed major natural gas pipeline estimate the project will cost from $20 billion to as much as $41 billion, depending on the route. The Alaska Pipeline Project details came in a filing with federal regulators, a first step toward an open season, when potential shippers of the gas are courted and commitment are sought. Early estimates, from a few years ago, were about $26 billion. Transcanada is working with >strong>ExxonMobil to advance the project, for which Transcanada has a promise of up to $500 million from the state of Alaska for reimbursement costs. The project seeks to move natural gas from the harsh North Slope to market in this state, through Canada and to the lower 48. A rival project also has been moving ahead.
Representative Gene Green is hosting an electronic waste recycling event tomorrow morning in the Houston Community College Northline parking lot on Fulton. It’s a way to safely dispose and recycle electronic devices such as televisions, CPUs, monitors, cell phones, keyboards, laptops, fax machines, printers and other devices. Rapid innovation and high turnover of electronic devices produces over 2.6 million tons of e-waste per year. Some devices contain toxic materials such as lead, mercury, cadmium and flame retardants.
The Galveston City Council has reversed a previous decision and voted to allow free metered parking downtown on Sundays. Critics wanted street parking fees eliminated in an effort to draw more visitors and business to Galveston, which suffered heavy damage when Ike hit on September 13th, 2008. Greg Roof had led a petition drive to abolish street parking fees. The Galveston County Daily News reports that Roof, who had about 500 signatures, agreed to drop the petition if council members made Sunday parking free. More than 900 Ike-damaged meters are scheduled to be replaced in the next few months.