Thursday PM February 4th, 2010
by: Ed Mayberry, February 4, 2010 5:02:15 pm
The number of newly laid-off workers filing initial claims for jobless benefits rose unexpectedly last week, evidence that layoffs are continuing and jobs remain scarce. The rise is the fourth in the past five weeks. Most economists hoped that claims would resume a downward trend that was evident in the fall and early winter. The Labor Department says that new claims for unemployment insurance rose by 8,000 to a seasonally adjusted 480,000. Wall Street economists had expected a drop to 460,000. The four-week average, which smoothes fluctuations, rose for the third straight week. The number of people continuing to claim benefits was unchanged at 4.6 million. The government also reports that worker productivity rose more than expected in the October-December quarter as companies squeezed more output from their employees. The Labor Department says productivity rose by a seasonally adjusted 6.2 percent in the fourth quarter, above analysts' expectations of a six percent rise. The increase follows two quarters of sharply rising productivity. Overall, productivity has risen 5.1 percent in the past four quarters, the most since the 12 months ending with the first quarter of 2002. Productivity often rises at the end of recessions as companies ramp up output before hiring new workers. Rising productivity can raise living standards in the long run. But it can also make it easier for companies to postpone new hiring.
Senate Majority Leader Harry Reid says the Senate will take up a jobs bill Monday and he hopes it will have Republican support. Key Democrats and Republicans in the Senate have been working on a bipartisan plan to give businesses a tax break for hiring unemployed workers. The bill under discussion would also extend unemployment payments for those whose benefits have run out, and would renew a program that offers the jobless a subsidy for health insurance premiums under the Cobra program. Reid said he hopes Senators will be ready to unveil all the details of a bipartisan proposal by Friday.
Discount retailer Dollar General says it will add 5,000 jobs as it opens 600 new stores over the next 12 months. Shoppers have flocked to discount stores during the recession as they look to spend less money on their purchases. During the first nine months of its fiscal year, Dollar General's profit surged while revenue rose 13 percent to $8.61 billion. The company, based in Goodlettsville, Tennessee, says it will add jobs throughout its operations. Dollar General says it added 4,000 jobs in 2009. It operates 8,800 stores with about 78,000 staffers.
The CEO of ConocoPhillips is meeting with Norwegian King Harald V tomorrow in Oslo. James Mulva was recently appointed Commander of the Royal Norwegian Order of Merit on June 19th last year, and the Order was presented to Mulva on November 9th by Consul General Lasse Seim. He was awarded the Order for his contribution to the development of the Norwegian offshore oil and gas sector, and for planning and financing the Ekofisk project offshore Norway. The Royal Norwegian Order of Merit was instituted by the late King Olav V in 1985 to be conferred on foreign nationals in recognition of particularly meritorious services that further Norwegian interests.
Toyota dealers have begun to repair defective gas pedals in millions of U.S. vehicles. Toyota recalled eight models January 21st because accelerator pedals could stick. Toyota is sending dealers a piece of steel about the size of a postage stamp that can be inserted into the accelerator mechanism and eliminate the problem. One dealership in Toledo, Ohio, received about 350 steel pieces and began repairs this morning. The service manager says the dealership hired three people to handle phone calls and repair scheduling and will add more people if needed. He also says the dealership will stay open as late as necessary.
There's a design problem with the antilock brake system in the new Prius, which went on sale last year. Toyota says it has corrected the design for models sold since late January. It's looking into how to inform people who had bought them earlier. Complaints about braking problems in the third-generation Prius have been reported in both the U.S. and Japan.
The Transportation Department has opened an investigation into brake problems in the 2010 model year Prius. The National Highway Traffic Safety Administration told the Associated Press it has received 124 reports from consumers, including four reports of crashes. The investigation will look into allegations of momentary loss of braking capability while traveling over uneven road surfaces, potholes or bumps. The Japanese government has ordered Toyota to investigate brake problems. The automaker said it had corrected problems with the antilock brake system in Prius models sold since late last month, including those shipped overseas. The flaw requires a software programming change to fix.
Texas retail gasoline prices eased this week for the third week in a row. The weekly AAA Texas survey shows unleaded regular is averaging $2.51 per gallon at Texas pumps, a nickel less than last week and back to January 1st price levels. Nationally, the price is averaging $2.66 per gallon, down three cents from last week. The state's lowest average price is in Fort Worth at $2.45, down seven cents from last week. The highest price is in El Paso at $2.61, down a penny from last week. An AAA Texas statement credits the price drop to a crude oil price that's dropped six cents from the start of the year to $75 per barrel on the New York Mercantile Exchange. That's down about $2.50 from last week.
Retailers are reporting modest gains for January as shoppers, uninspired by limited racks of holiday clearance, spent cautiously after a holiday buying spree in December. Fourth-quarter profit profits look brighter, however, as Macy's and Bon-Ton stores are raising their outlooks because they didn't have to discount heavily and saw sales improve. As merchants report their sales figures, several stores including Limited Brands and Macy's are reporting solid sales increases. But Stage Stores is announcing an 11.2 percent decline and teen retailer Wet Seal says sales fell 3.7 percent. Excluding gasoline, Costco Wholesale says it saw a small gain. The figures are based on sales at stores open at least a year.
Orders to U.S. factories posted a big gain in December, far exceeding expectations and adding to evidence that the manufacturing sector is supporting the economic recovery. The Commerce Department said that orders rose by one percent last month, double the 0.5 percent forecast by economists surveyed by Thomson Reuters. The advance was the eighth increase in the past nine months. It was led by big gains in orders for metals such as steel and aluminum, as well as machinery. However, orders for transportation equipment as well as computers and electronics dipped slightly.
Nearly two years ago, a broad coalition of environmental groups celebrated a deal with a Texas oil company that promised to eventually end its drilling operations off California's scenic Santa Barbara County coast. Now, a growing number of those former eco allies are lining up against the Plains Exploration & Production proposal that includes some new drilling. Many worry it could inadvertently end a 40-year moratorium on new drilling along the entire California coast. About 110 groups have joined the “Oppose PXP Coalition.” The growing opposition comes at a critical time, with politicians eyeing the coast for more drilling as a way to bolster battered budgets.
Royal Dutch Shell says it is investigating claims of a pipeline attack by a previously unknown militant group in the Niger Delta. A spokesman for Shell says the company is investigating its pipeline near Buguma. A series of text messages sent by a group calling itself the Niger Delta Reinforcement Team claimed it struck a pipeline operated by Shell's Nigerian subsidiary near there. A military spokesman in the region did not return a call for comment. Tensions in the oil-rich Niger delta remain high after the main militant group in the region broke a cease-fire with the government over a stalled amnesty program. Shell says another of its pipelines ruptured after being sabotaged Saturday.
The House has approved a measure allowing the government to borrow $1.9 trillion to pay its bills. The measure would raise the so-called debt limit to $14.3 trillion--more than $45,000 for every person living in the United States. Democrats provided every “yes” vote in the 217-212 tally just as Republicans had to supply votes when they controlled Congress and the White House. The massive increase in the debt is required because the government now has to borrow more than 40 cents of every dollar it spends because the recession has caused a slump in revenues at the same time spending has spiked. Passage of the bill would send it to President Barack Obama, who will sign it to avoid a first-ever, market-rattling default on U.S. obligations.
Congress has adopted new budget curbs to try to make it harder to run up the U.S. deficit with new tax cuts or federal benefit programs. The Democratic-backed plan would make it more difficult to permanently extend some tax cuts that expire at the end of this year and means that new revenues or spending cuts would have to “pay for” much of President Barack Obama's proposed jobs bill. The measure passed the House by a 233-187 vote. It attempts to curb the spiraling budget deficit by requiring spending increases or tax cuts to be “paid for” with cuts to other programs or tax increases. Obama will sign the rules into law as part of legislation to allow the government to increase its limit on issuing new debt by $1.9 trillion.
The government is cracking down on companies that advertise help for troubled homeowners but often turn out to be scam artists. The Federal Trade Commission is proposing to ban those foreclosure rescue services from collecting payment up front. Instead, they could only collect money if they were successful in providing help. Government officials say unscrupulous companies often charge upfront fees as high as $3,000 for help with loan modifications that rarely pay off. The government says it has filed charges against 28 companies, which often imitate government housing assistance programs.
A top Federal Reserve official says he's worried about the weakness of the economic recovery but doesn't think it will slip into another recession. William Dudley, president of the Federal Reserve Bank of New York, says in an interview with the Associated Press: “I think we do have a sustainable economic recovery.” But he adds: “I'm less confident how strong that recovery will be.” The odds that the economy will fall back into recession “are low, but not zero,” he says. To energize the recovery, the Fed has pledged to hold interest rates at record lows for an “extended period.” Dudley says that with unemployment high and factories operating well below capacity, the Fed can be “quite patient” before reversing course and raising rates.
Freddie Mac says rates on 30-year fixed mortgages rose slightly this week, inching above five percent. The average rate on a 30-year fixed mortgage was 5.01 percent this week, up from 4.98 percent last week. Last year at this time, the average rate for a 30-year fixed mortgage was 5.25 percent. Rates fell to a record low of 4.71 percent set in early December. They've been held around five percent by a Federal Reserve program to pump $1.25 trillion into mortgage-backed securities to try to keep rates low and make home buying more affordable. That program is set to end March 31st.
U.S. Supreme Court Justice Clarence Thomas says corporations and unions have a first amendment right to spend money on political candidates. Thomas spoke to law students in Florida and defended the Supreme Court's recent decision that corporations and unions could spend freely from their treasuries to run political ads for or against specific candidates. Thomas made his remarks at Stetson University. Thomas voted with the majority last month in the 5-4 decision. The ruling earned a public scolding from President Obama during his State of the Union address last week. The New York Times reports that Thomas told Stetson students he wasn't there to hear Obama's remarks in person because State of the Union speeches have become so partisan.
Last year Southwest Airlines shrank for the first time ever. Now the CEO says it could rebound with record revenue in 2010. Gary Kelly said that the nation's biggest discount airline had strong bookings for February and March. Kelly said 2010 will easily top last year in sales and could even beat 2008's record of $11 billion. He gave some of the credit to Southwest's heavily advertised bags-fly-free policy. Southwest reported that January traffic rose 7.1 percent from a year ago.