Monday PM February 22nd, 2010
by: Ed Mayberry, February 23, 2010 12:02:08 am
Continental Airlines is cutting about 600 jobs in its reservations centers because customers increasingly prefer to book flights online. Continental told employees the furloughs take effect April 11th. The airline says calls to the reservations centers are falling 15 percent per year as customers instead buy tickets from Web sites, including Continental.com. Continental also says it won't renew a contract to answer calls for Disney Resorts, which will result in about 100 of the 600 job losses. The airline says it will offer early-retirement packages including travel benefits to employees with at least ten years of service, and will offer severance payments to others losing their jobs. The Houston-based airline has about 2,600 U.S. reservations agents.
Oilfield services provider Schlumberger says it will acquire another major industry player, Smith International, for about $11 billion in stock. Schlumberger, based in Houston, struggled last year as the global recession weakened energy demand and discouraged drilling operations around the world. But prices have since rebounded.
A new study says health care costs for large employers will rise more than six percent this year, and more companies are thinking about revamping their benefits. The study from benefits consultant Towers Watson says this year's increase in the cost companies pay to administer health plans and pay claims is down slightly from 2009's seven percent hike. A total of 83 percent of companies surveyed say they have either revamped their health care strategy or expect to do so in the next two years. This can mean switching plan designs or increasing employee payments among other big changes. Towers Watson surveyed more than 500 employers from November through January. Each had more than 1,000 employees.
Superintendents at schools across Texas are facing more challenges in tough economic times. A consultant says typically there are about 150 superintendent vacancies a year among the state's 1,030 school districts. Mayo Neyland, with the Texas Association of School Boards Executive Search firm, also says smaller districts are usually where superintendents are developing, moving up and away. Bob Griggs of North Richland Hills is now is a search consultant after retiring in 1993 as superintendent of the Birdville district. Griggs says being a superintendent "is a difficult, difficult job, and some people just get worn out." The Fort Worth Star-Telegram reports national averages show it takes about five years for a successful new superintendent to turn around a troubled district. Urban superintendents are only around for an average of 3.5 years.
A new survey shows economists expect the recovery to remain "firmly on track" over the next two years, though job growth is likely to remain slow. The National Association for Business Economics sees regular job gains resuming this quarter. But the survey doesn't expect unemployment to drop below nine percent for another year. The survey was conducted before the government released the January unemployment rate this month, showing an unexpected drop in unemployment to 9.7 percent from ten percent. Economists predict consumer spending will be relatively sluggish as consumers continue to dig themselves out of debt. Inflation is expected to remain subdued, and home prices should rise at a rate slightly above inflation in 2010 and 2011.
Just days before Toyota's president faces U.S. lawmakers, internal documents from the automaker suggest the company put profits ahead of safety. Jeff Kingston of Japan's Temple University calls the papers handed over to Congressional investigators "damning." In the 2009 document, Toyota officials boasted a $100 million savings by getting the U.S. government to agree to a limited recall of floor mats in some Toyota and Lexus vehicles. It also cites millions of dollars in other savings by delaying safety regulations, avoiding defect investigations and slowing down other industry requirements. The Transportation Department calls the document "very telling" and promises to "hold Toyota's feet to the fire." Toyota president Akio Toyoda reportedly arrived in the U.S. over the weekend and appeared to be preparing to face a Congressional panel tomorrow. Toyota says it's "`first priority is the safety" of its customers.
A sweeping credit card law now in effect has been widely anticipated by consumers who believe banks have been taking advantage of them for too long. The law that President Barack Obama signed last May was supposed to prevent banks from using tactics that put borrowers deeper into debt. Yet, it still allows loans and cards with crushing terms. One reason is that card companies had nine months to prepare while certain rules were clarified by the Federal Reserve. One thing is certain, a cardholder's statement is going to contain an ugly truth: how much that card really costs to use. The consumer will now know how long it will take to pay off the balance. The law does allow banks to create new fees and raise old ones. It also permits some interest rate hikes with ample notification. But it shields card users from sudden hikes, excessive fees and other gimmicks that companies have used to drive up profits.
Students at Galena Park Middle School have won more than $80,000 in technology as part of the national HP Digital Assist education grant competition. The school's basketball-themed digital media project won first prize in December, demonstrating knowledge of math, science and reading through the creative use of technology and basketball. Honor Roll students are being congratulated by Aaron Brooks of the Houston Rockets in a pep rally tomorrow. The school has won 25 HP notebook computers, along with printers and a mobile storage cart. The multimedia department will make more videos and improve production of their yearbook, as well as their student—produced video "newscast" of school happenings.
The top Republican in the Senate says GOP lawmakers "may well" vote for a jobs bill, though it's not clear whether they will allow a Democratic measure to advance right away. But Republican Senator Mitch McConnell of Kentucky didn't commit his support to advance the legislation when interviewed on Fox News Sunday. He prefers a version drafted with GOP input. The pending measure would provide businesses that hire the unemployed a one-year break from payroll taxes and a $1,000 tax credit if those workers stay on the job for a full year. The tax breaks would cost about $13 billion. The measure would extend a tax break for small businesses buying new equipment, provide an additional $20 billion infusion of highway and transit money, and help states and local governments finance big public works projects.
President Obama's latest push for a health care overhaul could drive health plans nationwide into insolvency, an insurance trade group says. A plan released by the White House would give the federal government the power to regulate health insurers like a public utility. The Health and Human Services Department--in conjunction with state authorities--would be able to limit or deny substantial premium increases or demand rebates for consumers. But the Blue Cross and Blue Shield Association is warning against separating premium reviews from the responsibility of state regulators to make certain that health insurers have enough money to pay claims. A separation like that could lead to "multi-plan insolvencies," the association says.
The Obama administration is unveiling additional protections to ensure homeowners are treated fairly and consistently under its mortgage relief program. The policies, outlined in a draft Treasury Department document obtained by the Associated Press, would address long-standing complaints from housing counselors. They have cited cases of lenders continuing with foreclosures while homeowners were being evaluated for help. That practice would be banned under the new rules. Borrowers rejected from the program would also have 30 days to appeal the decision.
Short-term interest rates are inching lower in the bond market after a Federal Reserve official reiterated that record-low interest rates are still needed to help the economy. Federal Reserve Bank of San Francisco President Janet Yellen has become the latest Fed official in recent days to stress that the central bank isn't in any rush to boost borrowing costs for millions of Americans. The yield on the two-year note that matures in January 2012 is down at 0.89 percent from 0.93 percent late Friday and its price is up 2/32nd at 99 31/32nd. The yield on the ten-year treasury note maturing in February 2020, which is a basis for rates on mortgages and other consumer loans, is up to 3.79 percent from 3.78. Its price is down 5/32nd at 98 18/32nd.
As Wall Street looks to see more evidence of the economic recovery taking hold, it will hear first-hand from the nation's top central banker. Federal Reserve Chairman Ben Bernanke has two days of testimony on tap before lawmakers. Starting Wednesday, he'll be delivering his semi-annual testimony on the economic outlook. The Conference Board reports on consumer confidence tomorrow. Reports on sales of new and previously-owned homes are coming up, along with a revised estimate of fourth quarter economic growth.