Friday PM February 26th, 2010
by: Ed Mayberry, February 26, 2010 11:02:15 pm
Sales of previously occupied homes took a large drop for the second straight month in January, falling to the lowest level since summer. It was another sign the housing market's recovery is faltering. The National Association of Realtors says sales fell 7.2 percent to a seasonally adjusted annual rate of 5.05 million from a downwardly revised pace of 5.44 million in December. The results were far worse than forecast. Economists expected a slight increase to a rate of 5.5 million. The median sales price was $164,700, unchanged from a year earlier and down 3.4 percent from December.
Car sales in the Houston region experienced its biggest sales month in January since August 2008, with the exception of last August, when "Cash for Clunkers" provided a one-time boost. The latest TexAuto Facts published by InfoNation of Sugar Land says 23,674 new cars, trucks and SUVs were sold in the ten-county area. January sales were 30 percent higher than the monthly average last year. An increase in fleet sales is credited with some of the boost.
The economy rocketed ahead at a 5.9 percent pace at the end of 2009, stronger than first estimated. But the growth spurt isn't expected to carry over into this year. The Commerce Department's new reading was better than its initial estimate of 5.7 percent growth. Economists had predicted the updated reading would stay the same. Still, the upgrade didn't change the expectation of slower economic activity in the current quarter. Most of the fourth quarter's growth came from a burst of manufacturing--but not because consumer demand was especially strong. In fact, consumer spending weakened.
The House has voted to extend--for a month--a series of programs set to expire Sunday, including unemployment benefits and subsidies to help pay health premiums through the Cobra program. The bill passed the House on a voice vote Thursday evening and was sent to the Senate. It's a stopgap measure to continue existing programs while lawmakers decide how to address the issues long-term. The bill, which would cost about $10 billion, would extend highway funding and would spare doctors from a 21 percent cut in Medicare payments. It would extend a small business loan program and the copyright license used by satellite television providers.
Companies that pay workers "living wages" and offer generous benefits could gain an advantage in bidding on government contracts under a new policy the White House is considering. The policy, known as "high road" contracting, could draw the Obama administration into a larger debate over whether the government should use public purse strings to strengthen the middle class and promote higher labor standards. Business groups who oppose the plan say it would shut out smaller firms from competing for more than $500 billion a year in federal contracts and increase government procurement costs. The plan's advocates include unions and good-government groups. They say too many jobs financed by government contracts come with low wages and limited benefits and support companies that violate employment laws.
Federal bank regulators are fending off complaints from lawmakers and small business owners that overly strict directives to banks on holding capital and lending are keeping crucial credit from flowing. Martin Gruenberg, the number two official of the Federal Deposit Insurance Corporation, disputed contentions that agency examiners are discouraging banks from extending loans to small business and for commercial real estate. The FDIC gives banks "considerable flexibility" in decisions to extend loans, Gruenberg said. "We do not instruct banks to curtail prudently-managed lending activities." Federal Reserve Governor Elizabeth Duke said the central bank and other bank regulators have called on banks to meet the needs of creditworthy borrowers while practicing prudent lending.
The Port Commission of the Port of Houston Authority has awarded a $1.26 million contract to Houston-based Adobe Equipment for the purchase of 15 replacement yard tractors at Barbours Cut terminal. An Environmental Protection Agency grant will reimburse 25 per cent of the purchase and delivery cost of the more environmentally-friendly units. A grant from the Houston-Galveston Area Council Texas Emissions Reduction Plant fund will reimburse about 60 percent of the purchase.
Halliburton is transferring about 150 employees in Duncan, Oklahoma, to a research and development facility being built in Houston. The company began telling employees of its plans last week. Among the employees to be relocated from the company's former hometown are chemists and engineers. About 400 employees work at Halliburton's technology center in Duncan. Halliburton spokeswoman Diana Gabriel says the transfers are planned for 2012. She says Halliburton's new research and development facility in Houston will support about 2,200 employees. Halliburton was founded in 1919 and based in Duncan until 1961. Duncan Chamber of Commerce President Debra Burch says she's confident Halliburton will maintain a presence in the Stephens County town.
The state is investing $1.5 million through the Texas Enterprise Fund in Natura World for a manufacturing facility in Wichita Falls. Some 400 jobs will be created in the company's new U.S. headquarters. Natura World makes mattresses, pillows and bedding products using organic and gel components.
Dell is again postponing plans to close its North Carolina personal computer plant by three months thanks to an uptick in computer sales to businesses, governments and schools. The company told 400 workers they could keep their jobs until the end of July, the close of the company's second quarter. Dell announced last fall it would close the plant in January, then pushed the date back to April, and now to July. Spokesman David Frink said Dell cut its workforce from 900 last fall in anticipation of closing. The company quickly repaid local governments $26 million in incentives used to attract the plant that opened in 2005. Dell was offered more than $300 million in state and local incentives to choose a North Carolina site in 2004.
NASA's Johnson Space Center has added a $50,000 prize related to commercial space to the 2010 Rice Business Plan Competition. The Commercial Space Innovation Prize will recognize the team with the best business plan supporting the commercial space market in technology, service or products for sub-orbit, Earth-orbit or moon exploration. That can include sub-orbital microgravity entertainment and tourism flights using reusable launch vehicles, media participatory exploration, food and water innovations and medical support services. The prize brings NASA's contribution to the event to $110,000, which also includes its Earth/Space Engineering Innovation Prize and Earth/Space Life Science Innovation Award. The Rice Alliance for Technology and Entrepreneurship sponsors the annual competition, helping with early-stage funding of business ideas.
Interest rates are falling in the bond market after another surprisingly weak economic reading. The yield on the ten-year Treasury note that matures in February 2020 is down to 3.59 percent from 3.64 percent late Thursday. The ten-year yield is a benchmark for many consumer loans.
Banks borrowed less from the Federal Reserve's emergency lending program over the past week, another sign that strains on private credit markets are easing. Commercial banks averaged $13.96 billion in daily borrowing for the week that ended Wednesday, the Fed reported. That was down from $14.26 billion in average borrowing in the previous week. At the height of the financial crisis, discount window borrowing exceeded a daily average of $100 billion. The Fed last week boosted the interest rate it charges on discount window borrowing by a quarter-point to 0.75 percent as part of the central bank's efforts to unwind the exceptional support that had been provided during the financial crisis.
Fannie Mae is asking for a federal cash infusion of $15.3 billion after posting another big loss in the fourth quarter of last year. The mortgage finance company, seized by federal regulators in September 2008, lost $16.3 billion in the October-December period. That takes into account $1.2 billion in dividends paid to the Treasury Department. It compares with a loss of $25.2 billion, in the year-ago period. During the most recent quarter, Washington-based Fannie suffered $11.9 billion in credit losses and a $5 billion write-down for low income tax credit investments. The company has received about $60 billion so far from taxpayers. The new request will bring that total to more than $75 billion.
This is the last day for locking in college tuition and required fees at current rates for the state's public colleges. The Texas Tuition Promise Fund allows for pre-payment, with families able to buy up to six years worth of undergraduate education. The plan can also be used toward the cost of private or out-of-state schools. After today, the fund closes enrollment until September, when the program re-opens with contract prices based on college costs for the 2010-11 academic year.
The City of Galveston is hosting a workshop on the Disaster Recovery Rental Housing Rehabilitation Program on Saturday. It's at the McGuire-Dent Center on 28th Street in Galveston at noon tomorrow. Property owners who reside in Galveston are eligible.
A tax preparation workshop is set for Saturday morning at HCC Southeast Learning Hub on Rustic. The workshop is hosted by Congressman Gene Green and State Representative Carol Alvarado.
The number of rigs actively exploring for oil and natural gas in the U.S. rose by 28 this week to 1,373. Houston-based Baker Hughes says that 905 rigs were exploring for natural gas and 456 for oil. Twelve were listed as miscellaneous. A year ago this week, the rig count stood at 1,243. Texas gained 21 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.