Thursday PM March 18th, 2010
by: Ed Mayberry, March 18, 2010 9:03:06 pm
The number of newly laid-off workers requesting jobless benefits fell slightly last week for the third straight week. But initial claims remain above levels that would signal net job gains. The Labor Department says new claims for unemployment insurance fell 5,000 to a seasonally adjusted 457,000. That nearly matched analysts' estimates of 455,000, according to Thomson Reuters. The four-week average, which smoothes out fluctuations, dropped to 471,250. Still, the average has increased by 30,000 since the start of this year. That's raised concerns among economists that persistent unemployment could weaken the recovery. The average is also far above the 400,000-to-425,000 level that many economists say claims must fall below before widespread new hiring is likely.
Consumer prices were flat last month, as the weak economy limits the ability of companies to charge more for goods and services. The Labor Department's report indicates there is little sign of inflation, which enables the Federal Reserve to keep the short-term interest rate it controls at a record low in an effort to revive the economy. A rise in food prices last month was offset by a drop in gasoline and other energy costs. Excluding volatile food and energy prices, the Labor Department says the core consumer price index rose by 0.1 percent in February. That matched analysts' estimates. Consumer prices rose 2.1 percent in the past year, down from January's 2.6 percent pace. The core index rose 1.3 percent in the past year, down from 1.6 percent in January.
A private research group says its gauge of future economic activity rose 0.1 percent in February, suggesting slow economic growth this summer. The gain in the Conference Board's index of leading economic indicators was the smallest increase in 11 months. It matched expectations of economists polled by Thomson Reuters. In January, the index increased 0.3 percent. The leading indicators index forecasts economic activity in the next three to six months based on a variety of economic data. Only four of the index's 10 indicators increased in February. Harsh winter weather, which cut down on the hours factory employees worked, and turbulent stock markets weighed on the index last month.
The current account trade deficit widened in the fourth quarter, reflecting an improving economy, but the imbalance for all of 2009 fell to the lowest point in eight years. Economists believe the deficit will increase in 2010 but not return to the record heights seen before the recession. The Commerce Department says the deficit in the October-December quarter jumped 12.9 percent to $115.6 billion, as imports of oil, autos and other foreign products outpaced the gains in U.S. exports. For the year, the deficit in the current account plunged by 40.5 percent to $419.9 billion, the smallest imbalance since 2001. Last year's deficit represented 2.9 percent of the total U.S. economy, the smallest percentage in 11 years.
Dallas-based Blockbuster is reportedly close to bankruptcy, with more than $700 million in debt. Wedbush Securities analyst Michael Pachter says Netflix has been hammering Blockbuster with online movies, and Redbox kiosks are omnipresent."The pace of kiosk installations is just mind-boggling. I mean, we've seen Redbox literally go from 3,000 boxes three or four years ago to 20,000 boxes at the end of '09. So you're going to pass, you know, six Redboxes before you get to a Blockbuster, and at a lower price. I think the future of Blockbuster is they're gone. I mean I really think that the public won't support a 5,000 square feet store with four employees. When the competitor is a, you know, dumb box sitting outside a Walmart or Albertson's it's a lot easier to go to."
Blockbuster says between last year's loses, cash flow problems and increasing competition, there's substantial doubt that it can continue as a going concern.
The Seton Family of Hospitals is eliminating about 150 positions in a budget-cutting move. Greg Hartman, president of University Medical Center Brackenridge, said that the positions include 74 that are vacant. The rest of the job cuts involve full-time and part-time workers. Hartman says the jobs being eliminated do not involve direct patient care. Seton began notifying managers February 10th about the cuts. Hartman says Seton's goal is to trim its budget by five percent. Hartman says Seton is the largest hospital system in central Texas, with a network of 31 facilities, and provided $281 million in charity care during 2008. Seton, with about 11,500 employees, serves an 11-county population of 1.8 million.
A Texas pipeline company has agreed to pay $450,000 in civil penalties for failing to prepare adequate plans for dealing with spills or other accidents at eight oil storage facilities in Iowa, Kansas and Nebraska. A news release from the Environmental Protection Agency says Nustar Pipeline Operating Partnership of San Antonio also agreed to spend $768,000 to install tank monitoring and alarm systems at several of its facilities. The consent decree was filed in U.S. District Court in Omaha. The Iowa facilities are in Lemars, Milford and Rock Rapids; the Kansas facilities are in Hutchinson and Salina; and the Nebraska facilities are in Columbus, Geneva and Norfolk. The EPA says the decree needs final approval by the district court.
President Barack Obama has signed into law a package of tax breaks and spending designed to give the nation a jobs boost. In a sunny rose garden ceremony, Obama said the legislation will help the private sector start hiring again. It is the first of several jobs measures promised by Democrats this year. Obama called it essential but "but by no means enough." The legislation includes about $18 billion in tax breaks and $20 billion into highway and transit programs. There's plenty of skepticism that the new law will do much to actually create jobs. Optimistic estimates predict the tax break could generate perhaps 250,000 jobs through the end of the year, but that would be just a sliver of the 8.4 million jobs lost since the start of the recession.
Federal regulators have hit American Airlines with $300,000 in new penalties over maintenance issues. The Federal Aviation Administration said American's mechanics put off maintenance last year on a part designed to ensure that pilots get accurate readings on speed. The FAA said mechanics noted problems with a dashboard light on a McDonnell Douglas MD-82, then discovered the next day that a part called a pitot probe heater wasn't working. Pitot probes measure an aircraft's speed and are equipped with heaters to prevent freezing up during flight. The FAA says the plane should have been limited to daytime flying in good weather, but American used it on five flights in violation of federal rules. The airline has 30 days to appeal.
Continental Airlines has asked regulators for an exemption from new rules to punish airlines for long tarmac delays. Houston-based Continental says construction at New York's Kennedy Airport will slow operations at two other nearby airports. Continental joined a growing list of carriers asking not to be punished if they violate a new government rule limiting how long passengers can be delayed on the tarmac. JetBlue and Delta asked for exemptions from the rule last week, and Fort Worth-based American joined them on Tuesday. Those are the three biggest operators at Kennedy Airport, where the Federal Aviation Administration predicts delays will average up to 50 minutes during runway construction this spring. Continental's hub in the New York area is at Liberty International Airport in Newark, New Jersey.
Hewlett Packard has reached a settlement with three companies that have been accused of infringing on the printer company's patents for ink cartridges. HP filed a complaint with the U.S. International Trade Commission in September, seeking to ban imports of ink cartridges by 11 companies. Two of those companies have agreed to stop the imports and paid HP an undisclosed sum. HP expects to reach a similar agreement with a third. A fourth company has asked an administrative law judge to end the commission's investigation after agreeing to cease importing these ink cartridges. A default judgment was entered against the remaining seven companies.
The government has given millions of dollars in bonuses to its bank regulators. The payments are detailed in payroll data released to the Associated Press under the Freedom of Information Act. They are the latest evidence of the government's false sense of security during the go-go days of the financial boom. The regulators received taxpayer-funded bonuses despite missing or ignoring signs that the system was about to melt down. The bonuses were part of a reward program little known outside the government. Some government regulators have received tens of thousands of dollars in perks, boosting their salaries by almost 25 percent. Often, though, the rewards have amounted to just a few hundred dollars for employees who came up with good ideas.
Canadian Prime Minister Stephen Harper is urging G-20 nations to keep trade markets open and continue with stimulus measures as senior bureaucrats of the nations work to lay out the agenda for June's economic summit in Toronto. Harper told the negotiators at the start of meetings in Ottawa that they can't lose sight that the recovery from the recent global recession is by no means fully assured. Harper says too many citizens of the G-20 are still feeling the recession's impacts. But Harper says it also behooves them to talk about how stimulus measures will be balanced with exit strategies. The G-20, or group of 20, is an international body that meets to discuss economic issues. Its members--19 countries with some of the world's biggest industrial and emerging economies, plus the European Union--represent about 90 percent of the world's gross national product, 80 percent of world trade and two-thirds of the global population. Harper says the theme of the June 26th-27th summit will be "recovery and new beginnings."
Mortgage rates held below the five percent threshold for the third straight week as the Federal Reserve prepares to end a program that has kept rates near record lows. The mortgage finance company Freddie Mac said the average rate on a 30-year fixed rate mortgage edged up to 4.96 percent this week from 4.95 percent a week earlier. Rates dropped to a record low of 4.71 percent in December and have hovered around five percent since, kept down by the Fed's $1.25 trillion program to buy up mortgage securities issued by Freddie Mac and sibling company Fannie Mae. The Fed said this week that this program would end on March 31st, as expected. But some analysts fear that once the program ends, mortgage rates could rise.
Metro-Goldwyn-Mayer is up for sale again, and offers are due Friday. Six companies made nonbinding bids in January for MGM, which owns the rights to 4,100 movies and TV shows. The studio also has a stake in future James Bond and "Hobbit" films. Now MGM is preparing to receive binding acquisition offers. It is unclear how many suitors are still interested. Time Warner, Lions Gate Entertainment and billionaire Len Blavatnik's Access Industries are expected to make bids. None are expected to be more than $2 billion. That would be bitter for the lenders that financed the purchase of MGM for $5 billion in 2005 and now essentially control the company. Equity holders in MGM, such as Sony and Comcast, have already written off their investments.
The government is announcing a recall of some 1.2 million high chairs, saying they pose a fall hazard to children. The Consumer Product Safety Commission announced the voluntary recall involving a high chair made by Graco Children's Products of Atlanta. The regulatory agency says "screws holding the front legs of the high chair can loosen and fall out," and says cracking plastic brackets can cause the high chair to "tip over unexpectedly." Tip-overs have resulted in 24 reports of injuries including bumps and bruises to the head, a hairline fracture to the arm, and cuts, bumps and bruises and scratches to the body.
What will the wealthy do without their caviar? A leading conservation group says sturgeon species such as the beluga are being pushed to the brink of extinction by overfishing and environmental degradation. The International Union for Conservation of Nature says a complete ban on fishing in the Caspian Sea and elsewhere may be the only way to save the ancient species prized for its eggs, known as caviar. IUCN has assessed 18 types of sturgeon for its latest red list of endangered species and found all of them are threatened. One participating scientist, Ellen Pikitch of the Institute for Ocean Conservation Science at Stony Brook in New York, said that a total trade ban lasting several decades would allow sturgeon stocks to recover.