Thursday PM August 19th, 2010
by: Ed Mayberry, August 19, 2010 9:08:00 pm
New applications for unemployment insurance reached the half-million mark last week for the first time since November, a sign that employers are cutting jobs again as the recovery slows. The Labor Department says initial claims for jobless benefits rose by 12,000 last week to 500,000, the fourth increase in the past five weeks. Wall Street economists forecast that claims would drop. The four-week average, a less volatile measure, rose by 8,000 to 482,500, the highest since December. A Labor Department analyst says there were no special factors that distorted the numbers. Jobless claims declined steadily last year from a peak of 651,000 in March 2009. Employers reduced layoffs and began hiring. But after flattening out earlier this year claims have begun to grow again.
President Barack Obama is urging Republican leaders to stop blocking the jobs bill stalled in Congress. Speaking at the White House, the president said there would be plenty of time for politics but that this issue should not fall victim to partisanship. Obama said that 60 percent of job losses are coming from small businesses, the sector that under a strong economy hires the most workers.
The Labor Department says the number of workers who died on the job fell by 17 percent last year to the lowest level in nearly two decades. The 4,340 workplace fatalities recorded in 2009 was the smallest total since the Bureau of Labor Statistics first began tracking the data in 1992. The agency says high unemployment and layoffs in more dangerous industries like construction played a major role in the decrease. Workers on average logged six percent fewer hours last year than in 2008. Employees in construction worked 17 percent fewer hours in 2009 than the previous year. The number of workers who died on the job in Texas last year rose 3.6 percent. The state had 480 workplace deaths in 2009, that's 17 more than the previous year. More than half, 256, died in transportation incidents or as a result of assaults and violent acts, the report shows.
A private research group says its gauge of future economic activity edged up in July, suggesting growth will be sluggish for the rest of the year. The Conference Board says its index of leading economic indicators rose 0.1 percent last month after dropping 0.3 percent in June. Economists polled by Thomson Reuters had expected a gain of 0.2 percent. The leading indicators gauge had risen sharply from spring 2009 through March of this year. It has flattened out since then. Businesses are no longer building up their stocks. Consumers are saving at higher rates and spending less.
Congress' budget analysts are estimating that this year's federal deficit will exceed $1.3 trillion, slightly below last year's total but still a huge ocean of red ink. The nonpartisan Congressional Budget Office said the enormous shortfall is a result of the still staggering economy, which has meant lower federal revenues plus extra government spending aimed at prodding growth. But the Budget Office sees this year as a turnaround. It expects federal revenue to grow slightly and government spending to fall off a bit--both reversals of recent trends. The analysts also see the deficit falling steadily over the next few years. But that assumes that big tax cuts that will soon expire don't get renewed.
Mortgage rates fell to the lowest level in decades for the eighth time in nine weeks, a sign that investors are concerned about the weak economy. Mortgage buyer Freddie Mac says the average rate for 30-year fixed loans this week was 4.42 percent, down from 4.44 percent last week. That's the lowest since Freddie Mac began tracking rates in 1971. The average rate on 15-year fixed loans dropped to 3.9 percent, down from 3.92 percent last week and the lowest on records dating back to 1991. Rates have fallen since spring as investors sought the safety of Treasury bonds, lowering their yield. Mortgage rates tend to track those yields.
The owner of the Deepwater Horizon rig is accusing BP of withholding critical evidence needed to identify the cause of the worst maritime oil spill in history. In a sternly worded letter obtained by the Associated Press, Transocean says that lack of information is preventing the company from informing state and federal investigators, and the families of those killed on the rig, about what happened. According to the rig's owner, BP appears to be preventing any other entity from investigating the blowout. Transocean also reveals that it reluctantly signed a confidentiality agreement at BP's request to obtain some limited data. BP didn't immediately return calls for comment.
The government now says the final plugging of BP's blown-out Gulf well will begin sometime after Labor Day. Jeffrey Carter, an aide to the government's spill chief, tells the Associated Press that the plan is to replace a failed piece of equipment called the blowout preventer first. Then BP will finish drilling a relief well it can use to plug up the blown-out well with mud and cement from the bottom. Carter says that if everything goes as planned, the final plugging will begin after September 6th. He says the decision on the path forward was made overnight, just hours after retired Coast Guard Admiral Thad Allen told reporters he wasn't giving a timeline.
Scientists are reporting the first conclusive evidence of a deep underwater oil plume from the BP spill in the Gulf of Mexico. But don't go looking for it. It's invisible. A team from Woods Hole Oceanographic Institution in Massachusetts mapped a 22-mile-long mist of oil with special instruments that look for the chemical signature of oil. Scientists say the most troubling thing is that it's not degrading very fast. That means it could be a long-lasting threat for marine life deep in the ocean. The work is published online in the journal Science.
BP's image, which took a beating after the Gulf oil spill, is recovering since the company capped the well. But the company's approval level is far from robust. A new AP-GFK poll suggests that BP's approval rating has risen to 33 percent, from 15 percent. But confidence in Gulf seafood has not increased. More than half of those surveyed say they're not sure yet that it's safe to eat.
The mother of an infant who died in June after repeated nasal and chest congestion, headaches and other symptoms consistent with chemical exposure is suing BP’s Texas City refinery. The family’s legal claims were added to a pending case in Galveston County. The lawsuit alleges the infant, who lived near the refinery, was affected by weeks of undisclosed chemical releases from the refinery.
Texas spent at least $250 million in the past year for medical care and imprisonment of illegal immigrants and other non-citizens. The House State Affairs Committee heard testimony in Austin. Lawmakers who convene in January could face a projected $18 billion budget shortfall. Jerry McGinty, with the Texas Department of Corrections, says prisons last month had 11,766 inmates who are foreign citizens and housing them costs $171 million annually. The federal government reimburses ten percent. Rick Allgeyer, with the Health and Human Services Commission, said that health care to illegal immigrants cost Texas nearly $100 million. Representative Pete Gallego of Alpine says there could be significant effects if public agencies were asked to reallocate resources to check citizenship.
Dallas businessman and former presidential candidate H. Ross Perot is donating $20 million to the University of Texas MD Anderson Cancer Center for research and design novel targeted therapies. The funds will be used to analyze genetic blueprints, pinpoint molecular biomarkers, develop targeted anti-cancer drugs and test new drugs in clinical trials, according to MD Anderson President John Mendelsohn. Perot founded Electronic Data Systems in 1962 and Perot Systems in 1988.
New Jersey Governor Chris Christie plans to sign a bill into law that would offer tax credits to encourage the development of renewable energy resources. The bill establishes an Offshore Wind Renewable Energy Certificate program and authorizes the Economic Development Authority to provide tax credits for qualified wind energy facilities. Sponsors of the measure say wind projects would create significant development and environmental benefits for the state. A state study released in June found wind energy would have little negative impact on New Jersey's environment.
Chip maker Intel says it has agreed to buy computer-security software maker McAfee for $7.68 billion. The per-share price represents a 60 percent premium over McAfee's Wednesday close of $29.93. Intel, which is based in Santa Clara, California, said the deal highlights “that security is now a fundamental component of online computing.” Both boards of directors have unanimously approved the deal. The deal still requires McAfee shareholder approval and regulatory clearances. McAfee is also based in Santa Clara.Earnings
Dell says its net income improved 16 percent in the most recent quarter. Dell's results offer a gauge of the economic recovery in the form of business spending on technology. Companies spent more on servers, storage and computers for employees in the quarter. That pushed earnings for the world's second-largest computer maker up to $545 million. Revenue rose 22 percent to $15.5 billion. Consumers spent about the same amount on PCs in May through July as they did a year ago. Dell's gross profit margin fell to 16.6 percent from 18.7 percent a year ago. That's the percentage of revenue left after subtracting the cost of making products. Prices remained high for some PC components in the quarter.