Tuesday PM September 28th, 2010
by: Ed Mayberry, September 28, 2010 10:09:00 pm
A federal judge says he will not block the combination of United Airlines and Continental Airlines on antitrust grounds. A group of travelers had sued in San Francisco, claiming the deal would raise fares. They asked Judge Richard Seeborg to stop the deal from closing until a jury can hear their claims. But the judge's ruling says the travelers have not shown that they personally would be harmed enough to stop the deal from moving forward. The Justice Department has already said it has no antitrust objections to the deal. The airlines have said they expect it to close by Friday.
A monthly survey shows consumer confidence in September dropped to its lowest point since February as Americans' worries about jobs escalated. The report raises more concerns about the economic recovery. The Conference Board says its consumer confidence index now stands at 48.5, down from a revised 53.2 in August. Economists surveyed by Thomson Reuters were expecting 52.5. The reading marked the lowest point since February's 46.4. It takes a reading of 90 to indicate a healthy economy. Economists watch confidence closely because consumer spending accounts for about 70 percent of U.S. economic activity and is critical to a strong rebound. The index is based on a random survey mailed to 5,000 households from September 1st to September 21st.
Home prices rose in July for the fourth straight month, but many cities are bracing for declines in the year ahead. The Standard & Poor's/Case-Shiller 20-city home price index increased 0.6 percent in July from June and 3.2 percent from a year ago. Twelve cities showed monthly price gains. Cleveland's prices were flat. However, seven cities showed month-over-month declines and the gains in many cities were weaker from the previous month. The boost from government tax credits for homebuyers is fading. A record number of foreclosures, job concerns and weak demand from buyers suggest price declines are coming in the months ahead. Nationally, prices have risen almost seven percent from their April 2009 bottom. But they remain nearly 28 percent below their July 2006 peak.
A business group's survey says CEOs aren't quite as optimistic about sales growth now as they were in June, suggesting that plans to hire more workers may be on hold. The Business Roundtable, an association of CEOs of big U.S. companies, says two-thirds of the chief executives it surveyed in September expected sales to grow. That is down from 79 percent who said they expected sales growth in June. The September survey also shows only 31 percent of CEOs expect to boost their payrolls in the next six months. That is down from 39 percent who said in a June survey that they expected a bigger work force. The June percentage had been the highest level since mid-2007.
Toys r Us says it will hire about 45,000 employees to help with the holiday season, doubling its U.S. work force. The privately-held toy company says it is hiring more workers than in the past three holiday seasons because of an additional 600 smaller stores located in malls and shopping centers. Those “pop-up” stores are called Toys r Us Express. It also shows some optimism about holiday sales. Macy's last week said it was increasing seasonal hiring slightly this year to about 65,000 because it expects better holiday revenue than last year.
Census figures show the income gap between the richest and poorest Americans grew last year to its widest amount on record. Those making more than $100,000 each year received more than 49 percent of all income generated. Those below the poverty line earned just a 3.4 percent share. The wealthiest five percent of Americans added slightly to their annual incomes, while families at the $50,000 median level slipped lower.
The recession took a dramatic toll on marriage in America, new figures show, with those 18 and over who decided to wed in 2009 at the lowest ebb since the government began tracking the data over 100 years ago. A broad array of new census bureau data, documents the far-reaching impact of the business slump that experts say technically ended in June 2009: a surging demand for food stamps, far less homeownership and single people doubling up in housing to save money. The figures show that marriages fell to a record low level, with just 52 percent of adults 18 and over saying they were married, compared to 57 percent in 2000. Many young people struggled to find work and achieve economic independence.
A group of 47 House Democrats have broken ranks with President Barack Obama and Democratic leaders in Congress in calling for expiring tax cuts to be extended for investment income. The Democrats, led by Representative John Adler have sent a letter to House Speaker Nancy Pelosi saying they strongly support extending the current tax rates on capital gains and dividends. Tax cuts enacted in 2003 set the top tax rate on capital gains and dividends at 15 percent. Those tax cuts expire at the end of the year, and Obama wants to increase top tax rate on capital gains and dividends to 20 percent for individuals making more than $200,000 and married couples making more than $250,000.
The Senate is moving ahead with a stopgap spending bill to avoid a government shutdown at week's end. The legislation is needed because Congress has failed to pass any of the dozen annual bills required to fund agency budgets. The measure easily cleared its first hurdle by a 83-15 vote and is on track to pass the Senate Wednesday. The House should clear it for President Barack Obama's signature before the budget year ends at midnight Thursday. The measure would fund the government until early December. That buys time for Congress to act on unfinished agency budgets after the election. Lawmakers are keeping the measure free of extra spending sought by the White House earlier this month.
Tax legislation to punish U.S. firms that export jobs has failed in the Senate. The bill failed to reach the 60 votes required to advance. Democrats held the vote nonetheless to display their commitment to economic recovery just five weeks before the November 2nd midterm elections. Republicans called the vote a political ploy. The bill would have levied tax increases on U.S. companies that close domestic plants and open new ones overseas. The legislation would have also given companies that import jobs to the U.S. new tax breaks. All 435 House seats, 37 in the Senate and the Democratic majority in both houses are on the line November 2nd.
A Justice Department official says no settlement talks are taking place between the Obama administration and BP over fines for BP's massive Gulf of Mexico oil spill. The Justice Department official spoke on condition of anonymity because criminal and civil investigations are continuing. The justice official made the comment after Louisiana Republican Representative Steve Scalise said the two sides are talking in an effort to avoid a costly legal fight. Scalise told the Associated Press that members of his staff got information about discussions while working on oil spill-related legislation he is proposing.
The administrator of BP's $20 billion fund to compensate people harmed by the Gulf of Mexico oil spill says some whose claims were denied will get paid after all. Kenneth Feinberg says the Gulf coast claims facility expects many of the roughly 585 denied claims will become eligible for payment under new, more lenient procedures. Feinberg also says people who believe they have received far less than they deserve will get a review, and possibly another check. He says he wants to be generous and recognizes there have been some problems. Fishermen and business owners lost millions of dollars after the April 20th explosion of a BP-leased rig that killed 11 workers and allowed 206 million gallons of oil to escape from the company's well. Most went into the Gulf.
BP is planning to sell $2 billion to $3 billion in new bonds for the first time in more than a year. The move takes advantage of low interest rates and adds a fresh infusion of cash before incoming CEO Robert Dudley takes over on October 1st. Dudley is replacing Tony Hayward, who announced his departure in the wake of BP's massive oil spill in the Gulf of Mexico. BP spokesman Robert Wine said the sale is part of “routine Management” of the company's finances and not related to its handling of the Gulf spill. BP has said it will sell $30 billion in assets to cover the projected $32.2 billion cost of the spill. The last time BP issued bonds was a $2 billion sale in August 2009.
The Supreme Court is getting involved in an unusual Freedom of Information dispute over whether corporations may assert personal privacy interests to prevent the government from releasing documents about them. The court agreed to a request from the Obama administration to take up a case involving claims made by AT&T to keep secret the information gathered by the Federal Communications Commission during an investigation. The administration wants the high court to rule that corporations may not claim a personal privacy exception contained in the Freedom of Information Act.
A new poll indicates that citizens in many countries are divided on the merits of government stimulus programs. The BBC World Service poll finds that those in nations which have already spent heavily are more apt to express opposition to economic stimulus plans. The broadcaster says in its poll of more than 22,000 people in 22 countries that support for increased government spending to boost the economy ranged from a low of 30 percent to a high of 80 percent. In Germany, 66 percent of those surveyed were opposed to stimulus. The figure was 63 percent opposed in France and 58 percent in the United States. Debates over the effectiveness of the multibillion dollar measures have raged in all three countries.
A company with 100 years of history in central Illinois is moving its corporate headquarters to Texas. Company officials say Aventine Renewable Energy Holdings will keep its ethanol production in Pekin. But the Peoria Journal Star reports that 17 corporate jobs will move to Dallas, where the company's top executives live. Pekin Mayor Rusty Dunn calls the corporate move “disappointing,” but he says the company hopes to expand production in Pekin in the future. Aventine has its roots in a company called Illinois Sugar Refining, which started processing sugar beets in Pekin in the late 1890s.
Don't look for tax forms and instructions in your mailbox next year. The Internal Revenue Service has decided to stop mailing them because so many people now file electronically. The Washington Post reports on its website that the IRS expects to save about $10 million a year by eliminating mailing. More than 96 million people filed their returns through the IRS online service last year, and about 20 million filed paper returns through paid tax preparers. The IRS says only 11.5 million people who filed paper returns received forms in the mail. The agency says people who want to file paper returns will be able to obtain the forms from the IRS website or its offices as well as some libraries and post offices.