Tuesday PM November 23rd, 2010
by: Ed Mayberry, November 23, 2010 9:11:00 pm
Businesses and other employers added jobs in 41 states in October, the best showing in five months, according to the Labor Department. The figures indicate the job market is picking up a bit in most parts of the country. Even the nation's hardest hit states—Nevada and Michigan--showed declines in their unemployment rates. But the gains weren't enough to broadly reduce unemployment rates. The Labor Department said the jobless rate fell last month in 19 states, remained the same in 17 and rose in 14. Unemployment can rise when jobs are created if more people begin searching for work. The nation's four worst-hit states all reported some positive developments, evidence that the economic downturn is loosening its grip. People who are not actively job hunting are not counted in the unemployment rate. They can range from those who don't want jobs, to those who are in school or have given up looking. Nationwide, employers added 151,000 jobs in October, while the unemployment rate was unchanged at 9.6 percent. Companies added the largest net gain in jobs in six months.
Sales of previously owned homes slipped slightly in October as the housing market continues to battle tough economic conditions including high unemployment and tight credit. The National Association of Realtors says that sales of previously owned homes dipped 2.2 percent last month to a seasonally adjusted annual rate of 4.43 million units. The median price for a home sold in October was $170,500, down 0.9 percent from a year ago, as prices continue to be depressed by weak sales conditions and a huge overhang of unsold homes. Sales had plunged to the slowest pace in 15 years in July and then posted gains in August and September before slipping back in October. Sales in October were 38.9 percent below their peak of 7.25 million units set in September 2005 during the height of the housing boom.
The economy grew slightly faster last summer than first thought, benefiting from stronger spending by U.S. shoppers and improved overseas sales of U.S. goods. The Commerce Department reports that gross domestic product increased at a 2.5 percent annual rate in the July-September quarter. That was better than the two percent pace initially estimated last month. More brisk spending by American consumers, especially on autos and other big-ticket goods, and stronger sales of U.S. exports to foreign customers were the main reasons for the upgrade. Still, the modest improvement isn't enough to drive down the 9.6 percent unemployment rate.
Federal Reserve officials have become more pessimistic in their economic outlook through next year and have lowered their forecast for growth. Fed officials say in an updated forecast that the economy will grow only 2.4 percent to 2.5 percent this year, down sharply from a previous projection of 3 percent to 3.5 percent. Next year, the economy will expand by three percent to 3.6 percent, down sharply from the previous forecast of 3.5 percent to 4.2 percent. The darker view helps explain why the Fed decided at its November 2nd-3rd meeting to launch another round of stimulus. The central bank plans to buy $600 billion in Treasury bonds over the next eight months in an effort to lower interest rates and spur more spending.
Federal Reserve policymakers clashed over the benefits and risks of launching a $600 billion program to rejuvenate the economy, but voted for it anyway, minutes of their closed-door deliberations show. Despite a near unanimous 10-1 vote in support of the program, the minutes from the November 3rd meeting show that some Fed officials had concerns about embarking on a second round of stimulus. Some officials thought the additional purchases of government debt would have limited effect in revving up the economy. Some also worried about risks--unleashing inflation or causing a destabilizing slide in the value of the U.S. dollar. In the end, Fed Chairman Ben Bernanke persuaded most of his colleagues to back the plan.
The number of banks on the Federal Deposit Insurance Corporation's confidential “problem” list grew over the summer even while the overall industry posted solid net income. The FDIC says its list of troubled banks rose to 860 in the July-September quarter from 829 in the previous quarter. At the same time, the FDIC says banks earned $14.5 billion during the third quarter. That was a decrease from the previous quarter's result of $21.4 billion, but well above the $2 billion banks earned a year earlier. The FDIC says banks set aside less money to cover future loan losses than at any time since the October-December quarter of 2007, before the financial crisis. Fewer borrowers were behind on payments for credit cards and construction loans.
The federal government now figures that oil dispersants did a better job of breaking up the BP oil spill in the Gulf of Mexico than it first calculated. A new analysis says the controversial chemicals helped break up about 32 million gallons of oil--about 16 percent of the spill. That's about twice as much as a federal team figured in August. Scientists say that is mostly due to the unusual method of injecting the chemicals so deep, about a mile down near the busted well. Study author Bill Lehr of the National Oceanic and Atmospheric Administration says injecting the chemicals a mile deep proved to be roughly four times more effective per gallon of oil as spraying the chemical on the ocean's surface.
Relatives of the 11 men killed in the Gulf say too much of the public focus has been on the spill rather than the lives lost. The families told the Associated Press they want detailed answers from the companies about exactly how their loved ones died in the April 20th environmental disaster. Families say they want accountability for negligence and have been left with only limited financial support. BP and its partners on the doomed Deepwater Horizon say they are not indifferent to the families' suffering. Rig owner Transocean has been paying dependents. It has long-term settlements with three families and set up a charitable fund that distributed $130,000 to all the families in July.
Dynegy says its stockholders are likely to reject a takeover bid from private equity firm Blackstone Group. Dynegy says the takeover agreement will end if shareholders reject the deal. Last week Dynegy's board accepted a sweetened $603 million takeover bid from Blackstone. But two prominent shareholders opposed the deal including financier Carl Icahn. Dynegy is asking interested third parties to contact the company or its financial advisers, Goldman Sachs and Greenhill.
President Barack Obama says the story of one rebounding auto plant in central Indiana represents the “hope and confidence” of a better economy even while millions are still unemployed and hurting. The president spoke at a Chrysler transmission plant that is back running at full capacity. The White House is aiming to change the unfavorable public perception of the government bailouts of ,strong>General Motors and Chrysler, with the automakers now on the upswing. The Chrysler bailout helped keep the company's Kokomo transmission plant open. Obama's Democratic party took a serious hit in elections earlier this month in Indiana.
Interior Secretary Ken Salazar says he wants to spur offshore wind projects in the Atlantic Ocean by expediting permits and identifying promising areas for wind power. At a speech in Baltimore, Salazar said he will institute a “smart permitting process” that could result in leases issued within two years, instead of approvals that take as long as seven years. Salazar said he and other federal officials will work with governors in 11 Atlantic Coast states to identify promising areas for wind development. If no serious problems are identified, leases could be issued late next year or in early 2012. Salazar said he hopes to pursue offshore wind power along the Atlantic Coast in the same way officials are pushing solar power in the Southwest.
Negotiators for the United States Postal Service and the American Postal Workers Union have agreed to extend contract talks until December 1st. It was the second extension on talks since the union's four-year contract expired on Saturday. Union spokesman Cliff Guffey says he remains hopeful the two sides can reach a settlement. Talks with a second union, the National Rural Letter Carriers Association, remain at an impasse and the matter is likely to be heard by a third-party arbitrator. Employees of both unions will continue to work under the terms of their expired contracts. The Postal Service lost $8.5 billion last year and wants more concessions on wages and benefits from the unions.
American Airlines and Indian carrier Kingfisher Airlines are planning a frequent flyer partnership and a deal that will allow them to sell tickets on each other's flights starting next year. The partnership requires approval by regulators. The initial phase of the deal will allow American to place its code on Kingfisher's domestic network beyond Delhi. American will also share codes on Kingfisher Airlines flights from London Heathrow to Delhi and Mumbai. Kingfisher Airlines will place its code on American's daily service between Delhi and Chicago O'Hare and on select American flights between the United States and London Heathrow. Members of American's AAdvantage and Kingfisher Airlines King Club frequent flyer programs will be able to earn miles on the codeshare flights. The two airlines are considering a more comprehensive frequent flyer agreement that will include the ability to earn and redeem miles across each airline's entire network.