Friday AM February 2nd, 2007
by: Ed Mayberry, February 2, 2007 5:02:00 am
The Labor Department says the number of Americans filing first-time claims for jobless benefits fell by 20,000 last week to 307,000. That's a bigger-than-expected drop, indicating the job market remains firm. The less-volatile four-week average for claims dropped to the lowest level in a year, also a positive sign. The department is scheduled to release the January unemployment report tomorrow morning.
Online job recruiting as measured by the Monster Employment Index snapped back a bit last month following a holiday dip. The index was up a point in January--to a level of 168—a much smaller increase than the one a year ago when the economy was expanding at a very rapid pace before cooling off in the second and third quarters. As a result, year-over-year growth rate dipped to 11.3 percent, although the index remains up on a year-over-year basis. Last month, 12 of the 20 industries and 5 of the 23 occupational categories tracked by the index showed increased online job availability.
The arrival of the New Year appears to have led to an increased number of job cut announcements. The outplacement firm Challenger, Gray and Christmas says employers announced plans to cut payrolls by nearly 63,000 jobs last month. The total is up 15 percent from December, but nearly 40 percent lower from January of a year ago. Planned reductions by telecom firms accounted for the biggest single sector of the January job-cut plans.
There are fresh signs showing the economy was growing in December. The Commerce Department says consumer spending rose seven-tenths of one percent, while personal incomes surged one-half of one percent. The government also says that the personal savings rate for all of 2006 was a negative one percent. That indicates that Americans were dipping into savings or borrowed more to finance their purchases. It is the lowest savings rate since 1933, during the Great Depression. The Commerce Department said that the economy expanded at an annual rate of three and a-half percent in the fourth quarter of last year.
Upbeat economic news helped push long-term mortgage rates to their highest levels in almost four months this week. Freddie Mac says the average for the 30-year fixed-rate mortgage stands at 6.34 percent--up nine basis points from last week. That's the highest since late October, when it was 6.4 percent. The 15-year loan, popular for refinancing, rose to 6.06 percent from 5.98 percent last week. Freddie Mac Vice President and Chief Economist Frank Nothaft says the increases came in a week when the government reported stronger-than-expected fourth-quarter economic growth and moderating inflation.
Valero Energy reported its fourth-quarter profit fell 15 percent to $1.1 billion. The San Antonio-based refiner attributes the decrease to last year's inflated margins from severe Gulf Coast hurricanes. Without the gain from its sale of its remaining interest in Valero Holdings, Valero would have earned $987 million for last year's final quarter. Valero Chairman and CEO Bill Klesse says despite cold weather in the northeast until recently, distillate margins are still good and preliminary gasoline demand was up in January. The company also says it's hired Deutsche Bank to help explore "strategic alternatives'' for its Lima, Ohio, refinery as it seeks to improve margins and returns. For the year, Valero reported a $5.5 billion profit. That's up 52 percent from the previous year.
Marathon Oil posted a 15 percent drop in fourth-quarter profits. The Houston-based oil producer and refiner cites lower natural gas prices, higher exploration expenses and a decline in refining margins. Net income came in at $1.079 billion. Adjusted for special items, earnings were $838 million. Revenue fell 18.8 percent to $13.99 billion.
Oil and gas producer Apache Corporation said its fourth-quarter profit plummeted 34 percent as natural gas prices dropped sharply. Net income fell to $519.4 million. Revenue slipped 6.2 percent to $1.97 billion. Earnings for 2006 dipped 2.7 percent to $2.55 billion. Full-year revenue rose 9.4 percent to 8.29 billion.
American Airlines says it's saved $500 million in two years by revamping its maintenance base in Tulsa, Oklahoma. The changes came with the support of the union. Fort Worth-based American aims to raise $175 million in revenue this year by working on other carrier's jets. The 2007 target includes work that American hopes to attract at Tulsa and maintenance bases in Fort Worth and Kansas City. Two years ago, the nation's largest carrier was considering closing at least one of the bases to save money. Instead, it struck a deal with the transport workers union to aim for $500 million in savings by the end of 2006 by improving efficiency at the Tulsa base. Changes included reducing the time it takes to service a jet, and lobbying other carriers to work on their planes. American says it did about $95 million in contract work last year. American and Rolls-Royce also operate a joint venture engine-overhaul business in Tulsa.
Texas insurance agents warn that another hurricane hit on the Gulf Coast would devastate the state's economy. The Independent Insurance Agents of Texas study, conducted by economist Ray Perryman, quantifies how the Texas economy is dependent on the state's port cities. The group says that although only a quarter of Texas residents live in coastal counties, they produce more than 30 percent of the state's annual economic output. IIAT represents more than 15,000 independent insurance agents in Texas.
More money could be on the way to help college students. The Bush administration is planning the largest Pell grant increase in three decades. According to the education secretary, the maximum grant would climb over five years to $5,400. That's nearly $1,400 more than the current top award, which hasn't changed in five years. The House already passed a spending bill this week that includes a Pell grant increase. The Senate is expected to go along with that. Each year, some five million low-income students receive Pell grants, which don't have to be paid back.
The government has launched a nationwide campaign to increase the use of the earned income tax credit. The credit is the government's largest cash assistance program targeted to low-income Americans. The Internal Revenue Service says many taxpayers are eligible for the credit but fail to claim it. To remedy that, officials on the federal, state and local levels of government are holding a series of events designed to make people aware that they may be able to claim the credit. A recent study from the Census Bureau says 4.6 million people2.4 million of them children--were lifted out of poverty in 2002, thanks to the earned income tax credit.
A new study suggests when it comes to family-oriented workplace policies, the U.S. lags far behind virtually all other wealthy countries. Researchers from Harvard and McGill Universities looked at such factors as maternity leave, paid sick days and support for breast-feeding. They concluded that workplace policies for U.S. families are weaker than those of all other high-income countries and many middle and low-income nations. Study author Jody Heymann says other countries are providing workplace protections that "Americans can only dream of.'' She notes that 65 other nations grant paid parental leave to fathers. The study also shows the U.S. is one of only five countries that don't guarantee some form of paid maternity leave.