Friday PM March 7th, 2008
by: Ed Mayberry, March 7, 2008 11:03:00 am
For the first time in nearly five years, the economy has suffered back-to-back monthly job losses. The Labor Department says employers cut payrolls by 63,000 jobs in February. That was the biggest loss in five years. Many private economists say the jobs numbers raise the likelihood that a recession is near, or has already begun. The same report says the unemployment rate fell to 4.8 percent. But that is because hundreds of thousands of people left the work force. The report was weaker than expected. Manufacturing, construction and retail trades were among sectors seeing job losses, while health care employment continued to expand.
However, the Texas Workforce Commission revised its December new job estimate to 100,100, after comparing payroll tax reports to its earlier employment estimates. The Houston area managed a four percent increase in jobs in 2007—up from the 2.7 percent original estimate. Houston's new jobs are growing three times faster than the U.S average, according to the Bureau of Labor Statistics. A third of the nation's new jobs between January 2007 and January 2008 were created in Texas.
The dollar continues losing ground to the Euro. The 15-nation Euro is now worth $1.54. That makes the dollar worth about €0.65. The British pound traded at almost $2.02, making the dollar worth just over £0.49. The dollar continues losing ground to the Japanese yen, falling to just under ¥101.
Consumers increased their borrowing in January, especially relying on credit cards to finance their purchases. A new report from the Federal Reserve says that consumer credit increased at an annual rate of 3.3 percent in January. That was up from a 1.8 percent growth rate in December and marked the fastest pace since November.
Retail gasoline prices reached record heights in Texas this week. The weekly AAA Texas Gas Price Survey shows regular self-serve is averaging $3.10 per gallon across the state. That's three cents higher than last week. Houston's average is up almost three cents to $3.08 per gallon. Nationally, the average is $3.19 per gallon, two cents higher than last week. Auto club spokeswoman Rose Rougeau says record-high crude oil prices continue to drive retail gas prices higher. The lowest local average in Texas is in San Antonio, where it increased four cents to a record of $3.07 per gallon. The highest average is in Texarkana, where the price rose four cents to a record $3.17 per gallon.
According to the RBC Cash Index, confidence in the economy sank to a mark of 33.1 in early March. That's down from the previous low of 48.5 just last month. The new reading is the worst since the index began in 2002. Worries about a possible recession, persistent problems in the housing and credit markets and lofty energy prices have apparently put people in a more gloomy mind-set. Economist Richard Yamarone says from homes, to grocery stores, to gas stations, "there's very little for the consumer to cheer about.'' Income strategist T.J. Marta says consumers are "definitely in full defensive mode.'' The RBC Cash Index is based on results of the international polling firm Ipsos. The latest readout comes at a time when the central bank and the government are taking action to boost the economy.
President Bush says that "it's clear our economy has slowed'' and urges taxpayers to spend the rebate checks due to them within months from a stimulus package. Bush spoke to reporters at the White House in a hastily arranged appearance timed to Friday's release of a gloomy government economic report. He says the long-term outlook for the economy is good. The president said, "our economy will prosper."
Bush's top economic adviser says it's possible that the nation's economic growth will be negative for the current quarter. Edward Lazear, chairman of the White House Council of Economic Advisers, told reporters at the White House that the president's team has definitely downgraded the forecast for this quarter. His assessment tracks with most economic analysts but is the most pessimistic heard out of the White House. Lazear says the White House predicts that jobs numbers will pick up by summer. He would not discuss whether the White House is predicting that the economy will actually fall into a recession. Some economists think it already has.
A judge has sentenced a Texas oil executive to two years in prison for approving the payment of millions of dollars in kickbacks to Saddam Hussein's Iraq regime so he could secure large oil shipments through a United Nations program. U.S. District Judge Denny Chin in Manhattan also fined David Chalmers $9 million. He sentenced Chalmers' companies, Bayoil USA and the Bahamas-based Bayoil Supply & Trading, to three years probation. Chalmers pleaded guilty in August to conspiracy to commit wire fraud. Without a deal with prosecutors, Chalmers could have faced more than 60 years in prison. The 53-year-old Houston man apologized in court, saying he carried "heavy, heavy guilt.''
Royal Dutch Shell has agreed to pay $89.5 million to settle a lawsuit by investors in the United States over its 2004 restatement of oil and natural gas reserves. Shell will also pay $28.3 million to European investors. Shell's restatement of its proven oil and gas reserve estimates in January 2004 led to regulatory fines and the departure of three top executives.
A former Duke Energy natural gas trader is paying a $55,000 fine as part of a settlement of civil claims for manipulation of prices. Michael Whitney is also barred for four years from registering as a futures trader. The Commodity Futures Trading Commission filed suit against Whitney in early 2005, accusing him of filing false natural gas price reports to industry publications to manipulate a price index. Duke's energy trading unit, which is now defunct, agreed to pay $28 million in 2003 to settle related allegations.
Lawmakers are questioning how three corporate executives were able to make millions while their companies took financial nosedives because of the subprime mortgage crisis. Angelo Mozilo of Countrywide Financial, Stanley O'Meal, formerly of Merrill Lynch, and Charles Prince, formerly of Citigroup, are appeared before the House Oversight and Government Reform Committee. All three companies have been major losers in the mortgage crisis. Committee Chairman Henry Waxman says it looks like the CEOs "hit the lottery'' when their companies collapsed. Mozilo, however, says his compensation and stock holdings declined last year, and that he won't get any bonuses for this year or last. O'Neal disputed reported of a multimillion-dollar severance package, saying he didn't get one when he left Merrill Lynch. Republicans are questioning the need for the hearing, saying the issues falls outside of the responsibilities of the committee.
Allstate Insurance filed a federal lawsuit alleging deception and coercion on the part of a Texas-based chiropractic company. It contends the defendants convinced car crash survivors that they had severe injuries requiring immediate treatment. Allstate had to cover the costs. The clinics are located in Texas, Ohio, Indiana and Alabama. The lawsuit filed in U.S. district court in Texas accused 66 defendants of participating in an insurance fraud scheme. The lead defendant is Arlington-based Chiropractic Strategies Group and its owner, Michael Kent Plambeck. Other defendants include related law office management companies, attorneys and telemarketers. Allstate seeks $10 million in the lawsuit, alleging violations of the Federal Racketeer Influenced and Corrupt Organizations Act. Plambeck did not immediately respond to a message left by the Associated Press on Thursday.