Fire officials say it could be days before a spectacular fire at a large recycling warehouse near the Houston ship channel can be regarded as completely out. Houston Fire Assistant Chief Kevin Alexander says the compacted flammable materials inside the Amtech warehouse makes it difficult to get water to all smoldering materials. A pillar of black smoke was visible for miles after the three-alarm fire broke out about 5:30 a.m. on the eastern edge of Houston's Fifth Ward, east of downtown. The smoke prompted Houston school district officials to call off classes at nearby Pugh Elementary School for the day. The warehouse is filled with plastic, paper and cardboard. Reports from the scene say the roof of the warehouse and three walls collapsed. No injuries were reported.
The tally of newly laid-off Americans requesting jobless benefits fell for the third time in the past four weeks, fresh evidence that companies are cutting fewer jobs. The Labor Department says initial claims for unemployment insurance dropped last week by 24,000 to a seasonally adjusted 601,000. That's below analysts' estimates of 615,000. Continuing claims rose by 59,000 to 6.8 million, the highest on records dating to 1967. The department also revised last week's data, replacing what had been a drop of 15,000 with an increase of 6,000. That means continuing claims have risen to record levels for 19 straight weeks.
Companies reduced their business inventories more than expected in April as they worked to get stockpiles more in line with falling sales. The Commerce Department says businesses cut inventories 1.1 per cent in April, a bit more than the one per cent drop economists expected. The government also revised the March figure to a drop of 1.3 per cent, compared with the one per cent decline originally reported. Inventories have fallen for eight straight months, the longest stretch since there were 15 straight declines in 2001-2002, a period that covered the last recession.
Retail sales have risen by the largest amount in four months in May, as a rebound in demand at auto dealerships and gas stations helped to offset continued weakness at department stores. The Commerce Department said retail sales increased by 0.5 per cent last month, in line with economists' expectations. It was the largest increase since sales surged by 1.7 per cent in January following six straight declines. The May advance could be another signal that the worst of the recession is over. However, the all-important consumer sector is not expected to come roaring back, given all the troubles facing households as the country slogs through the worst recession in decades.
American households lost $1.33 trillion of their wealth in the first three months of the year as the recession took a bite out of stock portfolios and dragged down home prices. The Federal Reserve says household net worth fell to $50.38 trillion in the January-March quarter, the lowest level since the third quarter of 2004. The first-quarter figure marked a decline of 2.6 per cent, or $1.33 trillion, from the final quarter of 2008. Revised figures show that during the recession's deepest point in the October-December period, Americans' net worth fell by 8.6 per cent. Net worth represents total assets such as homes and checking accounts, minus liabilities like mortgages and credit card debt.
The number of U.S. households on the verge of losing their homes is still rising. At the same time, new figures show May's annual increase in foreclosure activity was the smallest in nearly three years. Realtytrac says foreclosure filings rose nearly 18 per cent in May compared with a year earlier. It was the smallest yearly gain since June 2006. The May figures were down six per cent decline from the previous month. Even so, foreclosures are expected to remain elevated this year and into next year. The weak job market has become the new driver in the foreclosure crisis. More than 321,000 households received at least one foreclosure-related notice in May. That means one in every 398 U.S. homes received a foreclosure filing last month.
Thousands of Americans who've kept up with their mortgages could still lose their homes because they let their homeowner association dues slide. The Associated Press reports condo and neighborhood associations may have the right to foreclose when dues aren't paid. Lacey Pilat of Irving lost her job catering corporate parties and then nearly lost her two-story house. The management company eventually agreed to let the family pay the debt over time. The Pilats cut a check for $600 in April that drained their checking account--but saved the house. They're slowly paying off the $1,200 debt. Many homeowner associations have turned the job of collecting member dues over to outside management companies. In Texas, foreclosure attempts initiated by homeowner associations in 19 counties are up 30 per cent from two years ago. That's according to Dallas-based foreclosure listing services. In the San Antonio area foreclosure actions by homeowner associations jumped to 170 in April--compared to 21 in April 2008. Details are from rexreport.com.
A survey sponsored by broadcasters says nearly 2.2 million households that rely on antennas for their TV reception are unprepared for the shutdown of analog TV signals on Friday. Research firm SmithGeiger surveyed 948 households that relied on antennas around the beginning of June and found that one in eight had not connected a digital TV or digital converter box. Those households stand to lose all major broadcasts channels Friday. Households that have all their sets connected to cable or satellite service are unaffected by the analog broadcast shutdown.
The CEO of Continental Airlines says his industry's current problems can be traced back to a drop in business traffic several months ago. With fewer business people flying, airlines had to cut fares to fill their seats with leisure travelers. Continental CEO Larry Kellner said the good news is that business travel turns on and off quickly. Kellner said Continental is working its corporate customers to increase travel “because clearly this is where we could also see a recovery much more quicker if we could get the business traffic back on the airplanes.” Kellner also said the current systems of airline regulation isn't working, and that Continental would consider consolidation with other carriers if industry leader Delta seems to be getting too strong.
The CEO of Southwest Airlines says June revenue looks weaker than May, and he doesn't yet see signs of a turnaround. “It's a very, very difficult time, and earnings are going to be very stressed until the economy changes,” Gary Kelly says. Revenue divided by capacity, a key measurement in the airline business, was weaker in June than in May, according to Kelly, although he didn't give any figures. The Dallas-based airline is responding by cutting unprofitable flights, adding fees for unaccompanied minors and pets, and offering incentives for employees to leave the airline.
Delta Air Lines will shave additional capacity later this year as it warns that more than $6 billion in benefits it expected from lower fuel prices, its merger with northwest airlines and previous capacity reductions will be overtaken by declining revenues. Executives at the world's largest airline operator told employees in a memo ahead of a presentation at an investor conference in New York that Delta will reduce system capacity by ten per cent this year compared to 2008. That’s up from Delta's previous plan to cut system capacity by six per cent to eight per cent. Delta also will reduce international capacity 15 per cent, up from a previous plan to cut it by ten per cent. Delta says capacity reductions will begin in September.
Lawmakers say they will try to force regional airlines to fix problems with pilot training and fatigue revealed by an investigation of the crash of a regional airliner in upstate New York in February. Congressman Jerry Costello, chairman of the House Transportation Committee's aviation subcommittee, told a hearing he's fed up with waiting for the Federal Aviation Administration and the airline industry on safety recommendations. He said he will try to force action through legislation. Safety officials have been urging the FAA to strengthen regulations on pilot hours for 19 years. The agency proposed a new regulation in the mid-1990s, but dropped the matter after it was unable reach agreement between pilot unions and industry.
A top adviser to President Barack Obama says global financial markets are starting to heal and the U.S. economy could begin to grow again late this year. But Paul Volcker says “a really strong recovery” seems unlikely. The former Fed chairman predicts “a long slog, with continuing high levels of unemployment.” Volcker cautioned that U.S. growth depends on stimulus spending. And he says “years of deficit spending far beyond past peacetime experience lie ahead.” Speaking at a conference of global bankers in China, Volcker also cautioned against “`heavy-handed and inflexible regulation.” He said there is “ample justification” for public anger at executive pay practices that were “wildly excessive” and encouraged risk-taking at the expense of stability, but warned against too much political involvement.
The Obama administration says executive compensation must be better managed to prevent the sort of risk-taking that jeopardizes the economy. Gene Sperling, who advises Treasury Secretary Timothy Geithner, said the administration does not want to impose caps on executive pay. But he also laid out for the House Financial Services Committee a list of guidelines calling on publicly-held companies to link compensation to long-term performance, not short-term gains. Sperling said in prepared testimony that the administration believes compensation practices “must be better aligned with long-term value and prudent risk management at all firms, and not just for the financial services industry.”
The nation's largest doctors group isn't sold on President Barack Obama's call for a public health plan and could be a hurdle to his reform efforts. Dr. Nancy Nielsen says the American Medical Association has “major concerns about government control over health care decisions.” Nielsen is president of the AMA, which Obama will address on Monday. Nielsen said the AMA wants a system that offers “affordable, high quality health insurance.” But she said reform of the private insurance market is likely the best way to achieve those goals. She stopped short of saying the ATA will lobby to block Obama's plan. Nielsen said the AMA wants to hear more details.
Bank of America CEO Kenneth Lewis says his bank decided to buy Merrill Lynch partly because it was pressured to do so by the Federal Reserve. Lewis says the Federal Reserve threatened to remove top executives at his bank if it reneged on its promise to acquire Merrill Lynch, despite Merrill Lynch's crumbling financial state. Lewis told a house committee that it concerned him that federal officials would make that threat to a bank in “good standing.” The panel is investigating claims that top government officials, including then-Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke, pressured Lewis and urged him to keep quiet about Merrill Lynch's financial problems.
ExxonMobil will partner with Transcanada to help build a pipeline capable of bringing natural Gas from Alaska to the lower 48 states. Irving-based Exxon and Transcanada announced the $30 billion project. Exxon will become an equity partner in Transcanada Alaska, but has not agreed to state licensing terms. State Senator Lesil McGuire of Anchorage says Exxon will make a $150 million capital investment in the company, which is licensed by Alaska to build a natural gas pipeline. Transcanada was awarded an exclusive state license sanctioning a pipeline with up to $500 million in incentives. Exxon controls more known reserves in Alaska's north slope than any other company. Houston-based ConocoPhillips and BP have been developing a competing pipeline project.
The Energy Department says it’s making $240 million available for research into more fuel-efficient large trucks and passenger vehicles. It also is providing about $11 million for nine projects looking into capturing carbon dioxide from coal plants and $49 million for two dozen solar technology projects. The awards come four days after President Barack Obama called for ramping up spending under his economic recovery plan. Nearly half of the spending is from the stimulus package. The rest is from normal department funds. The $240 million is for research aimed at improving the fuel efficiency of large trucks by 50 per cent and passengers cars by 25 to 40 per cent, depending on the type of fuel they use.
President Barack Obama's auto task force told lawmakers the government has no plans to pump more dollars into General Motors and Chrysler. They told the panel that the public has a “reasonable probability” of getting its money back. Task Force senior adviser Ron Bloom faced questions about the roughly $80 billion in federal aid to the car companies, their lending affiliates and suppliers. He said the Obama administration's efforts had given the automakers “a chance to become viable, competitive businesses with bright futures.” Senator Christopher Dodd said he wants the government's intervention to end as soon as possible.
General Motors says it is working on the next generation of its gas-electric mild hybrid system that will be more efficient than the one it is canceling in the Chevrolet Malibu and Saturn Aura. Company spokesman Terry Rhadigan says cars equipped with the current system weren't selling and inventory is backing up on dealer lots. Rhadigan says the new system will debut with new models in the summer of 2010. He would not identify which vehicles will get the new system. The current system costs almost $4,000 more than the conventional base model Malibu but gets only four miles more per gallon of gasoline. The hybrid system cuts off the engine when the car stops and uses an electric motor to help the gasoline engine get the car going again.
New crash tests on those fuel-efficient mini cars suggest that crash repairs can be an expensive proposition. The Insurance Institute for Highway Safety reports that repairing damage to micro-cars in low-speed crashes of three to six miles per hour could cost anywhere from $474 to $3,701. The institute conducted low-speed crash tests on the front and back bumpers and the front and rear corners of seven 2009 vehicles. The Kia Rio racked up the most damage in the four tests, averaging $2,705. The Smart ForTwo had the lowest average bill of $899. The other vehicles tested included the Hyundai Accent, the Honda Fit and the Toyota Yaris. Institute Senior Vice President Joe Nolan says such damages should cost less than the typical $500 deductible for a collision and that “anything $1,500 or higher is egregious.”
Kroger has recalled some store-brand chicken wings because of incorrect package labeling that could endanger people with certain allergies. The Cincinnati-based grocer says the 32-ounce bags of Kroger Fully cooked buffalo-style chicken wings may contain undeclared allergens such as wheat, soy and dairy. Those allergens could cause life-threatening allergic reactions in certain individuals. The recalled wings were sold at some Kroger stores in Texas and 16 other states.