New claims for jobless benefits increased last week, reflecting continued weakness in the labor market in the New Year. The Labor Department says first-time requests for unemployment insurance jumped to a seasonally adjusted 524,000 in the week ending January 10th, from an upwardly revised figure of 470,000 the previous week. Analysts expected 500,000 new claims. A Labor Department analyst says the increase is partly due to a flood of requests from newly-laid off people who delayed filing claims over the holidays.
Another huge plunge in energy costs sent wholesale inflation down for a fifth straight month in December, closing out a year in which prices dropped by the largest amount in seven years. The Labor Department said that wholesale prices fell by 1.9 per cent in December, close to the 2 per cent decline that economists had expected. For the year, the government says wholesale prices fell by 0.9 per cent, the first annual decline since prices had fallen by 1.6 per cent in 2001. That was also a year in which the country was in a recession.
CenterPoint Energy is decreasing the gas cost adjustment portion of Houston-area natural gas bills by ten per cent beginning in February. The adjustment lowers the average residential winter gas bill by about ten per cent. A bill that was $134.64 in January will be $121.53 next month. Much of the natural gas purchased for this season was bought last summer, when prices were at record highs. But gas prices have dropped dramatically. The new lower rates reflect a blend of the current lower wholesale natural gas prices and last summer’s record prices.
More than 2.3 million American homeowners faced foreclosure last year, marking an 81 per cent increase from 2007. And the worst is likely yet to come as consumers grapple with layoffs, shrinking investment portfolios and falling home prices. Foreclosure-listing firm Realtytrac says more than 860,000 properties were repossessed by lenders in the U.S. last year, which was more than double last year’s level. Research firm Moody’s economy.com predicts the number of homes lost to foreclosure is likely to rise by another 18 per cent this year before tapering off slightly through 2011. Houston ranked 51 in the top 100 metro areas, with about 1.5 per cent of its homes—31,981 properties—in foreclosure. That’s up 28.4 per cent from 2007. The four states with the highest foreclosure rates last year were Nevada, Florida, Arizona and California.
Venezuelan President Hugo Chavez nationalized foreign-run oilfields a couple of years ago, as oil prices climbed to record highs. But he’s now seeking new bids from oil companies, according to Bloomberg News. His government has been hurt by lower oil prices. The News York Times reports Venezuela is seeking bids from Chevron, Shell and Total for new projects. Those three companies stayed in Venezuela when Chavez initiated tax and royalty increases and nationalization of joint ventures. ExxonMobil and Houston-based ConocoPhillips left and filed for arbitration. An auction began October 30th, with 47 companies expressing interest.
An oil industry report says America’s demand for crude fell to its lowest level since 2003 last year. For all of 2008, U.S. petroleum deliveries — a measure of demand — fell six per cent to 19.4 million barrels a day, according to a report released by the American Petroleum Institute, the industry’s trade association. Record high oil prices to start 2008 and an ailing economy at the end of the year combined to sharply curtail energy consumption. In addition, API says, U.S. crude oil production last year dropped below five million barrels a day for the first time since 1946, largely from lower Alaskan output and disruptions caused by Hurricanes Gustav and Ike.
Texans paid more for gasoline for a second consecutive week following a long run of falling prices. AAA Texas reported the average retail price of a gallon of gas reached $1.66–a three-cent jump from last week. The cost of gasoline across Texas is still 13 cents less than the national average. AAA Texas also says gasoline statewide is about $1.25 lower than a year ago. Amarillo continues to have the most expensive gasoline in Texas at an average $1.71 per gallon. The cheapest gas can be found in Corpus Christi, where prices are about $1.61 a gallon.
More details are emerging about President-elect Barack Obama’s economic stimulus plan, which now has a price tag of $825 billion. House Democrats have been working closely with Obama aides on the measure. It calls for about $550 billion in federal spending and $275 billion in tax cuts over the next two years. The package aims to revive the economy, and emphasizes outlays on energy, education, health care and highway construction that would create jobs. The measure is one of two key elements in Obama’s economic plan. He’s also urging lawmakers to clear the way for the remaining $350 billion in the financial bailout fund.
The Treasury Department has finally released the rules that small banks will need to follow if they want help from the government’s $700 billion financial rescue program. The department is giving them until February 13th to submit their requests for money. The new rules cover roughly 2,500 banks that are organized as “S” corporations under the tax code. Those banks have had to wait to seek financial support until the government was able to draw up the rules under which they could apply. And that delay has caused some grief in the banking community. The treasury rules provide for government support in the form of loans at an interest rate of 7.7 per cent, until the fifth year, when the rate balloons to 13.8 per cent.
The Federal Reserve says commercial banks and investment firms scaled back borrowing over the past week from its emergency lending program. The Fed report says commercial banks averaged $69.1 billion in daily borrowing over the week ending Wednesday. That was down from $87.9 billion in average daily borrowing logged over the week that ended January 7th. Investment firms drew $33.7 billion over the past week. That compared with an average of nearly $36 billion the previous week. This category includes any loans that were made to the U.S.- and London-based broker-dealer subsidiaries of Goldman Sachs, Morgan Stanley and Merrill Lynch.
The Treasury Department is finally releasing the rules that small banks will need to follow to seek support from the government’s $700 billion financial rescue program. The department says the roughly 2,500 banks that are organized as s corporations will have until February 13th to submit their requests for money. Those banks have had to wait to seek financial support until the government was able to draw up the rules under which they could apply. Congress passed the rescue program in early October to deal with the most serious financial crisis to hit the country since the 1930s.
The federal government is considering a fresh multibillion-dollar aid package for Bank of America to help it absorb losses at Merrill Lynch. A person with knowledge of the discussions says the new aid package could be modeled along the lines of the financial lifeline that was thrown to Citigroup in November. The person spoke on condition of anonymity because of the sensitive nature of the discussions. The Citigroup rescue involved a fresh capital infusion and government backing of billions in risky assets held by the bank. Bank of America has received a total of $25 billion in capital injections from the Treasury Department’s $700 billion bailout. That includes $10 billion for Merrill Lynch, which Bank of America bought in a deal that closes January 1st.
Russia’s prime minister is proposing that European gas consumers form a consortium to buy the so-called “technical gas” used to push Russian natural gas through Ukraine’s pipelines to Europe. The proposal by Vladimir Putin comes in the second week of an acrimonious dispute that has kept Russian gas from European consumers since January 7th. Millions of people and thousands of businesses, mostly in Eastern Europe, have been affected. Putin’s spokesman Dmitry Peskov told reporters in a conference call that Ukraine would ultimately be responsible for paying for this technical gas but that prices have not been discussed. Russia’s demand that Ukraine pay $450 per 1,000 cubic meters of gas–more than twice what it paid last year — is one of the key issues in the dispute.
Pursuing the dream of a college education is hard. Paying for it is getting even harder. As the slumping economy forces states to slash spending, students can expect the sharpest increases in years. Final prices will not be set until state budgets are finished in the coming months, but the trend is clear. In California, the governor’s proposed budget would raise university fees around ten per cent. Florida’s governor is trying to give several state schools more power to raise prices. Other states have passed unusual mid-year increases, including a whopping 14 per cent increase in New York. College budget cuts may also mean larger classes or fewer admission slots. Some private universities are trying to hold the line. But four in five American college students attend public schools.
NASA Johnson Space Center Director Michael Coats receives the Bay Area Houston Economic Partnership 2009 Quasar Award for Economic Development tomorrow evening in a banquet at the South Shore Harbour Resort and Conference Center in League City. Its for contributions to the economic wealth and diversity of the Bay Area Houston region.
Kroger is opening its largest location in Fort Bend County tomorrow — a new Kroger Signature store on State Highway 6 in Missouri City. And a new HEB opens January 21st in Missouri City. The HEB Sienna Market is also on Highway 6.