A real estate group says sales of existing homes took an unexpected plunge from December to January, falling to the lowest level in nearly 12 years as buyers waited for the government to boost the U.S. housing market. The National Association of Realtors said that sales of existing homes fell 5.3 per cent to an annual rate of 4.49 million last month, from 4.74 million units in December. It was the weakest showing since July 1997. Sales had been expected to rise to an annual pace of 4.79 million units, according to Thomson Reuters. The median sales price plunged to $170,300–down 14.8 per cent from $199,800 a year earlier. That was the lowest price since March 2003 and the second-largest drop on record.
President Barack Obama has a commerce secretary–again. The president named Gary Locke to the post. He’s a former Washington governor, a Democrat and a Chinese-American. It’s Obama’s third time filling the position. His two previous selections dropped out before the Senate had a chance to confirm them. They were Democratic Governor Bill Richardson of New Mexico and Republican Senator Judd Gregg of New Hampshire.
Vice President Joe Biden says the economic stimulus program aims to “drop-kick” the economy out of its deep recession. The vice president vows he’ll make sure the $787 billion “gets out the door quickly and wisely.” He’s been meeting with top members of President Obama’s cabinet to discuss the plan. Biden also warns that he’ll use “the moral approbation” of his office to make sure the stimulus money is put to good use. He says the measure is meant to create jobs and rebuild the infrastructure. During his speech to Congress last night, President Obama said Biden would be keeping an eye on how the stimulus money is spent.
After stagnating under the Bush administration, domestic programs could soon be flush with federal money. Congress’ Democratic leadership is moving to pass a $410 billion spending bill that would boost spending for domestic government agencies by eight per cent on average. That’s on top of the $787 billion stimulus package that already won the president’s signature. As President Obama prepares to give Congress an outline of his 2010 budget, the House is taking up the bill that includes a 21 per cent boost for a program that feeds infants and poor women and a ten per cent hike for Section 8 housing vouchers for the poor. The measure is expected to sail through Congress. Taxpayers for Common Sense, a budget watchdog group, counted nearly 8,600 pet projects totaling $7.7 billion inserted into the legislation. House Republican leaders have attacked the bill as excessive, especially on the heels of the giant stimulus package.
The Treasury Department says the nation’s biggest banks are being granted immediate access to further support from the government’s $700 billion financial rescue fund. Treasury officials say the new support will be provided through the government’s purchase of preferred shares of the bank stock. Those shares can be converted into common shares of bank stock, a change in the rescue program designed to give financial markets greater confidence. The Treasury Department also provided details of how a new stress test will function to ensure banks have enough capital to survive a downturn that would be even more severe than the current recession.
Federal Reserve Chairman Ben Bernanke is again spurning speculation that the government may nationalize Citigroup or other big banks. When asked about Citigroup by the House Financial Services Committee, Bernanke said nationalization “is when the government seizes the bank and zeros out its shareholders,” adding, “we don’t plan anything like that.” But Bernanke says it is possible the government could end up with a much bigger ownership stake in Citigroup or other banks. In the case of Citigroup, Bernanke said “we’ll see how their test works out and what evolves.” he was referring to new “stress tests” that regulators will start conducting on the biggest banks to judge whether they can hold up if the recession were to worsen.
The government says the number of mass layoffs sharply increased last month as employers cut payrolls in the face of a deepening recession. The Labor Department says mass layoffs, or job cuts of 50 or more by a single employer, increased to 2,227 in January–up by almost 50 per cent from the same month last year. The department says more than 235,000 workers were fired due to January’s cuts. Companies from a wide range of sectors announced thousands of layoffs last month, including Home Depot, Boeing, Pfizer and Caterpillar.
Executives of the biggest oil companies are telling Congress that expanded drilling off the Atlantic and Pacific coasts will produce needed oil and gas and generate thousands of jobs. Shell Oil President Marvin Odum says oil will remain a major source of energy in the coming decades and be a transition to other energy sources. Odum told the House Natural Resources Committee that development of the country’s offshore oil and gas will produce jobs and help in the economic recovery. An executive from Irving-based ExxonMobil estimates 76,000 jobs would be created from new drilling in areas that until recently have been under a Congressional drilling ban. Critics argue it will take years before new leases would be issued and any oil would be produced from waters that have been off-limits. They argue drilling would have little impact on short-term economic recovery.
Top executives of Chrysler met with members of the Obama administration’s Auto Task Force, discussing requests for billions in new loans to keep the troubled automaker afloat. Chrysler Chairman and CEO Bob Nardelli, Vice Chairman Tom Lasorda and Chief Financial Officer Ron Kolka met with the administration panel, said a Chrysler official, who spoke on condition of anonymity because the talks were private. Struggling to survive, Chrysler and General Motors have received $17.4 billion in federal loans. They are seeking an additional $21.6 billion to keep operating during a difficult recession and a major plunge in auto sales. Auburn Hills, Michigan-based Chrysler has received $4 billion in loans and wants another $5 billion in federal aid and the approval of an alliance with Italian automaker Fiat Spa. The company said in a February 17th progress report to the Obama administration that it needed the loans to stave off a liquidation of the company. The automaker lost $8 billion last year. President Obama’s Auto Task Force is trying to restructure GM and Chrysler by March 31st. If GM and Chrysler fail to make a convincing case, the administration could pull the loans and essentially force the companies into bankruptcy protection. Obama, in his speech to Congress on Tuesday, said, “years of bad decision-making and a global recession have pushed our automakers to the brink” and the U.S. should not “protect them from their own bad practices.” But he said the administration was “committed to the goal of a retooled, re-imagined auto industry that can compete and win. Millions of jobs depend on it. Scores of communities depend on it. And I believe the nation that invented the automobile cannot walk away from it.” Members of the task force, led by Treasury Department advisers Steven Rattner and Ron Bloom, met with lawmakers and suppliers earlier in the week and are expected to meet with GM executives on Thursday. General Motors has said it could run out of money by the end of March and needs $2 billion in March and another $2.6 billion in April to stay in business.
The Small Business Administration is closing its Business Assistance Center tomorrow. The SBA opened the assistance center in the Houston SCORE Chapter office on South Gessner in September following Hurricane Ike.
Dallas-based AT&T says Houston businesses are better-prepared by disasters than in 2007. The study says 82 per cent of Houston companies have a business continuity plan—up from 78 per cent last year. Thirty-five per cent also require vendors to have a plan in place.
A pilots union says it’s preparing to disrupt the operations of American Airlines, but will stop short of a strike if it can’t get a new contract. Union leaders declined to say exactly what they might do, other than to say they would wait until federal mediators declare negotiations at a standstill. The Associated Press reports that could take months. Officials at Fort Worth-based American say they’re “fully committed” to negotiations led by federal mediators. They blamed union leaders for the lack of progress on a new contract. The Allied Pilots Association opened negotiations by seeking raises of more than 50 per cent over several years. American responded that its labor costs are higher than other U.S. airlines, but the company has not made a counterproposal on wages, according to the union.
The San Antonio Express-News announced that it’ll cut its staff by 15 per cent. It also says it’ll leave dozens of jobs unfilled as the newspaper battles the slump that has pummeled it and other daily newspapers across the country. Publisher Thomas Stephenson says wage and hiring freezes, buyouts and smaller job cuts haven’t been enough to offset the continuing revenue shortfall at the Hearst-owned newspaper. He says the paper now will eliminate 135 jobs and leave 30 open positions unfilled. Editor Robert Rivard says 75 of those positions will be eliminated from the newsroom March 20th. Stephenson says the Express-News also will make changes to its press runs, move all downtown San Antonio workers to its headquarters near the Alamo, and change its health and benefits packages to reduce costs.
CenterPoint Energy reports a 19 per cent drop in fourth-quarter net income. Th Houston energy provider blames igher transmission costs and impacts from Hurricane Ike. CenterPoint reports net income of $87 million on revenue of $2.8 billion. That compares with $108 million on revenue of $2.6 billion for the same period in 2007.
KBR, a former Halliburton subsidiary, says its fourth-quarter profit climbed 24 per cent, helped by strong results from most of its divisions, including its government and infrastructure and services units. Earnings increased to $88 million from $71 million a year ago. Results included a charge of 12 cents per share related to the resolution of a government investigation. Earlier this month, KBR pleaded guilty to bribing Nigerian officials to obtain contracts valued at more than $6 billion. Houston-based KBR, an engineering and construction services company, says revenue rose 42 per cent to $3.39 billion. Analysts had forecast revenue of $2.96 billion.