President Barack Obama says the United States remains in a deep recession that will take considerable time to escape. Obama met at the White House with his top administration officials to hear an update on his $787 billion spending plan. Obama says he is not satisfied with progress and told his cabinet that administration leaders need to push ahead. He said he wants to speed up the flow of stimulus money to help stem high unemployment. Obama also said he wants small business owners to see new customers, and that families need to be able to pay bills and young people find jobs. Vice President Joe Biden said that federal spending is on pace to add 600,000 jobs this summer and the country will be on the road to recovery by autumn.
The White House is defending the overly optimistic economic models it used to justify the historic stimulus plan. Four months after the stimulus was passed, unemployment is far higher than expected and continuing to rise. It’s even higher than the White House predicted it would have been without the stimulus. Vice President Biden’s top economic adviser, Jared Bernstein, says that when the forecast was issued, figures were not yet complete on how bad the economy was during the last three months of 2008. But Bernstein says that doesn’t call into question the model that Obama is using to promise the creation or saving of 3.5 million jobs.
President Barack Obama is promising to deliver more than 600,000 jobs through his $787 billion stimulus plan this summer, with federal agencies pumping billions into public works projects, schools and summer youth programs. Many of the stimulus projects that Obama said will save or create jobs this summer already were in the works at military bases and airports, on roads and in school districts. Obama is promising an accelerated pace of federal stimulus spending this summer designed to boost the nation’s ailing economy and produce jobs. The president’s announcement comes days after the government reported that the number of unemployed people continues to rise, and the unemployment rate now is at 9.4 per cent, the highest in more than 25 years. Senator John Cornyn of Texas is critical of government spending and says what’s needed are real, well-paying jobs and a curb on spending.
The Conference Board’s Employment Trends Index is up 0.2 per cent from 89.7 in April, according to the Houston Business Journal. A senior economist at the board says it’s too early to say that the index has bottomed out, but the moderation of the past two months is a sign that the decline in job losses is real. The Conference Board uses data from surveys, Department of Labor, Bureau of Labor Statistics, Federal Reserve Board and Bureau of Economic Analysis.
Seasonal hiring picked up this spring, according to the Associated Press’ monthly analysis of the economic pain in more than 3,100 U.S. counties. The latest results of the AP’s economic stress index show the free fall that marked the autumn of 2008 and winter of 2009 gave way in April to a more controlled descent, possibly even a bottom. Still, the analysis found that pain remains high compared with year-ago levels. The AP calculates a score from one to 100 based on each county’s rate of unemployment, foreclosure and bankruptcy, with lower numbers indicating less economic pain. The average stress index score dipped to 9.7 in April, from 10.3 in March. In April 2008, the national average was 5.9.
The International Air Transport Association says the airline industry is expected to lose $9 billion this year. IATA says the figure is nearly double the association’s March estimate of $4.7 billion. The group has also revised its loss estimate for last year to $10.4 billion from $8.5 billion. IATA represents 230 airline companies worldwide. The group’s chief says “the ground has shifted” with the global economic meltdown. He told IATA’s annual meeting in Malaysia that the airline industry’s future depends on a “drastic reshaping” of the way it does business. IATA says revenues will decline an unprecedented 15 per cent from $528 billion in 2008 to $448 billion in 2009.
American Airlines this week will test fuel-saving measures on a Paris-to-Miami flight that the carrier and federal officials hope will help make the case for a new navigation system. Thursday’s flight will take a direct route guided by global-positioning technology instead of staying within the usual jetliner highways. It will also ascend and descend more gradually and use other measures, some of which are already becoming standard, such as taxiing out to the runway on one engine instead of two. American said it will be the first U.S. carrier to test the full range of fuel-saving and emissions-reducing tactics on a trans-Atlantic route. The test is being conducted with the Federal Aviation Administration.
State officials are urging Texans to participate in the 2010 census to ensure that Texas gets its fair share of federal money. Communities are organizing “complete count committees” to urge residents to participate. Historically, Texas has been plagued by undercounting, which could cost the state millions of dollars for health care, schools and immunizations. Counties along the border tend to be the most under-counted, which short changes communities that most need federal aid. To help ensure better counts, the U.S. Census Bureau will do more follow-up visits to homes and allow people to respond via surveys and the Web in the upcoming count.
An independent commission has found that the Defense Department failed to provide adequate oversight over tens of billions of dollars in contracts to support military operations in Iraq and Afghanistan. The report to Congress comes from the Wartime Contracting Commission, which was directed to investigate waste and fraud in wartime spending. The bipartisan commission found that U.S. reliance on private sector employees has grown to “unprecedented proportions.” But it also found that the government has no central database of who all these contractors are, what they do or how much they’re paid. The commission cites concerns with a massive support contract known as “Logcap” that provides troops with essential services, including housing, meals, mail delivery and laundry. Houston-based KBR is the primary Logcap contractor in Iraq and has been paid nearly $32 billion since 2001. The commission says billions of dollars of that was wasted due to poorly defined work orders, inadequate oversight and contractor inefficiencies. In one example, defense auditors challenged KBR after it billed the government for $100 million in costs for private security even though the contract prohibited the use of for-hire guards. KBR has defended its performance and criticized the commission for making “biased” statements against the company.
About 800,000 service members move each year–nearly half during the summer. Moving is a ritual repeated nearly every three years on average for military families. It’s also one that military spouses say could be made easier. They’re asking Congress to let military spouses opt to claim the same state of residence as their wives or husbands, who are allowed by law to keep their original residency as they relocate. They say that option would prevent many hassles associated with every move, such as obtaining a new driver’s license and reregistering to vote. In some cases, it would eliminate the need for couples to file separate tax returns, and lower the income taxes that some spouses pay. Army spouse Rebecca Poynter says she first realized the discrepancy when she moved from McKinney to Fort Meade, Maryland, with a major corporation. Her income tax went from zero to ten per cent, so she brought home $500 less a month even though her overall pay remained the same.
The Texas subsidiary of the company at the heart of this year’s salmonella outbreak has filed for bankruptcy. Plainview Peanut–a subsidiary of Peanut Corporation of America–filed for Chapter 7 last month in Lynchburg, Virginia. That’s the same court where the parent company filed for liquidation protection three months ago. The shuttered Texas plant was fined a record $14.6 million by the state in April over alleged violations that include unsanitary conditions and product contamination. The plant in Plainview, about 300 miles northwest of Dallas, voluntarily closed February 9th. The national outbreak sickened more than 600 people, may have caused nine deaths and led to one of the largest product recalls in U.S. history.
The co-owner of a Texas business that hired out mentally disabled workers as laborers in turkey processing plants in Iowa says the firm didn’t violate labor laws. Henry’s Turkey Service is a subsidiary of Hill Country Farms of Goldthwaite. It employed and cared for dozens of men who worked at an eastern Iowa meatpacking facility. Iowa state investigators removed 21 mentally disabled men from a dilapidated bunkhouse at the facility and doled out $900,000 in fines to Hill Country Farms for alleged labor-law violations. Kenneth Henry tells the Dallas Morning News the payroll deductions were legal. He says the men needed round-the-clock care and also rejected criticism they were treated as slaves. Federal investigators–including the U.S. Justice Department, FBI and U.S. Labor Department–have since seized company records. Henry thinks the documents will clear his business. He says “people think that we got rich out of this deal, but we haven’t.”
Houston-based Indigo Minerals is acquiring producing properties, undeveloped acreage and other midstream assets from Oklahoma City-based Chesapeake Energy for $218 million, according to the Houston Business Journal.
A Texas company wants to more than double the size of a central Illinois wind farm and hopes to start work on the project next year. Horizon Wind Energy already has 240 turbines in its Twin Groves wind farm, near Bloomington. The Houston-based company says those turbines can generate enough power for about 120,000 homes. The expansion would add about 250 more turbines in the same area. The company is planning a series of meetings this week so landowners and others can hear details about the project. Horizon plans to ask McLean County for a permit this summer to start building.
Supreme Court Justice Ruth Bader Ginsburg has temporarily delayed Chrysler’s sale to Fiat. Ginsburg says in an order that the sale is “stayed pending further order.” The action indicates that the delay may only be temporary. Chrysler has said a delay could scuttle the deal. A federal appeals court in New York had earlier approved the sale, but gave opponents until 4 p.m. this afternoon to try to get the Supreme Court to intervene. Ginsburg issued her order just before 4 p.m., when Chrysler would have been free to complete the sale of most of its assets to Fiat. Ginsburg could decide on her own whether to extend the delay or ask the full court to decide. It is unclear when she or the court will act.
For dealers on Chrysler’s “hit list,” the last days of selling Dodge, Jeep and Chrysler vehicles have been filled with quick sales at deep discounts. Along with them have come sad goodbyes from longtime customers and feelings of dismay and anger toward the automaker they worked with for years. Chrysler maintains that the franchises singled out for termination were chosen because they weren’t profitable, didn’t have all of the automaker’s three brands under one roof, or were located too close to another Chrysler dealer. But the dealers argued in court that a smaller dealer base won’t save the company any substantial money. They say the dealers cover their own costs, paying for everything from the vehicles on their lots to employees, advertising and tools. Viva Chrysler-Jeep-Dodge in El Paso is among the lucky ones. It sells all three of Chrysler’s brands and escaped death. Finance Manager Jay Welsh says news of financial trouble with Chrysler and the upcoming terminations of other dealerships has done little to deter new car buyers. Welsh sold between 55 and 65 cars a month in April and May, compared with an average of about 25 cars a month in January, February and March. He says a few buyers have questioned the viability of warranties, while others have been looking for “fire sale” prices that the dealership has yet to offer.
General Motors says it will stop making medium-duty trucks by July 31st because it was unable to find a buyer for the operations. The company says in a statement that it will wind down production of the Chevrolet Kodiak and GMC Topkick trucks after searching for a buyer for four years. Both trucks are built at the Flint, Michigan, assembly plant, which also builds the Chevrolet Silverado and GMC Sierra pickups. The factory employs about 2,100 people, with most of its production in pickups. Last year it made more than 22,000 medium-duty trucks for GM and Isuzu, and almost 73,000 pickups. Medium-duty trucks normally are built for commercial use such as dump trucks.
A Senate committee plans to question two members of the White House’s Auto Task Force about using taxpayer money to restructure General Motors and Chrysler. The Senate Banking Committee will hear from Ron Bloom, a senior adviser to the Auto Task Force, and Edward Montgomery, who serves as the Obama administration’s Director of Recovery for Auto Communities and Workers. The Wednesday hearing was announced by Chairman Christopher Dodd, a Connecticut Democrat. The session will review the use of funds from the Troubled Asset Relief Program, or TARP, to help the auto companies and whether taxpayers will receive a return on their investment. Republican members of the committee have questioned plans for the government to take a majority ownership of General Motors.
Some 45 top students from Houston Independent School District schools are participating in the Rice Summer Business Institute through June 19th. The program introduces students to the fundamentals of business and the financial markets at Rice University’s Jones School of Management. The institute engages students from low- to moderate-income communities in business, finance and energy. It has graduated more than 140 top high school juniors and seniors from ten feeder schools.
China is requiring personal computers sold in the country to carry software that blocks online pornography and other Web sites. Parents can also add their own sites to the blocking list. China, which has the world’s largest population of Internet users at more than 250 million, also has one of the world’s tightest controls over the Internet. The Chinese government routinely blocks political sites, especially ones it considers socially destabilizing. PC makers including Round Rock-based Dell did not immediately comment. The Wall Street Journal reports China’s Ministry of Industry and Information Technology sent computer makers a notice May 19th. It said PCs to be sold in China as of July 1st must be preloaded with the software. The program would either be installed on the hard drive or enclosed on a compact disc.
There’s not a lot for investors to monitor this week when it comes to fresh news on the economy. Tomorrow, there’s a report on wholesale inventories. Wednesday, the government releases the nation’s trade balance for April, as well as the Federal Reserve’s economic roundup. May retail sales are due from the Commerce Department on Thursday, along with new claims for unemployment benefits and business inventories.
McDonald’s says its same-store sales climbed 5.1 per cent in May, as the hamburger chain continued to prosper from budget-conscious consumers. The Oak Brook, Illinois-based company says U.S. same-store sales climbed 2.8 per cent, helped by classic menu items and its new McCafe espresso-based coffees. European same-store sales surged 7.6 per cent, while same-store sales for Asia Pacific, the Middle East and Africa rose 6.4 per cent. Same-store sales, or sales at stores open at least a year, are a key indicator of retailer performance because they measure growth at existing stores rather than newly opened ones.