Government says economy growing at strongest pace in a year…Study says some CEOs make as much in one day as average workers are paid in a year…Federal government hiring, especially in security and law enforcement…
The government says the economy grew during the spring at the strongest pace in more than a year. The Commerce Department reports that Gross Domestic Product, the broadest measure of economic health, expanded at an annual rate of four percent in the April-to-June quarter. That’s significantly higher than the 3.4 percent rate the government had initially estimated a month ago. Solid improvements in international trade and business investment helped offset continued weakness in housing. Still, concerns remain that the recent turmoil in financial markets could dampen economic activity in the second half of this year. If the turmoil persists, many analysts think the Fed will begin cutting interest rates.
Freddie Mac, the nation’s second-largest buyer and guarantor of home mortgages, says its second-quarter profit was down 45 percent. It recorded larger provisions on its books for bad loans. The deepening mortgage crisis nationwide has bankrupted more than 50 lenders.
H&R Block is casting fresh doubt on the pending sale of its troubled mortgage lending arm, working to renegotiate sales terms as credit markets continue to deteriorate. Chairman and CEO Mark Ernst says “the mortgage origination market is in the midst of the most severe dislocation it has seen in years, maybe the most severe since the 1930s.” His comment to analysts during a conference call came as the company announced its fiscal first-quarter results. The Kansas City-based company says if negotiations are successful, it will stop selling new loans through Option One Mortgage unit, have several closing requirements waived and try to get the buyer, a subsidiary of Cerberus Capital Management, to close before the current deadline of December 31st. Ernst says block will exit the mortgage business regardless of negotiations with Cerberus, but adds “when and how exactly that would happen is fairly fluid at the moment.”
A Nobel prize-winning economist says sub-prime mortgage woes could mean a prolonged economic downturn in the U.S. But Joseph Stiglitz says that’s not likely to translate into a recession. The former World Bank chief economist says rising defaults on U.S. sub-prime mortgages have increased risks to the economy, with a worsening housing slump, credit problems and turbulence in global financial markets. Stiglitz says the credit crunch was a “totally predictable disaster” due to President Bush’s economic policies in 2001. Bush cut taxes for the rich, slashed interest rates and encouraged people to borrow more than they could afford to stimulate the economy. Stiglitz says Bush “has mismanaged the economy very badly.”
The number of newly laid-off workers filing for unemployment benefits went up last week. The Labor Department says jobless claims rose to 334,000, an increase of 9,000 from the previous week. That caught analysts by surprise. They had been expecting a decline of around 2,000.
The federal government is hiring, especially in the area of security, according to a Partnership for Public Service report called “Where the Jobs Are: Mission Critical Opportunities for America.” The survey finds nearly 193,000 mission critical jobs need to be filled in the next two years, including 62,863 security- and law enforcement-related jobs such as border patrol agents, customs officers, immigration agents, food inspectors, criminal investigators and airport screeners. The report cites the need to replace retiring federal workers, with nearly one-third of the 1.6 million full-time federal workforce expected to retire or resign in the next five years.
A study compiled by the Institute for Policy Studies and United for a Fair Economy says large U.S. company chief executives make as much money in one day as average workers are paid over the entire year. The report “Executive Excess—the Staggering Social Cost of U.S. Business Leadership” says the private equity boom has pushed the pay ceiling further up. Top executives average $10.8 million in total compensation, or more than 364 times the pay of the average American worker, based on data from 386 Fortune 500 companies.
The executive search industry has maintained a positive outlook for the employment market, according to ExecuNet’s Recruiter Confidence Index. According to an August survey of 134 executives, 55 percent have confidence that the executive employment market will improve over the next six months. The search industry expects a double-digit increase in assignments received from clients in the net three months. ExecuNet President Mark Anderson says businesses outside of the financial services industry are not apprehensive about hiring top talent.
An alliance of environmental groups and landowners is wary of a high-voltage transmission line required for two proposed large wind energy projects on the south Texas coast on the Kenedy Ranch. A 21-mile power line is needed to connect the $1 billion project with 400-foot tall turbines to the state’s electrical grid. The Coastal Habitat Alliance is asking the Public Utility Commission to reject American Electric Power’s new line because of serious environmental and economic harm, asking for public hearings on the application to build the power line.
The 9th U.S. Circuit Court of Appeals has ordered the Federal Energy Regulatory Commission to re-examine evidence that electricity wholesalers such as Portland General Electric may have overcharged buyers in 2000 and 2001, according to The Oregonian. PGE was an Enron subsidiary at the time. Plaintiffs contend the market was manipulated. Enron was determined to have been gaming the California energy market then, driving up wholesale power prices. Earlier this year, PGE agreed to refund about $59 million for energy that it sold in California.
Houston-based Hines has sold the 25-story 919 Milam office building for just over $100 million to Chicago-based Transwestern Investment Company. The tower used to be called the Bank One building. Hines bought it in December 2005, and the name change happened after Bank One moved out of the building after being acquired by JPMorgan Chase.
The U.S. Department of Agriculture says one of the nation’s largest organic milk producers will have to reduce its herd under an agreement with the agency. The USDA says it will monitor operations at Aurora Organic Dairy’s plants in Dublin, Texas and Platteville, Colorado, for compliance during the next year. If the company doesn’t follow the agreement, the USDA said it could end the agreement and revoke the organic certification for the Platteville plant. Aurora Organic Dairy says it was already planning to reduce its herd and that its organic certifications have remained valid. The deal was reached following an investigation prompted by a complaint filed by a Wisconsin-based farm policy group that the dairy’s cows weren’t being grazed enough. The dairy says the complaint has been dropped because of the deal but USDA says that’s not the case. The agency says it can pull out of the deal at any time and that the complaint hasn’t been dismissed.
Toys “R” Us has recalled 27,000 crayon and paint sets made in China because the packaging of the wooden box contains lead, as does some watercolor paint. The Consumer Product Safety Commission says no injuries have been reported from the use of the Imaginarium wooden coloring cases. The case includes crayons, pastels, colored pencils, fiber pens, paintbrush, pencil, water colors, palette, white paint, ruler and pencil sharpener in a light tan wooden carrying case. The case measures about 14 inches high by 19 inches wide. Toys “R” Us sold the product nationwide since October 2006. Consumers are asked to take the products away from children and return them to the nearest Toys “R” Us store for store credit.
An Associated Press-Ipsos poll suggests most Americans believe there’s blame on both sides of the Pacific for the recent recalls of Chinese goods. Nearly two-thirds of those who responded heaped most of the responsibility for the tainted products onto Chinese companies. But, 75 percent also say the U.S. government bears some of fault. And some go even further, with 71 percent saying the American consumers’ insatiable appetite for cheap goods encourages shoddy standards to a certain degree. Almost two-thirds say the U.S. government isn’t doing enough to ensure Chinese products are safe. And while 75 percent say they feel at least somewhat confident about all products they purchase, whatever their source, only 41 percent said the same about Chinese items. Chinese imports to the U.S. totaled $288 billion last year, a figure surpassed by only Canadian products.
Whole Foods Market plans to add at least 200 jobs as it renovates Boulder-area stores gained through its acquisition of Colorado-based Wild Oats Markets. The additions will come by 2010. The Austin-based natural and organic grocer said it plans to keep open stores of both chains in Boulder–but will not open a Wild Oats store planned on 29th Street. It didn’t announce plans about other stores in the Rocky Mountain region. Whole Foods also reiterated its pledge to lower prices at Wild Oats Markets in Colorado, New Mexico, Kansas, Utah, Idaho and Kansas City. Whole Foods earlier this week closed its $565 million purchase of Wild Oats. The deal ended a months-long contentious battle with federal regulators who opposed the union on antitrust grounds.
Texas will receive $390,000 as part of a nationwide settlement with the maker of an implantable heart defibrillator. Attorney General Greg Abbott announced the settlement with Guidant. Abbott says the company marketed the device even after discovering and correcting a problem that could have caused it to fail. The nearly $17 million settlement with Guidant involves the defibrillator known as the Prizm. A defibrillator delivers a small jolt of electricity to shock the heart back into a normal rhythm. Texas is among about three dozen states benefiting from the settlement. Guidant also must extend its existing warranty program to allow purchasers to repair or replace their Prizms with a new device within six months.
Dell announced its preliminary second-quarter earnings jumped 46 percent on stronger sales of Enterprise products and services. Round Rock-based Dell also cited improved average selling prices and favorable component costs. The computer maker earned $733 million in the three months ending August 3rd. That compares with year-ago net income of $502 million. Sales rose slightly to $14.8 billion. The results beat the prediction of analysts polled by Thomson Financial. The report comes as Dell emerges from a yearlong internal investigation into accounting misconduct. Dell has said it will have to reduce more than four years worth of earnings by up to $150 million–for misleading auditors and manipulating results to meet performance.
Jewelry retailer Zale Corporation said it swung to a fourth-quarter profit after posting a loss a year ago. That loss had been related to store closings. This year, the Irving-based company reports a profit of $1.5 in the three months ended July 31st. Excluding one-time items, Zale’s second quarter earnings were break-even. Revenue fell by half a percentage point to just over $488 million. Same-store sales also fell by half a percentage point. Analysts polled by Thomson Financial, on average, forecast a loss of 13 cents per share on revenue of just over $483 million for the quarter. The earnings estimates typically do not include one-time items. For fiscal 2007, Zale reports earnings rose almost 11 percent to just over $59 million. Annual revenue was steady at nearly $2.44 billion.