Monday PM April 28th, 2008

Percentage of vacant homes hits record high…United Airlines and US Airways in "advanced talks" as Continental rejects merger with United…IRS begins making direct deposits of tax rebates…

The Census Bureau says the percentage of vacant homes in the U.S. has hit a record high in the first quarter of this year. The report, released Monday, shows that 2.9 percent of U.S. homes–excluding rental properties–were vacant, compared with 2.8 percent in the fourth quarter of 2007. The West had the biggest gain in vacancy rates among homeowner, rising to seven percent in the January-March period from 6.5 percent in the fourth quarter of 2007. Vacancy rates fell in the Midwest and South, but rose in the Northeast.

Continental Airlines told its employees that now is not the time for the airline to combine with another carrier. Continental Chairman and CEO Larry Kellner said in a message to employees that the airline’s board met Sunday and agreed unanimously that it is not in the best interest of the airline to pursue a merger. There has been recent speculation that United Airlines and Continental might merge. Continental executives told employees that the risks of such a deal outweigh the potential rewards. The company says it will continue to review potential alliances and membership in Skyteam. Airlines have been considering consolidation as a way to cut costs as they face the strain of record fuel prices. Delta Air Lines announced earlier this month it is acquiring Northwest Airlines in a stock-swap deal. Mark Adams, a spokesman for Continental’s union pilots, said pilots were pleased that the company won’t pursue a merger, given the weak condition of other carriers. Continental and its regional subsidiaries operate about 3,100 daily flights. Continental has major hubs in Houston, Newark, New Jersey, and Cleveland.

United Airlines and US Airways are said to be in very advanced talks, expecting to announce within two weeks that they are combining. That’s the word from a person close to the negotiations speaking to the Associated Press. The two carriers stepped up their talks after Continental caught United off guard by deciding not to pursue a deal. The source asked not to be named because of the sensitive nature of the talks. The timing of any agreement remains hard to predict, and either side also could pursue an alliance instead or simply walk away from a deal, as Continental did.

About 800,000 taxpayers will have a little more money in their bank accounts by the end of the day today. The IRS began making direct deposits of tax rebates this morning. The government plans on 800,000 such transactions each day, today, tomorrow and Wednesday. After a break on Thursday, five million direct deposits will be made on Friday. The first paper checks will be mailed by the IRS on Friday, May 9th. The rebates, which are expected to reach 130 million households, include $600 for an individual and $1,200 per couple. Families with children will get $300 for each child. They are part of a $168 billion stimulus package that the administration hopes will spur consumer spending and revive the economy, and help Americans cope with rising gasoline and food prices, as well as aid a slumping economy. The Internal Revenue Service says all checks for those who filed tax returns on time are scheduled to be deposited or mailed by July 11th. President Bush announced last week that the rebates would go out a bit earlier than expected.

Hundreds of workers at Scotland’s only oil refinery are on strike, and that’s forced BP to shut a pipeline system that delivers a third of Britain’s North Sea oil. The pipeline brings in more than 700,000 barrels of oil a day, or between 30 and 35 percent of Britain’s total output. The main effect of the 48-hour walkout is likely to be felt by the British Treasury, which relies heavily on tax from oil production. It could also be felt at gas stations in Scotland, which are supplied by the refinery. Some Scottish gas stations had been limiting purchases in anticipation of the strike. Officials say it could take a week for the plant to return to production once the strike ends Tuesday.

The national average for gasoline prices has hit $3.60 a gallon. And oil futures have surged to a new record near $120 a barrel. The markets have reacted to news of labor actions overseas threatening crude supplies. AAA and the Oil Price Information Service report that gas rose 0.4 cent overnight to the new record. Prices are 66 cents higher than a year ago. Light, sweet crude for June delivery rose to a record $119.93 a barrel in electronic trading on the New York Mercantile Exchange overnight, but retreated from the high of the day.

General Motors says it will cut one shift at four North American factories that make pickup trucks and big sport utility vehicles, resulting in some layoffs. The world’s largest automaker said Monday the cuts are due to sagging sales, brought on by high gasoline prices and a housing industry downturn. GM says the cuts will affect pickup factories in Pontiac and Flint, Michigan, and Oshawa, Ontario, as well as the full-size SUV plant in Janesville, Wisconsin. The company says the cuts mean it will make about 88,000 fewer pickups and 50,000 fewer large SUVs this calendar year. GM says the number of layoffs will be worked out with its unions.

Published reports say Mars Incorporated and Warren Buffett’s Berkshire Hathaway are close to a deal to acquire the William Wrigley Junior Company for more than $22 billion. It’s a deal that could transform the candy industry. Mars is the maker of M&Ms, Snickers bars and other candy. Wrigley produces such gums as Extra, Eclipse, and Orbit. Buffett is already a candy owner in Sees candies. A deal could force other snack companies to merge to compete with the new confectionary giant.

This will be a busy week for those watching the latest turns for the economy. The Federal Reserve’s policymakers will meet Tuesday and Wednesday to decide whether to lower interest rates again and give an update on their assessment of the U.S. economy and financial system. It’s expected that the central bank will announce a reduction in interest rates on Wednesday. At the same time, many experts believe the Fed is nearing the end of this rate-reduction cycle. So, its statement will be mined for clues on that. On Friday, the Labor Department is to release the monthly jobs report. Analysts look for another contraction payrolls, and a rise in the unemployment rate.


Ed Mayberry

Ed Mayberry

News Anchor

Ed Mayberry has worked in radio since 1971, with much of his early career as a rock’n’roll disc jockey. He worked as part of a morning show team on album rock station KLBJ-FM, and later co-hosted a morning show at adult rock station KGSR, both in Austin. Ed also conducted...

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