Consumers were pulling back last month, while incomes suffered because of Hurricane Ike. The Commerce Department says consumer spending fell 0.3 per cent in September, marking the biggest drop since June of 2004. That follows flat showings in both July and August. Some of the slowdown was because of the impact of Hurricane Ike along the Gulf Coast. It reduced rental payments and earnings from businesses hurt by the damaging storm and what followed.
The government says that wages and benefits paid to U.S. workers rose by a moderate amount in the third quarter, matching analysts’ estimates. Incomes rose just 0.2 per cent in September, half the increase seen in August. The Labor Department reported that employment costs for civilian workers increased by a seasonally-adjusted 0.7 per cent for the June-September period–the same increase as the previous two quarters. The figure will likely reassure Federal Reserve policymakers that pay and benefits aren’t rising sharply enough to create inflation concerns.
Demand for executives is expected to soften in the months ahead, according to ExecuNet’s Recruiter Confidence Index. According to the October survey of 1412 executive recruiters, 37 per cent are confident the executive employment market will improve in the next six months–down from 49 per cent in September.
Retail gasoline prices in Texas apparently haven’t reached bottom yet this week. The weekly AAA Texas gasoline price survey finds that self-serve regular fell 29 cents per gallon this week to an average of $2.31 per gallon. That’s 47 cents cheaper than a year ago. Nationally, regular self-serve fell 28 cents to an average of $2.55 per gallon. Corpus Christi has the cheapest gasoline in the Texas survey with regular self-serve averaging $2.10 per gallon–down 28 cents from last week. El Paso has the most expensive gas at $2.72 per gallon–down 24 cents per gallon. The greatest price drop this week was in San Antonio, where regular self-serve fell 44 cents to $2.20 per gallon.
The author of RenGen: Renaissance Generation told a Business of the Arts luncheon that Houston has hidden potential with the continued growth of its arts sector. Patricia Martin says the conditions we’re facing now as a society are what it looks like just before a renaissance.
“People look at Houston and they think oil. And I think there’s a much bigger story. In fact, I encourage Houston to expand its definition of energy to include not just the fossil fuels, you know, and petroleum—the traditionals—but, what you’re seeing is, you know, you’re seeing Chevron making some significant investments right now in alternative energies—renewable energies. There are fringe companies that are just start-ups, you know, but this is how it starts in a renaissance. And the next wave, I think, of energy, is to qualify and quantify human capital energy—the energy that comes out of being in a creative city. And I think if Houston can tell that whole story, it’ll be a very powerful new-branded city for the 21st century.”
According to a study by Americans for the Arts, non-profit arts agencies in Houston contribute $270 million annually in direct spending to the local economy. Audiences spend another $356 million a year, making the total economic footprint $626 million.
Carnival Cruise Lines is shifting its Texas sailings back to Galveston from Houston this weekend. The line was forced to move its Ecstacy and Conquest vessels to the Bayport Cruise Terminal after Hurricane Ike until the Port of Galveston made major repairs. Both those ships depart from Galveston’s port this weekend. The Port of Galveston’s cruise port handles about a half million passengers each year.
Federal Reserve Chairman Ben Bernanke says the housing finance system being constructed following the collapse of the current system will need better safeguards to allow it to function during times of stress. Bernanke says whatever shape the new system takes should ensure that the institutions that support the financing of home mortgages do not pose a systemic risk to our financial markets and the economy. In a speech prepared for a housing conference in Berkeley, California, Bernanke outlined a number of possible ways to structure housing finance in the future, but did not state his own preferences.
It’s been months since the Energy Department pulled its support for building the FutureGen coal-fired power plant in central Illinois. Now the project’s backers are looking to Election Day–with optimism. Illinois Senator Dick Durbin fought to keep FutureGen alive. And Durbin and the coal and power companies that want to build the plant believe a new president might revive the project. Both Democrat Barack Obama and Republican John McCain have expressed support for developing clean-coal technology. It was in 2003 that President Bush said the Department of Energy would pursue a $1 billion research project, building a clean-coal power plant somewhere in the country. In December 2005, the Department of Energy said it will work with a group of energy companies, eventually known as the FutureGen Alliance, to build the power plant. Illinois joined six other states–including Texas–submitting bids for the plant in May 2006. FutureGen Alliance chose Mattoon and Tuscola, Illinois, along with the Texas cities of Jewett and Odessa, as finalists for the $1.5 billion plant in July. The alliance chose Mattoon on December 18th, 2007, but hours later warned that the cost, now $1.8 billion, was too high. The DOE pulled its support for Future Gen on January 29th, 2008, blaming costs. The next day, the DOE said it will pursue an alternative clean-coal project at multiple sites around the country. Senator Durbin and others who support FutureGen believe the Energy Department killed it because Mattoon was chosen over a pair of sites in west Texas. They contend President Bush’s Lone Star roots doomed Mattoon.
Marathon Oil has delayed a planned $1.9 billion expansion of a gasoline refinery in Detroit amid lower crude oil prices. The Houston-based oil company says it’s in the process of reevaluating the project construction schedule. Marathon says it’s working on a new timeline and cost estimates. Marathon Oil’s Angelia Graves tells the Detroit News that “market dynamics have changed.” The project was expected to be finished in 2010, creating up to 135 permanent jobs and hundreds of construction jobs.
Ridership on Amtrak’s Heartland Flyer passenger train is up again. Final figures for the fiscal year that ended September 30th show that ridership rose by more than 18 per cent to total 80,892 passengers. Amtrak operates the Heartland Flyer between Oklahoma City and Fort Worth, under contracts with the Oklahoma and Texas Departments of Transportation. ODOT’s Director of Engineering David Streb says the Heartland Flyer is one of the nation’s fastest growing lines. Streb says it also has the best customer satisfaction rating of any line. Transportation officials say all Amtrak trains saw increases in ridership last year. The 28.7 million total topped the 25.8 million riders for the previous 12 months by 11.1 per cent.
The University of Texas at Austin endowment has declined by nearly $1 billion this year as a result of the turmoil in worldwide financial markets. The university’s share of the Permanent University Fund, plus its other endowment holdings, stood at $7 billion at the start of the year. By the end of September, the value had declined by nearly 13 per cent to $6.1 billion. The Austin American-Statesman is reporting that UT officials are already revising next year’s budget projections, even as they brace for more bad news about the endowment’s performance in the past month. Two-thirds of the Permanent University Fund is earmarked for UT system campuses and one-third for Texas A&M University System institutions. That fund was worth $13.8 billion at the start of the year. Its value dropped nearly 14 per cent to $11.9 billion by the end of September.
KBR reports its third-quarter profit rose 35 per cent. Houston-based KBR says a newly-acquired business and work on Gulf of Mexico vessels drove sharp revenue increases. KBR, which provides engineering services to the energy sector and the government, says net income rose to $85 million in the three months ending September 30th. That compares to earnings of $63 million a year ago. Revenue climbed 39 per cent to $3.02 billion. KBR, which was spun off last year from Halliburton, bought Alabama-based construction contractor BE&K in May for $550 million.
Chevron says its third-quarter profit more than doubled on the back of record crude prices this summer. The San Ramon, California-based company, the second-largest U.S. oil company, said it made $7.89 billion in the three months ended September 30th, versus $3.72 billion at the same time last year. Revenue shot up 43 per cent to $78.87 billion from $55.2 billion.
A.H. Belo Corporation reports its third-quarter loss widened. The Dallas-based media company cited severance costs and an impairment charge, as advertising sales continued to soften. The publisher of the Dallas Morning News and three other newspapers also disclosed recently reducing staff by an additional 90 positions, which will lead to a $2.4 million fourth-quarter charge. A.H. Belo reported a loss of $17.3 million, compared with a loss of $6.3 million in the previous year. Quarterly results included an $11.1 million charge for a voluntary severance program and a $4.5 million printing press-related impairment charge. In July the company had said it would slash 500 jobs through voluntary severance offers. Newspapers have struggled as consumers and advertisers continue to migrate to the Internet.
American Electric Power says its third quarter earnings fell 8 percent from a year ago because of mild summer weather, higher fuel costs and increased maintenance expenses from storms that included Hurricane Ike. Columbus, Ohio-based AEP said that it earned $374 million for the quarter ended September 30th. That’s down from a profit of $407 million a year ago. It says revenue rose ten per cent to $4.2 billion. Thomson Reuters says analysts it surveyed expected revenue of $3.9 billion. The estimates typically exclude one-time items. American Electric Power delivers electricity to more than five million customers in 11 states, including Texas.