The number of Americans continuing to draw unemployment benefits has risen to the highest level in 25 years. The Labor Department reports the number of people continuing to get unemployment benefits jumped by 122,000 to more than 3.8 million in late October. That’s the most since February 1983, when the nation was struggling to recover from a long and painful recession. New filings for jobless benefits last week dipped to 481,000. The high level of claims reflects cost-cutting by companies. Democrats in Congress are pushing to include an extension of unemployment benefits in a new stimulus package, which could be taken up this month.
Shell-shocked by financial crisis, consumers avoided shopping last month. The nation’s retailers report the worst October sales since at least 1969. It’s prompting new concern about the holiday shopping season and dimming hopes for an industry recovery until at least the second half of next year. Whether catering to the rich or teenagers, a range of retailers tell of steep sales declines. One exception is Wal-Mart, which has found increased interest among consumers in discounted items, including the basics. The world’s largest retailer posted a 2.4 per cent rise in sales at stores open at least a year. The chief economist for the International Council of Shopping Centers calls October “awful.” He says the numbers reflect the severity of the financial crisis.
The government says the efficiency of U.S. workers slowed sharply in the summer as a huge pull back by American consumers threw the national economy into reverse. The Labor Department reported that productivity–the amount an employee produces for every hour on the job–grew at an annual pace of 1.1 per cent in the July-to-September quarter. That’s down from a 3.6 per cent growth rate in the second quarter. With productivity slowing, labor costs picked up.
Three British former bankers who pleaded guilty to a $20 million fraud related to Enron are headed to British prisons to complete their terms. The three were in New York federal court, wearing blue prison uniforms, to consent to go back to the U.K. The former Greenwich NatWest bankers, dubbed the NatWest Three by British tabloids, received 37-month prison terms on February 22nd. They were extradited after being charged with skimming $7.35 million from an off-books partnership with former Enron Chief Financial Officer Andrew Fastow and Michael Kopper.
Retail gasoline prices continue to plummet across Texas this week. The weekly AAA Texas survey showed regular self-serve retail prices were falling at the average rate of more than 2.5 cents per day per gallon. The survey found regular grade averaging $2.13 per gallon in the 11 Texas cities in the survey–18 cents lower than last week and nearly 80 cents less than this time last year. It’s also 21 cents less than the national average of $2.34 per gallon, which is down 20 cents from last week. Corpus Christi has the cheapest gas at $1.99 per gallon–11 cents less than last week. El Paso continues to have the most expensive gas at $2.51 per gallon–20 cents less than last week.
ConocoPhillips and state-run Saudi Arabian Oil say they’ve delayed plans to build a multibillion-dollar refinery in Saudi Arabia because of a slowing global economy. The two companies signed a $6 billion agreement in 2006 to build a 400,000 barrel-a-day oil refinery in the kingdom’s Red Sea city of Yanbu. The project is in the construction bidding process, and a round of bids was expected next month. Instead, the partners say the project will be rebid in the second quarter of 2009. “We believe that this short delay will allow the markets to adjust from the current uncertainties and provide a stronger basis for the long-term success of the refinery,” ConocoPhillips chairman and chief executive Jim Mulva said in a statement.
Motiva Enterprises has taken delivery of three coker furnace cells at its Port Arthur refinery. The furnaces extract the remaining usable parts from crude oil. Upon completion of its $7 billion expansion, the Port Arthur refinery will be the largest refinery in the United States and among the top ten in the world. The expansion of the refinery will double the facility’s crude oil throughput capacity to 600,000 barrels per day. Some 4,500 construction jobs are created with the expansion, and 300 jobs for operations when completed.
BP has ended its partnership with China’s Goldwind Science and Technology and plans to build wind power projects in India, China and Turkey. BP says it will focus on the onshore generation in the United States. BP plans to have one gigawatt of wind power generating capacity in the U.S. by the end of next year, with plans to increase output to three gigawatts within a couple of years.
Brazil expects to dominate global biofuels exports through 2015, according to a new study by Hart’s Global Biofuels Center. The GBC study notes other substantial biofuels exporters in Asia and Latin America, including in India, Thailand, Indonesia, Argentina and the Philippines.
A new price surge and more severe food crises could be triggered by the global financial crisis even with record high world cereal production this year. The United Nations Food and Agriculture Organization warns in a new report that farmers in developing countries may be unable to expand or keep up with production next year. That’s due to the rising cost of seed, fertilizer and other farm items. Cereal production this year was boosted by increased plantings encouraged by high prices and good weather. However, the Rome-based agency says credit markets squeezed shut by the financial crisis have “introduced greater uncertainty about next year’s prospects.” The agency says this year’s cereal production recovery centered mainly in rich countries.
The International Monetary Fund says the economies of the U.S., Europe and Japan are expected to contract in 2009. And it says that would be the first annual decline by the advanced economies since World War II. The IMF says governments should adopt economic stimulus packages to counteract the slowdown, while central banks “in some countries” should cut interest rates further. The fund didn’t specify which ones. The fund’s chief economist says development of stimulus packages “should be one of the highest priorities for governments to pursue at this stage.” Overall, the IMF now expects the world economy to grow at a 2.2 per cent pace in 2009, down from its projection last month of three per cent.
The Federal Reserve says banks and investment firms borrowed from its emergency lending program over the past week at a slightly slower–but still brisk–pace. The Fed’s report shows commercial banks averaged nearly $110 billion in daily borrowing over the past week. That was down from a record $111.9 billion in average daily borrowing logged over the past week. For the week ending Wednesday, investment firms drew $77 billion. That was down from $87.4 billion in the previous week. This category was recently broadened to include any loans that were made to the U.S. and London-based broker-dealer subsidiaries of Goldman Sachs, Morgan Stanley and Merrill Lynch.
The government’s takeover of mortgage giants Fannie Mae and Freddie Mac means taxpayers could be on the hook for more than just bad debts. They could also end up paying tens of millions of dollars in legal fees for the executives at the center of the housing market’s collapse. The Justice Department is investigating companies involved in the mortgage and financial meltdown, and like many large companies, Fannie and Freddie have contracts promising to cover legal bills for their executives. That means it’s possible the government will be paying lawyers to defend executives against the government’s own prosecutors. The Bush administration is working to avoid it, but that could spawn another court battle.
The Federal Reserve says the amount of commercial paper in the market has increased for the second straight week, but at a slower pace. Companies issue commercial paper to borrow money for short periods to finance their day-to-day operations. The Fed started buying highly rated, three-month commercial paper on October 27th to prop up a market that saw demand fall off after Lehman Brothers Holdings collapsed. Commercial paper outstanding increased by $50.5 billion to a seasonally adjusted $1.60 trillion in the week ended Wednesday, after rising by $100.5 billion in the previous week. The amount outstanding remains down from $1.82 trillion eight weeks ago, and down from $2.2 trillion at the market’s peak in the summer of 2007.
At least one payday lender is moving quickly to scale back its Ohio operations after the state’s voters capped interest rates on the short-term loans. The operator of Cashland stores says it’ll close about a third of its Ohio locations over the next few months. Fort worth-based Cash America International says the 43 Cashland lending shops in question are in markets throughout the state. The company says about 150 employees will lose their jobs. In approving a ballot issue, Ohio voters upheld a state law limiting interest rates on payday loans to 28 per cent, as opposed to rates and fees that have amounted to a 391 per cent annual rate.
This year’s citrus harvest in Texas is off to a good start, according to the Texas AgriLife Extension Service, despite hurricane damage and an unstable economy. Harvest started in the first week of October in deep South Texas and an unusually wet growing season that included Hurricane Dolly. The official USDA crop estimate is down a little over 13 per cent from last year in oranges and grapefruit, which means about 10.6 million, 40-pound cartons of grapefruit and three million cartons of oranges.
The Houston Business Journal hosts its annual Fast Tech 50 awards tomorrow night at the InterContinental Hotel. The publication’s Fast Tech 50 special section will be distributed, with the rankings and profiles of Houston’s fastest-growing technology firms.
Dell and Goodwill Industries have launched a free statewide computer recycling program. The Reconnect Texas program hopes to collect an estimated 11.5 million pounds of used computer equipment next year. There are 319 drop-off sites in Texas. The statewide program replaces similar programs set up in Austin, Houston and San Antonio. Goodwill will sort the equipment and Dell recycles and remarkets the materials.
The Houston Technology Center has opened the Technology Center of West Houston at the Katy Commerce Center. HTC officials will hold office part-time at the satellite business incubator location to help start-up tech companies with strategy, funding and advice.
The Christus Foundation for HealthCare has broken ground for its new Christus Health Center in midtown Houston. Primary health care services and 18 specialties, including medical and dental services, will be offered at the John S. Dunn Building. The center will also be the operational base for the Christus Healthy Living Mobil Clinic.
HEB is opening a new store in Bunker Hill on the Katy Freeway tomorrow that combines elements of HEB and Central Market stores. The store is stocking over 900 different fruits and vegetables and some 2,000 wines. A gas station and car wash are also in the complex, as well as a bakery, a cheese shop and pharmacy. A Central Market Café on the Run is on site.
Southwest Airlines plans to announce its fares and flight schedule for Minneapolis-St. Paul International Airport. The Dallas-based airline will begin service at the airport next March. Flights will run between the Twin Cities and Chicago’s Midway Airport. It’s Southwest’s 65th destination. Low-fare Southwest had been pursued for over a decade by the Metropolitan Airports Commission, which owns and operates the Twin Cities airport. The commission wanted to bring in some competition against Northwest, the airport’s dominant carrier that recently merged with Delta.
Dynegy says its third quarter earnings nearly tripled from accounting gains on forward sales contracts. But the power producer cut its 2008 profit forecast for a second time this year because of mild summer weather and lower margins. The Houston-based company said that it made $605 million for the quarter ended September 30th. That’s compared with profit of $220 million a year ago. Revenue nearly doubled to $1.9 billion from $1 billion. Analysts polled by Thomson Reuters on average expect revenue of $1.2 billion.
Blockbuster says it cut its third-quarter loss by more than 40 per cent. The better-than-expected results amounted to a net loss of $20.6 million for the quarter. It’s a marked improvement from the movie rental chain’s $37.2 million loss during the same period last year. Revenue slid nearly three per cent to $1.20 billion during the three months that ended October 5th. Meanwhile, the Dallas-based company’s same-store sales rose more than five per cent. That’s an important retail industry metric of sales in stores open at least a year.