President-elect Barack Obama has chosen Peter Orszag as his Director of the Office of Management and Budget. Orszag is currently the head of the Congressional Budget Office. If he’s confirmed by the Senate, he’ll head the White House office through which federal agency budget requests must flow. As he named Orszag as his White House budget chief, Obama told reporters that budget reform is a necessity, not just an option. Renewing his campaign pledge, he said his staff is going through the federal budget, page by page and line by line, to make sure that those programs that are kept are done sensibly. Obama is vowing to get rid of programs that have outlived their usefulness, or that exist solely because of the power of politicians. He said it’s not about big government or small government, it’s about smarter government.
A private research group says consumer confidence rose in November, but Americans’ views on the economy remain gloomiest in decades. The New York-based Conference Board says its consumer confidence index stands at 44.9, up from a revised 38.8 in October. Last month’s reading was the lowest since the research group started tracking the index in 1967. Economists surveyed by Thomson Reuters expected the November reading to slip to 37.9. Still, the November figure is about half of what it was a year ago, and hovers around levels not seen since December 1974, when the index was 43.2. to tap natural gas in southern Iraq. Hassan Balo, head of the Parliamentary Committee on Oil and Gas, says other companies should have been allowed to bid. He says the deal grants a 25-year monopoly on gas development in southern Iraq to Shell. Balo told reporters that the deal should be reviewed by Parliament. In September, Iraq and Shell signed a preliminary deal to establish a joint venture in which Iraq will hold 51 per cent and Shell the rest.
The government says the economy took a tumble in the summer that was worse than first thought as American consumers throttled back their spending by the most in 28 years. It was further proof the country is almost certainly in the throes of a painful recession. The Commerce Department’s updated reading on the economy’s performance showed gross domestic product shrank at a 0.5 per cent annual rate in the July-September quarter. That was deeper than the 0.3 per cent rate of decline first reported.
ExecuNet’s Recruiter Confidence Index has dropped to its lowest level in November, as the markets and the new administration seek a clear path out of the current recession. Ongoing economic uncertainty and an absence of leadership in addressing economic problems have eroded recruiters’ confidence, according to ExecuNet. But recruiters expect the executive employment market to improve in the second half of 2009 by nine per cent.
The government has introduced a pair of new programs that will provide $800 billion to help unfreeze the market for consumer debt which Treasury Secretary Henry Paulson calls vital to supporting the economy. Paulson says key markets for consumer debt such as credit cards, auto loans and student loans essentially came to a halt in October. He says the new programs are aimed to get lending back to more normal levels.
The Federal Reserve says it will buy up to $600 billion in mortgage-backed assets in another attempt to deal with the financial crisis. The Fed says it will purchase up to $100 billion in direct obligations from mortgage giants Fannie Mae and Freddie Mac as well as the federal home loan banks. It also will purchase another $500 billion in mortgage-backed securities, pools of mortgages that are bundled together and sold to investors.
The Federal Deposit Insurance Corporation says its list of problem banks–those considered to be in trouble–shot up to 171 during the third quarter. That’s up nearly 50 per cent from 117 in the second quarter. It’s the most since late 1995. The FDIC also says commercial banks and savings institutions suffered a 94 per cent drop in third-quarter profits to $1.7 billion from $27 billion in the same period last year. Except for the fourth quarter of 2007, it was the lowest quarterly profit since the fourth quarter of 1990. The report is yet another sign of growing troubles in the U.S. banking industry. Late Sunday, Citigroup got a government backstop for $306 billion worth of mortgages and other assets.
A widely watched index shows home prices dropping by the sharpest annual rate on record in the third quarter. The Standard & Poor’s/Case-Shiller U.S. national home price index tumbled a record 16.6 per cent during the quarter from the same period a year ago. Prices are at levels not seen since the first quarter of 2004. The monthly indices also clocked in record declines. The 20-city index fell by 17.4 per cent in September compared with a year ago, the largest drop since its inception in 2000. The ten-city index plunged 18.6 per cent, the biggest decline in its 21-year history. No city in the Case-Shiller 20-city index saw annual price gains in September–for the sixth straight month.
Texans plan to spend less this holiday season, according to a Deloitte & Touche study, as reported by the Houston Business Journal. About 53 per cent are pessimistic about the economy, up from 36 per cent last year. On average, Texans expect to spend $1,252 for gifts this year, which is less than the national average of $1,336. That’s a four per cent drop than the $1,900 spent on average by Texans last year. About two-thirds of those surveyed plan to seek gifts at discount stores—20 per cent plan to shop at dollar stores.
A judge has ordered the first round of punitive damages be issued to plaintiffs in the nation’s worst oil spill. A federal judge in Anchorage, Alaska, ordered the release of $151 million to thousands of Alaska fisherman and other claimants. Plaintiffs attorney Andrew Ott says he’s hopeful people should receive that money some time next week. Lawyers in the Exxon Valdez case earlier negotiated a settlement, under which about $383 million will be released by Irving-based ExxonMobil. Under the deal, the money will be distributed to nearly 33,000 commercial fishermen and others who sued ExxonMobil after the 1989 spill of 11 million gallons of crude in Alaska’s Prince William Sound. Ott says the remaining funds will be distributed later. The average payout is about $15,000 each.
An Iraqi lawmaker has accused the oil ministry of a lack of transparency when it signed a preliminary deal with STRONG>Royal Dutch Shell
Dozens of new cars and trucks, led by Ford and its Volvo subsidiary, have made the insurance industry’s annual list of safest vehicles. The Insurance Institute for Highway Safety says for the 2009 model year, Ford and Volvo have 16 vehicles on the list, followed by Honda with 13. The awards bolster the case made by Ford CEO Alan Mulally in Washington last week when he testified along with big three executives seeking massive government aid. He’d argued that Ford had made significant strides. Volkswagen and its Audi brand had nine vehicles on the list. GM and Toyota each had eight.
A federal report details safety concerns and citations issued to the East Texas refinery where an explosion killed one worker and injured others last week. The Occupational Safety and Health Administration released a 36-page report on the Delek refinery to the Tyler Morning Telegraph. It lists safety violations that include failing to ensure valves were properly configured and an inability to show structures followed blast resistance guidelines. The company would not discuss the report. OSHA is investigating Thursday’s fire and explosion at Delek’s Tyler plant.
The Humane Society of the United States has filed a lawsuit against six major retailers and fashion designers alleging that they falsely advertise and label fur garments. The suit claims that Dillard’s, Lord & Taylor, Macy’s/STRONG>, Neiman Marcus, Saks Fifth Avenue/STRONG> and designer Andrew Marc misrepresent fur products by labeling and marketing them as “faux fur,” when they are not, or by advertising and labeling products as common raccoon, fox or rabbit fur, when they are really made from raccoon dog–a canine species from Asia. The complaint also alleges that the retailers are in violation of the Federal Fur Products Labeling Act and Federal Trade Commission Act, which prohibit mislabeling of fur products.
Blockbuster will start giving consumers another reason to bypass the struggling video chain’s 7,500 stores. The Dallas-based video rental giant will begin renting movies and television shows via the Internet. The new system relies on a small box that connects to television sets and stores video after it’s downloaded over high-speed Internet connections. The player is made by San Jose, California-based 2wire. It’s built on the same concept as storage devices made by Apple and Vudu. The devices are all meant to provide a bridge between the Internet and TVs. Blockbuster nemesis Netflix has been trying to make the same leap with a video-streaming service that can be watched on TV sets through a variety of devices, including a $100 box introduced by Roku six months ago.
The Texas pecan crop is one of the smallest in years–and experts say the drought played a role. Texas agriculture officials recently estimated this year’s crop losses at $1.1 billion from the hot and dry spring and summer. But last year’s bountiful harvest is supplementing the shortfall. Texas this year is expected to produce 32 million pounds of pecans. It trails Georgia, on track to produce 70 million pounds, and New Mexico, which is projected at 45 million. The nationwide total is expected to be 204 million pounds. Last year’s Texas pecan crop of 70 million pounds was part of the nationwide total of 385.3 million pounds. That was the highest in a decade or more. Many trees typically produce less after a high-yield year in what’s called an alternate-bearing cycle.
Homebuilder D.R. Horton blames declining land values and falling sales for a widened fourth-quarter loss. The Fort Worth-based builder said it took more than $1 billion in charges tied to those falling land values and sales that fell by almost half. It lost $799.9 million for the quarter ended September 30th. That’s compared with a loss of $50.1 million during the same quarter last year. Analysts surveyed by Thomson Reuters, on average, expected revenue of $1.72 billion. While the builder’s revenue plummeted 44 per cent, it still beat analysts’ expectations. Sales fell 44 per cent to $1.75 billion in the quarter. The decline in revenue was attributable to a sharp decline in home sales. Total home sales during the quarter tumbled 41 per cent to 6,961. The backlog of homes under contract to be sold as of September 30th also fell sharply from the same time last year. For the full fiscal year, Horton’s loss grew 3.7 times to $2.63 billion. Full-year revenue fell by 41 per cent to $6.52 billion.
Zale Corporation says it’s fiscal first quarter loss grew by 60 per cent to $45.3 million. The Irving-based jewelry retailer also says it’s withdrawn its profit guidance for the full year. The company says it can’t reliably gauge how the all-important holiday shopping season will go. It cites what it calls “uncertainties surrounding the national economy and consumer spending” for withdrawing its fiscal 2009 forecast. Revenue fell three per cent to $364.1 million, falling short of a consensus expectation from Wall Street. Analysts polled by Thomson Reuters expected sales of $381.9 million in the quarter. Same-store sales fell 3.7 per cent in the first quarter over the year-ago period.