President Barack Obama is again asking Congress to pass his $3.6 trillion budget, saying it will “spark the transformation” the country needs to remain economically competitive. Appearing with the chairmen of the Congressional budget committees, he called it an “economic blueprint for the future.” Obama acknowledged that new deficit figures likely to be revealed in coming weeks will make the job tougher.
A new report says a growing number of companies are freezing salaries, reducing bonus pools and making other major changes to their executive pay programs. The consulting firm Watson Wyatt said more than half of 145 companies surveyed during the first week of March say they have frozen salaries. The survey showed roughly half plan to decrease this year’s bonus pool by an average of 40 per cent. The firm says 23 per cent of respondents added a policy that allows the company to recoup some compensation under certain circumstances. Public sentiment toward bonus pay has soured after reports that American International Group would pay $165 million in bonuses to its executives after getting more than $170 billion in federal bailout money.
February was another month of sagging real estate sales and pricing for the Houston area, according to the Houston Association of Realtors. Property sales are down about 26 per cent compared to a year ago, and foreclosures have been pulling down median sales prices. About one in four homes sold are foreclosures. HAR Chairman Vicki Fullerton says Houston didn’t have the 20 and 30 per cent appreciations that other markets experienced.
Fullerton says rental demand rose again in February.
“There are three factors working. We’ve got the unemployment concern, we’ve got the mortgage money tightness in the market, and then we have buyers that just aren’t qualified. And they need some place to live, and so the rental market is their option.”
The average price of a single-family home in Houston dropped 10.5 per cent to $182, 316, compared to the same time last year.
The government says construction of new homes rose sharply in February, defying economists’ forecasts for yet another drop in activity. The Commerce Department reported that construction of new homes and apartments jumped 22.2 per cent from January to a seasonally adjusted annual rate of 583,000 units. Economists were expecting construction to drop to a pace of around 450,000 units. Revised figures show construction activity fell to a pace of 477,000 units in January. That was a little higher than first reported, but still marked a record monthly low.
A Federal Reserve Bank of Dallas economists’ report says Texas felt the full force of the recession as 2009 rang in. And according to the report, the state’s unemployment rate could jump to eight per cent as more employers slash jobs. At least 296,000 jobs could be lost statewide this year, driving up the unemployment rate which was 6.4 per cent in January. While the national recession got underway in December 2007, Texas managed to avoid the recession longer than much of the country. Fed economists Keith Phillips and Jesus Canas wrote in the Fed’s quarterly publication on the region’s economy that the state was in recession as this year started. Austin and Dallas could feel some of the worst pain as the economy continues to decline this year because they have more exposure than other large Texas cities to cyclical industries.
The Labor Department reports wholesale prices edged up a tiny 0.1 per cent in February as a big decline in food prices offset a second monthly increase in energy costs. The increase was much lower than the 0.8 per cent surge in January and smaller than the 0.4 per cent increase economists had expected. Compared with a year ago, wholesale prices are actually down 1.3 per cent.
Motiva Enterprises is delaying the target date for completing its $7 billion expansion of its Port Arthur refinery by more than a year, according to the Houston Chronicle. The joint Shell Oil and Saudi Refining venture blames poor market conditions. It now plans completion by the first quarter of 2012. The expansion will double the facility’s crude oil processing capacity, making it the largest refinery in the United States.
A two-year interagency squabble appears to be resolved, clearing the way for development of rules for offshore wind energy projects. Interior Secretary Ken Salazar says the Interior Department and the Federal Energy Regulatory Commission have reached general agreement resolving the problem that dates back to 2007. Under the agreement, Interior’s Minerals Management Service has jurisdiction over offshore wind projects, while the commission has the “primary responsibility” on licensing wave and ocean current projects to make electricity. Salazar told a Senate hearing that the agreement allows the rules for wind projects to move forward.
Finger Furniture no longer holds the license for Ashley Furniture HomeStore franchise, according to the Houston Chronicle. New Braunfels-based Hill Country Furniture Partners, which owns five franchise stores in Austin and San Antonio, picked up the license for the six Houston-area Ashley outlets. Three or four more Ashley outlets are planned in the Houston area over the next 18 months.
ExxonMobil Chemical says it plans to build a technology center in Shanghai to support its business in China and the Far East. ExxonMobil Chemical is one of the world’s biggest petrochemical companies and part of Irving-based ExxonMobil. It says the project will involve an initial investment of $70 million and the center will be opened in 2010. ExxonMobil Chemical President Steve Pryor says the company expects about 60 per cent of the world’s petrochemical growth to happen in Asia over the next ten years. Shanghai and other parts of China’s southeastern seaboard are major petrochemical production bases. ExxonMobil, China Petroleum & Chemical and Saudi Aramco have a joint venture refining and ethylene joint venture in Quanzhou in Fujian Province, south of Shanghai. ExxonMobil has pledged to step up spending on capital and exploration projects by 11 per cent in 2009, even as many smaller rivals scale back operations.
Texas will invest $250,000 through the Texas Emerging Technology Fund in AnaLogix Development Corporation for the commercialization of its 3-D movement-based game controller for the personal computer and gaming markets. The company has developed a device compatible with all games currently on the market. The company is working with the University of Texas and the Austin Technology Incubator to commercialize the product. Texas was ranked third nationally for the number of entertainment software jobs in the state between 2003 and 2007.
A group of Robert Allen Stanford’s investment clients from the United States and other countries are joining forces. They’ve formed the Stanford victims coalition to “provide a unified voice to fight for the recovery of the billions of dollars invested in Stanford International Bank’s certificates of deposit.” Meanwhile, a federal judge in Dallas is letting the U.S. government go after at least $226 million in back taxes, penalties and interest it says are owed by the Texas billionaire financier. U.S. District Judge David C. Godbey also granted an IRS request to order Stanford to file his tax return for 2007 by April 15th. The IRS says Stanford and his wife, Susan, may owe taxes in addition to the $226.6 million for 1999-2003. They’re divorcing after more than 30 years of marriage. Stanford was charged with fraud last month by the Securities and Exchange Commission in a civil proceeding. He’s accused of conducting an $8 billion investment fraud ponzi scheme through an offshore bank. But Stanford hasn’t been charged with any crime. An attorney representing Stanford has said his client denies the allegations made by the SEC.
The Internal Revenue Service is allowing tax relief and refunds for some investors who paid taxes on earnings from their investments with Bernard Madoff that turned out to be nonexistent. IRS Commissioner Douglas Shulman is telling Congress that the agency is issuing guidelines for taxpayers who are victims of losses from ponzi investment schemes such as the massive Madoff swindle. Madoff investors should have been reporting earnings from their investments with him through the years and thus paid taxes on those earnings. Given that some of those were “phantom” profits, investors have said they should be entitled to refunds of the taxes they paid.
The government says that lending to businesses from the top banks getting bailout funds fell in January despite the billions of dollars the banks received in government support. The Treasury Department says that lending on regular business loans and on business loans backed by real estate both declined in January, compared to December. The findings were based on reports filed by the top 21 recipients of rescue money from the government’s $700 billion financial bailout fund. The report attributes the decline to weakening demand on the part of businesses, reflecting the dismal economy. However, critics complain that the government has not done enough to make sure that the money that banks are receiving is being used for its intended purpose–to get banks to resume more normal lending to businesses and consumers.
The state will end a contract with a health company that was supposed to improve care for more than 74,000 elderly and disabled Medicaid patients in North Texas. The Texas Health and Human Services Commission and Evercare of Texas have a deal to end the contract on May 31st. Evercare is a unit of UnitedHealth Group. A Dallas Morning News investigation in January detailed problems with Evercare’s program. The included more than 1,300 complaints filed with the Health and Human Services Commission last year. The state is paying Evercare about $1.8 million per month to operate the integrated care management program. The program, which debuted February 1st, 2008, was supposed to reduce costs by coordinating preventive care for patients. The contract was through August 2010. On June 1st, North Texans now covered by Evercare’s program will receive services through traditional fee-for-service Medicaid coverage and the Star Medicaid program.
A federal agency will take over the retirement plan for nearly 2,500 former and current foundry workers in Virginia whose Texas-based employer is amid bankruptcy proceedings. Intermet employed more than 1,200 people at Lynchburg Foundry before the iron castings plant closed in 1994. The Fort Worth-based company still owns Archer Creek Foundry in Campbell County and New River Foundry in Radford. Intermet said it cannot afford to pay the benefits in the retirement plan. Gary Pastorius of the Pension Benefit Guaranty Corporation said the agency’s top priority is to ensure benefits continue. Down the road, however, he said some retirees might see reductions in benefits and some current workers won’t be able to accrue additional benefits.
Plenty of people dream of leaving their jobs to become teachers. Today, more people are actually doing it. These real-life experience teachers often have deep knowledge of their subjects, and are answering a call to service that is part of a strategy to dramatically boost the size and quality of the teaching work force. Career switchers make up about one-third of the ranks of new teachers, and that number has jumped in the past decade. Now, as the recession deepens, even more people are deciding to become teachers. The new teacher project, which helps people switch from other careers to the classroom, reports a 44-per cent increase in the number of people who have applied to its teaching fellows programs this year. Not everyone who applies will make it into the classroom. But the avalanche of applications is encouraging to the Obama administration, which has a plan to dramatically increase the number of teachers.
Economic woes are forcing the post office to delay release of several new postage stamps scheduled for this year. Hurt by rising costs and declining mail volume, the Postal Service lost $2.8 billion last year. It is facing even larger losses this year. That’s despite a rate increase, to 44 cents for first-class mail, scheduled to take effect May 11th. Set four of the “Flags of Our Nation” series has been postponed until 2010. The postponed set includes the flags of Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York and North Carolina. It was not clear if that means flag stamps that had been planned for 2010 will also be delayed. In addition, a stamp honoring American painter Edward Hopper and a holiday stamp featuring an angel playing a lute have been dropped from the 2009 plans. Betts said it has not been determined when they might be rescheduled.