Employers cut a larger-than-expected 467,000 jobs in June, driving the unemployment rate up to a 26-year high of 9.5 per cent. Economists had expected 363,000 job cuts last months, and that the jobless rate would rise to 9.6 per cent from 9.4 percent in May. If laid-off workers who have given up looking for new jobs or have settled for part-time work are included, the unemployment rate would have been 16.5 per cent in June, the highest on records dating to 1994.
The government also says the number of newly laid-off workers filing for unemployment insurance dropped last week. The Labor Department said that initial jobless benefit claims fell by 16,000 to a seasonally adjusted 614,000. A survey by Thomson Reuters says that nearly matches analysts’ estimates. The total jobless benefit rolls fell for the second time in three weeks. The number of continuing claims is down 53,000 to 6.7 million, defying analysts’ expectations of a small rise.
We may be seeing the end of the worst of job shrinkage — at least in the Houston area — according to Adrienne Keally with Robert Half International.
“Houston has definitely not been immune to the economy crunch. You know, unemployment is definitely at a higher rate here than it has been for years. But we’re starting to see a slight uptick in business. I’d say the healthiest industries right now are probably the healthcare industries, financial institutes like your banks and mortgage companies, an uptick in business for logistics companies. Now that we’ve gotten through Q1 and Q2, companies are getting a little bit, they’re loosening up a little bit and the increase in just business in general, logistics companies are needed to move projects.”
President Barack Obama says he’s still “deeply concerned” about the continuing loss of jobs across the country. He said that developing both a short-term and longer-term solution to America’s economic woes is “one of the things that I’m most focused on.” Obama also told the Associated Press that he feels his administration has stabilized the housing and financial markets, while he acknowledged that more work needs to be done in the area of job creation. The president said he understands that people are “worrying if they’re going to be next.” He commented just hours after the Labor Department reported that the unemployment rate rose to 9.5 per cent last month.
Orders to U.S. factories jumped in May by the largest amount in nearly a year, further evidence that the nosedive in manufacturing is nearing an end. The Commerce Department says total orders rose 1.2 per cent in May, better than the 0.8 per cent increase that economists had expected. The April performance was revised slightly lower to a gain of 0.5 per cent, from 0.7 per cent. The May increase was the best showing since a 2.1 per cent rise last June. The back-to-back increases in April and May were the first consecutive gains in nearly a year.
Power generator Exelon says it has raised its offer to buy rival NRG Energy to about $8 billion in stock. Exelon first offered to buy NRG in October, and its previous offers have been rejected. Exelon said that it increased the bid by 12.4 per cent because it found an additional $1.5 billion in potential savings from the tie-up, and because of NRG’s recent acquisition of Reliant Energy’s Texas retail business. Princeton, New Jersey-based NRG has repeatedly said the old offer undervalues the company. If NRG combines with Chicago-based Exelon, the new company would be the largest U.S. power generator, providing energy to about 45 million homes. NRG owns a 60 per cent stake in the South Texas Nuclear Project power plant near Bay City.
Continental Airlines is asking its flight attendants to consider voluntary temporary leaves starting September 1st. The nation’s fifth-biggest airline has cut its flying capacity by six per cent for the year because of the global recession. Continental is offering its 9,500 attendants a choice of five-month or nine-month leaves. Employees will retain health benefits, travel privileges and seniority during the leave, and will accrue vacation time and credit toward their pensions. The airline is seeking up to 700 volunteers.
Continental reports a June load factor of 84.8 per cent—1.1 points above the same month last year. The Department of Transportation reports Continental’s on-time arrival rate was 80.5 per cent.
The House has passed a bill to keep state agencies operating. The measure has already been approved by the Senate and will next head to Governor Rick Perry for his signature. The unanimously approved bill will keep the Texas Department of Transportation, the Department of Insurance and three other agencies going for another two years. State law requires the legislature regularly review and reauthorize state agencies. Lawmakers failed to renew those agencies during the regular session that ended June 1st. Perry called them back to Austin to deal with that and to address transportation contracts and funding.
The Texas House has approved legislation allowing $2 billion in bonds to be spent to build new roads. The bonds were approved by voters statewide in 2007, but the bill authorized the spending. Lawmakers added a provision that would prohibit the money from being used to turn existing roadways into toll ways. A bill allowing the state to continue contracting for privately built toll roads, is in doubt as lawmakers try to wrap up the session before the holiday weekend.
Some states are facing their worst fiscal crisis in decades as a prolonged recession collides with historic drops in tax revenue. Several states are entering the first weekend of the fiscal year and July 4th holiday without a budget in place. California is set to begin issuing IOUs to vendors because it’s out of money. The sputtering economy has ravaged all forms of tax collections. Taxes ranging from sales to personal income to property are all down. New York’s Rockefeller Institute of Government says last year’s drop in sales tax revenue was the worst in 50 years and early data this year suggests the problem has worsened. The National Association of State Budget Officers says 42 states wrestled with budget deficits this spring, the most since the organization began tracking budgets 30 years ago.
Two new government reports show the percentage of Americans with private health insurance has hit its lowest mark in 50 years. Preliminary data released by the U.S. Centers for Disease Control and Prevention show about 65 per cent of non-elderly Americans had private insurance in 2008. That’s down from 67 per cent the year before. The CDC says nearly 80 per cent of Americans had private coverage in the 1970s and early 1980s. Some experts blame the faltering economy and corporate decisions to raise health insurance premiums or eliminate employee coverage entirely as the main drivers of the recent data. They say coverage statistics for 2009 may look even worse. However, public coverage of adults is rising in some states due to programs like Medicaid expanding eligibility. The CDC also reported on insurance coverage in the 20 largest states, and found the per cent of uninsured people ranged from three per cent in Massachusetts to 23 per cent in Texas.
The Federal Deposit Insurance Corporation is proposing rules that it hopes will attract more private equity investors as buyers of failed banks. Regulators already have shut down 45 banks this year. But some recent auctions have been lackluster, with many investors taking a pass because the banks for sale are too small, or because they have their own financial troubles. The FDIC hopes the auctions can command higher prices if there are more bidders. It also wants to set standards for potential investors to ensure they are committed to the banks they buy. More bank closures are expected as the longest recession since World War II has hobbled financial institutions of all sizes.
Banks borrowed less from the Federal Reserve’s emergency lending facility and cut back on other programs designed to ease the financial crisis, encouraging signs that some credit stresses are easing. The Fed says commercial banks averaged $35.9 billion in daily borrowing over the week that ended Wednesday. That was down from $39.1 billion in the week ended June 24th. Investment firms didn’t draw any loans for the seventh straight week. The last time they drew any money–just $482 million–was in the week that ended May 13th. The identities of the financial institutions are not released. They pay just 0.50 per cent in interest for the emergency loans.
A group of weekly community newspapers covering southern Dallas suburbs is printing its final editions. The publisher said newspapers is shutting down Friday because of a loss of advertising revenue. Today Newspapers published two editions. One served the communities of Cedar Hill, Duncanville, DeSoto, and Lancaster, which are south of Dallas. The other covered Grand Prairie, which is west of Dallas. Publisher Kim Petty told the Dallas Morning News that most of the advertisers were mom-and-pop stores that couldn’t continue buying ads in a bad economy. Petty said “there is just not a lot of hope for small-town newspapers.”
Television regulators say they are trying to help stations that lost viewers because of a switch to new frequencies on June 12th, when they turned off their analog signals. Hundreds of stations moved their digital signals from the UHF band to the VHF band, previously used only for analog broadcast, and viewers in cities like Philadelphia and Chicago are having problems receiving them. The Federal Communications Commission is working with two dozen stations, mainly on VHF, to help them improve reception, says Robert Ratcliffe, acting chief of the Media Bureau at the FCC. The agency says affected cities include Dallas, as well as Chicago, Philadelphia and New York.
Dish Network satellite TV customers can keep using their digital video recorders while a court battle continues with Tivo. That’s the word today from both companies. Tivo accuses dish of infringing on its DVR patent. But a federal appeals court granted Dish Network and Echostara stay on a contempt order that would have forced them to disable Dish DVRs. A judge in the federal court in Marshall last month found Dish and Echostar to be in contempt of his permanent injunction on Tivo’s DVR time warp technology. That technology lets viewers pause, rewind and fast-forward live shows. Dish had lost a 2004 patent infringement case brought by Tivo, and while the case was on appeal it sent modified software to customers’ DVRs. But Tivo said the workaround software still infringed on its patent and asked the court for the injunction.
About 400,000 Simplicity drop side cribs are being recalled for posing a suffocation or entrapment hazard. The Consumer Product Safety Commission says the crib’s hardware can break or deform, allowing the drop side to detach. This creates a gap between the mattress and the side of the crib, where a small child could be trapped or suffocated. The agency previously reported the death of an eight-month-old child, who suffocated when some of the hardware on his crib broke and created a gap. Last September, Simplicity recalled about 600,000 drop side cribs with similar defects. In 2007, the company recalled one million older model drop side cribs.