The government says retail sales advanced in June by the largest amount in five months, led by a surge in gasoline prices and a slight rebound in the battered auto sector. The Commerce Department said that retail sales rose 0.6 per cent last month, better than the 0.4 per cent gain that economists had expected. It marked the second consecutive increase and boosted hopes that the economy may be on the verge of a rebound. While much of the strength came from a price-driven surge at gasoline stations, there was also strength in a number of other areas, including the best showing at auto dealerships since January.
Wholesale prices took a bigger-than-expected leap in June, rising the most since November 2007, led by more expensive energy products. The Labor Department says the 1.8 per cent increase in the producer price index, which tracks the costs of goods before they reach store shelves, came after wholesale prices rose 0.2 per cent in May. Economists expected a gain of 0.9 per cent last month.
Businesses slashed inventories more than expected in May, the ninth consecutive decline, as companies continued to trim stockpiles amid a severe recession. The Commerce Department says inventories fell one per cent in May. Economists expected a 0.8 per cent drop. Total business sales dipped 0.1 per cent in May, led by a 0.9 per cent drop in sales by manufacturers. Sales at the wholesale and retail levels actually posted gains in May.
Texas wants $1.7 billion from the federal government to help develop high-speed rail service between its major cities. The Dallas Morning News reports state transportation officials submitted a preliminary grant application to the Federal Railway Administration. The agency is developing guidelines and awarding grants for developing high-speed rail service nationwide. Grants are to be awarded later this year. Texas hopes to use the $1.7 billion to eventually link Dallas, Austin, San Antonio and Houston with trains traveling at speeds exceeding 200 mph. The state also wants $200 million for less ambitious projects. Texas faces an uphill climb for the money since federal guidelines favor states that have already moved toward developing high-speed rail. However, rules are expected to be refined this summer that could give Texas a better shot.
Governor Rick Perry chaired a meeting of the state’s Cash Management Committee at the Texas Capitol to set a limit on the amount of Temporary Revenue Anticipation Notes, known as Tran notes. The committee includes the governor, lieutenant governor, comptroller and House speaker. Early each fiscal year the state sends out money to school districts. But that’s done before the state collects much of its yearly taxes, so there’s a temporary cash-flow shortfall. The state is allowed to borrow money short term to close that gap, and that borrowing is done through Tran notes.
President Barack Obama wants to spend billions of dollars over the next decade to beef up the nation’s community colleges. The Obama plan would pump $12 billion into the two-year institutions to train more people for the jobs that will be available in the future. About $9 billion would go toward challenge grants and addressing dropout rates and $500 million to online education. The rest would be used as seed money to spark renovation and construction. President Obama says lost auto industry jobs in states such as Michigan will not come back and new jobs will require greater training and post-high school education to achieve a higher skilled work force. Obama said jobs requiring at least an associate degree are expected to grow twice as fast as jobs requiring no college. The administration hopes to assist five million Americans earn degrees and certificates over the next ten years. Obama is proposing a $12 billion effort to help the two-year institutions teach and train more people for “jobs of the future.” Community colleges have been feeling the pinch lately. Enrollments are up for several reasons, including rising college costs at public and private schools and because of the economy–as people who’ve lost jobs sign up to learn new skills. About six million students attend community college. Officials say Obama wants to increase community college enrollment to 11 million by 2020.
Chrysler Financial says it’s repaid in full its $1.5 billion in government loans. The company secured the Troubled Asset Relief Program, or TARP, funding in January to help keep automaker Chrysler out of bankruptcy protection. Chrysler Financial says it used the TARP money to fund more than 85,000 consumer loans. The funds used to repay the TARP loans were obtained through the completion of an automotive asset-backed securitization. Chrysler Financial’s original TARP loan contained provisions that increased its costs over time, motivating the company to pay off the loan quickly. Chrysler Financial served as Chrysler’s preferred lender until the automaker filed for Chapter 11 earlier this year and it was replaced by GMAC Financial Services.
General Motors CEO Fritz Henderson says July sales for the automaker appear to be weaker than the same month last year. Henderson says that halfway through the month, July seems like it’s below a ten million annual selling rate. Sales this year have been running below a ten million annual rate each month. Henderson says a lot of the government’s economic stimulus package has yet to take effect, so he’s optimistic about a second half recovery for auto sales.
US Airways says it will cut 600 ground jobs this fall because of the slow economy. The airline says it will close its Las Vegas US Airways Club and reduce the staff at its club in Phoenix. It will also shift to outside contractors for ramp service work in nine stations, mostly those served by US Airways Express regional carriers. The cuts were laid out in a memo to workers from Chief Operating Officer Robert Isom. He says the company had hoped the staff would shrink through retirements and departures for other jobs. But he says attrition has fallen sharply this year and the airline needs to shrink faster. Airlines in the U.S. have been struggling with a sharp dropoff in business travel.
House Democrats want to raise taxes by 5.4 per cent on millionaires to pay for covering the uninsured. The ambitious plan would also require employers and individuals to get health insurance coverage or pay a penalty. For individuals, the penalty would be 2.5 per cent of income–but it could go no higher than the average cost of health insurance. The penalty for employers would be much higher–eight per cent of a worker’s wages–with an exemption for small businesses. Business groups are strongly opposing an employer requirement. House Speaker Nancy Pelosi told reporters the bill is both a starting point and a path to success. Pelosi and Democratic Representative Henry Waxman of California said the House would pass the bill before the August recess. President Barack Obama is pressing the House and Senate to vote this summer on the bill. The plan would scale back Medicare and Medicaid payments to hospitals and doctors. But the liberal-leaning plan lacked total cost figures and it was unclear whether last-minute changes by its sponsors would satisfy moderate and conservative Democrats who last week refused to commit their support. House leaders want to quickly move the legislation through three committees and to a floor vote before the Congressional recess in August.
ExxonMobil is making its first major investment in greenhouse-gas reducing biofuels, announcing a $600 million partnership with a California biotech company. Exxon and Synthetic Genomics said they’ll team up to develop transportation fuels from algae. Despite record-breaking profits in recent years, Exxon has been criticized by environmental groups, members of Congress and even shareholders for not spending enough to explore alternative energy options. One of the company’s requirements was finding a biofuel source that could be produced on a large scale. Exxon says photosynthetic algae appears to be a viable, long-term candidate.
Indictments returned in two east Texas counties accuse 17 people of stealing or conspiring to steal condensate from natural gas wells. A statement from the Panola County district attorney said arrests began this morning. Indictments returned in Panola and Rusk Counties involve 65 counts and thefts over a two-year period. Prosecutors say 15 people were indicted in Panola County for alleged participation in an organized crime ring. Indictments returned in Rusk County accuse two people of oilfield theft. Several natural gas companies cooperated in the probe. The investigation also included Shelby, Nacogdoches, Harrison, Smith and Gregg Counties, plus Texas Rangers.
Federal agents have launched a probe into the cause of a fire that devastated a large high plains egg production plant. The fire at the Cal-Maine Foods plant last week in Farwell killed an estimated 800,000 chickens. A statement issued by the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives says an ATF national response team from Lubbock has arrived at the scene. The statement says the fire destroyed four of the nine laying houses at the complex and killed chickens in a fifth. Each of the five destroyed buildings covered 24,000 square feet. Four firefighters suffered heat exhaustion and smoke inhalation while fighting the blaze. The Texas State Fire Marshal’s Office and the Parmer County Sheriff’s Department also are participating in the investigation.
Dell says the U.S. personal computer market has reached its low point. But the timing of a global turnaround in the technology industry remains anyone’s guess. At a meeting with Wall Street analysts, the company elaborated on guidance it issued Monday, when it said it expects slightly stronger sales in the current quarter. Despite these signs of improvement, Dell executives said that many of the conditions that have hurt the PC industry aren’t easing. Businesses have clamped down on technology purchases and put off new computers as the economic crisis persists. And consumers—the ones who are buying new computers at all — are choosing cheaper models.
Dellwants to be dismissed from a lawsuit over New Orleans’ crime camera program, disputing claims it used confidential information to rip off a camera system set up by two other companies. The request for dismissal comes with a September trial date looming and a federal inquiry into camera contracts and the city’s technology office under way. Dell calls the claims against it by Southern Electronics Supply and Active Solutions a “futile attempt to bring a well-capitalized defendant into this case.” The companies sued in 2007, claiming the surveillance system they had developed was misappropriated by people in and with ties to the city’s technology office. They also allege a conspiracy with Dell to sell the system. Dell has disputed the allegations.
Unemployment continues to rise, home values have tanked and many retirement accounts may have shrunk, but a new poll suggests Americans are feeling less stress these days, at least when it comes to debt. A new Associated Press-GFK poll finds debt-related stress lower than a year ago. One analyst says people have “some optimism that the worst is behind them,” while another adds “people are doing things that make them feel they are taking charge of their lives again.” Respondents indicate they are saving more, spending less and trimming debt to cope with the recession. Ironically, some of those changes could add to the national economy’s stress. If American consumers sharply cut back spending, that could short-circuit hopes for a recovery this year and prolong the recession.
The economy’s bad, but today’s young people still say they’re happy with life, according to an MTV poll, which finds that about 73 per cent of 18- to 24-year-olds are generally happy. That’s compared with about 66 per cent in 2007. And that’s despite the fact that more young people think they’ll have a harder time finding work, buying a house and raising a family than their parents did. The poll does suggest that young people–ranging in age from 13 to 24 — are less happy with the amount of money they have. Of respondents ages 13 to 17, 75 per cent say they’re happy. That’s up from 65 per cent two years ago. One analyst says being happy despite financial worries could be a good sign. He says it might show a transition from basing happiness on material objects.