The Federal Reserve expects the economy this year will sink at a slower pace than it previously thought, but that unemployment will top ten per cent. The Fed now predicts the economy will shrink between 1 and 1.5 per cent this year. The forecast issued in May projected it would contract between 1.3 and 2 per cent. Against that backdrop, the Fed says unemployment will be worse this year. It predicts the jobless rate could rise as high as 10.1 per cent, compared with the old forecast of 9.6 per cent. The nation’s unemployment rate climbed to 9.5 per cent in June, a 26-year high.
The government says consumer prices shot up in June by the largest amount in 11 months, reflecting the biggest jump in gasoline prices in nearly five years. The Commerce Department said that inflation at the consumer level rose by 0.7 per cent last month, slightly higher than the 0.6 per cent increase that economists were expecting. It was the biggest one-month gain since a similar 0.7 per cent increase last July. The big jump was seen as a temporary blip, however. Inflation is not expected to be a problem any time soon given a severe recession which is keeping a lid on wage pressures.
Industrial companies have cut back production yet again in June but not nearly as deeply as they have been, another sign the recession is easing its grip. The Federal Reserve said industrial production fell 0.4 per cent last month as the recession bit into demand for a wide range of manufactured goods, including cars, machinery and household appliances. Economists, however, were predicting a 0.6 per cent drop. The decline in June wasn’t as bad as in May. Industrial activity posted a revised 1.2 per cent drop then, which turned out to be slightly worse than first reported.
United Space Alliance plans to lay off 160 Houston employees, as it sheds about four per cent of its workforce–about 400 employees total—to align itself with NASA’s workload. NASA plans to end the space shuttle program and transfer its funding to the Constellation program, which is developing spacecraft for a return to the moon. USA is NASA’s primary industrial partner on the space shuttle and International Space Station. The company has 9,300 employees nationwide, with about 3,700 in the Houston area. The alliance is a joint venture between The Boeing Company and Lockheed Martin.
A key U.S. Senate vote has been postponed to strike out $1.75 billion added to the defense spending bill for more fighter jets from Lockheed Martin. Senator Carl Levin today temporarily withdrew the F-22 amendment so the Senate can first address a controversial hate crimes bill. The Senate Armed Services Committee last month narrowly approved the additional funding requested by Georgia Republican Saxby Chambliss. Lockheed’s primary manufacturing plant is in Georgia, but key parts of the plane also are made in Texas and California. Elsewhere, the House last month voted to include a $369 million down payment for 12 additional fighters to its version of the defense bill. The Obama administration has threatened to veto a defense spending bill that includes money to buy more of the radar-evading jets beyond the 187 requested.
The Environmental Protection Agency has awarded $5.8 million to clean diesel projects in Houston and the Port of Houston Authority. The funds are provided under the American Recovery and Reinvestment Act’s 2009 National Clean Diesel Funding Assistance Program. The port receives almost $3.7 million for projects promoting the use of advanced emission reduction and energy efficient technologies, as well as replacement of aging cargo handling equipment. Funds will also help repower the Sam Houston marine vessel.
The House Subcommittee on Transportation, Housing and Urban Development has preliminarily approved $150 million for Houston’s METRO North and Southeast lines, with $75 million for each project. The funding is for final design, land acquisition and construction for the first segments on the projects.
Texas utility regulators are calling attention to special electric rate discount programs as demand peaks during the long, hot summer. The Public Utility Commission of Texas reminds consumers that electric power retailers are offering prices of less than a dime per kilowatt hour. PUC officials also say discounts for low-income electricity users are being increased through August 1st to about three cents per kilowatt hour. A PUC statement says that means a rate cut of 17 to 30 per cent. Consumers can get immediate pricing information by phone at 866-797-4839 or on the Internet at www.powertochoose.org. Lite-Up Texas program applications for low-income consumers are available at 866-454-8387 or 877-399-8939.
The Senate Health Committee has passed legislation to revamp health care, becoming the first Congressional committee to act on President Barack Obama’s goal of overhauling the system this year. The Health, Education, Labor and Pensions Committee voted 13-10 along party lines to pass a $600 billion measure that would expand coverage to nearly all Americans by requiring individuals get insurance and employers to contribute to the cost. The bill would provide federal aid to families and individuals making less than four times the poverty level, or about $88,000 for a family of four. Massachusetts Senator Edward Kennedy, the chairman, wasn’t there for the milestone vote. He’s being treated for brain cancer.
Phil Angelides, former state treasurer in California who lost a 2006 bid to become state governor, and Bill Thomas, a former House Republican from California who chaired the Ways and Means Committee, have been picked to lead an independent investigation into the financial crisis. The ten-member panel is expected to recommend by December 15th, 2010, how the government can stabilize the economy and prevent another meltdown.
Prosecutors nationwide are filing 189 lawsuits and cease-and-desist orders against loan modification consultants accused of bilking desperate homeowners. Federal Trade Commission Chairman Jon Leibowitz and California Attorney General Jerry Brown announced the legal actions Wednesday in Los Angeles. They are part of a nationwide sweep of sham consultants conducted by the FTC and 23 states. The California Attorney General’s Office says the five Superior Court lawsuits it filed in Orange and Los Angeles Counties include allegations against 21 individuals and 14 companies. The lawsuits seek millions of dollars in civil penalties, restitution for victims, and a permanent injunction to keep the companies and the defendants from offering mortgage-relief services.
AT&T and its largest union say they have reached a tentative deal on a new contract for 18,500 employees in the midwest. The deal was reached after nearly five months of negotiations with the Communications Workers of America. The previous contract expired three months ago. The CWA says the new agreement “safeguards” the health benefits, which had been a sticking point in the talks. Union members will vote on the deal in the next few days. The phone company is still negotiating with the union in five other districts, covering nearly 100,000 workers.
Nigeria’s main militant group is threatening to end a cease-fire just 12 hours after halting attacks on oil installations, as it claims military gun boats and troops are heading toward one of their camps in the oil-rich south. A spokesman for the movement for the emancipation of the Niger Delta says the rebels are watching the military’s movement. Jomo Gbomo says in an e-mail to the Associated Press that if the troops were sent to threaten the militants they will immediately call off their cease-fire. Military officials were not available for immediate comment. The rebels had halted their campaign of vandalizing oil installations and kidnapping foreigners after the government released an ailing rebel leader.
Bell Helicopter and union representatives returned to the bargaining table–the fourth time since nearly 2,500 manufacturing workers went on strike a month ago. Both sides negotiated for two days last week without a resolution. Their first talks were July 1st, more than two weeks after United Auto Workers local 218 went on strike in the Dallas-Fort Worth area. Members had rejected a three-year contract because of proposed increases in medical costs and plans to outsource janitors’ work. Union bargaining committee officials say they will keep fighting to have their members’ voices heard. After last week’s failed negotiations, Bell said it remained committed to reaching a solution that will get everyone back to work.
The Energy Department says crude oil reserves fell more than expected last week. At the same time, gasoline stockpiles expanded more than thought. Crude inventories dropped 2.8 million barrels to nearly 345 million barrels. That is nearly 17 per cent above year-ago levels. Gasoline inventories rose by 1.5 million barrels to nearly 215 million barrels. Those supplies are more than two per cent above year-ago levels. Demand for gasoline over the previous four weeks was 0.6 per cent higher than a year earlier.
The chairman, president and CEO of CITGO received the Helping Hand Award from the Houston Minority Supplier Development Council last night, in recognition of the company’s efforts to help grow minority-owned businesses. Alejandro Granado says CITGO hosted four supplier diversity events last year, resulting in 524 minority and woman-owned businesses registered in their database.
University of Houston President Renu Khator has named ten industry leaders to her newly-formed UH Energy Advisory Board. The board will meet quarterly to help address research and workforce needs of the energy industry. Named to the board, which next meets on October 28th, are: Tim Cejka, president of ExxonMobil Exploration Company, John Gibson, president and CEO of Paradigm, John Hofmeister, chairman of the Greater Houston Partnership Energy Collaborative and CEO of Citizens for Affordable Energy, Ryan Lance, senior vice president of international exploration and production for ConocoPhillips, David McClanahan, president and CEO of CenterPoint Energy, Lamar McKay, chairman and president of BP America, Marvin Odum, president of Shell Oil and director of Royal Dutch Shell, David Ramm, partner of DKRW Energy, Corbin Robertson, chairman and CEO of Natural Resource Partners and Bruce Williamson, chairman, president and CEO of Dynegy.
A drop in travel during the recession pushed American Airlines parent AMR Corporation to a $390 million loss in the second quarter. AMR said that excluding charges related to the sale and grounding of planes, it would have lost $319 million. That’s less than analysts expected. Revenue dropped 21 per cent, to $4.89 billion. AMR said the swine flu outbreak cost it $50 million to $80 million in revenue. The AMR report was the first from major U.S. carriers covering the April-to-June quarter, usually a good one for travel. But companies have reduced travel due to the recession, and that’s hurting the airlines.
Cement maker Texas Industries has posted a fiscal fourth-quarter loss. That reverses the Dallas-based cement maker’s profit in last year’s quarter. TXI blames the sagging economy and a big charge that it booked for its cement operations in California. For the three months ended May 31st, the company lost $42.4 million. That’s after a net income of $26.1 million in last year’s fourth quarter. The results included an after-tax charge of $39 million for impairment of goodwill associated with its California cement operations. Sales plunged 32 per cent. Cement sales dropped 33 per cent. Sales of aggregate products–stone, sand and gravel–also fell 33 per cent. Consumer product sales slid 34 per cent. Analysts polled by Thomson Reuters, on average, expected sales of $193.9 million.