Retail sales declined in September by the largest amount this year as car sales plummeted following the end of the government’s popular cash for clunkers program. The Commerce Department says retail sales dropped 1.5 per cent last month. That’s smaller than the 2.1 per cent fall economists had expected, but still the biggest setback since sales dropped 3.2 per cent in December. Car sales plunged 10.4 per cent, but excluding autos, retail sales rose 0.5 per cent. That’s better than the 0.2 per cent increase analysts expected.
Businesses continued to reduce their inventories for a 13th consecutive month in August even as sales saw a third straight increase. The Commerce Department reports business inventories down 1.5 per cent in August. Sales by manufacturers, wholesalers and retailers rose one per cent, reflecting a big boost from the government’s cash for clunkers program in August. Businesses may begin rebuilding depleted store shelves after more than a year of inventory cuts. If that occurs, factory production will begin to rise and help bolster a broad recovery from the worst recession since the 1930s.
Prosecutors want a Houston federal judge to set a trial date for Texas financier R. Allen Stanford, who’s jailed for allegedly bilking investors out of $7 billion. But Stanford’s recently appointed defense attorneys want U.S. District Judge David Hittner to hold off on a decision. They say the vast number of documents and witnesses they’re still sorting through make it nearly impossible for now to know how long they’ll need to prepare for trial. Stanford got two new attorneys last month after his previous lawyer withdrew because he had no assurance of payment. Hittner is scheduled to hear arguments about a trial date during a court hearing in Houston on Wednesday.
Texas’ oil and chemical industries are worried about a crackdown on pollution permits in the state. The Environmental Protection Agency has scrapped the state’s “flexible” permits. Those permits have allowed about 140 plants and refineries to exceed toxic emissions limits in the short term, provided they complied with overall federal averages in the long term. The change is set to take effect next year. Federal regulators say it’s meant to cut toxic emissions and bring Texas in line with the Clean Air Act. But industry groups warn that getting rid of the state program in favor of more rigid standards will hurt businesses crucial to the Texas economy. They also say the costs of compliance may hit consumers.
The chief economist for the Mortgage Bankers Association says foreclosures will peak by the end of next year as unemployment creeps above ten per cent. The forecast from economist Jay Brinkmann came at the trade association’s annual convention and expo in San Diego. Brinkmann expects unemployment to peak at 10.2 per cent by mid-2010. He also forecasts economic activity to slow again in the first half of next year but pickup in the second half. His forecast calls for home resales to increase by about 11 per cent over 2009 levels. Mortgage rates, meanwhile, will average about five per cent through the end of this year, then rise to 5.6 per cent by the end of next year. That means prospective borrowers should continue to enjoy fairly low rates.
Federal regulators say rising losses on commercial real estate loans will continue to hurt U.S. banks in coming months and pose the biggest challenge for many financial institutions and their overseers. Federal Deposit Insurance Corporation Chairman Sheila Bair says real estate loans will continue to be “the most prominent area of risk” for banks over the next several quarters. In testimony prepared for a Senate hearing, Bair says the $6.2 billion in loans backed by commercial properties that banks wrote off as lost in the past two years will likely grow sharply as more loans come due. Bair and U.S. Comptroller of the Currency John Dugan disputed accusations that regulators have been telling banks to restrain lending in the high-risk climate.
With many Americans in dire financial straits, states are cracking down to make sure aggressive debt collectors target only people who legitimately owe them money. National consumer credit laws already prohibit collection agencies from harassing, deceptive, or unfair practices like telling neighbors or family about what is owed, or calling before 8 a.m. or late at night. Now a half-dozen states have adopted additional limits, like imposing statutes of limitation on collections and adding opportunities to punish abusive practices in court, and other states may follow suit. Lawmakers are increasingly focusing on outfits that buy bad debt from credit card companies and other lenders for pennies on the dollar and profit when they collect more than they paid.
The IRS says 7,500 international tax dodgers have applied for an amnesty program that promises no jail time and reduced penalties for tax cheats who come forward. IRS Commissioner Doug Shulman says response to the program has been unprecedented. He said the tax dodgers were hiding money in more than 70 countries and on every continent except Antarctica. Accounts ranged from just over $10,000 to more than $100 million. The IRS has long had a policy that certain tax evaders who come forward before they are contacted by the agency usually can avoid jail time as long as they agree to pay back taxes, interest and hefty penalties. In March, the IRS began a program that sweetened the offer with reduced penalties. It ends Thursday.
A new document shows Federal Reserve policymakers were conflicted over whether to expand or cut back a program intended to drive down mortgage rates and support the housing market. In the end, Fed Chairman Ben Bernanke and his colleagues agreed to slow down the pace of a $1.25 trillion program to buy mortgage securities from Fannie Mae and Freddie Mac. Instead of wrapping up the purchases by year-end, the Fed last month said it would do so by the end of March. But minutes of the Fed’s closed-door deliberations on September 22nd-23rd reveal that some members thought “an increase” in the program could help the economy recover more quickly. Another member believed “a reduction” was warranted because the recovery was showing signs of picking up. The minutes don’t identify speakers.
Microsoft has issued a record number of security patches for its software as part of its regular monthly update. The software maker plugged 34 holes and designated most of them “critical,” Microsoft’s most severe rating. Among them are fixes for Windows Vista, Windows XP, Windows 2000 and even Windows 7, which doesn’t go on sale to consumers until October 22nd but has been in use by early testers and software developers. The patches target a wide array of Microsoft software, including the Internet Explorer Web browser, Media Player, Outlook and the Silverlight technology underlying multimedia Web sites.
The Federal Aviation Administration wants to levy multimillion dollar penalties on United Airlines and US Airways for safety violations. The FAA said it has proposed a $5.4 million fine against US Airways for operating eight planes on a total of 1,647 flights from October 2008 to January 2009 in violation of safety directives or the company’s own maintenance rules. The agency also said it is proposing a $3.8 million fine against United for allegedly operating one of its Boeing 737 aircraft on more than 200 flights after the carrier had violated its own maintenance procedures on one of the plane’s engines. The fines would be among the highest in the FAA’s history if measured by the number of planes involved.
Airlines are challenged by weak revenue and volatile fuel prices, but a new survey finds many executives think keeping loyal customers happy is the best way to improve their business. But the survey by the Southlake-based travel reservations technology company Sabre also finds that raising revenue and keeping customers happy is a tricky balancing act. Sabre said that its survey of 90 airlines around the world found that 86 per cent believe efforts to maintain and build customer loyalty had the most positive impact on their business. In the same survey, 58 per cent said merchandising and extra revenue from sources such as fees for checking baggage would help them financially. A study released in June by consulting firm J.D. Power & Associates found that customer satisfaction with airlines had fallen this year partly because of new fees. Sabre was the reservations-technology arm of Fort Worth-based American Airlines until it was spun off into a stand-alone company.