With the recession apparently over, the Federal Reserve held a key interest rate at a record low and again pledged to keep it there for an “extended period” to foster the fragile economic recovery. The Fed says economic activity has “continued to pick up” and that the housing market also has grown stronger, a key ingredient to a sustained recovery. The Fed says it will trim its purchases of debt from Fannie Mae and Freddie Mac to $175 billion, from $200 billion, because there is limited availability of that debt.
Challenger, Gray & Christmas says the number of planned job cuts announced by U.S. employers declined for the third consecutive month in October. The announced cuts fell 16 per cent to 55,679 from 66,404 in September, according to the Chicago-based outplacement consultant. That’s the lowest number since last March. The pace of downsizing has slowed steadily throughout the year after reaching a seven-year peak in January.
A trade group says the U.S. service sector grew for a second straight month in October, but at a slower pace than in September, as the recovery creeps along for the country’s hospitals, retailers, financial services companies and truckers. The Institute for Supply Management’s service index dipped to 50.6 last month from 50.9. Any reading above 50 signals growth, but analysts polled by Thomson Reuters had expected a 51.5. But new orders, an augur of future activity, grew faster in October. That measure rose to 55.6, from 54.2 in September. The ISM index tracks more than 80 per cent of the country’s economic activity.
U.S. retail sales figures from a key data service show signs of a rebound in October from last year’s plunge. Spendingpulse, a service of Mastercard Advisors, reports that categories including jewelry and apparel posted gains in October compared with a year earlier. Michael McNamara, vice president at Spendingpulse notes that discounting, which depresses total sales figures, wasn’t as deep this October as last, and he says more people are coming out to shop in recent weeks than earlier this fall. But he says October’s sales were lower than two years earlier in many categories, and only a tad higher than October 2005. The numbers from Spendingpulse come ahead of the release Thursday by major retailers such as Target and Macy’s of their October sales at stores open at least a year.
Two CPS Energy workers are on administrative leave over a recently disclosed jump in the projected cost for two more units at the South Texas Project. The CPS Energy board has launched an investigation into how and when management because aware of the higher estimate. Interim CPS Energy General Manager Steve Barley said an estimate that exceeds the preliminary total project cost of $13 billion is not acceptable. The statement cited recent news reports about a $4 billion increase. The utility seeks to expand STP, a two-unit nuclear complex about 90 miles southwest of Houston. The utility says the substantially higher preliminary cost estimate caused postponement last week of a proposed $400 million bond issue. Names of the two workers were not released by the company.
Texas spent $300 million on merit pay for teachers in the past three years in an effort that led to few gains by students. The national center on performance incentives reviewed the now-defunct Texas Educator Excellence Grant. The Dallas Morning News reports that researchers determined there was “no systematic evidence that TEEG had an impact on student achievement gains.” Researchers examined reading scores on the Texas Assessment of Knowledge and Skills for more than 140,000 students. A spokeswoman for Governor Rick Perry, Allison Castle, says he supports rewarding the best teachers through merit pay. She says Perry worked with the legislature to consolidate programs into one with an increase funding. Legislators provided nearly $200 million annually for another merit pay plan that began last year, district awards for teacher excellence, or date.
House Democrats want tougher rules for credit card companies to go into effect by December 1st, accelerating by two months the enactment date of legislation previously passed by Congress. Congress passed similar legislation last spring. But lawmakers gave banks until mid-February to prepare for the changes. Representative Barney Frank, who chairs the House Financial Services Committee, said lenders have abused the grace period by raising interest rates ahead of the bill’s enactment date.
The Treasury Department expects to hit the government’s debt limit in December, two months later than its initial estimate, after scaling back an emergency loan program as the financial crisis abated. Treasury Department officials say they’re working closely with Congress to pass the legislation needed to boost the debt ceiling, currently at $12.1 trillion, and avoid an unprecedented default on the nation’s debt obligations. Treasury also says it’s ending sales of 20-year inflation-protected securities and will instead offer similar 30-year securities starting next year. The government believes the longer maturity option will be more popular with investors.
The House Financial Services Committee has voted to give federal regulators more power and money to police major players in the stock market. The bill, approved 41-28, would give the Securities and Exchange Commission the ability to offer bounty money to tipsters on fraud cases and bar violators of the law from employment in any securities-related industry. The measure also would double the sec’s budget in the next five years. The proposal is part of a broader effort by the committee to tighten rules governing financial institutions after last year’s market crisis. The full House was expected to vote on the bill and related proposals in early December. The Senate is still drafting its own legislation.
Texas will set aside more than $13 million in sales tax funding as the Dallas-Fort Worth area prepares to host the 2010 NBA All-Star game. The Arlington city council approved a financial agreement with the organizing committee and the state comptroller’s office. The Dallas Morning News reports the financial tool, known as a major events trust fund, uses estimates of how much money the game and related events could generate. The set-aside money can be used for advance costs such as security. The calculations are based on anticipated spending by people arriving for the event. The estimated $13.3 million will be available to Dallas, Fort Worth, Arlington and the private committee organizing the 2010 NBA All-Star game. The game is February 14th at the new $1.2 billion Cowboys Stadium in Arlington.