The government says unemployment rose in most cities and counties in December. That’s a signal that companies remain reluctant to hire even as the economy recovers. The Labor Department said that the unemployment rate rose in 306 of 372 metro areas while it fell in 41 and was unchanged in 25. That’s worse than November, when the rate fell in 170 areas, rose in only 154 and was unchanged in 48. Joblessness topped ten percent in 138 metro areas, up from 125 in November but below last year’s peak of 144 areas in June. Houston’s unemployed is at 8.3 percent for December, from 8.2 percent the previous month.
President Barack Obama proposes to cut some taxes for companies that hire workers. At the same time, his budget would raise a host of other taxes on businesses and wealthy individuals. The budget proposal would extend Obama’s signature making work pay tax credit–$400 for individuals, $800 for a couple filing jointly–through 2011. It would also impose nearly $1 trillion in higher taxes on couples making more than $250,000 and individuals making more than $200,000 by not renewing tax cuts enacted under former President George W. Bush. Obama would extend Bush-era tax cuts for families and individuals making less. Obama revived numerous proposals for business tax increases that didn’t fare well in Congress last year, including a scaled-down plan to increase taxes on U.S. companies with major overseas operations. He also plans to increase taxes on oil and gas companies.
A key Democratic Senator says there is bipartisan support in the Senate to pass a bill that offers tax credits to employers that add workers. Senator Max Baucus of Montana, chairman of the Senate Finance Committee, said that he supports Obama’s plan. He noted that other Senators on the committee, including Republican Senator Orrin Hatch of Utah, have proposed similar bills. Obama’s plan would give companies a $5,000 tax credit for each new worker they hire in 2010. Businesses that increase wages or hours for their current workers in 2010 would be reimbursed for the extra social security payroll taxes they would pay.
Meanwhile, Treasury Secretary Tim Geithner says the nation’s economy is stronger than it was a year ago, yet the government must continue to act to stimulate job growth. Geithner told the Senate Finance Committee that the Obama administration is trying to balance the desire to add jobs with the need to rein in ballooning budget deficits.
Former Federal Reserve Chairman Paul Volcker says prohibiting large commercial banks from engaging in high-risk trades would cut back on institutions deemed “too big to fail” and add security to the financial system. Volcker testified before the Senate Banking Committee, pushing new bank limitations on behalf of President Obama. The Obama administration wants to add the restrictions on trading to legislation that would overhaul financial regulations. The banking committee is in the midst of negotiating a bill. Obama has embraced Volcker’s idea to prohibit large financial companies that have both commercial and investment functions, such as Goldman Sachs, from engaging in speculative trading. Large banks oppose the idea.
A small steel shim the size of a postage stamp may fix what ails some Toyotas. The parts to repair sticky gas pedals began arriving today. The shims are designed to relieve the friction in the accelerators that can cause them to get stuck. The problem led to the recall of more than two million Toyotas, including the popular Camry and Corolla. The company says the fix will take about half an hour. Toyota insists the solution has been through rigorous testing and will solve the problem for the life of the car. The automaker expects finishing all the repairs will take months and says some dealers will be open around the clock to handle the vehicles. Federal regulators say Toyota has “done the right thing.” At the same time, a transportation department official says the government is investigating reports that electrical problems may also be at play.
A Toyota executive says a consumer backlash from its gas pedal problems is to be expected, particularly given the scale of the recalls. The executive admits there’s a perception the company moved too slowly. He said it was too soon to put a number on the ultimate cost of the recall. The recall covered 4.45 million cars worldwide, including 2.48 million of them in North America. The Toyota official denied there were any electronic problems. He says the company had investigated for electronic problems, and hadn’t found any.
Another Toyota executive says there are no electronic problems in vehicles being recalled in U.S. for a gas pedal problem. The National Highway Traffic Safety Administration continues to investigate the issue but a Transportation Department official says there’s been no evidence seen yet to support an electronic malfunction. The executive, who oversees quality control at the Japanese automaker, says there’s a perception the company was slow in responding to the gas pedal problem but he says the company made finding a fix a priority.
Transportation Secretary Ray LaHood says Toyota was slow to realize there were safety problems with its gas pedals that has led to the recall of millions of popular Toyota brands. LaHood says the Toyota case is one of most pressing safety issues he has faced as secretary. Toyota has recalled 2.3 million vehicles due to concerns over gas pedals that can stick when drivers step on the gas. That’s in addition to millions more the company has recalled over problems with pedals catching on floor mats.
Automakers say their sales in the United States mostly rose in January as the economy improved. GM saw a 14 percent increase, while Ford’s sales were up 25 percent from a year ago. But Toyota was an exception, posting a 16 percent drop in a month in which it had to stop sales of several top-selling models because of a gas pedal problem. Still, the top sales analyst at Ford says he doesn’t see any evidence that Ford was taking buyers from Toyota.
The number of people preparing to buy a home rose slightly in December, a sign that home sales could be stabilizing heading into the spring home buying season. The National Association of Realtors says its seasonally adjusted index of sales agreements rose one percent from November to December to a reading of 96.6. That was a little lower than the 97.1 level analysts expected, according to Thomson Reuters. The index has risen for nine out of the past ten months as buyers scrambled to take advantage of an $8,000 first-time homebuyer tax credit before its scheduled expiration November 30th. Congress extended the tax credit to April 30th, and added a $6,500 credit for current homeowners.
Opening statements have been delivered in the case of two former employees of disgraced financier R. Allen Stanford. A Miami federal prosecutor told newly seated jurors that Thomas Raffanello and Bruce Perraud shredded thousands of documents in Stanford’s Fort Lauderdale office. Defense attorneys say the charges are completely false. They say Raffanello and Perraud had no connection with Stanford’s financial dealings. Prosecutors have refused to give immunity to witness Anthony Belovich because he also may face criminal charges. Belovich has invoked his fifth amendment right not to testify. Visiting Judge Richard Goldberg told jurors the trial is expected to last about eight days.
Cadbury shareholders have voted to approve Kraft Foods’ nearly $20 billion offer to acquire the British candy maker. The vote clears the last major hurdle to the creation of the world’s largest confectionary company, greatly expanding Kraft’s global reach. Kraft says nearly 72 percent of Cadbury shareholders approved the deal. The deal does not require a vote by Kraft’s shareholders. The purchase is expected to close this month.
NASA has introduced a group it calls the Seven New Pioneers of Space. They are not astronauts, but private companies. At a gathering in Washington were representatives of companies that are getting government seed money for commercial space development. The Obama administration is canning its back-to-the-moon plans and wants private industry to build spacecraft to NASA’s astronauts. Some of the players include companies run by Internet pioneers Jeff Bezos of Amazon and Elon Musk of Paypal. Others include Boeing Company of Houston; Paragon Space Development of Tucson, Arizona; Sierra Nevada of Sparks, Nevada; United Launch Alliance of Denver, and Orbital Science of Dulles, Virginia.
Continental Airlines says January traffic rose 8.5 percent from a year earlier but a key revenue measurement continued to fall. Houston-based Continental says paying passengers flew 6.98 billion miles last month, up from 6.43 billion miles in January 2009. That includes traffic on both Continental’s mainline brand and regional affiliates such as Continental Express. Capacity rose 2.8 percent, to 9.04 billion available seat miles. With traffic rising faster than capacity, planes were fuller. Average occupancy, or load factor, rose to 77.2 percent from 73.2 percent in January 2009. Continental says revenue per available seat mile, a closely watched indicator of pricing power and financial performance in the airline industry, fell between one percent and two percent from a year ago. The decline was even steeper on the main Continental brand, falling between 2.5 percent and 3.5 percent.
A top Senate Democrat is asking 30 leading technology, Internet and communications companies to provide detailed descriptions of their operations and human rights practices in China. The companies include Apple, Facebook, Twitter, AT&T, Amazon.comeBay. Senate Democratic whip Dick Durbin of Illinois sent letters to the companies seeking information about their business in China and their plans for protecting human rights, free speech and privacy there. Durbin’s letter comes nearly three weeks after Google said it would stop censoring search results in China and threatened to pull out of the country altogether after uncovering a hacking attack emanating from china and attempts to snoop on dissidents.
Americans’ love affair with top-shelf booze cooled last year as the recession took a toll on high-priced tipples. A new report by an industry group shows people drank more but turned to cheaper brands. They also drank more at home and less in pricier bars and restaurants. Industry growth slowed in 2009, with the amount of liquor sold by suppliers up 1.4 percent. That’s the smallest increase since 2001 and below the ten-year average of 2.6 percent. Last year, the lowest-priced segment, with brands such as Popov vodka that can go for less than $10 for a fifth, grew the fastest, with volume rising 5.5 percent. The most expensive price range, roughly $30 or more for a 750 ml bottle, such as Grey Goose, fell the most, tumbling 5.1 percent.
UPS is seeing more people using cell phones to buy and ship goods over the Internet. And, a greater number of customers are paying for premium services like next-day air, while businesses are beefing up operations overseas. UPS reported a fourth-quarter profit of $757 million, nearly triple the amount from a year earlier. The only blemish was UPS’ money-losing freight business, which ships larger items such as gym equipment, grand pianos and automobiles. The world’s largest shipping carrier continues to position itself for an economic rebound, albeit a gradual one. UPS will again this year spend less money than it has historically on things like equipment, airplanes and trucks. It also is cutting jobs, although ups says it has enough money to give raises to managers. The company forecasts 2010 earnings within a range that’s consistent with Wall Street expectations.
The chief oil adviser to Nigeria’s president says the West African nation will offer an auction later this year on oil fields that may have up to two billion barrels. Adviser Emmanuel Egbogah says the auction will include both land and offshore oil fields for companies. Egbogah says he expects China to be among those vying for the fields. He says some of the fields up for auction may be those already relinquished by oil companies operating in Nigeria. Nigeria used to be Africa’s number one crude oil producer, but violence in the Niger delta knocked the nation off that pedestal. The Financial Times first reported the potential auction.
Marathon Oil says higher oil prices helped it earn $355 million in the fourth quarter, reversing a loss from a year ago. The Houston oil company lost $41 million in the same quarter of 2008. Revenue increased 11.5 percent to $15.9 billion. For the full year, Marathon earned $1.46 billion, compared with $3.5 billion in 2008.
D.R. Horton says it made a first quarter profit of $192 million as the homebuilder benefited from a heavy tax gain. The company lost $62.6 million in the prior-year period. Excluding the one-time tax benefit of $149.2 million, the company reported earnings of $42.8 million. Revenue rose 23 percent to $1.1 billion from $900.3 million. The number of homes closed increased 36 percent to 5,529, while orders increased 45%. Analysts were expecting revenue of about $960.2 million.