The number of newly laid-off workers seeking unemployment benefits fell sharply last week, a hopeful sign the job market may be improving. The Labor Department said that first-time claims for unemployment insurance dropped by 43,000 to a seasonally adjusted 440,000, the lowest total in a month. Wall Street economists had expected a decline of 15,000. A Labor Department analyst said the decline largely reflects the end of administrative backlogs that had elevated claims in the previous three weeks. The number of people claiming benefits for more than a week fell by nearly 80,000 to 4.5 million. That was a steeper decline than expected.
A White House report predicts the United States is likely to average 95,000 more jobs each month this year, while Americans’ personal savings will remain high as credit remains tight. The Council of Economic Advisers also trumpets the $787 billion economic stimulus package, which it says has saved or created about two million jobs. In a message to Congress, President Barack Obama points out that the economy he inherited was losing 700,000 jobs each month. Republicans were quick to describe the document as propaganda masquerading as governing. Obama’s report predicts the economy could grow at a rate of 2.5 percent, in line with what the administration’s economists predicted last year.
The Labor Department is reversing Bush administration rules that made it easier for farmers to hire temporary foreign workers to help pick their crops. The new regulations will increase wages and offer greater protections for thousands of foreign farm workers. The rules also require growers to make a greater effort to fill those jobs with domestic workers. Farm owners have vehemently opposed changes to the H-2A guest worker program. They say the new rules make it more burdensome and expensive to hire foreign workers for physically grueling jobs that most Americans don’t want. But labor and immigrant rights groups claimed the Bush regulations slashed farm wages and made it harder for domestic workers to claim those jobs.
A real estate industry group says home prices rose in 40 percent of U.S. cities in the fourth quarter of last year, as massive federal spending helped the housing market show signs of stability. The National Association of Realtors says that the median price for previously occupied homes sold rose in 67 out of 151 metropolitan areas in the October-December quarter versus a year ago. That’s a sharp improvement from the third quarter, when prices rose in only 20 percent of cities surveyed. The national median price was $172,900, or 4.1 percent below the fourth quarter last year. That was the smallest year-over-year price decline in more than two years.
A watchdog group reports failed commercial real estate loans could pose a threat to the nation’s overall economic health over the next several years. The Congressional Oversight Panel says banks face up to $300 billion in losses on loans made for commercial property and development, whose values have fallen more than 40 percent in the past three years. Small- and mid-size banks have been failing at the fastest rate since the savings and loan crisis of the 1980s and 1990s. The failures are due mostly to bad loans they made for commercial projects. Defaults could lead to reduced lending and force families from rental properties. Bank failures could contribute to job losses and hurt the economic recovery.
The number of U.S. households facing foreclosure in January dropped compared to December but increased 15 percent from the same month last year. Experts say a surge in cash-strapped homeowners who’ve fallen behind on mortgages could be on the way. Realtytrac says more than 315,000 households received a foreclosure-related notice in January, down nearly ten percent from 349,000 in December. December was the third highest total since the company began tracking foreclosure data in 2005. Patrick Newport, an economist with IHS Global Insight, says there are “a lot” of foreclosures coming in the future.
Retail gasoline prices in Texas slipped for the fourth straight week to settle at $2.48 a gallon. AAA Texas reports the group’s survey found a three cents drop in gasoline prices from the previous week. Nationwide gasoline prices declined two cents, reaching $2.64. The association found Fort Worth had the cheapest gasoline statewide, at $2.43 a gallon. The most expensive gasoline in the survey was in El Paso, averaging $2.60 a gallon. Oil prices continue to decline from the January 7th high of more than $83 a barrel. AAA says retail gasoline demand likely will be soft for the coming week because of major snowstorms that hit parts of the country, along with poor road conditions.
Back-to-back snowstorms along the East Coast have brought huge sales of shovels, groceries and alcohol. For airlines and department stores, however, the bad weather has resulted in millions of dollars of lost revenue. As businesses tallied up the impact of the second major snowstorm in less than a week, forecasters warned of a third wave of snow that could hit the northeast Monday. On Wednesday, people planning to travel or shop were stopped in their tracks. From Washington to New York City, roads, airports and businesses were closed. Airlines have canceled hundreds of flights in the past week and stand to lose millions of dollars. Ski resorts, liquor shops and hardware stores counted themselves lucky as out-of-school kids hit the slopes, and the grown-ups bought shovels–and booze–as the snow piled up.
Senators have released a bipartisan jobs bill that includes a tax break for companies that hire unemployed workers, money for highway construction, relief for private pensions and a short-term extension of the patriot act used to combat terrorism. The bill would also extend unemployment payments for those whose benefits have run out as well as subsidies to help the jobless continue paying premiums for health insurance. Democrat Max Baucus of Montana and Republican Chuck Grassley of Iowa released the bill this morning. They said it should be acted on “expeditiously,” but should not be rushed. Baucus is chairman of the Senate Finance Committee and Grassley is the top Republican on the committee.
Senate Democrats are trying a new route to break through an impasse on banking rules meant to prevent another financial meltdown. Senate Banking Committee Chairman Christopher Dodd has begun negotiating with Tennessee Republican Senator Bob Corker to write a bipartisan bank regulation bill. Dodd’s announcement comes less than a week after he said talks with the committee’s top Republican, Senator Richard Shelby, had reached an impasse. The Senate Banking Committee has been working for months to try to fashion legislation responding to the 2008 financial crisis. The House already passed its version of the legislation. Corker has been active in working with Democrats to help write new rules for Wall Street.
Western Union has agreed to a $94 million settlement in a dispute with Arizona prosecutors involving the state’s efforts to reduce the flow of immigrant and drug smuggling money through wire transfers. The Arizona Attorney General’s Office said the Englewood, Colorado-based company will pay $7 million to each of three Arizona law enforcement agencies to cover the costs of investigating Western Union and its agents. Authorities have alleged in court the company had some unscrupulous agents who knowingly helped smugglers send money to Mexico. Western Union also will contribute $50 million to the Southwest Border Anti-Money Laundering Alliance, which includes the Attorneys General of Arizona, California, New Mexico and Texas. The company will spend another $19 million to strengthen its own anti-money laundering effort and pay $4 million for independent monitoring of its anti-money laundering efforts.
A federal judge says he’ll have a ruling by the end of the month on whether to put jailed Texas financier R. Allen Stanford’s businesses put into bankruptcy. Greg Blue, an attorney for the investors, says placing the companies in bankruptcy would give every fleeced investor a voice in a potential recovery. Receiver Ralph Janvey, court-appointed to return as much money as possible to investors, opposes bankruptcy. The government accuses Stanford of running a $7 billion ponzi scheme by promising inflated returns on certificates of deposit at his Antiguan bank. He also is accused of skimming more than $1 billion for personal use. Stanford, who is jailed in the Houston area on similar criminal charges, denies the allegations.
Some Texas prisons could face closure to help balance the state budget. The deadline is Monday for state agencies to offer proposed cuts amounting to five percent of their budgets. The request came in January from Governor Rick Perry, Lieutenant Governor David Dewhurst and House Speaker Joe Straus. The Austin American-Statesman reports that Texas prison officials are looking for perhaps as much as $300 million in cutbacks. House Corrections Committee Chairman Jim McReynolds says the issue of possibly closing prisons is “absolutely on the table.” Senate Criminal Justice Committee Chairman John Whitmire of Houston says public safety cannot be compromised and he is “opposed to closing prisons just to save a buck.” Texas has 112 units and spends nearly $3 billion annually to house more than 153,000 inmates, although the prison population has been decreasing.
Mortgage financier Freddie Mac says rates on 30-year fixed mortgages slipped below five percent this week. The average rate on a 30-year fixed mortgage was 4.97 percent this week, down from 5.01 percent last week. Freddie Mac says the rate for a 30-year fixed mortgage averaged 5.16 percent at this time last year. Rates fell to a record low of 4.71 percent in early December. They have held around five percent due to a Federal Reserve program to pump $1.25 trillion into mortgage-backed securities to try to keep rates low and make home buying more affordable. That program is set to end March 31st.
Banks trimmed borrowing from the Federal Reserve’s emergency loan program over the past week, adding to evidence that credit problems are easing. Commercial banks averaged $14.6 billion in daily borrowing for the week that ended Wednesday, the Fed says. That was down from $14.8 billion in average borrowing for the previous week. Banks have been scaling back their use of the Fed’s emergency “discount” loan window as financial conditions have improved. At the peak of the financial crisis in the fall of 2008, daily borrowing from the discount window reached $110 billion as banks found their normal sources of credit frozen. Banks pay just 0.50 percent in interest on the emergency loans.
Burlington Northern Santa Fe says shareholders approve the sale of their railroad to Warren Buffett’s Berkshire Hathaway. Burlington Northern CEO Matt Rose says 70 percent of shares cast approved the deal. The acquisition needed two-thirds approval to pass. The shareholder vote is the last major step before the $26.3 billion purchase of the Fort Worth-based railroad. When the deal officially closes on Friday, it will be Berkshire’s largest-ever acquisition. Berkshire is based in Omaha, Nebraska.