Friday PM February 12th, 2010

Retail sales up slightly; business inventories trimmed…Northeast snow storms affect air travel nationwide…Texas sales tax collections continue their slide…

The U.S. Army has upheld its decision to award of the army FMTV vehicle contract to a Wisconsin company, after almost two decades of construction at BAE in nearby Sealy. The bids of competitors were re-evaluated in response to protests about the bidding process. The FMTV is a series of vehicles consisting of up to 23 variants and 17 different models, ranging from 2.5 to 5-ton payloads. Senator John Cornyn of Texas says the Army’s decision to discard this important and valuable asset—the FMTV’s Sealy-based manufacturing home–is ill-informed.

Retail sales posted a better-than-expected increase in January, a welcome development that could mean stronger economic growth in coming months. The Commerce Department said that retail sales increased by 0.5 percent last month, the best showing since November and higher than the 0.3 percent increase economists had expected. Excluding autos, sales posted a 0.6 percent increase, also better than expected. Strength in consumer spending is important because it accounts for 70 percent of economic activity. Economists are worried that the spending gains since last summer could falter given the tough times facing many U.S. households.

Businesses reduced inventories in December, a sign that they remain cautious about the strength and durability of the economic recovery. The Commerce Department said that businesses trimmed stockpiles by 0.2 percent in December, a weaker performance than the 0.2 percent gain that economists had expected. Total business sales rose 0.9 percent in December following a 2.4 percent increase in November. The hope is that further gains in sales will convince businesses to make sustained increases in their inventories, a development that would boost factory production and help support a recovery from the deepest recession since the 1930s.

The latest northeast snow storm is over, but it could be days before the nation’s airlines can get flight schedules back to normal. Thousands of flights had to be canceled this week, and thousands more today. But air carriers–including United and Southwest–are expecting to start getting things on track tomorrow. They’re moving more planes to east coast hubs like Baltimore and Washington, D.C. A spokesman at Dallas-Fort Worth airport isn’t saying when overall operations can again run smoothly. About one-third of Thursday’s scheduled flights were canceled at the nation’s fourth-biggest airport. For air travelers, the best advice over the next few days continues to be: pack patience. As for taking the train, Amtrak says downed trees and power lines south of Washington are forcing the cancellation of more service in Virginia, North Carolina and South Carolina. Tracks between Washington, New York and Boston are open, but there have been scattered cancellations elsewhere in the northeast.

A new government report says airlines were on-time for 80 percent of their flights last year. That’s their best record since 2003. The Transportation Department report released says Hawaiian Airlines had the best record last year, followed by Southwest and Alaska Airlines. United had the best record of the big international carriers. The month of December was tough, though, with just 72 percent of flights arriving on-time. Major snowstorms made airline operations difficult. The DOT also said the mishandled baggage rate for last year was the lowest since 2004.

The National Mediation Board says nearly 8,000 fleet service employees of Continental Airlines voted in favor of representation by the International Brotherhood of Teamsters. Continental’s fleet service employees include ramp, operations and cargo agents. They also direct jets to the terminal gates.

A federal judge has ordered the acquittal of two former employees of disgraced financier R. Allen Stanford on charges that they illegally shredded thousands of company documents. U.S. District Judge Richard W. Goldberg cited insufficient evidence in Miami in the case against ex-Stanford employees Thomas Raffanello and Bruce Perraud. The judge’s order came on the second day of jury deliberations. Raffanello and Perraud faced up to 50 years in prison if convicted of conspiracy, document destruction and other charges. Defense attorneys had argued that all records were backed up electronically. Raffanello was previously chief of Miami’s Drug Enforcement Administration office. Stanford is awaiting trial in Houston.

Union Pacific begins making $29 million worth of improvements to its line running from Spring to the Washington Corridor next Thursday. The 23-mile stretch of tracks parallel to the Hardy Toll Road will see improvements, as well as the line along Washington Avenue from downtown to Hempstead Road. A modern track-renewal train called the TRT 909 installs rails and concrete ties in one pass. It can install up to 5,000 ties in 12 hours. Crews are removing old rails and wooden ties and installing new rails, 29 track switches and more than 62,000 concrete ties. Some 99,000 tons of rock ballast for roadbed will be spread, and 14 rail crossings will have roadway improvements.

Sales tax collections across Texas continued their slide in January as major sectors like retail, fuel production and construction posted lower numbers. Texas collected $1.66 billion in sales tax revenue—down 14.2 percent compared to the same month in 2009. Texas Comptroller Susan Combs sent $618.2 million in local sales tax to Texas cities, counties and transit systems—down 7.1 percent compared to February 2009 disbursements.

President Barack Obama has signed legislation lifting the cap on government borrowing to $14.3 trillion. The new law also puts in place new budget rules to curb growing annual deficits. Known as “paygo” for “pay as you go”—the rules require future spending increases or tax cuts to be paid for with tax increases or other spending cuts. If the rules are broken, the White House Budget Office would force automatic cuts in programs like Medicare and farm subsidies. Most other benefit programs, including Medicaid, social security and food stamps, would be exempt. The debt limit was increased from $12.4 trillion to keep the U.S. from going into default. Obama signed the bill privately at the White House.

Senate Democrats are proposing a new, stripped-down version of a jobs bill they hope will still get support from both Republicans and Democrats. The latest version focuses on several popular provisions aimed at boosting job creation. Those include a new tax break negotiated with Republicans for companies that hire unemployed workers and for small businesses that buy new equipment. It also would renew highway programs and help states and local governments finance large infrastructure projects. But some Republicans are accusing Democrats of reneging on a bipartisan agreement that took weeks to produce. A spokeswoman for Iowa Senator Chuck Grassley says the goal was to “build broad-based support for tax relief and other efforts to help the private sector recover from the economic crisis.” The original bill had won support from across the political Spectrum, from President Barack Obama to conservative Republicans. A test vote is expected when the Senate returns later this month.

Royal Dutch Shell says a database containing business contact details for many of its employees and contractors has been leaked to several environmental groups. Shell spokesman Wendel Broere confirms the database with 176,000 entries sent to Greenpeace and others is authentic, though the information it contains is not particularly sensitive. The database was sent from anonymous e-mail addresses with a note claiming authorship by employees who want the company to right alleged wrongs in Nigeria, where shell is the largest foreign oil producer. Broere says Shell is investigating the leak. Shell has laid off around five percent of its roughly 102,000 staff in the past year, and announced another 1,000 job cuts earlier this month.

Kroger and Shell Oil are combining forces to offer gas discounts for grocery shoppers at Shell stations. The deal is a big expansion of the largest U.S. traditional grocer’s ability to use gas incentives, an increasingly popular industry tool for building loyalty among recession-squeezed households. Beginning Monday, Kroger shopper card customers in five markets in Ohio, Tennessee and California can get at least ten cents off a gallon at Shell stations after buying $100 in groceries. Adding Shell to Kroger’s own gas stations will triple the number of places Kroger shoppers can get discounts in those markets—and provide them for the first time in the San Diego area, where Kroger’s Ralphs Stores don’t sell gas.

BP is starting a system to allow drivers to redeem instant cents-off-per-gallon savings from retailers at the pump. The program is similar to those offered by grocery stores, rewarding loyal customers with cheaper fuel. BP has deployed the technology to about 350 sites so far, part of a year-long process. Nearly all BP stations will be participating.

Rates on 30-year fixed mortgages fell slightly this week, dipping below five percent. Freddie Mac says the average rate on a 30-year fixed mortgage was 4.97 percent this week, down from an average of 5.01 percent last week. And last year at this time, the rate for a 30-year fixed mortgage averaged 5.16 percent. Rates fell to a record low of 4.71 percent in early December.

The number of rigs actively exploring for oil and natural gas in the U.S. rose by 11 this week to 1,346. Houston-based Baker Hughes said that 891 rigs are exploring for natural gas and 443 for oil. Twelve are listed as miscellaneous. A year ago this week, the rig count stood at 1,339. Of the major oil- and gas-producing states, Texas gained five. The rig count tally peaked at 4,530 in 1981, during the height of the oil boom. The industry posted a record low of 488 in 1999.


Ed Mayberry

Ed Mayberry

News Anchor

Ed Mayberry has worked in radio since 1971, with much of his early career as a rock’n’roll disc jockey. He worked as part of a morning show team on album rock station KLBJ-FM, and later co-hosted a morning show at adult rock station KGSR, both in Austin. Ed also conducted...

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