More people applied for unemployment benefits last week, one week after applications fell to their lowest level in more than two years. The Labor Department says applications rose by 18,000 to a seasonally adjusted 409,000 in the week ending January 1st. Applications fell to 391,000 in the previous week, the lowest point since July 2008. Fewer than 425,000 people seeking unemployment benefits signals modest job growth. But economists say applications need to fall consistently to 375,000 or below to substantially bring down the unemployment rate. Applications for unemployment benefits peaked during the recession at 651,000 in March 2009. Last week’s increase isn’t enough to reverse the downward trend. The four-week average, a less-volatile measure, fell to 410,750, its lowest level since late July 2008.
Economists are predicting that the December jobs report, due out tomorrow, will show a big increase in hiring. Analysts say employers may have added 145,000 net new jobs and the unemployment rate is expected to drop to 9.7 percent.
December retail figures didn’t hit expected levels, but analysts say Americans spent more in the 50 days of holiday shopping than predicted. Retailers are reporting surprisingly weak December revenue after a strong November pulled forward holiday spending and a blizzard in the northeast took a bite out of sales after Christmas. Analysts still expect spending in November and December to show the largest annual increase since 2006. As merchants report their figures, many retailers including Target, Costco Wholesale and Macy’s report gains that were below Wall Street expectations. Bon-Ton Stores sales were virtually flat and company officials blamed the severe snowstorms. The figures are based on revenue at stores opened at least a year, a key measure of a retailer’s health.
For investors, the December figures were disappointing, with a blizzard in the northeast dampening the after-Christmas sales. But retail revenue still rose significantly. One trade index says holiday sales for November and December combined rose 3.8 percent over last year Analysts say they expect shoppers will spend more aggressively this year, and that should translate into more jobs. Economist Mark Zandi thinks consumer spending will rise 3.6 percent in 2011, twice as fast as in 2010. That would propel the economy to grow about 4 percent, up from the 2.8 percent Zandi expects for 2010. He says the stronger growth should lead companies to add 2.9 million jobs this year. That would drop the unemployment rate to nine percent for all of 2011.
Legal experts say months of investigation by Gulf oil spill panels show there’s a greater likelihood that criminal charges will be filed against some of the companies involved. Several experts made their comments after part of a Presidential Oil Spill Commission’s report was released. The picture painted by that report and others do not blame a single person or group. That means in the end–no one may go to prison for the worst offshore oil spill in U.S. history. But criminal charges could add to the huge fines the companies like BP, Transocean and Halliburton already face. The Justice Department is conducting a criminal probe over the April 20th disaster in the Gulf of Mexico, but has not made any announcement about charges.
The last word on the largest offshore oil spill in history won’t be the conclusion from a presidentially appointed commission finding that decisions intended to save time and money created an unreasonable amount of risk. But it already has the companies involved with the blown-out well and Deepwater Horizon rig pointing fingers at each other again. In a 48-page excerpt of its final report obtained by the Associated Press, the commission described systemic problems in the offshore oil and gas industry and government regulators who oversee it. It also said such a disaster could happen again without significant reforms. The full report is due to the president January 11th. The Justice Department continues its own investigation, as does a joint U.S. Coast Guard-Bureau of Ocean Energy Management, Regulation and Enforcement panel.
A White House appointee says preserving the ecosystem of the Gulf Coast–damaged by the BP oil spill and decades of erosion–will be a massive undertaking, the “granddaddy” of restoration projects. John Hankinson was in New Orleans addressing a meeting of the Louisiana Governor’s Advisory Commission on coastal protection, restoration and conservation. In October, Hankinson was appointed the executive director of the Gulf Coast Ecosystem Restoration Task Force, a group that will recommend how to use potentially billions of dollars in fines BP faces paying. The White House plans to use fines BP pays on restoration projects along the Gulf Coast. Louisiana’s coast was hit the hardest by the oil spill and faces massive problems.
Two psychiatrists tell a federal judge that former Texas billionaire and financier R. Allen Stanford in not mentally competent to stand trial on charges he bilked investors out of $7 billion in a ponzi scheme. The psychiatrists testified about their conclusions during a hearing in Houston federal court on whether to postpone the January 24th start of Stanford’s trial. Stanford’s attorneys say their client is not able to assist them because he suffers from depression and a brain injury. Prosecutors suggest the financier might be faking mental illness. The jailed financier’s attorneys are asking for at least a two-year delay. Prosecutors are open to a delay but argue two years is unreasonable. Stanford has denied any wrongdoing in the case.
The Houston Ship Channel will be closed for at least four days as workers use pitchforks and fishnets to corral, pierce and remove 15,000 gallons of beef fat. Coast Guard spokesman Richard Brahm says shipping has not been impacted. The refinery-lined waterway is one of the busiest marine thoroughfares in the country. On Tuesday, about 250,000 gallons of beef fat leaked from a storage tank, and some reached the waterway through a storm drain. The fat solidified when it hit the colder water. Initially, the Coast Guard thought the channel would reopen early today. But Brahm says the cleanup is taking longer than expected. By late Wednesday only 25 percent of the mess had been removed.
Retail gasoline prices across Texas inched up one cent this week. AAA Texas reports the average price at the pump was $2.92 a penny, to reach $3.08. El Paso had the least expensive gasoline in the state survey, at $2.87 per gallon. Texarkana had the most expensive gasoline, averaging $2.95. Oil prices are hovering above $90 a barrel. AAA reports a barrel of oil, in early November, traded at about $81.
Treasury Secretary Timothy Geithner is urging Congress to raise the nation’s debt limit, arguing that failure to do so could affect millions of American jobs. Geithner says in a letter to Congressional leaders that the government will reach the limit on how much it can borrow between March 31st and May 16th. He says that not increasing the debt limit could lead to job losses, noting inaction could drive up interest rates and make it more costly for U.S. companies to borrow money. Geithner’s warning is directed chiefly at Republicans, who are vowing to block an increase in the debt limit and use the fight to restrain government spending.
Rates on fixed mortgages dipped this week after rising steadily over the last two months. Freddie Mac says the average rate on the 30-year mortgage dropped to 4.77 percent from 4.86 percent the previous week. It hit a 40-year low of 4.17 percent in November. The average rate on the 15-year loan slipped to 4.13 percent from 4.20 percent. It reached 3.57 percent in November, the lowest level on records starting in 1991. Rates have been rising since November. Investors have shifted money out of Treasurys and into stocks. Many expect the tax-cut plan will fuel economic growth and increase inflation. Yields tend to rise on inflation fears. Mortgage rates tend to track the yield on the ten-year Treasury note. Those rates have been fluctuating in recent weeks.
With more snow forecast for the northeast this weekend, major U.S. airlines hit hard by a December blizzard are warning of delays and cancellations and waiving the usual fees to change flights. Delta, American, United and Continental all say there could be travel disruptions. The bad weather could affect large airports such as Newark, LaGuardia and JFK in the New York City area. The airlines say passengers scheduled to fly through some northeast airports this weekend can change flights and delay their trip without paying a $150 change fee.
Dallas-based Southwest Airlines is revamping its frequent-flier program. The changes are scheduled to begin March 1st. Southwest says passengers will be able to redeem points for any flight without blackout dates. Southwest credit card holders will be able to redeem points for international flights on other airlines. In most cases, rapid rewards customers earned one credit for every one-way flight and got a free flight with 16 credits. Miles and fares didn’t matter. But customers complained that they weren’t rewarded for longer trips, couldn’t earn international flights, and credits expired in two years. Now Southwest will extend the credits if there’s some activity on the account.
Microsoft CEO Steve Ballmer has focused on the XBox video game system, smart phones and PCs during his talk the night before the opening of the tech industry’s premier gadget show in Las Vegas. Ballmer opened the keynote by demonstrating a new feature in Kinect, an add-on for XBox 360 that lets people control games and other features by moving around and speaking. Kinect avatars will more closely mimic people’s behaviors and facial expressions after an update this spring. Ballmer said Microsoft sold eight million Kinect sensors in its first two months on the market, three million more than expected. Microsoft also said that this spring, people who have Kinect will be able to wave their hands or speak aloud to browse and play video from Netflix and Hulu.
The first portable devices announced for Verizon Wireless’ new, high-speed wireless data network are a smart phone and a tablet from Motorola, both designed to take advantage of network’s speed with cameras for videoconferencing. More devices for Verizon’s “4G” network, which went live for laptop modems in December, are expected to be announced Thursday by the CEO of Verizon Communications at the International Consumer Electronics Show in Las Vegas. For the moment, Verizon has the fastest wireless network in the country, and it’s hoping to capitalize on it by selling data-hungry tablets and smart phones. There are unconfirmed reports that Verizon will also get to sell version of the iPhone, breaking AT&T’s exclusive hold, but analysts don’t expect Verizon to reveal one at the show.
AT&T will start selling the previous-generation iPhone–the iPhone 3GS–for $49 starting Friday to customers who buy the smart phone with a two-year service contract and data plan. The wireless company, which is the exclusive U.S. carrier for the iPhone, said it will include iPhone 3GS devices sold through AT&T and Apple. The iPhone 3GS was released by Cupertino, California-based Apple in 2009 and had been sold for $99 by AT&T and Apple since the release of the iPhone 4 last June. It can use the same ios4 software as the iPhone 4. AT&T, which is based in Dallas, is currently selling refurbished iPhone 3GS’ on its website for as low as $49.
The federal government plans to reward farmers who use crop insurance and demonstrate good management practices that limit their losses. The awards under the Good Performance Refund Program will average about $1,000 per eligible farmer, and payments will go out in the first quarter. The program will cost about $75 million, but the Federal Crop Insurance Corporation says the benefits will outweigh the costs by promoting sound farming practices that reduce losses and encouraging producers to keep using crop insurance. Regulations for the program were published in the Federal Register. The public comment period runs 15 days. To be eligible, farmers must have been in the crop insurance program at the “buy-up” level for varying numbers of years with no more than one year with a reported loss. Certain new and beginning producers are also eligible.