The number of laid-off workers filing claims for unemployment benefits showed an unexpected improvement last week although a key indicator of unemployment hit a four-year high. The Labor Department reported that applications for unemployment benefits totaled 357,000 last week, a decline of 18,000 from the previous week. That pushed applications for benefits to their lowest level since mid-April. However, the four-week average for people receiving benefits edged up to 3.086 million--the highest level since March 6th, 2004, when the country was still struggling to recover from a prolonged period rising unemployment. Initial claims for unemployment insurance in Texas rose last week by 7.6 percent to 14,260. But that's lower than the same week in 2007, according to the Texas Workforce Commission.
The Mortgage Bankers Association says home foreclosures and late payments set records over the first three months of the year. Even worse, the numbers are expected to continue to rise. The trade group says the proportion of mortgages that fell into foreclosure soared to nearly one percent in the January-through-March period. The mortgage bankers also say that more homeowners slipped behind on their monthly payments. More problems also cropped up with loans to more credit worthy borrowers. California, Florida, Nevada and Arizona accounted for 89 percent of the total increase in new home foreclosures. Those are places where prices have fallen sharply and there was a lot of home building, creating too much supply.
A Ford executive is telling North American white-collar workers the company wants to cut its salaried work force costs by 15 percent. President of the Americas Mark Fields said in an e-mail message sent to workers Thursday the cuts will take place by August 1st. Ford spokeswoman Marcey Evans says the company does not have a target number of employees. The departures will be involuntary, and workers would get standard severance packages that are based on years of service. Evans says the cuts will vary by department. Ford announced last month it was cutting North American production for the rest of this year and no longer expects to return to profitability by 2009 due to the rapidly deteriorating U.S. auto market.
General Motors this week announced drastic cuts in production of sport utility vehicles and pickups, stepping up plans for smaller cars and engines. Chevrolet General Manager Ed Pepper says high gasoline prices has forced a "structural shift" by consumers away from large vehicles, but he doesn't see this as the end of the SUV.
"I don't see it that way at all. I think that, you know, certainly consumers are concerned with gas prices being high, but remember, full sized utilities—people buy them for the capability that they provide, and it's just the same as in pickup trucks. You know, people need pickup trucks to do what they have to do. No, I see this as a temporary thing. And you know, as the economy improves--which it will, because it's all cyclical—a lot of these vehicle segments, I think, will improve, as well.
Pepper says GM has mounted a full-scale attempt to recapture market share.
"We have actually hired 2,000 of the brightest engineers out there that are working on you know, our fuel and energy solutions going forward. I mean, we're going to bring a Volt to marketplace—first electric vehicle with the range-extender technology by the end of 2010. You know, this isn't a hybrid. This is a true electric vehicle, and we're backing up our talk and we're really, really into this. We've been into it--we just haven't been getting credit for it for many, many years."
Chevrolet is introducing the Volt, which will be powered by batteries and a small gasoline engine. The manufacturer will also produce two new small cars and a new 1.4-liter four-cylinder engine.
Many retailers saw a pickup in sales last month, as consumers put their economic stimulus payments to work. Even so, there were signs that shoppers were focusing on the basics, like food and gasoline. Discounters and lower-priced stores such as Costco and Wal-Mart were again among the strongest performers. Analysts had predicted a tough May, as consumers contend with rising energy costs, declining home values and tightening credit. Wal-Mart says sales at stores open at least a year rose nearly four percent. That was better than forecast. But rival Target saw a bigger-than-expected drop. Department stores reported weaker results, but many still beat analyst expectations and the luxury sector was strong.
American Airlines says its new $15 fee for checking a single bag will affect fewer than one in four customers. Fort Worth-based American said it doesn't believe the added cost, as fuel prices go up, will lead to longer lines at boarding gates. The fee takes effect on tickets bought on or after June 15th. American said three-quarters of summer travelers had already bought their tickets and wouldn't pay the fee. The airline defended the fee, saying it's still a bargain compared to the shipping a 45-pound bag overnight on a package-delivery company. American says such a tab for sending a bag from Dallas to New York could be $150 or more. Members of the elite levels of American's frequent flyer program won't have to pay the first-bag fee, and neither will those who bought full-fare tickets or are traveling overseas.
Americans aren't the only ones upset with high gasoline prices. Protests broke out in India and Malaysia as consumers reacted angrily to sharp fuel price hikes. Fuel subsidies in both countries were reduced overnight, leaving citizens to foot more of the bill. The sudden increases could ultimately undermine both governments. In Malaysia gas is up 41 percent, and diesel fuel 67 percent just from Wednesday. It jumped 11 percent in India. Some are concerned about the impact the increases will have on food and transportation prices. More rallies are planned in both countries.
World leaders at a U.N. summit have pledged to reduce trade barriers and boost agricultural production to combat a food crisis that is spreading hunger and unrest across the world. Delegates at the Rome summit approved a declaration resolving to ease suffering caused by soaring food prices. The three-day summit urged help for farmers in poor countries who need seed and fertilizers. A final draft of the report calls for stepped up food production, reduced trade restrictions and more research on the contentious issue of biofuel. Cuba and other Latin American countries hampered attempts to draft a final report, insisting that language condemning embargoes be added in the report. The United States opposed efforts to condemn its long-running embargo against Cuba.
A Dubai-based company has agreed to buy 80 percent of struggling Sino Swearingen Aircraft. San Antonio-based Sino Swearingen says the deal with Emirates Investment & Development will allow full-scale production of its SJ30 business jet. Fuselages and wings are manufactured in Martinsburg, while the 560-mph planes are assembled in San Antonio. Sino Swearingen announced that the federal government has approved the transaction. Sino Swearingen has gone through several rounds of layoffs and shaken up its management while searching for fresh capital. Sino Swearingen won regulatory approval to build the jet in late 2005, but has delivered just a handful of planes.
Transportation officials say rising gas prices are the reason behind a ten percent increase in riders on Amtrak's Heartland Flyer. The train runs daily to and from Oklahoma City and Fort Worth. John Dougherty at the State Transportation Department says rising gas prices are leading people to look for travel options and the Heartland Flyer meets that need. Nationwide passenger train use is up by 11 percent. Studies are now under way to determine the feasibility of extending the Heartland Flyer's route to Tulsa or to Kansas City via Newton, Kansas.
Philadelphia is taking steps to tackle the mortgage mess. The city is launching a pilot program next week that will require court mediation between homeowners and lenders before foreclosures can take place. Mediation is the city's latest effort to address the nationwide mortgage crisis that's affecting many Philadelphia homeowners. The city has delayed sheriff's sales for April and May to give the pilot program time to provide help for struggling homeowners. Mayor Michael Nutter has also launched a public service announcement to make people aware of a housing hot line. He says about 8,500 foreclosure filings are expected in the city this year. Philadelphia is spending about $2 million on the foreclosure protection program in the upcoming fiscal year.
The owner of Bennigan's, Steak & Ale, Ponderosa and Bonanza restaurants says it's working out a plan to restructure its debt. Plano-based Metromedia Restaurant Group say it's in the process of formulating a proposal to present to lenders. The Wall Street Journal, cited people familiar with the matter, reports Metromedia had violated terms of its loan agreement with its major lender, GE Capital Solutions. The private company issued a statement saying it "would like to clarify that it has neither filed for bankruptcy nor prepared a bankruptcy filing." The company said it was committed to maintaining service at its restaurants. Casual-dining chains are being squeezed by the higher costs of food and energy, just as many customers pull back on spending.