Friday PM June 27th, 2008
AT&T says it is moving its corporate headquarters from San Antonio to Dallas to get better access to its customers and operations around the world. The telecommunications company says it will then be closer to key technology partners, suppliers, innovation and human resources needed for continued growth. With customers in all 50 states and in 160 countries, air travel to and from Dallas will be more convenient, time efficient and cost effective. AT&T said the move will begin in the coming weeks and is expected to be complete around the end of the year. The company expects the move to involve about 700 of its nearly 6,000 San Antonio-based employees. AT&T has called San Antonio home for 16 years.
The average price of gasoline in Texas appears to be edging lower this week. AAA Texas on Friday reported the statewide average for self-serve regular is $3.92 per gallon--down seven-tenths of a penny since last week. Houston's average is at $3.91. The nationwide gasoline price average went down one penny, to reach $4.06 per gallon. The association reports Beaumont and the Dallas-Fort Worth areas had the most expensive gasoline this week in Texas at $3.94 per gallon. Corpus Christi had the least expensive gasoline, averaging $3.88 per gallon.
Some of the Houston Independent School District's lowest-paid workers are getting help with rising gas prices. The school district's board agreed to spend $2.8 million to help about 10,000 of the district's lowest-paid workers with high gasoline costs. The workers--who make as little as $15,000 a year--will get a one-time payment of $250. The Houston Educational Support Personnel Union had asked for $500 for the workers. Gasoline prices are averaging nearly $4 a gallon in Texas. The budget also gives all of the district's 12,500 teachers at least a three percent pay raise.
Unemployed Americans who've exhausted their regular 26 weeks of benefits are going to get an extension. The Iraq war funding bill that Congress has passed and sent to the White House includes another 13 weeks of unemployment benefits for workers who've used up their regular benefits. The extension will run through March. The move follows five straight months of falling payrolls, and an unemployment rate that jumped a half-point in May to 5.5 percent.
The millions of economic stimulus payments gave a massive jolt to household finances in May, sending after-tax incomes up by the largest amount in 33 years. The payments helped boost consumer spending by the largest amount in six months. The Commerce Department reported that disposable incomes, the amount left after paying taxes, surged by 5.7 percent last month. It was the biggest increase since May 1975, reflecting $48.1 billion in rebate payments made last month. The surge in incomes helped boost consumer spending by 0.8 percent, the biggest gain since last November.
The chief investment strategist for Wells Fargo Capital Management says the country is in a "fear-session" rather than a recession, according to the Houston Business Journal. Addressing oil executives, Jim Paulsen says the economic crisis is being driven more by fear than facts, but should ease in the second half of 2008. He says profit margins in the non-financial sector are running at near post-World War II highs. Paulsen says U.S. corporations will benefit as they sell products to emerging economies.
Larger losses are being seen for one of the nation's biggest home builders. KB Home says weak sales and falling home prices led to a 55 percent drop in revenue. The company also booked charges to lower the value of unsold homes, joint venture deals and land option contracts. The Los Angeles-based company reported a loss of nearly $256 million. A year ago, it lost nearly $149 million. CEO Jeffrey Mezger said weak demand for new homes and falling home prices forced the company to book additional impairment charges during the quarter, hurting the company's operating results. KB Home, which builds homes to order and has operations in nine states, said its cancellation rate also improved in the second quarter. It rate was 27 percent, down from 34 percent in the year-ago period and 53 percent in the first quarter. The average selling price of KB's homes tumbled 17 percent during the quarter to $226,600.
A Mississippi jury returned a $900,000 verdict for a Pascagoula couple who sued their Texas-based insurer for unpaid Hurricane Katrina damages. Retired Navy Admiral James Lisanby and his wife had sued San Antonio-based USAA. The dispute involved damage to their Pascagoula beach front home, as well as their rental cottage, garage and other losses from the August 2005 storm. The jury on Monday will consider punitive damages. USAA lawyers had argued company did not owe more than the about $45,000 it had already paid because the homeowners insurance policy did not cover water, even wind driven water. An attorney for the Lisanbys says USAA failed to properly and fully investigate the claim on the couple's home before denying coverage.
Despite the light rains we've had in Houston recently, Texas is in another widespread drought. The latest U.S. drought monitor map shows about 95 percent of Texas is now in some stage of drought. In late May, only about 59 percent of Texas had some degree of drought. The Associated Press reports that one year ago 99 percent of the state was drought-free. Worst hit now is the San Antonio area, which is in extreme drought and has had just under four inches of rain since January 1st. The National Weather Service says that's the driest ever for that time span. The drought forced the Edwards Aquifer Authority this week to implement the first stage of groundwater restrictions. The aquifer supplies drinking water to San Antonio. Burn bans are in effect in nearly half of the state's 254 counties.
Baker Hughes in Houston reports the number of rigs actively exploring for oil and natural gas in the U.S. rose by seven this week to reach 1,913. One year ago the rig count stood at 1,775. Texas is down one rig. The count peaked at 4,530 in 1981, during the height of the oil boom. The industry posted several record lows in 1999, bottoming out at 488.