A key gauge of homebuilders' confidence sank to a new record low this month, as the deepening U.S. recession and rising unemployment erode chances for a housing turnaround. The National Association of Home Builders/Wells Fargo housing market index dropped one point to a record eight in January. The index was at nine for the previous two months. Index readings higher than 50 indicate positive sentiment about the market. But the index has drifted below 50 since May 2006 and has been below 20 since April. The slide in builders' confidence accelerated in the wake of the U.S. financial crisis, slipping three points in October and then five points in November.
General Motors sold fewer cars globally than Toyota last year, as the Japanese automaker passed the Detroit company for the first time. GM says it sold 8.356 million cars and trucks in 2008, falling about 616,000 vehicles short of Toyota's total of 8.972 million. General Motors posted an 11 per cent drop for the year, while Toyota's sales fell four per cent.
The target date for General Motors to get its second installment of government loans passed last week. But a top company executive says he expects the money to arrive in the next several days. Fritz Henderson, GM's president and chief operating officer, says without the second installment of $5.4 billion, the company will run out of cash long before March 31st. GM received $4 billion late last year and was to get $5.4 billion January 16th and another $4 billion on February 17th. That's the day it is to submit its plan to show the government how it will become viable. Henderson tells the Automotive News World Congress in Detroit the money is critically needed to pay GM's bills. He attributed the delay in receiving the second installment to the Treasury Department's workload and the change in administrations.
Governor Rick Perry is heralding the arrival of 1,400 new Caterpillar jobs and says the company's expansion shows the Texas Enterprise Fund is working well. Perry is asking the legislature to put more money into the fund that's used to seal business deals that bring jobs to Texas. At a Caterpillar plant groundbreaking ceremony in Seguin, Perry said that the uncertain economy makes the state fund especially important. Caterpillar received $10 million from the Enterprise Fund. The equipment company previously announced it is consolidating and relocating its assembly, paint and testing operations from Illinois and South Carolina to Seguin, about 30 miles northeast of San Antonio.
The Texas budget has been filed as legislation and it's more than $2 billion in the red. Under the version filed in the Senate — lawmakers will either have to borrow $2.3 billion from the so-called Rainy Day Fund or cut state services by that amount. Lieutenant Governor David Dewhurst says the initial budget meets his top priorities by holding the line on state spending, continuing the record local school property tax cuts and funding essential services. The main state share of the proposed budget is $83.8 billion. Comptroller Susan Combs has projected $80.1 billion in available revenue. That means there's a $2.3 billion hole, plus another $1.4 billion shortfall that could result from a constitutional spending cap — tied to investment returns — from a key education fund. Lawmakers will start the budget period with about $6.7 billion in the Rainy Day Fund.
Clear Channel Communications has officially announced that it's laying off 1,850 employees, as the nation's largest owner of radio stations grapples with the economic meltdown. The cuts represent about nine per cent of the company's total work force and affect staff throughout the company, in radio, outdoor advertising and corporate offices. In a company-wide email sent on Tuesday, chief executive Mark Mays told employees that the company is facing an "unprecedented time of distress."
The Federal Communications Commission is fining nine cable TV operators for attempting to thwart its investigation of a practice in which analog channels were transferred to a more expensive digital tier. That left some customers without access. In a letter to Congressional leaders Monday, on his last full day in office, FCC Chairman Kevin Martin said cable operators had exhibited "contempt" for the commission by not providing full information about their practices, as ordered. The cable operators receiving fines were Comcast, Time Warner Cable, Cox Communications, Charter Communications, Cablevision Systems, Bright House Networks, Harron Communications, Midcontinent Communications and Suddenlink Communications. The fines range from $7,500 to $25,000 — totaling about $500,000. Some companies also were told to issue refunds to customers within 90 days for failing to give a 30-day notice about the channel changes.
Latham & Watkins partner Kathryn Ruemmler is accepting a position in the Obama administration. She'll be principal deputy attorney general in the Department of Justice. Ruemmler was deputy director of Justice's Enron Task Force, handling the closing arguments for the Nigerian barge trial and the trial of Enron founder Ken Lay and Jeff Skilling.
Oil and gas companies in Texas are cutting back on drilling as crude prices drop below $40 per barrel. The Associated Press reports the layoffs are beginning and the boom of the past few years appears to be drawing to a close. Midland City Manager Courtney Sharp expects a drop in tax revenue next month because of slumping sales. Kevon Horst landed his first job in the booming West Texas oilfields when crude was selling for about $140 a barrel last summer. Horst and about 20 others working a rig near Canadian, about 40 miles from the Oklahoma line, were laid off recently. He and his girlfriend moved in with her mother. He's struggling to keep up with the $500-a-month payments on his new truck. Overall unemployment is still low in Texas oil towns — 3.1 per cent in Midland and 3.7 per cent in Odessa, or about half the national average. Ben Shepperd with the Permian Basin Petroleum Association says everybody is feeling anxious about the future. Industry experts said that until prices climb back to $70 per barrel or so, drillers may be unable to persuade lenders to give them the financing they need.
Ukraine's prime minister has proclaimed her country the winner in the two-week gas dispute with Russia even though higher gas prices are going to badly hurt the Ukrainian economy. Yulia Tymoshenko says at Wednesday's cabinet session that Ukraine has won "great conditions" under a gas deal that ended Russia's natural gas cutoff to European countries. Monday's deal doubled the price Ukraine has to pay for Russian gas in the first quarter. Gas prices are expected to fall later this year, but Ukraine is still expected to pay significantly more this year for Russian gas than it did in 2008. Ukraine was struggling to pay for Russian gas even at last year's price as it faced a currency collapse, falling exports and a shaken banking sector.
The Iraqi oil ministry is evaluating offers submitted by three international companies to develop a prized oil field in southern Iraq. The ministry's spokesman, Assem Jihad, says Italy's Eni Spa, Spain's Repsol and Japan's Nippon Oil submitted bids for a service contract to develop the Nasiriyah oil field. It's believed to have 4.4 billion barrels in reserves. Jihad said that the contract will be for engineering, procurement and construction services. He didn't elaborate. The field is one of Iraq's discovered but undeveloped fields and lies in the oil-rich Dhi Qar province, about 200 miles southeast of Baghdad. Iraq holds the world's third largest proven reserves of crude, with more than 115 billion barrels of oil.Earnings
American Airlines parent AMR Corporation says it lost $340 million in the fourth quarter as fewer people flew than a year ago. The loss of 77 cents per share, excluding special items, matched Wall Street's expectations, as falling oil prices helped lighten costs. Revenue was $5.47 billion, below the $5.52 billion forecast by analysts surveyed by Thomson Reuters. CEO Gerard Arpey says the loss reflects problems facing all airlines. He says moves like cutting capacity have put American in better shape to deal with high fuel prices and a weak economy. A year ago, the company lost $184 million without special items.
Railroad operator Burlington Northern Santa Fe says its fourth-quarter earnings jumped 19 per cent, as the benefit of lower fuel prices offset lower demand for shipments. Burlington Northern Santa Fe said it earned $615 million, compared with $517 million a year ago. It says revenue edged up three per cent to $4.37 billion. Thomson Reuters says analysts were expecting a profit of $1.74 per share on revenue of $4.4 billion. The Fort Worth-based company attributed its revenue gain to better efficiency and higher fuel surcharges for customers. These factors were somewhat offset by fewer shipments of goods as the economy contracted further during the quarter.