The White House says the record federal budget deficit will get even worse. The deficit for the current budget year will rise above $1.8 trillion--about four times the record set just last year. The record red ink flows from the deep recession, the Wall Street bailout, and the cost of President Barack Obama's economic stimulus bill. As the economy performs worse than expected, the deficit is expected to worsen by almost $90 billion for the current budget year and the 2010 year beginning in October. Tax revenues are down, while the government is paying out more than expected for unemployment benefits and food stamps. For the current year, the government will borrow almost half the money it takes to run the government. Next year's deficit is estimated at $1.3 trillion.
President Barack Obama has praised health industry groups for coming forward with an offer to reduce the growth of spending by $2 trillion a year to overhaul the system. Obama appeared at the White House with an array of industry figures, including union representatives, and called it the occasion "historic." Industry figures pledged that they would voluntarily slow their rate increases over the next ten years. Obama said the step the industry took must be carried out as part of "a broader effort" to change the health care system, keep costs under control and provide health insurance for the some 46 million Americans who do not now have it. He said, "I will not rest until the dream of health care reform is achieved in the United States of America."
The Houston Purchasing Managers Index edged upward to 40.9 in April, according to the National Association of Purchasing Management-Houston. The PMI can range between zero and 100, with readings above 50 indicating likely production growth over the coming months. The Houston PMI posted 58 consecutive months of readings above 50 before last November. The Houston PMI indicates that production has improved for two consecutive months and sales improved over the month, while employment declined at a much-reduced pace last month.
Houston residents who install solar arrays or other renewable power generation facilities can now participate in a program offering credit for excess energy sent to the electric grid. Texas-based Green Mountain Energy has launched its Renewable Rewards buy-back program. For the first 500 kilowatt hours per month of excess electricity, the credit will be the same per kWh rate that Green Mountain charges. For excess beyond 500 kWh per month, the buy-back rate will be reduced by 50 per cent.
Accounting firms, grocery stores and dentists are experiencing above-average sales during the economic downturn, according to Sageworks, as reported by the Houston Business Journal. The North Carolina-based provider of financial analysis tools says other industries with growth despite the recession include vehicle maintenance, home remodeling, specialty schools and personal care services.
A new poll suggests that fewer Americans will be traveling for vacation this summer. Only 42 per cent of those surveyed by the Associated Press and GFK said they are planning a leisure trip this summer. That's down from the 49 per cent who told pollsters a year ago that they were planning a summer trip. One-third of those surveyed said they have already canceled at least one trip this year because of financial worries. Money appears to be a major factor in who's traveling. More than two-thirds of those making $100,000 or more said they had travel plans, while less than half those in the $50,000-$100,000 bracket did. Only a third of those with family incomes under $50,000 expect to be making a pleasure trip. About 20 per cent of respondents who are going say they'll be staying closer to home, and nearly a quarter say they'll save money by staying with friends and family rather than a hotel.
Businesses are poised to boost their law budgets in the seconds half of 2009, following a seven per cent drop in corporate spending on legal services since the end of last year. That's according to Massachusetts-based BTI Consulting, as reported by the Houston Business Journal, which says that corporate legal spending at large companies will grow nearly five per cent over the next six months. The increase will be lead by regulatory compliance, employment, securities and bankruptcy/corporate restructuring law.
Bank customers favor financial institutions that offer the best variety of services, according to J.D. Power & Associates. Bank reputations have a strong effect on customer choice. But the study finds that customers are going beyond the hype of headlines to find banks that offer services such as online functionality, mobile banking services, debit cards with reward programs and account alerts. Customers switching banks report having a previous good service experience with the new bank or receiving a positive recommendation. Better interest rates and lower fees were notably less important selection criteria.
General Motors' CEO says bankruptcy protection for the nation's biggest automaker is becoming more probable with a deadline just over two weeks away. CEO Fritz Henderson is still holding out hope that the company can restructure without court protection, but he says the tasks to complete before a June 1st government-imposed deadline are large. GM has been given $15.4 billion in federal loans. The government deadline to restructure or seek Chapter 11 protection is just over two weeks away. But the company must reach concessionary agreements with unions, persuade thousands of bondholders to exchange $27 billion in debt for ten per cent of GM's stock, cut thousands of dealers, close plants and lay off more salaried workers. The company also plans to begin notifying dealers later this week about plans to reduce their ranks by about 2,600.
The Justice Department is warning corporate America that the government will aggressively investigate big firms that improperly dominate markets. Assistant Attorney General Christine Varney said the department is abandoning legal guidelines put in place by the Bush administration in September 2008. Critics complained the earlier set of instructions made it difficult to pursue antitrust cases against big firms. She says some of the problems in the current economy were due to the lack of enforcement in the previous ten years--a clear jab at the Bush administration, which, she said, raised too many hurdles to antitrust investigations. Varney said the Obama administration would try to follow the historic lessons of the Great Depression, in pursuing antitrust cases even in a troubled economy.
The White House is telling industry officials it is leaning toward wanting the Federal Reserve to become the super cop for "too big to fail" companies capable of causing another financial meltdown. Officials who attended a private one-hour meeting Friday said the administration made it clear it was not inclined to divide the job among various regulatory agencies, as suggested by industry and some federal regulators. The officials said Treasury Secretary Timothy Geithner told the group that one organization needs to be held responsible for monitoring systemwide risk. He said such a regulator should be given better visibility into all institutions that pose a risk to the financial system, regardless of what business they are in.