The government says the number of newly-laid off workers requesting unemployment insurance dropped last week after spiking the previous week due to auto layoffs. The Labor Department says initial claims for jobless benefits fell to a seasonally adjusted 631,000, from a revised figure of 643,000 the prior week. That nearly matches analysts' expectations of 630,000. Claims jumped two weeks ago as Chrysler shut its factories after filing for bankruptcy protection April 30th. Wall Street economists expect factory shutdowns by Chrysler and General Motors will inflate the initial claims numbers through June. Continuing claims, rose to nearly 6.7 million, the highest total on records dating to 1967 and a 16th straight record.
A private research's group forecast of economic activity rose more than expected in April, the first gain in seven months. The Conference Board says its index of leading economic indicators, designed to forecast economic activity in the next three to six months, rose one per cent last month. Economists surveyed by Thomson Reuters expected a 0.8 per cent increase. Conference Board economist Ken Goldstein says that means declines in activity could switch to growth in the overall economy in the second half of the year. The index is derived from ten components including stock prices, the money supply, jobless claims and new orders by manufacturers. The Conference Board says strengths among the components exceeded weaknesses for the first time in more than a year.
Retail gasoline prices are on the rise in Texas. However, a weekly AAA Texas survey shows the price is still well below last year. The survey shows the price of regular grade self serve at the pump rose by nine cents per gallon in Texas to $2.26 per gallon with the approach of Memorial Day. That's about 25 cents higher than last month but about $1.40 per gallon less than last Memorial Day. The national average rose nine cents to $2.36 per gallon. San Antonio has the cheapest gasoline in Texas at $2.21 per gallon. That's about nine cents below last week. The most expensive gas in Texas is in El Paso, where regular self serve averages $2.30 per gallon — 16 cents more than last week. The auto club says increased crude-oil prices are also fueling the retail price increase, as is the annual shift to more-expensive summer gasoline blends. However, it says experts don't expect gasoline to reach the $4 per gallon level seen last summer.
Millions of Americans are expected to hit the road for Memorial Day weekend — and gasoline prices are rising. But analysts say the economic slack created by the recession all but guarantees prices won't spike the way they did last year. AAA estimates 32.4 million people, or about one in ten Americans, will travel over the holiday — most of them driving. That's a slight 1.5 per cent increase from 2008. Vacations make a lot more sense for many families than they did last year. Airfares, hotels and tourist attractions are all cheaper this year because of the relentless recession. But gasoline prices jumped in May. Refineries are taking in less oil because of the glut in gas, and those cutbacks are showing up at the pump. Meanwhile, hurricane season begins June 1st. Last year Hurricanes Gustav and Ike battered the Gulf of Mexico and gas shot to $5 a gallon in some parts of the southeast.
Rains across south Texas the past week loosened drought's grip on the region, while other regions received too much rain. Robert Burns is with the Texas Agri-Life Extension Service at Texas A&M University.
"Many crops not under irrigation were not growing or declared a total loss by insurance adjusters. In the north, it was a matter of too much rain. What wheat the April freeze didn't take, heavy rains knocked down or caused sprouting of the heads. Coastal bend growers had a similar experience with drowned wheat."
The past two weeks has turned the Texas crop around, according to RiceTec. Brian Otis is with the hybrid seed company near Alvin.
"The weather has turned out hot and sunny, and the rice loves it. We went from cool night time temperatures along with wet weather to very warm and dry conditions. At this point, they're around 98 per cent planted in Texas. There are still some guys east of Houston waiting for dry ground conditions to get the drills back in the field. With extremely heavy rains several weeks back, we're looking at several fields that had to be replanted due to the seed spoiling before the flood water could come off of the field."
Parts of south Texas moved from the worst of five drought categories—exceptional — to severe, an improvement of two stages. Only 8.5 per cent of the state remained in exceptional drought—down from about 15 per cent a week ago. Texas has no drought in about 32 per cent of the state—up from 31 last week. Three months ago just 3.2 per cent was without any drought status. Only 90 of 254 counties — most east of Interstate 35 — have burn bans, down from 161 in mid-April.
The United Auto Workers has reached a tentative agreement on contract concessions with the U.S. government and General Motors, a key step toward GM's effort to restructure out of bankruptcy court.
The government is close to providing auto lender GMAC with billions of dollars in fresh aid, according to people with familiar with the matter. The cash infusion is intended to help the company continue to make loans for General Motors and Chrysler vehicles. The people spoke on condition of anonymity because they were not authorized to speak before a formal announcement by the Treasury Department. The move would come after GMAC failed a bank "stress test" earlier this month, with the Treasury mandating the company raise $11.5 billion within six months. GMAC received $5 billion from the government's $700 billion financial bailout program in December.
Lawmakers want the Obama administration to give poor-performing Chrysler dealers more time to wind down their dealerships. Senator Kay Bailey Hutchison is pushing a proposal to give Chrysler dealers 60 days to close their dealerships instead of three weeks outlined by the company. Her measure would bar the Treasury Department from providing funding to an auto company that failed to give a dealership at least 60 days to wind down its operations and sell its inventory. Chrysler, which has filed for bankruptcy, said last week it intends to close about a quarter of its 3,200 U.S. dealerships by June 9th. General Motors has told about 1,100 of its dealers — about 20 per cent — that they would be dropped by late next year.
The Houston Business Journal hosts its third annual Best CFOs of the Year awards event at a luncheon tomorrow at the Wortham Center—part of their four-day Celebrate!Enterprise program. Things kicked off yesterday with a Growth Summit, with economists offering the latest economic data and predictions of a sluggish economy for the rest of the year. The Health Care Heroes awards luncheon recognized health care professionals in Houston. This morning, the newspaper hosted the Houston Energy Forum, discussing President Obama's energy policy and the impact of an uncertain economy. HBJ held its 40 Under 40 awards program this afternoon, and the third annual Battle of the Business Bands gets underway in about an hour at Warehouse Live on St. Emanuel. Six groups led by CEOs and executives of Houston companies are scheduled to play. Bands include BTN, Red Inc., 33 1/3 RPM, Complete Wrecks, Algae and Blue Screen. Kosmic Pearl plays before the competition.
The federal government is making $50 million in federal funds available for green energy job training in communities hurt by layoffs in the auto industry. President Obama's Director of Recovery for Auto Communities and Workers, Ed Montgomery, announced the program in Dayton, Ohio. He says funds will be used to train workers for jobs in energy efficiency and renewable energy sectors. It also will provide counseling and placement services to laid-off autoworkers. The $50 million is part of $500 million provided to the U.S. Department of Labor through the federal stimulus law. To qualify for the money, a community must have a motor vehicle manufacturer or supplier and experienced significant layoffs.
A major overhaul of credit card law is expected to be signed by President Obama on Friday. Congress approved the legislation, which sets limits on sudden hikes in interest rates that can drive consumers deeper into debt. The new rules, which go into effect in nine months, will protect debt-ridden consumers from many of the surprise charges common in the industry, such as over-the-limit fees and costs for paying a bill by phone. Banks, which opposed the legislation, will need to make up the cost somewhere, and cardholders who pay off their balance in full each month could see new annual fees and cancellation of lucrative rewards programs. Credit could become harder to come by, too.
President Obama has signed into law legislation that encourages banks to spare homeowners from foreclosure. Obama signed the bill in the White House's East Room. He says it protects homeowners and cracks down on lenders who take advantage of them. The law expands an existing $300 billion program that encourages lenders to adjust a mortgage if the homeowner agrees to pay an insurance premium. The bill also extends through 2013 an increase in deposit insurance by the FDIC from $100,000 to $250,000. The lending industry helped scuttle a tougher measure that would have forced lenders to reduce the monthly payments of owners in bankruptcy.
Treasury Secretary Timothy Geithner says the majority of additional money he is seeking for his department will be devoted to improve tax collection efforts. The Treasury's $13.4 billion budget request for fiscal 2010 represents a five per cent increase over current spending. Geithner told a House appropriations subcommittee $332 million would go to new enforcement by the Internal Revenue Service and $90 million to protect taxpayer records from Internet hackers. The enforcement emphasis means that tax returns—particularly those from businesses and high-income Americans — will face greater scrutiny in hopes of closing an annual $300 billion gap between taxes owed and taxes actually collected. Geithner also said he wants to boost international tax compliance.
The Federal Reserve says banks trimmed borrowing from its emergency loan program over the past week, while investment firms took a pass — a hopeful sign that some credit stresses are letting up. The Fed says commercial banks averaged $38.2 billion in daily borrowing over the week that ended Wednesday. That was down from $39.9 billion in the previous week. Investment firms didn't draw any loans over the past week from the Fed program. That hasn't happened since the early fall. Firms drew just $482 million in the week that ended May 13th.
Venezuela's finance minister says the nation's ability to import has been cut in half because of the falling price of oil. Ali Rodriguez says the government is now prioritizing imports of food and medicine. Under currency controls imposed by President Hugo Chavez in 2003, Venezuelans must apply to a government agency for dollars at the official rate of 2.15 bolivars to import goods or take vacations. The dollar now sells for about three times that rate on Venezuela's black market. Venezuela relies on oil for 93 per cent of exports, but has seen world oil prices tumble 58 per cent since the peak last July. Rodriguez dismisses suggestions that Venezuela's government has drained its savings.
The chief executive of military contractor KBR says the electrical work it did in Iraq met the military's expectations. KBR is under scrutiny in the electrocution of at least three American troops who died while showering in buildings the company maintained in Iraq. Chairman William Utt tells the Associated Press the electrical codes it used in the buildings it maintained in the war zone "were known and thought to be acceptable" by the Pentagon. Utt says the company was not expected to meet the U.S. electrical code in a wartime environment. An electrical inspector hired by the army testified before the Democrats' Policy Committee that 90 per cent of KBR's wiring in newly constructed buildings in Iraq was not done properly.
Construction has begun on a new downtown Embassy Suites hotel on Dallas, near the George R. Brown Convention Center and Discovery Green Park. It's the first full-service hotel to be built downtown in 27 years, according to the Houston Business Journal. Completion is set for spring 2011. A ceremonial groundbreaking is set for next Tuesday.
American Airlines says one of its pilots failed a breathalyzer test at London's Heathrow Airport. The Fort Worth-based airline says the pilot was given the test after airport security staff alerted police. He was supposed to operate a flight with 204 passengers to Chicago. The flight was delayed while a replacement was found and the plane eventually took off.
The 49-story First City Tower in downtown Houston is the first office building in the state to receive LEED gold certification for an existing building, according to the Houston Business Journal. The Leadership in Energy and Environmental Design rating system from the U.S. Green Building Council measure environmental impact of a building's design, construction and operations. Waste Management helped the million-square-foot tower on Fannin with its certification by implementing an aggressive recycling program.