Unemployment rates rose in all the nation's largest metropolitan areas in April, with Indiana's Elkhart-Goshen again logging the biggest gain. The Labor Department says all 372 metropolitan areas saw their jobless rates increase in April from a year earlier. Elkhart-Goshen's rate jumped to 17.8 per cent, up 12.7 percentage points from a year ago. The figures aren't seasonally adjusted, making month-to-month comparisons far more volatile.
Pilots at Southwest Airlines have voted down a new contract that would have given them raises in the midst of a slump in the airline industry. The vote was close, with less than 51 per cent voting down the contract. Union President Carl Kuwitzky said that despite some financial gains, there were too many negative provisions in the contract. The union board of directors will meet next week to plan for returning to the bargaining table with Southwest.
The government says factory orders rose 0.7 per cent in April, the second increase in three months and further evidence that manufacturers may be recovering. Still, the Commerce Department's figure is below analysts' expectations of a 0.9 per cent increase. The department also sharply marked down the March figure to a 1.9 per cent drop, compared with the 0.9 per cent decline previously reported. Shipments fell 0.2 per cent, the ninth consecutive drop, though at a much slower pace than the 1.8 per cent fall in March.
A trade group says its measure of the health of the U.S. services economy shrank in May at the slowest pace since October. The Institute for Supply Management said its services index registered 44 in May, slightly up from 43.7 in April. It's the highest reading since last October, when the index was at 44.6. It was the eighth straight monthly decline. And it is still below the reading of 45 that economists polled by Thomson Reuters had expected. Any reading below 50 indicates the services sector is shrinking. Service industries such as retailers, financial services, transportation and health care make up about 70 per cent of the country's economic activity.
Federal Reserve Chairman Ben Bernanke is urging Congress and the administration to start plotting a strategy to curb record-high U.S. budget deficits. He says that failing to do so could eventually erode investor confidence and endanger the economy's prospects for long-term health. Bernanke's comments come as concerns grow at home and overseas about the United States' mounting red ink. In testimony prepared for the House Budget Committee, Bernanke says: "even as we take steps to address the recession and threats to financial stability, maintaining the confidence of the financial markets requires that we, as a nation, begin planning now for the restoration of fiscal balance." Bernanke says the forceful government intervention to fight the financial crisis and lift the U.S. out of recession was "necessary and appropriate" even though it worsened the nation's budget deficit. In testimony before the House Budget Committee today, Bernanke warned that failing to do so could eventually erode investor confidence and endanger the economy's prospects for long-term health. Concerns are growing at home and overseas about the United States' mounting red ink. German Chancellor Angela Merkel says central banks, including the Fed, may have gone too far in trying to fight the global financial crisis. Bernanke disagrees, saying he's "comfortable" with the Fed's actions.
Members of President Barack Obama's administration are crisscrossing four Midwestern states badly hurt by the auto industry's woes. Officials in those states--Michigan, Ohio, Indiana and Wisconsin--are lining up to ask for a better deal when it comes to getting funds from the Federal Recovery Act. At stake is $87 billion in discretionary federal recovery dollars being handed out. Michigan has the nation's highest unemployment rate. Ohio and Indiana are in the top ten. But the formulas used by the Recovery Act usually don't consider unemployment and layoffs, so these states aren't getting anything extra for being hard-hit. Some critics are calling the four-day tour a feel-good attempt by the White House. A spokeswoman for Vice President Joe Biden, who's overseeing the recovery efforts, is defending the tour, saying the amount each state gets in both formula and discretionary funds is changing day by day.
Attorney General Chris Koster has sued a Texas company, alleging it falsely promised to help Missouri customers with credit card debt. Koster's office announced the lawsuit against Credit Solutions of America. It was filed last week in St. Louis Circuit Court. Koster says the Richardson company advertised that it could get customers out of debt within three years and cut their monthly credit card payments in half. But he says the company took customers' money without solving their problems. Missouri law prohibits credit services from taking a customer's money before performing services in full. Credit Solutions CEO Doug van Arsdale says the company is committed to satisfying its customers and moving consumer protection legislation forward.
A hearing on Chrysler's request to terminate the franchises of 789 of its dealers has been pushed back by a day. U.S. Judge Arthur Gonzalez will hear arguments Thursday on the Auburn Hills, Michigan-based automaker's motion to eliminate the franchises. Chrysler executives are also expected to testify. The U.S. Court of Appeals for the Second Circuit halted Chrysler's sale of the bulk of its assets pending an appeal of the sale by a trio of Indiana state pension and construction funds. Arguments for that appeal will take place on Friday.
Top executives from General Motors and Chrysler are defending their decision to slash dealerships around the country despite many hardships. They say the moves are unavoidable as they fight to overcome bankruptcy and survive. GM President Fritz Henderson and Chrysler President James Press tell the Senate Commerce Committee in prepared testimony that there are too many dealers and the networks date from the 1940s and 1950s when their companies were giants. Henderson says that reinventing GM is "quite painful" for the company, customers and especially for our dealers. Committee Chairman Jay Rockefeller is complaining that the car companies are leaving local dealers and their customers out in the cold. That, Rockefeller said, is just plain wrong.
The government now has an equity stake in auto lender GMAC Financial Services after providing $12.5 billion in aid to keep loans flowing to buyers of GM and Chrysler cars. The Treasury Department said it now holds a 35.4 per cent stake in GMAC, after exchanging an $884 million loan it made to General Motors for that equity under an earlier agreement. GM filed for Chapter 11 bankruptcy protection Monday, a historic move designed to remake the automaker as a smaller and leaner company, that also made the federal government its principal owner with a 60 per cent stake.
Chrysler says the majority of its plants will resume production by the end of June. The automaker idled all of its factories almost immediately after it filed for bankruptcy protection to reduce its inventory. T Chrysler has been operating under Chapter 11 protection since April 30th. Over the weekend, a bankruptcy judge in new york approved the sale of the bulk of its assets to Italian automaker Fiat Group. That brings the Auburn Hills, Michigan, automaker closer to emerging from bankruptcy--possibly as early as this week.
Hovnanian Enterprises' CEO says recent trends in sales and home prices indicate the housing market is improving despite the uncertainty over the U.S. economy. In remarks to analysts, Ara Hovnanian said homebuyer tax credits are stoking sales and noted home price declines have slowed in some hard-hit markets. The builder's new home orders per community jumped 25 per cent in its fiscal second quarter, although new home contracts were down 29 per cent overall from a year earlier. Hovnanian said there's still some pain ahead for the housing market if foreclosures continue to climb. The Red Bank, New Jersey-based builder reported that it cut its second-quarter loss to nearly $119 million from a loss of nearly $341 million a year ago.
Devon Energy CEO Larry Nichols says the company is reducing its natural gas drilling until gas prices start to rebound. Nichols said at Devon's annual shareholders meeting that the company sees no reason to continue to drill and bring natural gas production beyond what it needs to. He says it's better to leave that gas in the ground and sell it next year, or in future years, when the company can generate a greater profit for its shareholders. Nichols said that 2009 continues to be a challenging year for the industry but that the largest U.S. independent oil and natural gas producer is well-placed to weather the economic downturn.
The Federal Reserve says investors requested $11.5 billion worth of loans in a program intended to spark consumer and business lending. The tally is up from $10.6 billion requested last month. Investors are buying newly issued securities backed by, among other things, auto and student loans, credit cards, business equipment and loans guaranteed by the Small Business Administration. The Term Asset-backed Securities Loan Program, or TALF, figures prominently in efforts by the Fed and the Obama administration to ease credit, stabilize the financial system and help end the recession. Some analysts say the program has reduced credit pressures for companies, but others contend it has yet to filter down to consumers.
The federal government is making plans to put hurricane evacuees in foreclosed homes if a Katrina-like storm devastates Florida. Officials tell the Associated Press the plan would be enacted if shelters, hotels and other housing options are full. It's an effort to keep people close to their homes and communities instead of allowing them to scatter around the country. The idea is still being developed, but FEMA would likely compile a list of available homes. The evacuees would then be assigned homes and FEMA would use a contractor to pay rent directly to a bank or whoever owns the home. When Katrina struck nearly four years ago, evacuees were scattered to Houston, Atlanta and other cities. Many never returned to New Orleans.
The National Association of Broadcasters says a majority of U.S. House members are now opposed to imposing new fees on radio stations to pay performance artists. The NAB says 220 House members have agreed to co-sponsor a nonbinding resolution against any new fees--which indicates there is not enough support for a bill that would collect such fees. Such a bill passed the House Judiciary Committee last month, but the NAB hopes the show of opposition will prevent it from being brought to the House floor for debate and vote. Over the last several decades, broadcasters have successfully stopped attempts by the recording industry to require radio stations to pay artists for playing their music. Stations have been exempt from such royalties on grounds that radio airplay offers artists a promotional benefit.