The unemployment rate jumped to 9.4 per cent in May, the highest in more than 25 years. But the furious pace of layoffs eased, with employers cutting 345,000 jobs, the fewest since September. Congressman Kevin Brady says the report is disturbing for several reasons.
"First, the higher unemployment rate reflects greater hardship for American workers and families. Second, along with other economic data, it reflects a continuing weakness in the economy. And third, the higher unemployment rate underscores the unrealistic nature of the administration's economic assumptions based on the idea that the stimulus spending would cap rising unemployment. The employment decline reported today also shows that the economy continues to contract."
If laid off workers who have given up looking for new jobs or have settled for part time work are included, the unemployment rate would have been 16.4 per cent, the highest on records dating to 1994. The Labor Department also says a total of 14.5 million people were unemployed in May. Job cuts were smaller than the 520,000 economists expected, while the unemployment rate was higher than the 9.2 per cent forecast.
Vice President Joe Biden says the highest unemployment rate in more than 25 years underscores the tough times many Americans still face, but that the slowing rate of job losses reflects some "signs of hope." Biden said he will join President Barack Obama on Monday in seeking to ramp up the pace this summer of the massive economic stimulus effort that Congress approved earlier this year. Biden spoke to reporters at the start of a briefing with economic advisers. Biden said: "to sum it up: encouraging signs, but a long, long way to go." The vice president says the White House plans to "ramp up" the pace of its economic recovery efforts. Biden, the administration's point person overseeing the massive $787 billion economic stimulus recovery plan, has defended the pace of spending as critics have complained that money for roads, bridges and other infrastructure projects has been slow to arrive.
AAA Texas cites rising oil and wholesale gasoline prices as the average retail cost at the pump rose 11 cents this week statewide. The association reports the average cost per gallon hit $2.44 a gallon. Nationally, the association found gas prices at an average $2.57, or 12 cents higher than one week ago. AAA Texas says gasoline prices across the state are about $1 higher since January 1st. Amarillo had the most expensive gasoline this week in Texas, at $2.53 a gallon. The cheapest gas was in Galveston and Houston, at $2.39. Association spokesman Dan Ronan says it currently costs about $34 to fill up a car with a 14-gallon tank, compared to $55 last summer.
Oil prices are spiking above $70 per barrel for the first time since October. Prices jumped after a Labor Department report that showed the pace of layoffs eased in May. Benchmark crude for July delivery is over $70 per barrel, the highest since October. Crude's stellar rise--it now fetches roughly twice what it did only four months ago--is leading analysts to revise forecasts upward, with many now saying they expect a barrel to cost $80 or more by year's end. Crude prices have been boosted by expectations that the U.S. economy could be stabilizing and as some investors scoop up oil and other commodities as a hedge against a weak dollar.
Consumer borrowing fell by $15.7 billion in April as U.S. households continued to trim spending and put away their credit cards amid a severe recession. The Federal Reserve says the April decline was the second largest ever in dollar terms following March's drop of $16.6 billion. March's decline originally was reported as $11.1 billion, which had been the most on records dating to 1943. The April decline is more than double the $6 billion drop that economists had expected.
General Motors strikes a tentative deal to sell its Saturn brand to former race car driver and auto dealer Roger Penske. Penske, who owns the Penske Automotive Group dealership chain, told reporters that he plans to offer all 350 Saturn dealerships new franchise agreements. He says Saturn's 13,000 employees will stay on with the company for at least the immediate future. He declined to name the price for the deal. Penske says GM will continue to produce Saturn vehicles, though he's in discussions with manufacturers worldwide about building the vehicles going forward.
General Motors' planned sale of its Hummer brand to a little-known Chinese truck maker could be blocked by regulators in China. GM announced earlier this week that it has a tentative agreement to sell hummer to Sichuan Tengzhong Heavy Industrial Machinery. Neither company has provided financial details about the planned purchase. Such a deal would have to be approved by the Chinese Commerce Ministry, at least at the provincial level. Reports in the Shanghai Securities News and other state-run newspapers raise questions over whether the deal will be allowed to go through, with one report likening the Chinese company's plan to a "snake trying to swallow an elephant." News of the deal has also raised questions in the U.S. about the future of the military's Humvee. The U.S. Army is assuring people that GM's deal has nothing to do with the military version of the rugged vehicle.
Wal-Mart Vice Chairman Eduardo Castro-Wright is pledging to shareholders at its annual meeting that it will press for more diversity in its workforce and create more career opportunities for advancement. The company's business has been one of the few bright spots in retailing as it steals market share and customers away from rivals amid the recession. But as the nation's biggest private employer, it is under pressure by labor-backed critics to improve its labor practices. Castro-Wright says that 40 per cent of regional general managers are "of color." Twenty per cent of that group are women.
Gallery Furniture owner Jim McIngvale says his original North Freeway location, which was damaged by a warehouse fire, will reopen in phases starting July 4th. Liberty Mutual has already paid an initial installment of $3 million in insurance. An arson investigation by the Bureau of Alcohol, Tobacco Firearms and Explosives is ongoing. McIngvale estimates fire damage to be around $20 million. He announced that he was providing furniture for the 31 local fire stations that responded to the blaze.
Responding to a challenge from President Barack Obama, House Republicans have come up with some ideas for saving federal money. They're sending the White House a list of specific actions that they say would save $23 billion over the next five years. Among them: $72 million a year less money for an Agriculture Department program that promotes sales abroad, $833 million a year on things like landscaping and historic preservation, and $183 million in the Safe Routes to Schools program by cutting funding for crossing guards, sidewalks and bike paths. The GOP savings plan is far less dramatic than ideas Republicans trumpeted when they took over Congress 14 years ago. Then they proposed things like the complete elimination of the Education Department. The new list follows GOP derision of Obama's order for department heads to cut what Republicans describe as "a mere" $100 million in waste this year.
The Federal Reserve says banks boosted borrowing from its emergency lending program, while investment firms took a pass for the third straight week. The Fed says commercial banks averaged $41.9 billion in daily borrowing over the week that ended Wednesday. That was up from $38.2 billion in the week ending May 27th. Investment firms didn't draw any loans over the past week from the Fed program. The last time firms drew any money--just $482 million--was in the in the week that ended May 13th. The following week, the firms didn't draw any loans, the first time that had happened since early September. The identities of the financial institutions are not released. They pay just 0.50 per cent in interest for the emergency loans.
A gas drilling company says it believes a vandal loosened bolts on a pipe that leaked wastewater into a southwestern Pennsylvania stream and killed aquatic life. Range Resources spokesman Matt Pitzarella said it's impossible that three bolts securing a coupling loosened by themselves after the pipe had already passed a pressure test and inspection. He said the leak was brief and that employees of the Fort Worth-based company responded quickly to stop it. The wastewater is from a recently drilled Marcellus shale gas well. Pitzarella says it leaked into a farm's drainage ditch that led to an unnamed tributary of Cross Creek Lake in Washington County. State environmental regulators are weighing penalties against Range Resources. Fish, salamanders, crayfish and insects were killed along three-quarters of a mile of the stream. Exploration companies blast millions of gallons of chemically treated water into the shale to fracture the rock and encourage gas to flow upward. Some of the wastewater remains underground, while the rest returns to the surface.
Venezuelan lawmakers say they're planning to approve a bill that would give the state majority control over all petrochemical companies. Venezuela's national assembly has given preliminary approval to a bill that would give Petroquimica de Venezuela or other state-run enterprises control over the sector. Congressman Angel Rodriguez said that the law would allow private companies only a minority stake. The assembly must still give the bill its final approval. President Hugo Chavez's government has recently announced the nationalization of dozens of oil contractors and metal companies as it moves to build a socialist "industrial complex."
Internet advertising revenue is down five per cent. The decline in the first quarter of 2009 represents the first year-over-year decline in seven years as the recession takes its toll even on the hardiest of ad sectors. The interactive advertising bureau is estimating revenue of $5.5 billion for the quarter. That's based on a study it commissioned PricewaterhouseCoopers to conduct quarterly. IAB Chief Executive Randall Rothenberg says growth should resume as the U.S. economic climate improves. He notes that interactive media continues to gain market share as companies want to better measure the effectiveness of their ads.
Liverpool's accountants have cast doubt over the future of the English Premier League soccer club's parent company. It's American owners are struggling to refinance debt of Î£350 million, or $563 million. The group formed by Tom Hicks and George Gillett, Jr., to buy the club in 2007 lost Î£42.6 million last year. The losses are blamed mainly on interest payments to service the debts the two partners took on to buy the club in 2007. In its annual report, Liverpool's accountants warned that the group is struggling to refinance debts before a deadline of July 24th. The accountants said the problems "may cast significant doubt on the group's and parent company's ability to continue as a going concern." Hicks and Gillett have been scouring the globe to find investors for the club. Hicks' financial problems extend beyond Liverpool. The Dallas businessman has already said that he is prepared to sell a majority shareholding in his Texas Rangers baseball team. That was after his Hicks Sports Group defaulted in April on $525 million in loans relating to that team and his Dallas Stars hockey team.
The number of rigs actively exploring for oil and natural gas in the United States fell by 12 this week to 887, down roughly 1,000 from a year ago. Of the rigs running nationwide, 700 were exploring for natural gas and 179 for oil, Houston-based Baker Hughes reported. Eight were listed as miscellaneous. A year ago, the rig count stood at 1,886. The U.S. count is down 56 per cent since the end of August as weak energy demand has hampered oilfield activity. Of the major oil- and gas-producing states, Texas lost three. Baker Hughes has tracked rig counts since 1944. The tally 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.