A closely watched index of home prices shows year-over-year improvement for the sixth month in a row and prices in all 20 cities rose from June to July. The Standard & Poor's/Case-Shiller home price index of 20 major cities rose 1.2 per cent from June. Though home prices are still 13.3 per cent below July a year ago, they have risen for three months straight. The index is down about 33 per cent from the peak in mid-2006.
Home prices are now at levels not seen since the third quarter of 2003. And prices in Las Vegas, Detroit and Seattle are still falling. "We do need to be cautious in coming months to assess whether the housing market will weather the expiration of the federal first-time buyer's tax credit in November, anticipated higher unemployment rates and a possible increase in foreclosures," said David M. Blitzer, committee chairman for the Case-Shiller index. First-time homeowners can qualify for a tax credit worth ten per cent of the purchase price, up to $8,000, but it expires at the end of November. More than a dozen bills to extend the credit have been introduced in Congress, but it's unclear if lawmakers want to continue subsidizing the real estate market. Still, there are clear positive trends: 13 metro area posted at least three straight months of price gains. The Case-Shiller indexes measure home price increases and decreases relative to prices in January 2000. The base reading is 100; so a reading of 150 would mean that home prices increased 50 per cent since the beginning of the index.
Consumers' confidence in the economy falls in September as Americans' worries about job security offset any enthusiasm about the rally in the stock market. The Conference Board says that the consumer confidence index now stands at 53.1, down from the revised 54.5 reading in August. Economists surveyed by Thomson Reuters were expecting a reading of 57. The present situation index, which measures consumers' current assessment of the economy, declined to 22.7 from 25.4. The expectations index, which measures consumers' outlook over the next six months, dipped to 73.3 from 73.8 last month.
About 40 per cent of executives interviewed worldwide are optimistic about the direction of the economy. But Leo Espinoza with Korn/Ferry International says there's lingering anxiety about the labor markets.
"Labor market data is the biggest driver in understanding when we are going to recover. In terms of 'have we hit the bottom,' that was the big question on this one. About ten per cent indicated that we hit the bottom in the second quarter of 2009. Another 37 per cent indicated that it will take place in the third quarter or fourth quarter of this year. Another 37 per cent indicated that it'll actually be in 2010."
Executives rank "labor market data" as the most accurate economic indicator, followed by "consumer attitude and opinion surveys," "manufacturing and retail data," "stock market data," "inflation" and "housing data."
Newly released census figures show the recession has hit middle-income and poor families the hardest. The economic gap between the richest and poorest Americans has gotten wider as rippling job layoffs ravaged household budgets. The wealthiest ten per cent of Americans--those making more than $138,000 each year--earned 11.4 times what those living near or below the poverty line made in 2008. That ratio was an increase from 11.2 in 2007 and the previous high of 11.22 in 2003. Household income declined across all groups, but at sharper percentage levels for middle-income and poor Americans. Poverty jumped sharply to an 11-year high. Analysts attribute the widening gap to the wave of layoffs in the economic downturn that have devastated household budgets. They say while the richest Americans may be seeing reductions in executive pay, those at the bottom of the income ladder are often unemployed and struggling to get by.
Low wellhead prices continue forcing oil and natural gas producers to scrap drilling plans and law off workers, according to the latest Texas Alliance of Energy Producers Texas Petro Index. Petroleum economist Karr Ingham says the combined value oil and gas produced in Texas so far this year totals less than $32 billion, compared to $77 billion during the same time period a year ago. That's a $45 billion decline, so permit applications are off and drilling remains low by historic standards. Ingham says as demand increases, various measures of industry activity will begin to recover. In December 2008, there were 240,000 Texans employed in the industry, compared to 202,700 at the end of August.
The average retail price for gasoline dipped below $2.50 a gallon for the first time in two months Monday. Rising oil supplies and slumping demand overshadowed news of a fire at a major U.S. refinery. Friday's fire at a Tesoro refinery in Los Angeles is seen leading to some higher pump prices in California, but an analyst says the effect is muted elsewhere. Auto club AAA says the average price for a gallon of regular gasoline fell a half a penny overnight to just under $2.50. That's 11 cents less than a month ago, and nearly $1.16 below what drivers were paying at this time last year.
The average price of an international coach or economy ticket dropped 18 per cent last month, welcome news to passengers but a sign that "profitability remains ever distant" for airlines. The International Air Transport Association reports a 1.1 per cent decline in international air traffic last month compared to a year earlier. It's an improvement over July's 11.3 per cent decline from the same month last year. At the same time, planes were slightly fuller on average because airlines have been reducing flights. With fare prices down, the air transport group's CEO warns prices "have stabilized, but at profitless levels." The air transport group expects full-year international traffic to fall nearly five per cent this year and rebound to grow just over four per cent next year.
Continental Airlines is joining other airlines in adding a $10 surcharge to tickets purchased for peak winter holiday travel days. That's for travel between November 29th--the Sunday after Thanksgiving—and for January 2nd and 3rd.
Two cruise lines sailing from Galveston are going to court to resolve a dispute with harbor pilots that guide ships arriving and leaving, according to the Houston Business Journal. Pilots earlier this year dropped their insistence on having two pilots on board, with the second pilot billing the cruise lines at 50 per cent of the regular tariff. Carnival and Royal Caribbean Cruises signed a memorandum of understanding with the pilots to eliminate the second pilot in return for the cruise lines dropping their objections to rate increases.
The Port Commission of the Port of Houston Authority has named Houston businessman Alec G. Dreyer as the new PHA executive director. Dreyer will be Houston's 11th port director in 90 years. He's the first to come from outside the maritime industry. Dreyer was recently CEO of wind energy developer Horizon Wind Energy, after serving as an executive vice president at Dynegy. Dreyer succeeds Tom Kornegay, who retired in February after 17 years of leadership. PHA Managing Driector Wade Battles has been serving as acting executive director in the interim.
The Federal Reserve is proposing rules to better protect Americans from sudden hikes in interest rates on credit cards. The plan would generally bar rate increases during the first year after an account is opened. It would also virtually ban increasing the rate on existing credit card balances. The proposal also would require credit card companies to obtain a customer's consent before charging fees or transactions that exceed their credit limit. Companies would also be forbidden from issuing credit cards to people under the age of 21, unless they have the ability to make the required payments or a parent or other co-signer. The Fed is required to take the action under legislation passed by Congress and signed into law by President Barack Obama in May. The public and industry will have a chance to weigh in on the provisions, which are slated to take effect on February 22nd, 2010.
It's the first time the Federal Deposit Insurance Corporation is making banks pay up front. The agency is expected to collect billions of dollars in regular premiums from banks early--to shore-up the deposit insurance fund, which is shrinking. Industry execs and a government official say the FDIC will probably call for "prepaid" bank insurance premiums at its meeting tomorrow. The banking industry would prefer that over a special emergency fee, which would be the second one this year. According to two of the officials, the plan calls for banks to pay in advance their insurance premiums for each of the next three years, 2010 through 2012. That would bring in about $12 billion in each of those years. FDIC Chairman Sheila Bair said earlier this month that she was "considering all options, including borrowing from treasury," to replenish the insurance fund. Federal regulators expect bank failures to cost the deposit insurance fund about $100 billion in the next four years and the fund to fall to a negative balance this month. That's higher than an earlier estimate of $70 billion in failure costs through 2013.
The World Bank's president says currency issues will likely be discussed at this week's annual meeting of the bank and the International Monetary Fund. Robert Zoellick didn't say which currencies will make the agenda, only saying that weak currencies have the potential to affect trade. He did reiterate recent remarks that the U.S. dollar's status as the world's reserve currency shouldn't be taken for granted. But he downplayed suggestions that the dollar's rule will end any time soon. Zoellick also praised China for its efforts to boost its economy during the global downturn. At the same time, he says China needs to move away from its dependence on exports and create greater domestic demand and consumption. Analysts say the best way for China to rebalance its economy is to let its currency rise more quickly in value against the dollar to which it's pegged. The higher currency would make imports cheaper and reduce the U.S. trade deficit with China.
Dell says it will beef up accounting and corporate governance rules as part of a settlement tied to an investigation into past financial practices. The PC maker will also pay $1.75 million in legal fees. After a Securities and Exchange Commission investigation into Dell's accounting was made public in 2006, several shareholder groups filed lawsuits saying Dell misrepresented its financial health while officers and board members sold stock at inflated prices. Dell restated results for 2003 through 2007 after an internal audit found it overstated sales by $359 million and profit by $92 million during those years. The SEC probe is ongoing. Under the settlement filed Monday with the SEC, Dell will increase the board's independence and more tightly control its finances.
An Ecuadorean court has said it will allow a judge to withdraw from overseeing a $27 billion lawsuit charging Chevron with environmental damage in the Amazon rain forest. The lawyer representing Ecuador in the lawsuit told the Associated Press about the court's decision to allow Judge Juan Nunez to step down. Pablo Fajardo says the case now will be heard by Judge Nicolas Zambrano. A different court had earlier denied Nunez's request. He asked to step down to facilitate an investigation of Chevron suggestions he was involved in a bribery scheme. He denied involvement in such a scheme. The judge's removal could delay a verdict that had been expected this year.
Land Commissioner Jerry Patterson says clearing of Hurricane Ike debris from the Galveston-area bay system left sites cleaner than before the storm. Patterson says the state-led effort, which has ended, came in under budget. Ike hit the Galveston area on September 13th, 2008. Texas spent nearly $25 million to clear the beaches and bays. The state had estimated the price tag would be about $30 million. Sonar was used in the bays to identify more than 8,000 debris items ranging from refrigerators to ambulances to yachts. The Galveston County Daily News reported that crews working for the state agency recovered 124 boats, some as big as 70 footers.
A voter advocacy organization asked the Justice Department to undo Diebold's sale of its voting machine business. Washington-based Voter Action says the sale of Allen, Texas-based Premier Election Solutions to its biggest competitor, Election Systems and Sofware of Omaha, Nebraska, promotes a monopoly. In a letter to the department's antitrust division, voter action says the transaction is a grab for market share and creates monopoly power in violation of federal antitrust laws. Diebold said early this month that it's selling its subsidiary for $5 million plus payments representing 70 per cent of collections of the unit's accounts receivable as of August 31st. A spokesman for North Canton, Ohio-based Diebold, says the sale has already gone through and referred questions to Election Systems & Software.
Liverpool Soccer Club co-owners Tom Hicks and George Gillett, Jr., have confirmed they are looking for outside investors. In a statement, Hicks and Hillett said they have jointly retained Bank of America Merrill Lynch and Rothschild "`to evaluate the possibility of new investors injecting equity" into the club. However, they say "the process is at an early stage" and "there is no agreement with any party." Sports investment firm F6, which is chaired by a Saudi prince, has said that it had signed a deal with Gillett to begin the process of examining Liverpool's accounts. Hicks is a Dallas businessman who also owns baseball's Texas Rangers and hockey's Dallas Stars.
The Houston Hispanic Chamber of Commerce was recently given the 2009 National Large Hispanic Chamber of the Year award by the U.S. Hispanic Chamber of Commerce. The award recognizes the chamber's success in achieving "outstanding regional leadership and growth" over the past year.