First-time claims for jobless benefits rose more than expected last week, a sign employers are reluctant to hire and the job market remains weak. The Labor Department says initial claims for unemployment insurance rose to a seasonally adjusted 551,000 from 534,000 in the previous week. Wall Street economists expected an increase of 5,000, according to a survey by Thomson Reuters. The increase comes after three weeks of declines. Weekly claims have been trending down since the spring, but the decline has been painfully slow. The four-week average, which smoothes out fluctuations, dropped to 548,000, about 110,000 below its peak in early April. The number of people remaining on the rolls fell 70,000 to 6.09 million, the lowest level since the week of April 4th.
Monthly layoff announcements fell in September to the lowest level since March 2008, according to Challenger, Gray & Christmas. Employers announced plans to reduce payrolls by 66,404 positions—down 13 per cent from cuts in July.
Consumer spending, propelled by the wildly popular cash for clunkers auto sales program, shot up in August by the largest amount in nearly eight years even though personal incomes continued to lag. The Commerce Department says that consumer spending rose 1.3 per cent in August, even better than the 1.1 per cent gain that had been expected. Incomes continued to lag, edging up 0.2 per cent in August, the same as the July increase. The big jump in consumer spending, which accounts for 70 per cent of total economic activity, is a good indication that the economy was returning to positive growth this summer. But economists are worried that any rebound from the recession could falter if income growth does not improve.
A private trade group says the manufacturing sector grew for a second straight month in September, after contracting for 18 months. The Institute for Supply Management, a trade group of purchasing executives, says its index measuring the industrial sector read 52.6 last month. The survey came in at 52.9 in August--the first time it was above 50, indicating expansion, since January 2008. While showing growth, analysts polled by Thomson Reuters had expected a reading of 54. New customer orders, a gauge of future production, came in at 60.8 last month. That followed a reading of 64.9 in August, the highest since December 2004. The index also includes production, employment, inventories, prices, and export and import orders.
Construction spending rose unexpectedly in August on the biggest jump in housing activity in nearly 16 years, another sign the housing sector is mounting a recovery. The Commerce Department says construction spending rose 0.8 per cent in August, much better than the 0.2 per cent drop that economists had expected. But July activity was revised to show a much steeper decline of 1.1 per cent instead of the 0.2 per cent drop originally reported. Still, the August construction gain was encouraging following three straight months of decline. It reflected a 4.7 per cent rise in private residential activity, the biggest one-month increase since November 1993.
Retail gasoline prices across Texas dropped six cents this week. AAA Texas reports the average price per gallon at the pump was $2.34. Nationally, gasoline prices also declined six cents, to reach $2.47. Galveston had the cheapest gasoline in Texas at $2.21 a gallon; El Paso had the most expensive gasoline at $2.36. AAA Texas attributes the falling prices to low oil prices, low seasonal demand and a quiet hurricane season on the Gulf Coast.
Hispanic households contributed more than $171 million to the Texas economy in 2008, according to a study by the Selig Center for Economic Growth at the University of Georgia. The study, issued by Texas Comptroller Susan Combs, says the annual buying power of Hispanics is expected to rise to nearly $252 billion by 2013. That's a 47 per cent increase in just five years. Texas is home to 8.9 million Hispanics—37 per cent of the state's population.
A new report from an environmentalist group says Texas can dramatically clean up its skies and save billions in utility bills with solar-powered homes. The Environment Texas Research and Policy Center's study says the savings would come from building "net-zero homes" that can generate the same amount of energy they use. The group says reduced annual emissions in the nation's leading greenhouse-gas producing state would be the equivalent of cutting the pollution of more than three million cars by 2030. The study found huge savings if ten per cent more net-zero houses are built each year for the next decade, then by 2020 all new homes were built that way. Environment Texas' director thinks it's a realistic goal.
A massive West Texas wind farm billed as the largest in the world is up and running. German company E.ON Climate and Renewablesannounced the completion of the 100,000-acre wind farm near Roscoe that spans four counties. The company says the 627-turbine wind farm is now producing energy. It has the capacity to generate 781.5 megawatts, enough electricity to power more than 230,000 homes. Texas is the nation's top wind power-producing state. Roscoe is about 220 miles west of Dallas.
A reservations company says air fares are leveling off but at lower prices than travelers paid a year ago. Airlines have been cutting flights to reduce costs and drive up prices by reducing supply, and figures from Travelocity indicate the strategy may be working. Southlake, Texas-based Travelocity says fall air fares are 14 per cent below the levels of a year ago, after summer fares fell 18 per cent from summer 2008. Travelocity senior editor Genevieve Shaw Brown says fares have shown signs of stabilizing over the past eight weeks. She says that over the summer, prices fell the closer travelers got to their departure date. He says the trend has slowed in the fall. Brown says travelers should also consider that hotel prices are still dropping and not become fixated on air fares.
CVS Caremark says it will provide 100,000 free flu shots to unemployed people beginning Monday. The drugstore operator says it will give away vouchers for $3 million in flu vaccinations. The vouchers will be given out at some one-stop career centers starting October 5th. The vouchers can be redeemed at CVS pharmacies that are running flu shot clinic events, or during regular business hours at walk-in MinuteClinics inside CVS stores. One-stop career centers are sponsored by the U.S. Department of Labor. CVS said the vouchers will be distributed in California, Connecticut, Georgia, Illinois, Indiana, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New York, Ohio, Rhode Island, Texas, Virginia and Washington, D.C.
GM, Chrysler and Ford say their September sales fell, revealing a tough hangover from this summer's cash for clunkers buying spree. But Hyundai bucked the trend, reporting a 27 per cent rise in sales last month over a year earlier. Automakers got a big lift in July and August from clunkers, which spurred sales of nearly 700,000 new cars and trucks. The government program's big discounts lured in many customers who otherwise would have waited until later in the year to walk into dealerships. General Motors sales fell 45 per cent from a year earlier. Chrysler sales slid 42 per cent. Ford was down 5.1 per cent, breaking a two-month streak of gains.
Federal Reserve Chairman Ben Bernanke tells Congress the central bank is "well suited" to oversee colossal financial companies whose failure could endanger the entire economy. But he was silent on the issue of the Fed losing some of its consumer protection duties, after previously criticizing the administration for its plan to strip the central bank of some of those powers. In testimony prepared for the House Financial Services Committee, the Fed chief says only that protecting consumers from abusive practices involving mortgages, credit cards and other financial products is "vitally important."
Banks reduced their borrowing from the Federal Reserve's emergency lending facility over the past week, and cut back on their use of other programs designed to ease the financial crisis. The reductions indicate that banks are having an easier time borrowing in private markets for short-term loans. Banks averaged $28 billion in daily borrowing over the week ended Wednesday, down from $28.2 billion in the week ended September 23rd. The identities of the financial institutions that receive emergency loans are not released. They pay just 0.50 per cent in interest for the loans.
Freddie Mac says rates on 30-year home loans dropped below five per cent for the first time in four months, but still remained above this year's record low. Freddie Mac said the average rate on a 30-year fixed mortgage was 4.94 per cent, down from 5.04 per cent last week. The last time the 30-year home loan averaged less than five per cent was the week ending May 28th, when it was 4.91 per cent. Rates hit a record low of 4.78 per cent hit in the spring, and remain appealing for people interested in buying a home or refinancing.