Retail sales rose more than expected in November, boosting hopes that the all-important consumer sector will support the fragile recovery. The Commerce Department says retail sales rose 1.3 per cent last month, more than double the 0.6 per cent increase economists had expected. Excluding autos, retail sales jumped 1.2 per cent, triple the 0.4 per cent advance economists expected. A six per cent surge in sales at service stations, partly reflecting higher gasoline prices, led the overall gain. But even excluding that jump, retail sales posted a respectable 0.8 per cent rise in November.
Businesses unexpectedly increased their inventories in October, halting a slide of 13 consecutive declines. The small gain raised hopes that businesses will begin restocking their depleted shelves, helping support the economic recovery. The Commerce Department says businesses increased inventories 0.2 per cent in October. That was better than the 0.3 per cent drop economists had expected. Total business sales rose 1.1 per cent, the fifth straight gain. The hope is that steadily rising sales will encourage businesses to restock shelves, which will boost factory production and bolster a broad recovery.
A consortium led by Shell has won the rights to develop Iraq's giant Majnoon oil field, an almost 13 billion barrel behemoth that is the largest on offer in the country's second international oil auction. Iraqi oil minister Hussain al-Shahristani said that Shell and Malaysia's state-run oil company, Petronas, beat out another consortium grouping France's Total and China National Petroleum. Majnoon is one of 15 fields on offer. The deal marks a solid start to Iraq's second international oil licensing round. Iraqi officials see the auction as key to the country's postwar reconstruction efforts. The first auction held last summer saw only a deal struck on only one of eight fields on offer.
The House has approved a compromise plan to give General Motors and Chrysler dealers an appeals process to keep their showrooms open. The provision is contained in a $1.1 trillion spending bill. It gives the 789 Chrysler dealers closed in June and more than 1,350 GM dealers expected to be shut down next year a chance to challenge the automakers' decisions. GM and Chrysler have attempted to shed dealerships as part of their government-led bankruptcies. But the moves have riled up members of Congress, who have received numerous complaints from dealers being shut down. The legislation requires arbitration panels examining the closings to weigh a number of issues. Those include the economic interests of the terminated dealer, the company and the public, the dealer's profitability during the past four years and conditions that could have led to a poor sales performance, including natural disasters and a poor local economy.
A House Democratic leader says Congress will have to permit at least $1.8 trillion in additional federal borrowing next year to avoid a default on the U.S. debt. Maryland Representative Steny Hoyer said an increase in the so-called debt limit would have to be in the neighborhood of $1.8 to $1.9 trillion in order to allow the government to borrow enough money to keep operations afloat through December of next year. Democrats are struggling to pass an increase in the $12.1 trillion debt before the end of the year. To win the votes of moderate "blue dog" Democrats, Hoyer pledged to advance strict budget rules aimed at offsetting tax cuts or new spending programs next year with offsetting cuts or revenue hikes.
The Obama administration's pay czar is limiting the cash compensation for executives at companies that received the largest taxpayer bailouts to $500,000 and delaying some other payouts. The rules apply to the 25th through the 100th top earners at Citigroup, GMAC, American International Group and General Motors. Treasury says about 12 executives were granted exemptions to the $500,000 cash cap. Treasury pay czar Kenneth Feinberg already announced specific pay packages for the top 25 earners at firms he oversees. He says the new rules apply only to the second half of December but will affect many executives' bonuses and stock grants. Feinberg's rulings don't apply to Bank of America because its bailouts were repaid this week. Chrysler and Chrysler Financial also were exempt because executives there made less than $500,000.
Sales tax collections plummeted across Texas in October, dimming hopes for a quick turnaround and raising fears that the downturn is far from over. For months, most communities have seen declining sales tax revenue. But the Texas Comptroller's Office says in many cities the drop became a nose dive in October. Statewide, revenues were down nearly 15 per cent. The Dallas Morning News reports that the numbers, released this week, suggest that an economic recovery may yet be some distance away. University of North Texas economist Terry Clower says the recession's impact is cumulative and slow to show up in numbers. Collections in Plano were down nearly 20 per cent in October from a year ago. October revenue was off 18 per cent in Irving, 17 per cent in Fort Worth and 11 per cent in Garland. Dallas fared somewhat better, reporting a 5.3 per cent decrease. Sales tax revenue declined nearly one-third in Midland, 22 per cent in Round Rock and 17 per cent in Houston. Beaumont was among the hardest-hit cities, with collections dropping 36 per cent.
The state's prepaid college tuition plan will face a financial review during the 2011 legislature after thousands dropped the program. The State Comptroller's Office says about 7,000 investors left the Texas Guaranteed Tuition Plan since August, when the state announced a now-defunct plan to cut refunds. Agency spokesman R.J. deSilva says about $110 million was withdrawn, equal to slightly more than seven per cent of the fund's value, which topped $1.4 billion as of October 31st. The Texas Prepaid Higher Education Tuition Board on November 5th decided to cancel new rules that would have cut the value of refunds, amid shortfall projections. State Representative Richard Pena Raymond of Laredo, vice chairman of the Texas House Appropriations Committee, said the panel will review the tuition plan. Recommendations will to the 2011 legislature.
A new government report about how the increased use of biofuels is affecting the nation's water supply says farmers in the Northern Plains use much more water to produce corn ethanol than growers elsewhere. An ethanol industry group says the report offers little new insight and most ethanol is produced from rain-fed corn. The Government Accountability Office's November study quotes Argonne National Laboratory data. It says farmers in North Dakota, South Dakota, Nebraska and Kansas use, on average, 323.6 gallons of water to produce one gallon of ethanol from corn. All but three of those gallons are used for irrigation. The GAO says that's 20 to 30 times the amount of water used by the nation's two other main corn producing regions, where rainfall is more plentiful.
Smokers in Galveston will be allowed to light up in certain public spots. The smoking ban adopted in July by the Galveston city council, and set to take effect January 1st, has been amended to allow smoking in stores that sell tobacco and cigars. The change will allow smoking in tobacco and cigar stories, but those businesses are banned from selling alcohol or allowing drinking on the premises. Tobacco shops must install ventilation systems and be off limits to anyone younger than 18. The Galveston County Daily News reports the amendment is seen as a compromise between opponents of the smoking ban and supporters who raised public health issues.
The number of rigs actively exploring for oil and natural gas in the U.S. rose by 20 this week to 1,161. Baker Hughes, based in Houston, says that 757 rigs were exploring for natural gas and 393 for oil. Eleven were listed as miscellaneous. A year ago this week, the rig count stood at 1,790. Texas gained seven rigs. The rig count tally peaked at 4,530 in 1981, during the height of the oil boom. The industry posted a record low of 488 in 1999.