Consumer prices rose less than expected in January while prices excluding food and energy actually fell, something that hasn't happened in more than a quarter-century. The Labor Department said that consumer prices edged up 0.2 percent in January while prices excluding food and energy slipped 0.1 percent. That was the first monthly decline since December 1982. The benign inflation news gives the Federal Reserve more time to keep interest rates at record-low levels to shore up the economy and should ease worries in financial markets that a fed rate hike is more imminent.
The number of borrowers falling behind on their mortgage payments dropped sharply at the end of last year, a sign the foreclosure crisis is beginning to ebb. The Mortgage Bankers Association said the percentage of borrowers who missed just one payment on their home loans fell to 3.63 percent in the October to December quarter, down from 3.79 percent in the third quarter. The decline was even more remarkable because delinquencies usually rise at during that time of year because of heating bills and holiday spending. However, more than 15 percent of homeowners with a mortgage had missed at least one payment or were in foreclosure, a new record.
Toyota's president says he will speak sincerely to the U.S. Congress and the American people about his company's efforts to resolve safety problems behind massive recalls. Akio Toyoda said that he'll be happy to appear before a Congressional hearing next week after being formally invited to attend. He said he hopes to win understanding of Toyota's commitment to resolving questions involving gas pedals, accelerators getting jammed in floor mats and brakes on various vehicles. Japan's transport minister, Seiji Maehara, welcomed the decision, saying it is important for Toyota to take its responsibility.
Millions of seniors who signed up for popular private health plans through Medicare are facing sharp premium increases this year. A study released by a major consulting firm finds that premiums for Medicare Advantage plans offering medical and prescription drug coverage jumped more than 14 percent on average in 2010. More than eight million elderly and disabled Americans are in the plans, which provide more comprehensive coverage than traditional Medicare. The findings of the study by Avalere Health are bad news for President Barack Obama and his health care overhaul. That's because the higher Medicare advantage premiums for 2010 follow a cut in government payments to the private plans last year. And the Democratic bills pending in Congress call for even more cuts.
President Barack Obama is unveiling $1.5 billion in housing help in a town hall appearance in Las Vegas, the city with the worst foreclosure crisis in the nation. Obama's announcement is the latest by a White House determined to show it is helping families rebound from a deep recession. The downturn is taking an election-year toll on Obama's party as voter frustration builds. Obama says housing finance agencies in the five hardest-hit states in the housing crisis will receive $1.5 billion to help spur local solutions to the problem. The five states are Arizona, California, Florida, Michigan and Nevada.
Congress has set aside $5 billion to help states find jobs for people on welfare. But most states don't seem to want it. The federal government has doled out just $1 billion from the money set aside as part of last year's stimulus package. The money and the program will expire at the end of September. Georgia, Tennessee and California are among the states that have asked for their share. Many states haven't touched it because they're worried about what will happen when the money runs out. Critics of the program also say states can't afford to pony up the matching funds that the federal program requires.
An Oklahoma State University study indicates the economic performance of Oklahoma and Texas are linked through trade and that growth in one state results in growth in the other. Kyle Dean and Russell Evans of OSU's Center for Applied Economic Research led the study. They developed a model to estimate the level of economic interdependency existing along the Interstate 35 corridor linking Oklahoma City to Dallas and Fort Worth. The study indicates a hypothetical one percent increase in the Texas region's gross domestic product will likely result in a $56 million increase in Oklahoma output. And a hypothetical one percent increase in the Oklahoma region GDP will likely result in a $173.7 million increase in Texas output.
An oil and gas drilling technique calledfracking is drawing scrutiny from lawmakers who fear it may pose a pollution hazard. Top Democrats on the U.S. House Energy and Commerce Committee this week sent letters to eight oil and gas companies seeking more information on chemicals used in hydraulic fracturing. Halliburton was among those receiving letters, along with BJ Services and Schlumberger. All three are based in Houston. Halliburton pioneered hydraulic fracturing. The process injects vast quantities of water, sand and chemicals underground to force open channels in sand and rock formations so that oil and natural gas will flow. A 2004 study by the Environmental Protection Agency said there was no evidence that fracking threatens drinking water. Critics say the methodology was flawed.
Interest rates are falling in the bond market after a benign report on consumer inflation. The Labor Department says the consumer price index rose by a smaller-than-expected 0.2 percent in January. The CPI report comes as a relief for investors, a day after the producer price index shot up higher than expected. That measures prices at the wholesale level. Inflation is normally one of the biggest concerns for bond traders because it eats into the fixed returns on government-backed debt. Investors were comfortable adding to bond positions, which in turn pushes yields on the bonds lower. The yield on the ten-year treasury note maturing in February 2020, which is a basis for rates on mortgages and other consumer loans, fell to 3.79 percent from 3.81 percent Thursday.
The Federal Reserve has decided to boost the rate banks pay for emergency loans. The action is part of a broader move to pull back the extraordinary aid it provided to fight the worst financial and economic crisis since the 1930s. The move won't directly affect borrowing costs for millions of Americans. But with the worst of the financial crisis over, it brings the Fed's main crisis lending program closer to normal. The Fed decided to nudge up the so-called "discount" rate by one-quarter point to 0.75 percent, effective today.
Rates for 30-year home loans have edged lower for the second straight week, but remain above last year's record lows. The mortgage finance company Freddie Mac says that the average rate on a 30-year fixed rate mortgage fell to 4.93 percent this week from 4.97 percent a week earlier. Rates dropped to a record low of 4.71 percent in early December, pushed down by an aggressive government campaign to reduce consumers' borrowing costs.
A mortgage analyst says there's still a big problem with borrowers falling behind on their mortgage payments. But Jay Brinkmann of the Mortgage Bankers Association says, "the good news is it looks like it may not get much bigger." The group says the number dropped sharply at the end of last year, a sign the foreclosure crisis is beginning to ebb. The percentage of borrowers who missed just one payment on their home loans fell to 3.63 percent in the fourth quarter, down from 3.79 percent in the third quarter. The number who were at least three months behind, however, continues to soar. More than five percent of borrowers fell into that category in the fourth quarter, up from 4.4 percent in the third quarter.
The Mall of the Mainland in Galveston County hosts a free Community Resource and Information Festival tomorrow to help those still affected by Hurricane Ike. Resources are available to assist with questions on home rehabilitation, rental assistance, job placement and training and utility assistance. Information about Community Development Block Grants will be available.
Nearly 1,400 applications have been turned in for City of Galveston Recovers, a voluntary program that offers Galvestonians an opportunity to rebuild if they owned and lived in a home in Galveston that was damaged during Hurricane Ike. Tables are being set up this weekend at various Galveston events to distribute flyers and applications.
A home ownership preservation workshop is being held in Houston on Saturday for homeowners at the risk of foreclosure. The event is sponsored by the Obama administration's Making Home Affordable Program, Hope Now Alliance, the Greater Houston Foreclosure Prevention Task Force and NeighborWorks America at Lakewood Church on the Southwest Freeway. The Obama program was created to help homeowners refinance or modify their mortgage payments to a more affordable level. The free workshop provides an opportunity for face-to-face meetings with mortgage company representatives.
Three Houston Internal Revenue Service offices are among 200 Taxpayer Assistance Centers in more than 190 cities nationwide that are open on Saturday to help with tax filing. The IRS centers are on South Gessner, on I-45 North and on Smith Street. IRS employees will answer questions on the full range of tax law provisions, and free tax preparation and electronic filing for those who earn less than $49,000 a year will be available.
A government watchdog says the Federal Aviation Administration's lax oversight of aircraft maintenance at American Airlines raises concerns about the agency's ability to regulate airline maintenance in general. Investigators confirmed at least four maintenance-related allegations made two years ago "have potential safety implications," according to a report by the Transportation Department's inspector general. The report says maintenance problems at American were increasing at the time, and the airline had experienced a 32 percent rise in delays of maintenance work. It says the airline went from an average of 298 open maintenance items to 394 open items. Despite the increase, the report says the FAA only tracked the number of deferrals rather than identifying the cause of the delays or the type of aircraft parts involved. According to the report, American also wasn't following required procedures for inspection of maintenance work at the time. FAA and American officials say the problems are old issues that have largely been addressed.
Theme park operator Six Flags will have more time to gain support for its bankruptcy reorganization. A Delaware judge extended the company's exclusive right to reorganize until April 5th. If the plan isn't approved following a trial next month, however, a group of note holders could submit an alternative. Under Six Flags' plan, holders of senior secured notes issued by Six Flags Operations, a subsidiary, would receive about 93 percent of the equity in the reorganized company. Holders of junior notes issued by Six Flags would receive only about five percent of new equity under the company's plan. They claim to have lined up $1.8 billion in financing for an alternative plan that would increase the recovery for creditors. Six Flags operates three attractions in Texas: Six Flags Over Texas and Six Flags Hurricane Harbor in Arlington and Six Flags Fiesta Texas in San Antonio.
The number of rigs actively exploring for oil and natural gas in the U.S. dropped by one this week to 1,345. Houston-based Baker Hughes said that 893 rigs were exploring for natural gas and 440 for oil. Twelve were listed as miscellaneous. A year ago this week, the rig count stood at 1,300. Texas lost two. 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.Earnings
J.C. Penney is reporting a 5.2 percent decline in fourth-quarter earnings, dragged down by a big expense for its pension plan, but the profit topped its own expectations. The merchant says sales slipped 3.6 percent to $5.5 billion as shoppers continue to focus on necessities in a tough economy. Penney expects 2010 to be a better year, forecasting sales and profit increases. The department store operator says net income was $200 million in the period ended January 30th. That compares with $211 million in last year's fourth quarter. Sales at stores open at least a year fell 4.5 percent. Penney is based in Plano.