Sales of new homes plunged to a record low in January, underscoring the formidable challenges facing the housing industry as it tries to recover from the worst slump in decades. The Commerce Department reports that new home sales dropped 11.2 percent last month to a seasonally adjusted annual sales pace of 309,000 units, the lowest level on records going back nearly a half century. The big drop was a surprise to economists who had expected sales would rebound to an annual rate of 360,000 units. The January decline will heighten fears about the fledgling recovery in housing. Economists were already worried that an improvement in sales in the second half of last year could falter as various government support programs are withdrawn.
Toyota's troubles will not keep a vehicle processing plant planned for Temple from being built. City and company officials say the project has been put on hold but that Toyota still intends to build the plant despite its ongoing recall of more than six million vehicles. But Michael Owen, a vice president at Gulf States Toyota, told the Temple Daily Telegram that the company could not commit to a timeline for construction of the plant, which would employ about 240 workers. The plant would add accessories to Toyota vehicles and get them ready for delivery to dealerships throughout a five-state area. Construction had been expected to begin last year.
Consumer Reports has named Honda and Subaru best all-around vehicle makers in its annual auto issue, marking the fourth consecutive year Honda won top marks from the influential magazine. The ratings are based on the magazine's average road test scores and predicted reliability scores. Chrysler fared the worst in the pack, though Consumer Reports recommended one of its vehicles, the ram pickup. It did not recommend any Chrysler vehicles last year. Honda and Subaru were followed by Toyota and Hyundai. Nissan and Volkswagen tied for fourth.
Government Procurement Connections will soon celebrate its 17th year linking minority, small and women-owned businesses with more than $5.3 billion in contract opportunities. A procurement conference is set for mid-March. Mayor Annise Parker says it's an opportunity to make key contacts."An inter-governmental contracting fair that provides small, minority, women and disadvantaged business owners the opportunity to meet directly with more than hundred exhibitors from the city, county, state and federal governments involved in purchasing, construction and professional services contracting. I invite any new small business or minority-owned business that wants to figure out how to do a better job of government contracting, what they need to do, how they can make those connections."
This year's procurement conference is set for March 17th and 18th at the George R. Brown Convention Center.
The rate at which credit card companies wrote off bad debt jumped in January, but the number of payments two or three months late fell, which may be a positive sign for the months to come. Moody's Investors Service says the rate at which card issuers who securitize their lending wrote off balances as uncollectable rose to 11.15 percent in January. The last time the statistic, known as the charge-off rate, topped 11 percent was in August, when it was 11.5 percent. Charge offs were at 7.74 percent in January 2009. Lenders securitize loans by repackaging them and selling them to investors, which spreads risk.
America's thrifts reported a small profit last year after two years of losses as the industry stabilizes amid a slow economic recovery. The Office of Thrift Supervision says that savings and loans earned $29 million last year, after net losses of $15.9 billion in 2008 and $649 million in 2007. Thrifts earned $505 million in the fourth quarter, the second profitable quarter in a row. The number of troubled thrifts--those with low capital reserves and other problems--was unchanged at 43 in the October-December period, compared to the third quarter. Still, that is up from 26 a year earlier.
The Senate has passed a bill aimed at boosting job growth by giving tax breaks to businesses that hire the unemployed. The jobs legislation would also extend highway and mass transit programs through the end of the year and pump $20 billion into them in time for the construction season. Economists say the tax breaks could create perhaps 250,000 jobs. It's the first of several job-creation measures promised by Democrats, who also want to give cash-strapped states further help with their budgets and give subsidies to people who make their homes more energy efficient. The measure passed by a bipartisan 70-28 and now goes back to the House, which passed a far more ambitious version in December.
President Barack Obama is asking business leaders to get behind his plan to overhaul the financial system. The proposal to update U.S. financial regulations to prevent another economic meltdown is stalled in Congress, and the president told leading CEOs he isn't trying to punish Wall Street. He said the aim, instead, is to "guard against the recklessness of a few" who take risks that threaten the economy. The president's plan calls for stronger oversight of financial institutions that could pose a risk to the system. He also wants to increase protections for consumers and investors. Obama said that assertions the plan would undermine businesses outside the financial sector "couldn't be further from the truth."
Federal Reserve Chairman Ben Bernanke is offering no clues as to when interest rates may be increased. Bernanke told Congress that record-low interest rates are still needed to ensure that the economic recovery will last and to help ease the sting of high unemployment. Most economists think an increase is months away. Bernanke stressed that when the economy is on firmer footing and the Fed needs to reverse course and tighten credit for millions of Americans, he will do so. Boosting rates too soon could derail the recovery. But waiting too long could trigger inflation and feed a speculative asset bubble. That, too, could threaten the economy, along with Americans' pocketbooks and nest eggs.
Treasury Secretary Timothy Geithner says stimulus spending and budgetary austerity over the longer term require careful balance, but aren't at war with each other. In prepared remarks to Congress, Geither said that before the federal government can begin attacking soaring deficits and a massive national debt, it needs to increase jobs and ensure economic growth. He offered a forceful endorsement of administration policies, ranging from expanded health care to tougher banking regulations, to the House Budget Committee. Geithner focused on the recession relief and job stimulus components of the Obama administration's $3.8 trillion budget for fiscal 2011. Those efforts alone account for nearly $300 billion in proposed spending.
Federal regulators have imposed new curbs on the practice of short-selling, hoping to prevent spiraling selling sprees in a stock that can stoke market turmoil. A divided Securities and Exchange Commission voted 3-2 to adopt new rules. The rules put in a so-called circuit breaker for stock prices, restricting for the rest of a trading session and the next one any short-selling of a stock that has dropped ten percent or more. Short-sellers bet against a stock. They borrow a company's shares, sell them and then buy them when the stock falls and return them to the lender--pocketing the difference in price.
A ribbon-cutting ceremony this morning officially opens the Behavioral and Biomedical Sciences Building at the University of Texas Research Park Complex on the south campus of the Texas Medical Center. The $74 million, six-story building will include a state-of-the-art regenerative medicine program and will house outpatient clinics offering specialized care for autism, mood and anxiety disorders and alcohol and substance use programs.
Freddie Mac lost $7.8 billion in the final three months of last year, but the mortgage finance company didn't need a federal cash infusion for the third quarter in a row. The results, however, were better than the fourth quarter 2008 when Freddie lost $23.9 billion. During the most recent quarter, Freddie suffered $7.1 billion in credit losses and a $3.4 billion write-down in low income tax credit investments. Freddie Mac has received about $51 billion from taxpayers to date.
Fannie Mae plans to take a $5 billion charge when its reports its fourth quarter results later this week because the government blocked its plan to sell tax credits. The Treasury Department last year prevented the mortgage giant from selling about half of its low-income housing tax credits worth about $2.6 billion to investors including Goldman Sachs Group. Fannie Mae said in a regulatory filing that change would cause it to ask for more money from the government, which has already provided $61 billion to keep the company afloat.
Zale says closing stores and cutting costs helped it report a fourth-quarter profit in spite of anemic sales. The struggling jewelry retailer says quarterly profit totaled $6.7 million. Revenue fell 14 percent to $582.3 million. Zale has seen its sales sag during the recession and been hurt by tight credit markets. The company has closed hundreds of stores in the past two years. Its CEO and other executives left in January following a tough holiday season. Zale is working with Peter J. Solomon on financing alternatives to improve its liquidity.