Extended unemployment benefits began running out today for an estimated two million Americans. Unless Congress changes its mind, benefits that had been extended up to 99 weeks will end this month, just as the holidays arrive. Congressional opponents of extending the benefits any further say fiscal responsibility should come first. Republicans in the House and Senate, along with a handful of conservative Democrats, say they're open to extending benefits, but not if it means adding to the $13.8 trillion national debt. The Federal Reserve expects the unemployment rate will hover around nine percent for all of next year.
Federal Reserve Chairman Ben Bernanke is expressing concern that the economy isn't growing fast enough to significantly reduce unemployment. Bernanke says the economy needs growth of two percent to 2.5 percent just to create enough jobs to accommodate new people looking for work. The Fed chairman is also signaling concern about the 6.2 million people unemployed for more than six months, who amount to 42 percent of all unemployed Americans. Bernanke says that problem could contribute to an unusually high unemployment rate even as the economy returns to health. Bernanke spoke at an Ohio State University business school forum on the economy that also featured Ford Motor CEO Alan Mulally and IBM CEO Sam Palmisano.
The work force was more productive in the summer than originally thought, reflecting the fact that the economy produced more goods and services than first estimated. The Labor Department says productivity grew at an annual rate of 2.3 percent in the July-September quarter, an improvement over an initial estimate of 1.9 percent productivity growth. Labor costs fell at an annual rate of 0.1 percent, unchanged from the initial estimate made a month ago. Productivity measures the amount of output per hour of work. The upward revision follows a higher second estimate for economic growth in the third quarter of 2.5 percent.
In a reversal, the Obama administration says it will not pursue offshore drilling in east coast waters, including the eastern Gulf of Mexico. A senior administration official told the Associated Press that because of the BP oil spill, the Interior Department will not propose any new oil drilling in the east coast for at least the next seven years. Obama's earlier plan--announced in March, three weeks before the April spill--would have allowed drilling from Delaware to central Florida, plus the northern waters of Alaska. The new plan allows drilling in Alaska, but officials said they will move cautiously before approving any leases. The eastern Gulf was singled out for protection by Congress in 2006 as part of a deal with Florida lawmakers that made available 8.3 million acres to oil and gas development in the east-central Gulf.
BP is suspending construction of an oil rig off Alaska's coast to review its engineering and design plans and ensure the Liberty Project can be done safely. BP Alaska spokesman Steve Rinehart says “a few issues” were encountered over the last year in working to assemble the rig. He wouldn't define those but said BP wants to ensure the rig meets company standards. The project calls for using a manmade gravel island in the Beaufort Sea as a drilling base, with a rig drilling horizontally for six to eight miles to tap what BP estimates is a 100-million-barrel reserve of recoverable oil. Critics have questioned the approach following the Gulf oil spill. Rinehart says BP remains committed to the project. No timeline was given for construction to resume.
Americans jumped on deals and promotions offered online on Cyber Monday, spending $1 billion and making it the busiest online shopping day ever, according to new data. Research firm Comscore says revenue rose 16 percent from a year ago to $1.03 billion on the Monday after Thanksgiving. Since the beginning of November, online sales are up 13 percent to $13.55 billion. The improvement is welcome for retailers hoping that Americans start spending more freely. But shoppers are still holding out for bargains and spending cautiously as unemployment remains high. According to ShopperTrak figures, revenue at brick-and-mortar stores was flat over the weekend following Thanksgiving, but traffic rose 2.8 percent. A clearer picture of spending will come tomorrow when the nation's retailers release revenue figures for November.
A new report says state lawmakers around the country may have to cut more state services in coming years despite the recession's end. The report says states will have to deal with dwindling help from the federal government as well as a slow recovery in tax revenue. States will spend about $43 billion in economic stimulus money during the current fiscal year ending June 30th. After that, they'll probably have to get by with less federal help. To deal with a sharp decline in tax revenue, most states have undertaken a series of program cuts and tax increases to balance budgets. Of the states that made midyear 2010 budget cuts, 35 reduced spending on elementary and secondary education, and 32 lowered spending on higher education.
Factory output grew for the 16th straight month in November, though at a slightly slower pace than the previous month. The Institute for Supply Management says its index of manufacturing activity dropped to 56.6 in November, down from 56.9 in October. Any reading over 50 indicates growth. Wall Street analysts expected a steeper drop. Manufacturing has been one of the strongest sectors of the economy since the recession ended. New orders and production also grew at a slower pace. Exports are benefiting from a cheaper dollar. The export index grew, but not as quickly as in October, the ISM said. Separately, manufacturing also picked up in China last month. A survey affiliated with the government said its measure rose to 55.2 in November from 54.7 in October.
Construction spending rose for the second straight month in October, pushed up by growth in residential construction and government building projects. The Commerce Department says construction spending increased 0.7 percent in October, matching the 0.7 percent gain in September. It marked the first time that construction activity has risen for two straight months since March and April. Spending rose in October to a seasonally adjusted annual rate of $802.3 billion. Even with the gains, construction spending is 33.7 percent below the peak hit in March 2006.
A spokesman for Nigeria's anti-graft agency says investigators want to talk to the managing directors of local subsidiaries of Royal Dutch Shell and Houston-based Halliburton over bribery allegations. Femi Babafemi of the Economic and Financial Crimes Commission says that the discussions come after U.S. investigations that found massive corruption within the troubled Nigerian Customs Service. Those cases discovered oil and shipping companies paid millions in bribes to circumvent red tape at the country's notoriously slow ports. While the cases have garnered fines in the U.S. against firms involved, officials in oil-rich Nigeria have been slow to respond. A customs spokesman did not immediately respond to a request for comment.
Federal regulators are moving ahead with a plan to prohibit phone and cable companies from blocking or discriminating against internet traffic flowing over their broadband networks. Julius Genachowski, chairman of the Federal Communications Commission, will outline his proposal for so-called “network neutrality” rules in a speech. Despite Republican opposition in Congress, Genachowski plans to bring his proposal to a vote by the full commission before the end of the year. Many big internet companies Google and Skype, as well as public-interest groups, insist regulations are needed to ensure broadband companies don't use their control over internet connections to dictate where consumers can go and what they can do online. Big phone and cable companies argue that they should be allowed to manage their networks as they see fit.
Motorola will split into two companies in early January, finalizing the breakup of one of the founders of the U.S. electronics industry. Motorola is splitting its consumer unit, maker of cell phones and cable set-top boxes, from the seller of police radios and barcode scanners to government and corporate customers. Shareholders will get shares in both the consumer business, Motorola mobility, and the professional business, Motorola Solutions. Motorola set the breakup plan in motion in 2008 after prodding from activist investor Carl Icahn. The goal was to complete the separation by 2009, but the economic downturn and the continuing collapse of Motorola's phone sales prompted it to postpone the plan.
Lowe's is recalling about 11 million blinds and roman shades out of concern that children could strangle on the cords. The recall involves all styles and sizes of roman shades and roll-up blinds sold by Lowe's. That's about six million shades and five million roll-up blinds. The Consumer Product Safety Commission says two children became entangled in the exposed cord found on the backside of the roman shades while looking out of windows. The recalled shades and blinds were sold at Lowe's stores, other retail stores and at www.lowes.com since at least 1999 through June of this year. Consumers are advised to stop using the recalled products and contact the Window Covering Safety Council for repair kits, at 800-506-4636.