FutureGen site decision expected next Tuesday…Wholesale prices up 3.2 percent; retail sales surge by 1.2 percent…Farmers Insurance seeks higher homeowners rates along the Texas coast…
The developers behind an experimental low-pollution power plant say they’re ready to choose between sites in Illinois and Texas. That’s despite a letter from the U.S. Department of Energy advising them to put on the brakes. Coal and power companies planning to build FutureGen in partnership with the Energy Department plan to announce the site Tuesday. Possible locations are Mattoon and Tuscola in eastern Illinois, or the west Texas town of Penwell or Jewett in east Texas. An Energy Department official told the developers in a letter this week that the agency may not be ready for an announcement by Tuesday. And he complained developers had planned their announcement without consulting the department. The plant promises several thousand construction jobs and 150 permanent positions.
There’s been a big jump in inflation at the wholesale level. The government says wholesale prices shot up 3.2 percent in November, the biggest increase in 34 years. Much of that was due to a record rise in gasoline prices. When volatile energy and food prices are removed, all other prices rose by four-tenths of a percent in November, after being flat the month before. The pickup in “core” prices suggested inflation may be seeping into a wider range of goods. The inflation figures were worse than economists were expecting.
Consumers have been streaming into shopping malls, despite concerns about the weak economy. The Commerce Department reports that retail sales surged by 1.2 percent last month, double the gain that economists had expected. It’s the largest increase since a 1.6 percent jump last May, and follows an October gain of just two-tenths of a percent. Half of the November increase came from a big jump in gasoline pump prices, and therefore is not seen as a sign of strength in consumer demand. But excluding gasoline, retail sales would have been up by a still solid six-tenths of a percent. There were widespread gains across a number of other areas from department stores to appliance and furniture stores.
Business inventories in October posted the smallest increase in seven months. The Commerce Department reports that supplies held by businesses grew by just one-tenth of a percent in October following a four-tenths-percent rise in September. The October increase is the weakest gain since inventories were unchanged in March. It is below the four-tenths-percent gain that economists had expected. The small rise in inventories was seen as an effort by companies to control inventories in advance of an expected period of sluggish growth.
Despite economic headwinds, the job market is holding up as the year winds to a close. The Labor Department says new claims for unemployment benefits dropped last week. The number of Americans filing first-time claims for jobless aid fell by 7,000 to 333,000. That is the lowest level since the middle of November. Analysts had been expecting no change. The less volatile four-week moving average declined by 2,000 to nearly 339,000. Just last Friday, the government said the nation’s unemployment rate remained at 4.7 percent.
The Labor Department wants companies that sell 401(k) services to disclose all their fees upfront, in writing. The idea is to make sure the retirement funds aren’t drained by hidden charges. Employers would know all the fees and expenses involved before they hand over employee funds for investment. Labor Secretary Elaine Chao says the proposed regulations are meant to foster “fair, competitive and transparent prices for services.” But House Education and Labor Committee Chairman George Miller says the new rules don’t go far enough. He wants the disclosure to be made to employees as well, so they can see exactly what’s happening with their money.
Farmers Insurance wants to raise homeowners rates 20 to 30 percent along the Texas coast–while reducing rates in many other areas. Some Harris County customers could see hikes as high as 25 percent, and up to 16 percent increases are expected for Galveston County. This week’s filing with the Texas Department of Insurance indicates a net result of a statewide increase of 2.2 percent–with hefty premium hikes in coastal counties and southeast Texas. Many other parts of the state would see modest reductions. Farmers spokeswoman Michelle Levy says nearly half of the company’s 686,000 policyholders in Texas would see lower premiums under the plan. The rates, which will be reviewed by insurance regulators, are scheduled to take effect February 16th for new and existing customers. This filing comes five months after the company withdrew a proposed 6.6 percent increase in homeowner rates–when regulators indicated they’d reject the plan. The industry saw massive property losses from 2005 Hurricanes Katrina and Rita.
Mortgage interest rates have risen over the past week. Freddie Mac says fixed-rate mortgages averaged 6.11 percent this week. That’s up from 5.86 percent last week, the lowest in more than two years. Until this week, the benchmark rates had been falling or holding steady since mid-October. Other rates also moved higher. Rates on 15-year fixed mortgages, popular for refinancing, rose to 5.78 percent, up from 5.65 percent last week. The average rate for one-year adjustable mortgages moved up to 5.50 percent, from 5.46 percent last week. The pickup in mortgage rates around the country comes as some prospective home buyers struggle with a credit crunch that has made it more difficult to secure financing for homes. The worsening credit crunch has aggravated the housing slump, which is weighing heavily on national economic activity. The odds of a recession are generally regarded to have been rising.
Houston-based Harvest Natural Resources is acquiring a 50 percent interest in an African exploration contract offshore Gabon from Sasol Petroleum West Africa, according to the Houston Business Journal.
Houston-based The Trevino Group has completed construction of the Exploration Development Laboratory for United Space Alliance, lead by Lockheed Martin. The lab will be utilized to develop state-of-art space exploration hardware, as well as avionics software for the Orion crew exploration vehicle as well as other components of NASA’s Project Constellation. The Orion human space flight system will transfer astronauts to and from the International Space Station, the moon, Mars and other destinations.
KBR has been awarded a $57 million contract by Germany-based Man Ferrostaal to provide engineering services an ammonia plant for Petroquimica de Venezuela, according to the Houston Business Journal.
The insurance industry is watching a terrorism bill on Capitol Hill closely. A program to help bail out the insurance industry in case of a catastrophic terrorist attack was enacted in 2002 after 9-11. It’s set to expire at the end of the month. The current program pays out after companies have suffered losses over $100 million. But, the House has passed a bill which would lower it to $50 million. It’s at odds with the Senate’s version, which keeps the $100 million threshold. The legislation has more than just the less aggressive Senate bill to contend with. The White House says advisers have told the President to veto. The program was meant to calm re-insurers, who after the 2001 attacks said they would no longer cover such losses. Re-insurers provide insurance for insurers so they can cover the risk of a catastrophic loss.
Vanity Fair Brands says it will add 200 jobs at its Monroeville, Alabama, plant after closing a distribution center in south Texas. Company officials say the division of Fruit of the Loom will consolidate a Mission, Texas, distribution center into its Monroeville plant by the end of next year. The company did not disclose the types of jobs or pay scale. Kentucky-based Fruit of the Loom last January purchased the intimate apparel line for $350 million from North Carolina-based VF, which makes clothing. Vanity Fair brands include Lily of France, Bestform and Vassarette, with operations based in Alpharetta, Georgia.
The executive director of the Port of Houston Authority has been named 2008 Houston Area “Engineer of the Year.” Thomas Kornegay was selected by representatives of various Houston engineering organizations. Kornegay has served as the managing director of the Port of Houston Authority for five years. He’ll be recognized during the nationwide celebration of Engineers’ Week on February 22nd, 2008.
A review finds moving the air defense artillery school from Fort Bliss to Fort Sill, Oklahoma, will cost nearly $80 million more than expected. The Oklahoman reports the Government Accountability Office says the 2005 base closure round will be more expensive than expected and won’t yield any savings until after 2017. The review found the round will save the Pentagon about $15 billion by 2025–far less than the $36 billion estimated. Members of the U.S. House Armed Services Subcommittee on Readiness expressed disappointment. Chairman Solomon Ortiz of Corpus Christi says the base realignment and closure process was flawed. Ortiz says it didn’t obtain realistic data and it was again tainted by politics. A deputy undersecretary told the subcommittee that inflation had already caused an increase of $2 billion in construction costs.
Clear Channel Communications and the private equity firms trying to buy it extended their agreement while they await regulatory approval. The $19.5 billion sale of the San Antonio-based radio station chain to a group led by Thomas H. Lee partners and Bain Capital Partners has been extended until June 12th. In October, shareholders approved the buyout offer, the third in a series made by the equity firms facing resistance from several large shareholders. The private buyout deal was announced in November 2006. Clear Channel has been trying to divest stations in smaller markets but has had a number of deals fall through. Clear Channel also owns 90 percent of the world’s largest outdoor advertising company with roughly one million signs worldwide.