Friday AM May 30th, 2008

Latest GDP falls short of "recession"…Unemployment applications increase…UN joint report says world food prices will decrease, but not to previous levels…

The plodding economy did a bit better than predicted in the first quarter, with the latest statistic falling short of actual recession. The Commerce Department says first-quarter growth was nine-tenths of a percent, underscoring caution by consumers and businesses walloped by housing, credit and financial problems. The figure didn’t meet the definition of recession. Under a rough rule, recession is two straight quarters of shrinking gross domestic product. The new GDP reading is an improvement from the government’s initial estimate of six-tenths percent growth for the January-to-March quarter. It also improved on final quarter of last year, also pegged at six-tenths percent. GDP measures the value of all goods and services produced within the United States.

The number of new people signing up for unemployment benefits increased last week. It was the latest sign of softness in employment conditions. The Labor Department reports that new applications filed for unemployment insurance rose by a seasonally adjusted 4,000 to 372,000 last week. The increase left claims slightly higher than the 370,000 level that economists were forecasting.

A new report is predicting that world food prices, which have been soaring in recent months, are set to head downward from their current peaks in the coming years. At the same time, the joint report by the Organization for Economic Cooperation and Development and the U.N. Food and Agriculture Organization says prices will remain “substantially above” average levels from the past decade. The soaring prices were triggered by high oil prices, changing diets, urbanization, expanding populations, flawed trade policies, extreme weather, growth in biofuel production and speculation. As might be expected, the world’s poorest nations are most vulnerable–particularly the urban poor in countries that import food. The report says those nations will need increased humanitarian aid to alleviate hunger and undernourishment.

Meanwhile, the World Bank says it is making available $1.2 billion to help overcome the global food crisis. The bank says it also will increase its overall support for agriculture and food to $6 billion next year–up from $4 billion in 2008. Robert Zoellick, president of the 185-nation lending organization, said there is a need for a clear action plan because higher food prices are driving people and countries into danger. He said aid should be provided to address immediate humanitarian needs such as seeing that pregnant women receive proper nutrition. He said longer term help should go to small farmers, giving them seed and fertilizer so they can increase their crops.

The Houston-area carbon footprint might be getting smaller, according to the Brookings Institution’s “Shrinking the Carbon Footprint of Metropolitan America” report. It finds that transportation and energy use here fell by 8.6 percent between 2000 and 2005, according to the Houston Business Journal. The average carbon footprint of a resident from home energy use decreased 14.2 percent during that time. Houston ranks 35 overall based on metric tons of carbon emitted per person, with about 2.3 tons of carbon in 2005. El Paso ranks ninth with 1.6 metric tons. Austin was the only city to have an increased footprint from transportation and residential energy use, climbing 10.5 percent in the five-year study period.

Cities may be hot spots for global warming, but a new report says people living in them are greener than folks out in rural areas. Researchers at the Brookings Institution say each resident of the 100 largest metropolitan areas is responsible, on average, for nearly 2.5 tons of carbon dioxide in energy consumption each year. That’s 14 percent below the U.S. average. Those cities still produce more than half the nation’s carbon dioxide pollution. But their greater use of mass transit and population density reduce the per-person average. Metropolitan area emissions of carbon dioxide are highest in the east, where people use a lot of coal for electricity. They’re lower in the west, where the weather is better and electricity and motor fuel cost more.

The Federal Reserve plans to keep on making short-term loans available to squeezed banks to help them overcome credit problems. The Fed announced Thursday that it will conduct three auctions in June, with each one making $75 billion available in short-term cash loans. It’s part of the Fed’s ongoing effort, launched in December, to calm stressed financial markets.

Houston-based GulfMark Offshore is buying Rigdon Marine of Houston, according to the Houston Business Journal, in a $282 million deal. The combined company will operate 90 vessels, with an additional 16 under construction for delivery through 2010.

Dallas-based Blockbuster says it is still considering a possible acquisition of electronics retailer Circuit City. Blockbuster’s proposed takeover of Richmond, Virginia-based Circuit City was only mentioned briefly during the rental chain’s annual meeting Wednesday. Chairman and Chief Executive Jim Keyes said the company is still in the due diligence stage and did not disclose when a decision will be made on the bid of just over $1 billion. Keyes said acquiring Circuit City would be an “accelerator” of the company’s strategy to grow Blockbuster’s core rental business and enhance its product offerings of movies, games and entertainment gadgets.

Circuit City says it is cutting 123 employees nationally from a pilot program of its Firedog service business. The cuts in Texas, as well as in Virginia, Georgia, Maryland and Massachusetts, represent slightly more than four percent of the unit’s work force of 3,000. As part of an 18-month pilot program, the Richmond-based electronics retailer acted as a subcontractor for Charter Communications and Comcast. The cuts include installers and support staff. Circuit City says the program was shut down because it did not meet goals or expectations. In March, the company announced it would lay off 67 workers who sold, installed or managed programs to wire and install electronics in new single-family homes. Those cuts were in response to the nationwide slowdown in home construction.

FMC Technologies is supplying oil services and products to Norway’s StatoilHydro in a $50 million deal, according to the Houston Business Journal. The equipment is for use in a gas field project in the Norwegian Sea, with deliveries slated for this summer.

More airports are now allowing travelers whose cell phones get e-mail to use paperless boarding passes for Continental Airlines flights. The program, which started in Houston last year, is now available for flights out of Logan International Airport in Boston, Newark Liberty International Airport and Ronald Reagan Washington National Airport. Boarding passes that Continental e-mails to passengers’ cell phones and other handheld devices will display an encrypted bar code along with passenger and flight information. TSA officials will use hand-held scanners to validate the passes. Users must be flying alone to a domestic destination.

An elderly south Texas couple who toiled for decades as migrant farm workers are the first landowners to reach a federal appeals court in their fight against the border fence. Attorneys for Hilaria and Baldomero Muniz and another landowner have asked a panel of judges at the 5th U.S. Circuit Court of Appeals in New Orleans to void a federal judge’s order that they open their land to surveyors for the border fence. They argue that the district judge erred when he allowed government officials to attempt to negotiate property access after suing. They say the law requires the government to try to strike a deal before filing a lawsuit–not after filing one. The appeals court has agreed to expedite the case, but even so, oral arguments are not expected until early July. That’s just a couple weeks before work is to begin on the border fence in Hidalgo County. The government is trying to complete 670 miles of fencing along the U.S.-Mexico border by the end of the year. Eighty-three year-old Muniz and his 78-year-old wife are unlikely trailblazers in the legal fight over the border fence. The Munizes live in the tiny Los Ebanos community, tucked into a sharp bend in the Rio Grande. They bought their third of an acre in 1980 and built the house there over five years, during breaks in the migratory circuit that took them as far north as Michigan. Now the Munizes subsist tending a few goats. Baldomero speaks only Spanish and does not read or write.

Clear Channel Communications says that full funding for its $17.9-billion sale to two private equity firms is now in place in an escrow account. The radio and outdoor advertising company agreed in November 2006 to be acquired by the buyout firms Bain Capital Partners and Thomas H. Lee Partners. Earlier this month, the company decided to take a lower price and slightly higher lending rates to settle a dispute with lenders financing the deal. Besides the two buyout firms, the parties that contributed equity to the transaction include Highfields Capital Management, Abrams Capital Ppartners and Clear Channel’s controlling shareholders, the Mays family. Last week, Clear Channel said the lenders, which include Citigroup, Deutsche Bank, Morgan Stanley, Credit Suisse Group, Royal Bank of Scotland Group and Wachovia, placed all financing into escrow.

Dell says its profit and sales grew in its fiscal first quarter, beating Wall Street’s expectations in a sign the computer maker’s turnaround efforts may be starting to pay off. For the three months ended May 2nd, Round Rock-based Dell says it earned $784 million–up four percent from $756 million in the same period a year earlier. Dell says its revenue jumped nine percent to $16.08 billion from $14.72 billion. Analysts, on average, had expected sales of $15.68 billion, according to a poll by Thomson Financial. The company says strong growth of commercial and consumer products and services and lower operating costs as a percentage of sales helped drive results.

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