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Friday PM May 22nd, 2009

Gallery Furniture's "Mattress" Mac plans to rebuild burned North I-45 store…Houston unemployment rate set at 6.3 per cent, compared to 6.7 per cent statewide…Gas prices on the rise, just ahead of Memorial Day weekend…

The damage at Gallery Furniture from last night’s fire is estimated at millions of dollars. The Thursday night fire at the Gallery Furniture warehouse delayed traffic on nearby Interstate 45. Owner Jim McIngvale — also known as “Mattress Mac”— said the fire began in a corner of the warehouse on I-45 North between Tidwell and Parker. An investigation is underway to pinpoint the cause. Houston Fire District Chief Tommy Dowdy says they have not confirmed a report from an employee that the fire started around a generator. More than 100 people were in an adjacent showroom when the fire broke out but they escaped safely. McIngvale says his staff is helping those who had furniture on order at the damaged store.


“Obviously once the phones get back on we’ll make arrangements for them to come out here and pick up something else or we’ll, our manufacturer is going to quick-ship us—they may have to wait three or four days, but we’ll get it in. We’ve always four a way, when tragedy hits, to take care of our customers, and we’re certainly going to do that this time, more than ever.”

Former President George H.W. Bush spoke by phone this morning to McIngvale, expressing his relief that no one was hurt. McIngvale vows to rebuild the business, and continues operating from his second location on Post Oak at Westheimer.

New numbers from the Texas Workforce Commission show the state’s unemployment rate remaining steady at 6.7 per cent in April. Workforce officials say that’s lower than the rising 8.9 per cent U.S. unemployment rate. But it’s still far higher than it was a year ago. Texas lost 39,500 nonagricultural jobs in April. Professional and business services had the largest monthly drop with 20,100 jobs lost. The largest industry gains in April were in leisure and hospitality, with 10,600 job added. Education and health services also gained. The Houston unemployment rate dipped by 1.4 per cent, year-over-year. The TWC says the local jobless rate dropped in April to 6.3 per cent. With an 8.9 per cent unemployment rate, the McAllen-Edinburg-Mission region was hardest hit. The Amarillo area fared best with a 4.1 per cent unemployment rate.

Forty-four states lost jobs in April, led by California where employers slashed 63,700 positions, as the recession took a further toll on U.S. workers. The U.S. Labor Department says that behind California in over-the-month job losses were: Texas, which saw 39,500 jobs vanish; Michigan, which lost 38,400 jobs; and Ohio, which lost 25,200. California’s unemployment rate dipped to 11 per cent last month, fifth-highest in the country. Michigan’s jobless rate was the highest at 12.9 per cent, followed by Oregon at 12 per cent, South Carolina at 11.5 per cent and Rhode Island at 11.1 per cent.

Gas prices at the pump are on the rise, just ahead of this Memorial Day weekend. It’s seen as the unofficial start of the summer driving season. The national average jumped nearly three cents overnight to $2.39 a gallon. The surge comes amid signs that a rally in crude has stalled. Gas is nearly 33 cents a gallon more expensive than last month. It’s still $1.44 a gallon cheaper than a year ago when fears of an oil shortage sent energy prices soaring.

Millions of Americans are getting started today on their Memorial Day weekend trips. Despite the struggling economy, AAA estimates 32.4 million people, or about one in ten Americans, will travel over the holiday. That’s up slightly from last year. Most people will drive. While gasoline prices are rising again, experts say rest easy. The economic slack created by the recession all but guarantees prices won’t spike the way they did last year. Energy analyst Darin Newsom at DTN in Omaha, Nebraska, expects the average price for regular unleaded to push $2.80 a gallon this summer. That’s higher than many other forecasts.

President Barack Obama signed legislation in the Rose Garden today making big changes for every American with a credit card. The bill will revolutionize the credit card market with several restrictions, on everything from sudden hikes on interest rates to who can actually get a card. Obama’s spokesman Robert Gibbs says the legislation will “bring some common sense rationality into our financial system.” Congressman Dan Maffei says the most important change is aimed at protecting debt-ridden consumers. The New York Democrat says Americans reaching for their plastic will know cards come from “a responsible lender and not a loan shark.” But experts say banks will get more creative to make up for lost revenue by hiking fees.

Lawmakers in Washington want underperforming Chrysler dealers targeted for closing to have more time to wind down their businesses. Republican Senator Kay Bailey Hutchison of Texas is pushing a proposal to give Chrysler dealers 60 days to close their dealerships, instead of three weeks outlined by the company. Hutchison and Democratic Senator Debbie Stabenow of Michigan later spoke with Chrysler President jim press, who assured them the company would try to provide a soft landing for the outgoing dealers. Chrysler said last week it intends to close about a quarter of its 3,200 U.S. dealerships by June 9th.

The president of the Canadian Auto Workers says the union and General Motors Canada have agreed on a cost-cutting deal. The announcement came from Ken Lewenza, the head of the CAW. An agreement on wages and other costs is critical for General Motors Canada to receive government aid. The deal comes a day after the united auto workers reached a tentative deal with the U.S. government and GM Canada parent General Motors. GM is also talking with its bondholders. GM is facing a June 1st government-imposed deadline to restructure or be forced into bankruptcy protection.

United Airlines says it will recall 107 furloughed mechanics. The nation’s third-largest airline says it needs the line mechanics to help it with repairing cabin items, reducing the number of out-of-service planes, and ensuring the reliability of the fleet. Chicago-based United says the recalls will begin immediately and will be spread across all its hubs. United, a unit of UAL, has 2,995 mechanics furloughed.

Continental Airlines is suing nine pilots that it says got sham divorces so their spouses could collect their retirement benefits while they kept flying. The airline says the pilots and their spouses remarried after they got the money — between $10 million and $11 million in all. Continental says most of the pilots involved have been fired or quit, but one was rehired after he promised to pay back the retirement money. The airline filed the lawsuit in federal district court in Houston.

President Barack Obama has signed into law a Congressional bill aimed at tightening controls on defense spending, saying it is “long overdue.” Standing with leading Congressional players on the south lawn of the White House, Obama said he was “extraordinarily proud” to sign the bill, which passed unanimously in both the House and Senate this week. Obama noted one study which found that roughly $295 billion of taxpayers’ money was wasted last year on cost overruns involving 95 defense programs. He said wasteful defense spending “is unacceptable” at a time when the country is fighting two wars and trying to overcome a deep recession at home.

The number of rigs actively exploring for oil and natural gas in the United States fell by 18 this week to 900, down more than half from a year ago. Of the rigs running nationwide, 711 were exploring for natural gas and 180 for oil, Houston-based Baker Hughes reported. Nine were listed as miscellaneous. A year ago, the rig count stood at 1,889. The U.S. count is down 56 per cent since the end of August as weak energy demand has hampered oilfield activity. Oil prices peaked at almost $150 a barrel in July before plunging. Texas lost 11 rigs. Baker Hughes has tracked rig counts since 1944. The tally peaked at 4,530 in 1981, during the height of the oil boom. The industry posted several record lows in 1999, bottoming out at 488.

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