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Archive for December, 2008

Continuing Jobless Claims Rise Sharply in December

Wednesday, December 31st, 2008

Unemployment claims in Kitsap County are 53 percent higher now that this time last year. – Rachel Pritchett

(AP) — The number of laid-off workers continuing to draw unemployment benefits has surged again, as finding new jobs becomes even more difficult amid a deepening recession.

The Labor Department reported Wednesday that people continuing to draw unemployment benefits increased by a larger-than-expected 140,000 to 4.5 million for the week ending Dec. 20, the most recent period for which that information is available. That was the most since early December 1982, when the country was emerging from a deep recession, though the labor force has grown by about half since then.

A year ago, the number of people continuing to draw jobless benefits was 2.7 million.

The department’s report also showed that the number of newly laid-off workers filing first-time applications for jobless benefits dropped by a seasonally adjusted 94,000 to 492,000 for the week ending Dec. 27.

That decline, however, didn’t signal any improvement in labor conditions. The drop — while bigger than economists expected — was mostly related to seasonal adjustment difficulties and reflected some out-of-work people not making it to unemployment offices to file claims over the Christmas holiday, analysts said.

Even with the drop, new filings remained elevated. A year ago, claims stood at 339,000.

Similarly, the four-week moving average of first-time jobless claims, which smooths out week-to-week fluctuations, fell last week to 552,250, a decrease of 5,750 from the prior week. A year ago, this figure was 344,500.

Economists expected so-called “continued” claims to rise to around 4.38 million, and that first-time applications for unemployment benefits would drop to around 550,000.

On Wall Street, investors took some comfort in the drop in first-time unemployment claims. The Dow Jones industrials were up about 60 points in morning trading.

Next week’s jobless claims report is likely to be distorted by another shortened holiday week because of New Year’s Day, analysts said.

“The bottom line here is that it probably won’t be until mid-January that we begin to get a clear picture of what claims are saying,” said Abiel Reinhart, economist at JPMorgan Chase Bank.

Employers have slashed payrolls as they scramble to cut costs. The deepening recession, disappearing jobs, shriveling nest eggs and tanking home values have forced consumers to cut back, which is hurting businesses.

Atlanta-based Interface Inc. on Tuesday said it will lay off about 530 employees to cope with weakening demand for its carpet products.

Other companies that announced mass layoffs recently include: technology services provider Unisys Corp., pharmaceutical company Bristol-Myers Squibb Co., International Paper Co. and Bank of America Corp.

The unemployment rate in November jumped to 6.7 percent, a 15-year high, as employers eliminated a staggering 533,000 jobs in that month alone. Since the recession began in December of 2007, the economy has lost nearly 2 million jobs.

Spurring job creation is a key priority for President-elect Barack Obama, who takes over on Jan. 20. He is contemplating a massive package of government spending and tax cuts to stimulate the economy.


Some Hope this Wednesday: Mortgage Rates Fall to Record Low

Wednesday, December 31st, 2008

WASHINGTON (AP) — Rates on 30-year mortgages fell to a record low for the third straight week and borrowers took advantage of the drop, sending new applications soaring.

With the Federal Reserve on the verge of pouring hundreds of billions of dollars into the devastated U.S. housing market, mortgage rates have plunged to the lowest level since Freddie Mac started tracking the data in April 1971.

Low rates are a great opportunity for borrowers with solid credit and plenty of equity in their homes. But those in danger of foreclosure are still sidelined, and defaults are expected to keep rising in the coming months.

Freddie Mac reported Wednesday that average rates on 30-year fixed mortgages dropped to 5.1 percent this week, down from the previous record of 5.14 percent set last week. It was the ninth straight weekly drop. The survey was released a day early due to the New Year’s holiday.

Mortgage rates have plunged by about 1.3 percentage points since late October, Freddie Mac said. For a borrower taking out a $200,000 loan, that means a savings of more than $170 in monthly payments, according to Frank Nothaft, the mortgage finance company’s chief economist.

Meanwhile, mortgage applications last week remained at the highest level in more than five years, the Mortgage Bankers Association said.

The trade group’s weekly application index was essentially unchanged for the week ending Dec. 26. Applications surged earlier this month to the highest level since July 2003, when refinancing activity boomed at the peak of the housing market.

More than 80 percent of applications came from borrowers looking to refinance at more affordable rates, the trade group said.

Interest rates have plunged since the Federal Reserve pledged last month to buy up mortgage-backed securities in an effort to bolster the long-suffering housing market. The Fed, starting early next month, will buy up to $500 billion in securities guaranteed by the government-controlled home loan giants Fannie Mae, Freddie Mac and Ginnie Mae, a federal agency.

“It’s a huge number,” said Derek Chen, an analyst at Barclays Capital, who noted that mortgage rates are still high when compared with yields on long-term Treasury debt.

With the Fed and Treasury Department buying up a significant portion of the new mortgage securities issued by Fannie and Freddie next year, that gap, or spread, could narrow.

If that happens, mortgage rates could fall further, possibly as low as 4.5 percent, Chen said.

The average rate on a 15-year fixed-rate mortgage dropped to 4.83 percent, the lowest point since March 2004. That rate was 4.91 percent last week, Freddie Mac said.

Rates on five-year, adjustable-rate mortgages rose to 5.57 percent, compared with 5.49 percent last week. Rates on one-year, adjustable-rate mortgages fell to 4.85 percent, from 4.95 percent last week.

The rates do not include add-on fees known as points. The nationwide fee for 30-year, 15-year mortgages and five-year adjustable rate mortgages averaged 0.7 point last week, compared with 0.5 point for one-year adjustable-rate mortgages.

Meanwhile, home prices dropped by the sharpest annual rate on record in October and there are no signs the housing pain is over.

The Standard & Poor’s/Case-Shiller 20-city housing index, released Tuesday, fell by a record 18 percent from October last year, the largest drop since its inception in 2000. The 10-city index tumbled 19.1 percent, its biggest decline in its 21-year history. Prices are at levels not seen since March 2004.


Recession Not Slowing Bainbridge Island Internet Tax Company

Friday, December 26th, 2008

By Rachel Pritchett

rpritchett@kitsapsun.com

BAINBRIDGE ISLAND

Nothing’s certain except death and taxes, Ben Franklin said.

Perhaps that is one reason Avalara, the Web-based business tax management company, is defying the recession.

Here’s proof:

n Customer commitments rose 100 percent last year. 

n Its number of employees rose from 60 in 2007 to 150 now. That places Avalara among Kitsap’s 40 biggest employers. It plans to hire more in 2009. 

n In the past two years, Alavara has acquired two tax software firms; opened two offices in California and Virginia; and made a major debut on the global stage by opening an India office.

“The bottom line is we know that this industry is going to explode because of the complexities and the pressure on businesses,” said Bryan Wiggins, marketing vice president.

Avalara uses software systems to help companies compute and pay sales taxes.

Its typical client might be a retailer that sells products in a number of states. Most are small to mid-sized, but some are very big, like Bharti, a telecom company in India, and the Borders online book business.

 

Retail companies like Borders have to pay taxes in the many tax jurisdictions they do business. Since there are about 12,500 different taxing districts just in the United States, to calculate what is owed and then pay it can be a monumental task.

Companies like Avalara offer to do the calculations, pay the various taxes and charge the companies a fee of up to $6,000 a year for the service.

Sometimes, Avalara does its tax calculating when an online customer is shopping. Say a customer is shopping for books at Borders.com, and a prompt asks for a mailing address. Alavara’s software tests the address to see if its correct. If it is, the tax is calculated and shows up at the end of the order.

When asked why Avalara is growing, Wiggins gave several reasons, among them his company’s belief of an enormous potential in companies outsourcing their tax work.

“We feel we’re really only beginning to scrape the surface of this,” he said.

Companies that sell on the Internet will increasingly be required to collect sales tax, he said. Now, some do and some don’t.

“Actually, e-commerce is a major growth area for us,” he said.

Wiggins also attributed Avalara’s growth to changes in states’ sales-tax laws. Bewildered business people in Washington state needed lots of help earlier this year when this state switched from an origin-based sales-tax system to a destination-based system. While companies used to have to deal only one sales-tax rate, they can have hundreds now.

“We definitely had some growth from the state of Washington this year because of the new complexities they were up against,” he said.

He also said that since most states are facing big budget deficits, they’ll likely become more aggressive in requiring companies to collect sales tax.

As for so many more employees, Wiggins said that the more sales people the company hires, the more its services get sold.

The company’s growth was helped along be two acquisitions. Last year, it acquired TrustFile, a similar company active in the East. In 2008, it acquired Illinois-based Independent Systems and Programming Inc., maker of tax-rate tables.

Avalara is looking offshore for future growth. It began in 2007 in India, were it opened a development office with a staff of 35.

“Global tax calculation is were our next growth will come from,” Wiggins said.

Alavara was started in 2004 by Scott McFarlane, Rory Rawlings and Jared Vogt. McFarlane serves as president of the privately held company.

 

 

Avalara at a Glance

What: A Web-based automated business tax management company

Headquarters: Bainbridge Island

Years in Business: Four

Founders: Scott McFarlane, Rory Rawlings and Jared Vogt, all Bainbridge residents

Employees: 150, half on Bainbridge

Offices: Bainbridge Island, Wash.; Irvine, Calif.; Falls Church, Va.; Batavia, Ill.; and Pune, India 

Competitors: Sabrix, Speedtax

Number of clients: Core of 1,100; total of 8,000

 


November Personal Spending Falls .6 Percent

Friday, December 26th, 2008

WASHINGTON (AP) — Consumer spending fell for a fifth straight month in November, the longest weak stretch in a half-century, while incomes declined under the weight of massive job layoffs. Economists don’t think the hard times will end anytime soon.

The Commerce Department reported Wednesday that consumer spending fell by 0.6 percent last month, slightly less than the 0.7 percent drop economists had expected.

The November drop marked the fifth straight month of decreased spending, the longest stretch of declines in government records that go back to 1959. Economists think that the weakness in consumer spending will continue, given the multitude of problems facing the economy.

The country is mired in the longest recession in a quarter century and facing a financial crisis that has cut off credit for millions of borrowers.

Job layoffs are also accelerating. A separate report Wednesday showed that the number of newly laid off workers filing claims for unemployment benefits rose to 586,000 last week, up by 30,000 from the previous week, a much bigger increase than analysts had expected.

The personal spending reports showed that Americans’ incomes fell by a worse-than-expected 0.2 percent in November. It was the first decline since July and reflected, in part, the fact that more than a half-million jobs were cut in November as the recession deepened.

The 0.6 percent drop in consumer spending followed an even larger 1 percent fall in October. But the steep plunge in gasoline prices, which is good news for consumers, made the declines look worse. Excluding price changes, consumer spending would have dropped by 0.5 percent in October and actually risen by 0.6 percent in November. The November increase excluding inflation was the best showing in more than three years.

All of those troubles have left retailers braced for what could be their worst holiday shopping season in decades.

The government reported Tuesday that the overall economy, as measured by gross domestic product, was declining at an annual rate of 0.5 percent in the July-September quarter, and analysts believe the contraction will accelerate in the current quarter. Some are forecasting that GDP will plunge at an annual rate of 6 percent, which would be the worst showing in 26 years.

Many analysts think GDP will also fall in the first and second quarters next year before beginning a modest rebound in the summer. If that forecast turns out to be accurate, it would make the current recession, which began in December 2007, the longest in the post World War II period.

The economic weakness is helping to keep inflation under control. A price gauge tied to consumer spending fell by a record 1.1 percent in November, the second monthly decline. Excluding the cost of energy and food, the price index was unchanged last month.

Over the past 12 months, consumer prices are up 1.4 percent, the smallest 12-month change since August 2002.

Economists closely watch consumer spending because it accounts for two-thirds of economic growth. For the July-September quarter, the government reported Tuesday that spending had fallen by 3.8 percent, the biggest quarterly setback in 28 years.

Analysts say the fourth quarter could turn in an even worse performance, given that the recession has intensified. The economic problems facing households have translated into weak holiday shopping for retailers.

Michael P. Niemira, chief economist for the International Council of Shopping Centers, is forecasting that sales at established stores in November and December will be down 1.5 percent to 2 percent — making this the weakest holiday season since at least 1969.

Retailing giant Wal-Mart Stores Inc. is one of the few bright spots in the current environment. Some merchants including AnnTaylor Loft were already sending out e-mails to customers promoting after-Christmas discounts that can be enjoyed now.


Friday Stocks Up 30 to 8,498 at 9 a.m. Pacific

Friday, December 26th, 2008

NEW YORK (AP) — Wall Street rose modestly in light post-holiday trading Friday, but was still cautious about embarking on a year-end rally following dreary preliminary readings on holiday spending.

Not surprisingly, Americans spent much less on gifts this season than they did last year, according to SpendingPulse, a division of MasterCard Advisors. Retail sales dropped between 5.5 percent and 8 percent compared with last year, the data showed, or between 2 percent and 4 percent after stripping out auto and gas sales.

Personal consumption is a huge part of U.S. economic activity — comprising more than two-thirds of gross domestic product — so Wall Street is nervous that a more frugal consumer could keep the economy weak in 2009.

Investors did get a some good news on Christmas Eve, when the Federal Reserve allowed GMAC Financial Services — the finance arm of struggling Detroit automaker General Motors Corp. — to become a bank holding company and thus qualify for the government’s $700 billion rescue fund. Analysts had said that without financial help, GMAC might have had to file for bankruptcy protection or shut down.

But so far, with just four trading days left in the year, no news has been upbeat enough to spark a year-end rally on Wall Street. December is usually a strong month for the stock market, with a flurry of trading known as a “Santa Claus rally” often seen in the month’s final week.

In early trading, the Dow Jones industrial average rose 40.54, or 0.48 percent, to 8,509.02.

Broader stock indicators also advanced. The Standard & Poor’s 500 index rose 4.18, or 0.48 percent, to 872.33, and the Nasdaq composite index rose 3.98, or 0.26 percent, to 1,528.88.

Trading volumes are expected to be extremely low on Friday as they were earlier this week. When trading is light, stock movements are often not indicative of broader market sentiment. Friday is also likely to be a quiet day of trading because there are no major economic or corporate reports scheduled.

 


Icy Slush or Not, Bargain Seekers Expected to Hit Stores Today

Friday, December 26th, 2008

Bloggers,

 

Call me at (360) 475-3783 today with your experience. Rachel Pritchett

NEW YORK (AP) — Shoppers hit the stores early Friday to return unwanted gifts and take advantage of drastic price cuts offered by retailers desperate to get rid of old merchandise and boost their less-than-cheery holiday sales.

Many retailers opened before 6 a.m., offering 50 percent to 75 percent off on toys, furniture, electronics and clothing. J.C. Penney opened at 5:30 a.m. — the earliest post-Christmas opening in the chain’s history — and offered customers more than 100 “doorbusters” until 1 p.m, including 75 percent off Christmas decorations. The chain even made wake-up calls to customers who signed up online.

Laura Hernandez, a 37-year-old nurse, hoped to find a good deal at a Miami-area Wal-Mart on the one present her husband and son had really wanted — a plasma TV.

“When they saw that there was no Christmas gift larger than the Christmas tree, they knew there was no TV,” Hernandez said. “They know Mommy is out early this morning bringing home their new toy.”

Lisa Gillespie, 42, was meeting her niece to buy her a late Christmas present at Macy’s flagship store in Manhattan. She found a purse for $20 in a bin marked 65 percent off.

“Even if I don’t end up liking it, I can always bring it back,” the Manhattan resident said. “These are crazy deals. I have eight coupons. We won’t overshop, but we will shop.”

Stores were hoping the discounts would entice shoppers to redeem gift cards and use cash from returning unwanted gifts to buy something new.

But with gift card sales down this holiday season and consumers looking to save money rather than spend it, even the big discounts may not be enough to salvage what looks to be one of the most dismal holiday shopping seasons in years.

“The last week of December represents about 14 percent of Christmas sales,” said C. Britt Beemer, chairman of America’s Research Group. “You can’t save a season with only one-seventh of the sales to go.”

The holiday season — which typically accounts for 30 percent to 50 percent of a retailer’s annual total sales — has been less than jolly for most retailers. Job cuts, portfolio losses and other economic woes have convinced consumers to cut back on their spending. Meanwhile, strong winter storms during the holiday season kept some would-be shoppers at home.

According to preliminary data from SpendingPulse — a division of MasterCard Advisors that tracks total sales paid for by credit card, checks and cash — retail sales fell between 5.5 percent and 8 percent during the holiday season compared with last year. Excluding auto and gas sales, they fell 2 percent to 4 percent, according to SpendingPulse.

Sales of women’s clothing dropped nearly 23 percent while men’s clothing sales slipped more than 14 percent. Footwear sales fell 13.5 percent. Sales of electronics and appliances fell even more drastically, dropping almost 27 percent.

More consumers appeared to do their shopping online, particularly in the last two weeks of the season when storms snowed shoppers in. Online sales dipped just 2.3 percent from the 2007 holiday season, according to SpendingPulse.

Online retailer Amazon.com said Friday the 2008 holiday season was its “best ever,” with more than 6.3 million items ordered. Holiday bestsellers included the Nintendo Wii, Samsung’s 52-inch LCD HDTV, the Apple iPod touch and the Blokus board game.

A better indicator of how retailers fared will arrive Jan. 8, when major stores report same-store sales, or sales at locations open at least a year, for December.

With sales so far slim, retailers were hoping the day after Christmas would bring out bargain-hunters.

Sears stores were opening several hours early at 7 a.m. and offering doorbuster deals through noon, such as 65 percent off all women’s boots. Toys R Us said it was cutting prices by 60 percent on some brands.

Some retailers such as Target are pushing online deals, rather than in-store promotions. Target said it is putting thousands of items on clearance and making them eligible for free shipping the day after Christmas.

The deals still weren’t enough for some shoppers.

Paul McAdam, 48, of Everett, Mass., took a 20 percent pay cut recently and was shopping for “items I need in a price range I can’t pass up.”

“I’m a little disappointed because a lot of the prices seem to be about the same as before Christmas,” he said.

Newlywed Anthony Guites, 32, planned to stop at three different Miami-area stores to return gifts from his wife. He had three things to exchange at Wal-Mart for a fishing rod he wanted.

“She got me a fishing rod that I don’t like. She got me this tool set that I already have. And she got me workout clothes that, let’s just say, are way too colorful for me,” he said.

Beemer said retailers may be greeting a lot of shoppers like Guites, and see returns up 50 percent to 60 percent.

“The one thing I heard last night from parents is that when kids got gifts that weren’t exactly right, they’re taking them back to the stores,” Beemer said.



Coming Soon: Avalara

Friday, December 19th, 2008

Readers,

I spent a most interesting morning with Bryan Wiggins of Bainbridge-based Avalara, the sales-tax fortware firm. Look for my story soon. The 4-year-old company has seen huge growth; it’s just opened an office in India, and plans on adding staff next year. I’ll explain why, in this economy, the company seems to be fairly resilient.

 

Rachel


Friday Stocks End Flat; Dow Closes at 8,579, Down 25

Friday, December 19th, 2008

NEW YORK (AP) — Stock prices pared earlier gains to end a choppy day relatively flat on Friday, as Wall Street remained uncertain that a $17.4 billion lifeline for U.S. automakers will make a lasting difference for the beleaguered industry.

In the early going, investors cheered the government’s pledge to provide General Motors Corp. and Chrysler LLC with short-term financing and sent the Dow Jones industrial average up as much as 182 points. But stocks turned lower at midday, recovered in the afternoon, and then lost ground again in the last hour of trading as initial enthusiasm over the bailout waned.

The decision to provide emergency help to carry the struggling industry into the new year comes after a $14 billion bailout for the automakers failed to make it out of the Senate last week.

The companies’ cash flows have been dwindling to a slow trickle due to the weak economy, slumping sales and the credit crunch.

The White House said it will let GM and Chrysler draw $13.4 billion in short-term financing, and another $4 billion will be added later. But it attached conditions that must be quickly met — GM and Chrysler must prove viability, defined as positive cash flow and the ability to pay back government loans, by March 31. Ford Motor Co., meanwhile, is not asking for short-term assistance, but its CEO predicted the aid will stabilize the broader industry.

GM CEO Rick Wagoner said the company had much work ahead, but he was confident it could reinvent itself with the government help.

Some analysts expressed doubts.

“I think that there’s a lot of skepticism about how much real reform we’re likely to see, particularly at GM, given the parameters under which the loans have been made,” said Alan Gayle, senior investment strategist at RidgeWorth Investments. “There is a lot of skepticism about whether GM is prepared to do what needs to be done.”

Still, the government’s move staved off, for the time being, a major bankruptcy that could have sent a debilitating blow to the economy and the labor market.

Investors have been concerned about the job market ramifications of a possible bankruptcy filing by an automaker like GM or Chrysler LLC, which some analysts said could result in up to 3 million U.S. job losses. The government lost more than half a million jobs in November, and the Labor Department said Thursday that new claims for unemployment remained well above 500,000 last week. When unemployment rises, spending declines and credit deteriorates.

The White House’s action Friday “prevents the collapse of a very high profile industry less than a week before Christmas,” said Phil Orlando, chief equity market strategist at Federated Investors. “That’s not to say that these guys won’t collapse next March, but it takes it out of the headlines now, and takes the threat of an auto industry default off the table until next spring.”

GM shares jumped 83 cents, or 22.7 percent, to $4.49, while Ford shares added 11 cents or 3.9 percent to $2.95. Chrysler is not publicly traded.

According to preliminary calculations, the Dow Jones industrial average fell 25.88, or 0.30 percent, to 8,579.11. The Standard & Poor’s 500 index rose 2.60, or 0.29 percent, to 887.88, while the Nasdaq composite index rose 11.95, or 0.77 percent, to 1,564.32.

For the week, the Dow ended down 0.59 percent, while the S&P 500 finished up 0.93 percent and the Nasdaq up 1.53 percent. All of the indexes are still down more than 35 percent for the year.

The technology-heavy Nasdaq was lifted by big gains from Oracle Corp. and Research In Motion Ltd., both of which released earnings reports after the bell on Thursday. Oracle’s profit weakened for the first time in years, but its shares rose 7 percent as investors bet that the company will fare better than others as the economy struggles. BlackBerry-maker Research In Motion rallied $4.39, or 11 percent, to $42.83, after reporting better-than-expected revenue guidance for the fourth quarter and strong holiday sales of its new smart phones.

The Russell 2000 index of smaller companies rose 7.09, or 1.48 percent, to 486.26.

Advancing issues outnumbered decliners by about 2 to 1 on the New York Stock Exchange, where volume came to 2.14 billion shares.

Some analysts attributed much of the market’s choppiness on Friday to the expiration of options contracts, as well as the routine rebalancing of stock indexes.

Earlier Friday, Treasury Secretary Henry Paulson said that Congress should release the second $350 billion from the rescue fund that it approved in October to bail out financial institutions. Paulson said tapping the fund for the auto industry basically exhausts the first half of the $700 billion total.

At the same time, he said he was confident that the Treasury Department, Federal Reserve and Federal Deposit Insurance Corp. had the resources to address a significant market event if one should occur before Congress approves the use of the second half of the largest government bailout program in history.

Meanwhile, the industry that has already gotten billions in government funding — the financial sector — remains in sad shape. On Friday morning, Standard & Poor’s downgraded its ratings on 11 major U.S. and European financial institutions, including Citigroup Inc., Goldman Sachs Group Inc., JPMorgan Chase & Co., and Wells Fargo & Co.

Citigroup shares sank 41 cents, or 5.5 percent, to $7.02. Wells Fargo slipped 29 cents to $29.36.

On Thursday, the stock market tumbled, shaken by a negative ratings outlook for industrial conglomerate and Dow component General Electric Co. A drop in oil prices also weighed on stocks, pulling down the energy sector and revealing how downbeat investors are about consumer demand.

The market’s losses on Wednesday and Thursday erased most of the Dow’s 360-point rally on Tuesday, which was sparked by the Federal Reserve’s historic interest rate cut. The central bank set its target for the rate at which banks lend to each other to a range of zero to 0.25 percent, the lowest level on record, and vowed to use “all available tools” to jump-start the economy.

Still, analysts believe Wall Street has entered a period of relative stability, compared with the wild swings of September, October and early November. Since their multiyear lows on Nov. 20, the Dow is up 13.6 percent and the S&P 500 is up 18 percent.

“Even though there’s been a lot of really bad news coming out about the economy in the last few weeks, especially in unemployment numbers, the market hasn’t been reacting negatively to that,” said Richard Sparks, senior equities analyst at Schaeffer’s Investment Research.

Yields on long-term Treasurys recovered from record lows on Friday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.12 percent late Friday from 2.07 percent late Thursday. The yield on the popular three-month T-bill — whose yield has at times gone negative due to frenzied buying — rose slightly to 0.01 percent from zero late Thursday.

The January contract for light, sweet crude, which expired Friday, fell $2.35 to settle at $36.22, the lowest close in nearly five years after falling at one point to $33.44.

The dollar rose against other major currencies. Gold prices fell.

Markets overseas were mostly lower. Japan’s Nikkei stock average slipped 0.91 percent, while Hong Kong’s Hang Seng index sank 2.39 percent. Britain’s FTSE 100 was down 1.01 percent, Germany’s DAX index fell 1.26 percent, and France’s CAC-40 fell 0.26 percent.


Unemployment Building in Kitsap, Because Nobody Else Is

Wednesday, December 17th, 2008

At least 600 local construction jobs have been lost this year, contributing to a 5.8 percent jobless rate.

By Rachel Pritchett

rpritchett@kitsapsun.com

he construction industry has been hammered into oblivion during the current recession. And that’s one big reason that unemployment in Kitsap County is on the rise.

Kitsap’s unemployment rate for November was 5.8 percent, up from 5.5. percent in October, the state Employment Security Department reported Tuesday. Kitsap County began the year with 4.7 percent unemployment.

At least 600 local construction jobs have vanished in the past year, but builders say the real number is much higher. Unemployed construction workers are among a total of 7,310 unemployed people in Kitsap.  

“New construction is just dead,” said Sherryl Suldan, owner of Olympic Personnel of Bremerton.

Hardest hit has been residential construction, which essentially has ground to a halt by banks’ reluctance to lend money on speculative projects.

Commercial construction isn’t so bad off. Drury Construction Co. of Poulsbo actually is hiring, said Vice President Rick Cadwell.

While commercial work is “not like it was three or four years ago,” there “certainly is a bit of work,” he said. All that is being fueled by public entities not as affected by the downturn — the military and highway builders, for instance.

Commercial and public construction nationally is beginning to slow, but enough local projects already are in the pipeline to provide hope, Cadwell said. Major projects on the horizon include expected expansions by Harrison Medical Center, Poulsbo City Hall and work on Bremerton’s Westpark neighborhood.

Nonetheless, industry leaders such as Drury are contemplating branching
out into other types of work to ride out the recession. In Drury’s case, that could include metal buildings or specialty concrete work, Cadwell said.

State Employment Security Department economist Mary Ayala said construction job losses accounted for most of the 11,700 jobs that went away statewide in November. Other hard-hit sectors include retail, and administrative and support services.

Kitsap unemployment remains lower than the state (6.4 percent) and national (6.7 percent) rates.

Washington may catch up with the rest of the nation.

“Just as we saw with the 2002 recession, Washington’s economy held up longer than most of the nation, but we’re quickly catching up now,” said Employment Security Commissioner Karen Lee.

But there still are jobs out there. Kitsap’s largest private employer, Harrison Medical Center, has implemented a hiring freeze on non-essential positions, but openings in local health care are available, Suldan of Olympic Personnel said. 

“Medical, it’s just always in demand,” she said.

Public employers such as Puget Sound Naval Shipyard and the Intermediate Maintenance Facility are expected to hire several hundred positions in the new year. Port Madison Enterprises has three dozen job openings now, and some 17,000 available jobs in Washington are posted at www.go2worksource.com.

Washington is expected to see job growth in health care, social and community-services, engineering, computers and education.

Bill Stewart, director of the Kitsap Economic Development Alliance, said unemployment could continue to rise.

“The hope and expectation would be that it won’t hit levels that we saw in the early 1980s,” he said.


Stocks Fluctuate on Fed Rate Cut: Dow at 8,847 at noon Wednesday, up 76

Wednesday, December 17th, 2008

NEW YORK (AP) — Wall Street fluctuated in late afternoon trading Wednesday, as investors’ enthusiasm over the Federal Reserve’s rate cut was dampened by downbeat corporate news.

Stocks declined moderately earlier in the day after a larger-than-expected loss from Morgan Stanley offered fresh evidence of the sizable obstacles the battered financial industry still faces. The company posted a loss of $2.37 billion, or $2.34 per share, for the fiscal fourth quarter. The report came a day after rival Goldman Sachs Group Inc. posted its first quarterly loss since going public in 1999.

Some selling had been expected after Tuesday’s huge rally in which the Dow Jones industrial average rose more than 4 percent and other indexes gained more than 5 percent. The moves came after the central bank lowered its federal funds rate target to a range of zero to 0.25 percent — the lowest levels on record.

After briefly moving into positive territory, stocks fluctuated in midafternoon trading as investors tried to look past concerns about the financial sector and let the magnitude of the Fed’s actions begin to sink in.