Monthly Archives: July 2010

Consumer confidence falls to lowest point since February

NEW YORK (AP) — Americans’ confidence in the economy eroded further in July amid worries about a still-stagnant job market. The report raised concerns about the economic recovery and the back-to-school shopping season.
The Conference Board, a private research group, said Tuesday that its Consumer Confidence Index slipped to 50.4 in July, down from the revised 54.3 in June. Economists surveyed by Thomson Reuters expected a reading of 51.0. The decline follows last month’s nearly 10-point drop, from 62.7 in May, which marked the biggest since February, when the measure also fell 10 points.
The survey was taken July 1-21, beginning just as the Standard & Poor’s 500 index was falling to a nine-month low of 1,022.58 on July 2. It had risen 4.5 percent by July 21 and has since climbed an additional 4 percent as upbeat earnings reports from manufacturers like 3M Co. and Caterpillar Inc. have made investors more convinced that the economic recovery isn’t stalling as much as they had originally thought.
However, stocks traded in a tight range Tuesday as investors again try to balance conflicting economic and upbeat earnings reports to figure out the pace of a global recovery. A slowdown in regional manufacturing activity from the Richmond Federal Reserve dampened the market’s early gains, leaving indexes mixed in midmorning trading. The Dow Jones industrial average rose 3 points. Stocks rose moderately at the open because of strong earnings from chemical maker DuPont Co. and European banks UBS and Deutsche Bank.
Still, a sustainable recovery can’t happen without the American consumer. And the second straight month of declining confidence following three months of increases is worriesome, economists say.
“Consumers have a much different view of the economy than the stock market does, and their views matter more to the economy,” said Mark Vitner, an economist at Wells Fargo. The reading, he says, “tells me that the economy is heading for slower growth in the second half.”
One component of the index, which measures how shoppers feel now about the economy, declined to 26.1, from 26.8. The other barometer, which measures shoppers’ outlook over the next six months, declined to 66.6, from 72.7.
The index — which measures how shoppers feel about business conditions, the job market and the next six months — had been recovering fitfully since hitting an all-time low of 25.3 in February 2009. The index typically falls before the economy slows down, and on the way out of a recession, the expectations component, which accounts for more than 60 percent of the reading, rises sharply, Franco said.
“It’s all about jobs. That’s still the primary source of income,” said Lynn Franco, director of The Conference Board Consumer Research Center. “Until we see the pace of job growth pick up and consumers are confident that this is sustainable, we are not likely to see a significant pickup in confidence.”
Economists say the expectations component correlates more closely with the stock market movements, but Vitner noted that the big plunge in May has made such an imprint on consumers that the recent rebound hasn’t registered. On the other hand, confidence usually rises before an improvement in the gross domestic product, the broadest measure of economic activity, Vitner said.
Economists watch the number closely because consumer spending accounts for about 70 percent of U.S. economic activity and is critical to a strong recovery. A reading above 90 indicates the economy is on solid footing.
With unemployment stuck near 10 percent, Americans are skittish about spending. A continuing stream of sobering economic data — from disappointing job figures in May and June to weak housing numbers — is increasing worries that the economic recovery is stalling just as government stimulus programs are disappearing.
In particular, concerns are rising about the housing market. While the S&P/Case-Shiller 20-city home price index released Tuesday showed a 1.3 percent rise in May from April, the home buyer’s tax credit, which expired April 30, had an impact on the reading. In fact, the report warned that the recent gains in home prices are not likely to last.
Economists will monitor Friday’s first reading on second-quarter GDP. Only modest growth is expected. And on Aug. 6 the government is expected to report that employers eliminated 85,000 jobs in July, following a loss of 125,000 in June. Economists surveyed by Thomson Reuters on average expect the jobless rate to rise to 9.6 percent, from 9.5 percent.
Retailers had a surprisingly solid start to the year, but business has been slowing since April. Stores have had to deepen their discounts on summer clothing more than planned to make room for back-to-school merchandise. That raises concern about whether stores will have to mark down fall goods earlier than expected to get shoppers to buy.
The Conference Board survey, based on a random survey mailed to 5,000 households, showed that consumers’ assessment of the job market was more negative than the month before. Those claiming that jobs are “hard to get” increased to 45.8 from 43.5 percent, while those saying jobs are “plentiful” remained unchanged at 4.3 percent.

Monday stocks edge higher on gain in new home sales

Dow now at 10,496, up 66 points.

NEW YORK (AP) — Stocks rose moderately Monday after a better-than-expected jump in new home sales and an increase in the profit outlook for shipping giant FedEx Corp.
The Dow Jones industrial average rose 74 points in midday trading, moving back into the black for the year.
Major stock indexes rose after the Commerce Department said sales of new homes increased to an annual rate of 330,000 units in June. The gain came after sales hit a record low in May. The sales came in ahead of the estimates of economists polled by Thomson Reuters.
Analysts said the unexpected jump in sales was a positive sign for a beleaguered housing market.
“Even though the data was soft, it was better than economists expected and that was the first time that has happened in awhile,” said Jeffrey Kleintop chief market strategist for LPL Financial.
The home sales gain gave investors a glimmer of hope for the embattled housing market and sent prices for homebuilders higher. D.R. Horton Inc., Lennar Corp. and Toll Bros. Inc. rose more than 2 percent after the report.
Sales had fallen sharply in May after a tax credit for home buyers expired at the end of April. Investors have been concerned that the credit was propping up the housing market and that sales would stay at low levels now that buyers have fewer incentives.
FedEx gave the market more encouraging news about the economy by raising its earnings forecast. Like UPS Inc., FedEx is seen as an economic bellwether since companies tend to ship more when their orders increase. FedEx said it was seeing better than expected growth in its overnight and ground delivery businesses.
Stocks have rallied in recent days as more companies reported strong second-quarter results and improved outlooks for the coming quarters.
“There’s been too much negativism priced in and we’re coming off that,” said Brian Gendreau, market strategist at Financial Network Investment Corp. “Earnings reports are definitely helping.”
In midday trading, the Dow rose 73.72, or 0.7 percent, at 10,498.34. The Standard & Poor’s 500 index rose 10.07, or 0.9 percent, to 1,112.73, while the Nasdaq composite index rose 20.79, or 0.9 percent, to 2,290.26.
About seven stocks rose for every two that fell on the New York Stock Exchange, where volume came to 354.3 million shares.
Bond prices dipped after the housing report. The yield on the 10-year note, which moves opposite its price, rose to 3.03 percent from 3.00 percent late Friday. That yield helps set interest rates on mortgages and other consumer loans.
D.R. Horton rose 38 cents, or 3.5 percent, to $11.23. Lennar jumped 61 cents, or 4.1 percent, to $15.54, while Toll Bros. rose 52 cents, or 3 percent, to $17.99. FedEx jumped $4.50, or 5.7 percent, to $83.46.
Investors are watching a key technical level on the S&P 500 of 1,110. Pushing above that level would indicate optimism is growing in the market. However if the market cannot climb and hold above that level, it could lead to a pullback, analysts said. The S&P briefly rose above 1,110 earlier in the day.
Earnings reports are likely to be a big driver of trading again this week as hundreds more companies in the S&P 500 release results.
Earnings results due out Tuesday from oil company BP will be closely watched because of reports that CEO Tony Hayward will step down and that the company could take a big charge to cover costs of cleaning up the oil spill in the Gulf of Mexico.
BP shares jumped $1.97, or 5.3 percent, to $38.83.
Investors are also preparing for the first reading on second-quarter gross domestic product, the broadest measure of economic growth.
The second-quarter report, due out Friday, is expected to show just modest growth after stronger gains earlier in the year. The slowdown is being forecast because of the withdrawal of government stimulus measures.
Even with a modest slowdown, there are no signs that the economy is going to fall back into recession, says Jim Meyer, chief investment officer at Tower Bridge Advisors.
“The rolling over of the economy Wall Street thinks it sees just isn’t taking shape,” Meyer said.
European markets rose slightly as investors had their first chance to react to a series of tests that assessed the health of the continent’s big banks. Regulators said only seven of the 91 banks tested would struggle if the European economy and government debt problems worsened.
Britain’s FTSE 100 rose 0.7 percent, Germany’s DAX index rose 0.5 percent, and France’s CAC-40 gained 0.8 percent. Japan’s Nikkei stock average rose 0.8 percent.

An amazing WorkSource project in Belfair …

By Rachel Pritchett
From now on, people looking for work in North Mason won’t have to drive the 25 miles to the employment office in Shelton.
WorkSource North Mason opened this week in the same building as the North Mason Chamber of Commerce in downtown Belfair.
Operating just on Mondays for now, it will be staffed by specialists who can help job seekers find work in a county suffering 9.9 percent unemployment as of June. Visitors can use one of six computers to do Internet searches.
The office also is expected to help employers find qualified workers more cheaply and quickly.
The new office is unlike any other government WorkSource office in that it’s a collaboration between businesses and government. All others are government-supported. Each county in the state has one.
Local business owner
and chamber board Chairman Mike Boyle hatched the idea with the help of Mike Kennedy, chief executive officer of the Pacific Mountain Workforce Development Council, which oversees WorkSource offices.
The chamber and its members quickly jumped in.
Today, several chamber members are covering the $500 monthly rent for the 350 square feet of space that includes the computer room and two offices. The Shelton WorkSource office is sending specialists to Belfair on Mondays and footed the bill for six computers.
Local businesses provided the thousands of dollars in office setup, including Hood Canal Communications of Union, which installed fiber optics lines and electrical.
All that resulted in a new center with an estimated $30,000 annual budget, but the cost is among a number of entities, both government and private.
It is being called the first of its kind in the nation.
“I think it has potential to be replicated throughout the United States,” Kennedy said.
Boyle, owner of North Bay Mortgage, is very comfortable with business getting directly involved in employment.
“Business hires the people. They really should be more involved than they have,” he said.
About five years ago, Belfair lost a Shelton WorkSource satellite office at the same location. Though it was there only a year, residents have missed it.
With limited bus service from Belfair to Shelton, job-seekers have been hitching rides.
Even for those with cars, it can be a tough trip from the remote areas of North Mason.
“It almost breaks my heart sometimes when someone has drive in from Tahuya, you know, 20 minutes, and we have to tell them you have to drive all the way to Shelton,” chamber President Frank Kenny said.
Kennedy estimates the office will draw 100 visitors a week.
No one’s ruling out staffing it more days in the future.
“There’s a huge need,” Kenny said.

Thursday stocks surge on upbeat earnings and forecasts

Dow up 210 points so far, at 10,331.

NEW YORK (AP) — Stocks surged Thursday after another strong batch of earnings reports revived optimism about the economic recovery. Encouraging signs of growth in Europe added to the upbeat mood.
Traders largely wrote off a jump in the number of people seeking unemployment benefits for the first time. The increase was likely skewed by seasonal factors. Instead, investors focused on earnings from a broad range of companies that showed businesses aren’t seeing a slowdown in the recovery. News of corporate deals also lifted shares.
The Dow Jones industrial average rose more than 200 points in afternoon trading. Broader indexes also rose more than 2 percent. Interest rates surged in the Treasury market as investors felt less need to put their money into the safety of government securities.
Caterpillar Inc., 3M Co., UPS Inc. and AT&T Inc. all topped earnings forecasts and raised their outlooks for future profit. Only Travelers reported a dip in earnings, but that came as bad weather led to more claims payments.
Investors who have been selling stocks on disappointing earnings and revenue figures over the past week got some reassurance from companies’ outlooks on Thursday. Caterpillar said its orders are growing and production will pick up in the second half of the year. UPS raised its outlook because of spending by businesses. Caterpillar’s stock rose 1.5 percent, while UPS gained 5.8 percent.
Chris Hobart, founder of Hobart Financial Group in Charlotte, N.C. said the outlooks are especially important because if companies expect to grow, that might get them to ramp up hiring.
If improved outlooks lead to jobs growth, “then this can be better than a good quarter or good second half, (it can mean) we’ve got a good economy,” Hobart said.
More earnings are due out later in the day, including from American Express Co., Microsoft Corp. and Inc.
In afternoon trading, the Dow Jones industrial average rose 206.91, or 2 percent, to 10,327.44. The Standard & Poor’s 500 index rose 23.60, or 2.2 percent, to 1,093.19, while the Nasdaq composite index rose 51.64, or 2.4 percent, to 2,238.97.
Nearly seven stocks rose for every one that fell on the New York Stock Exchange, where volume came to 491.7 million shares.
European markets rose after a report showed unexpected growth in the 16-nation group that uses the euro. In recent months, investors worldwide have been concerned that rising government debt in Europe would stall a global recovery. A jump in Europe’s purchasing managers index reported Thursday was a welcome relief after forecasts of a possible recession on the continent.
The economic reports out of Europe were “a big surprise because everyone expects that to be the Achilles heel of the global economy,” said Anthony Chan, chief economist at J.P. Morgan Private Wealth Management in New York.
The market’s gains Thursday came a day after investors sold stocks because Federal Reserve Chairman Ben Bernanke warned Congress that the economy remains fragile. Bernanke confirmed investors’ fears that the best scenario for the economy is only slow growth and relatively high unemployment. Bernanke was testifying again before Congress on Thursday.
Stock trading has been erratic for weeks as investors were quick to sell at any signs of bad news and just as eager to buy on signs of optimism. The Dow has moved by at least 100 points in just over half the trading days since it hit its 2010 high of high for the year on April 26.
Guy LeBas, chief fixed income strategist of Janney Montgomery Scott in Philadelphia said there are two groups fighting back and forth, which has led to the volatility. One believes the economy is going to fall back into recession, while the other thinks this is just a pause in a strong rebound.
“There’s no middle ground,” LeBas said. As a result, he said, each group will pounce on news that backs up their claims and send the market sharply higher or lower. “We are absolutely hypersensitive to what we’re seeing.”
Overseas, Britain’s FTSE 100 rose 1.9 percent, Germany’s DAX index gained 2.5 percent and France’s CAC-40 rose 3.1 percent. In Japan, where trading ends before it begins in the U.S., the Nikkei stock average fell 0.6 percent.
UPS jumped $3.49, or 5.8 percent, to $63.50. AT&T rose 78 cents, or 3.1 percent, to $25.70. Caterpillar rose 98 cents to $67.85.
Shares of 3M rose $2.26, or 2.8 percent, to $84.56. Travelers fell 67 cents to $49.20.
General Motors agreed to buy auto financier Americredit Corp. for $3.5 billion. The deal lets GM expand loans to customers with poor credit and offer more leases, two areas that GM needs to expand to boost car sales.
Americredit shares surged $4.30, or 21.8 percent, to $24.00.
The upbeat corporate profits, outlooks and acquisitions come against a backdrop of still mixed economic data. The Labor Department said weekly claims for jobless benefits jumped by 37,000 to 464,000. Economists polled by Thomson Reuters expected claims to rise to 445,000 last week.
The big jump comes after a big drop a couple of weeks ago when companies like GM reported fewer temporary layoffs than usual for the time of year. Even with the distorted numbers, high unemployment remains of the biggest obstacles to a strong, sustained recovery.
Bond prices dipped as investors jumped back into stocks. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.93 percent from 2.88 percent late Wednesday.

Study: Teen unemployment unintended consequence of federal minmum-wage hike


A new study from the Employment Policies Institute blames a $2 hike in the federal minimum wage since 2007 for causing as much as a 12 percent drop in employment for teens ages 16 to 19. Between 2007 and 2009, the federal minimum wage rose from $5.15 to the current $7.25.

While teens in Washington state continue to struggle to find jobs in this recession now taken by older workers pushed out of the labor market, the federal wage hike had no additional effect here.

That’s because Washington’s current $8.55 minimum wage is higher than the federal minimum wage, and actually is the highest in the nation.

Rachel Pritchett, business reporter

To read a summary of the study, visit:

To read the full study, visit:>

Sweeping financial reform bill now law

WASHINGTON (AP) — Reveling in victory, President Barack Obama on Wednesday signed into law the most sweeping reform of financial regulations since the Great Depression, a package that aims to protect consumers and ensure economic stability from Main Street to Wall Street.
The law, pushed through mainly by Democrats in Washington’s deeply partisan environment, comes almost two years after the infamous near financial meltdown in 2008 in the United States that was felt around the globe. The legislation gives the government new powers to break up companies that threaten the economy, creates a new agency to guard consumers in their financial transactions and puts more light on the financial markets that escaped the oversight of regulators.
Obama described them all as commonsense reforms that will help people in their daily life — signing contracts, understanding fees, understanding risks.
He went so far as to call the reforms “the strongest consumer protections in history.” The president added to a burst of applause: “Because of this law, the American people will never again be asked to foot the bill for Wall Street’s mistakes.”
Republicans portray the bill as a burden on small banks and the businesses that rely on them and argue it will cost consumers and impede job growth. Republican Rep. Darrell Issa of California called Obama’s bill-signing a “charade” that ignored the root causes of the financial crisis.
The president said otherwise. He argued that a crippling recession was primarily caused by a breakdown in the financial system that cannot be allowed to happen again. “I proposed a set of reforms to empower consumers and investors, to bring the shadowy deals that caused this crisis into the light of day, and to put a stop to taxpayer bailouts once and for all,” Obama said to supporters. “Today, thanks to a lot of people in this room, those reforms will become the law of the land.”
In a note of irony, Obama signed the bill with great fanfare in the massive Ronald Reagan Building, named after a president who championed deregulation. The president was joined by scores of consumer advocates, state and local government officials, business owners and executives, and members of Congress who supported the bill. Obama singled out for praise Sen. Chris Dodd, D-Conn., and Rep. Barney Frank, D-Mass., who shepherded the bill through Congress.
In the midst of a heated midterm election season for many lawmakers, Obama sought to put the complex law in consumer-oriented terms for the nation. He said it would help root out fine print and hidden fees for people, and provide deeper scrutiny of the sophisticated financial transactions on Wall Street.

U.S. Senate about to OK jobless benefits for millions

WASHINGTON (AP) — Senate Democrats broke a GOP filibuster and set the stage for a vote Wednesday on legislation that would restore jobless benefits for millions of people unable to find work.
After the Democratic-controlled Senate voted 60-40 on Tuesday to move ahead on the bill, approval became a formality. The measure would go to the House for a final vote and on to President Barack Obama.
At issue are payments averaging $309 a week for almost 5 million people whose 26 weeks of state benefits have run out. Those people are enrolled in a federally financed program providing up to 73 additional weeks of unemployment benefits.
About half of those currently eligible have had their benefits cut off since funding expired June 2. The jobless benefits are a lifeline to millions of people struggling to find work in what has so far been a largely jobless recovery.
“I can’t tell you how relieved we will be when Congress passes this. We have in Pennsylvania about 200,000 people who have lost their unemployment compensation coverage because of their inaction,” said Pennsylvania’s secretary of labor and industry, Sandi Vito. “Folks need this money for their mortgages, for food, and so our goal is to get them their payments as quickly as possible.”
The filibuster-breaking vote came moments after Democrat Carte Goodwin was sworn in to succeed West Virginia Democrat Robert Byrd, who died last month at 92. Goodwin was the crucial 60th senator needed to defeat the Republican filibuster. The Senate gallery was packed with Goodwin supporters, who broke into applause as he cast his “aye” vote.
Republicans say they support the benefits extension. But with the exception of Maine GOP moderates Olympia Snowe and Susan Collins, who voted with Democrats on Tuesday, they insist any benefits be financed by cuts to programs elsewhere in the $3.7 trillion federal budget.
The election-year battle has been amplified by the White House and Democrats, who are emphasizing the plight of the unemployed while arguing that putting money in the pockets of jobless families would also boost economic revival.
Missing no opportunity to seize a political edge, the White House lashed out at Republicans simply for forcing an extra day of debate as required under Senate rules — unless all 100 senators agree to waive them.
“That means 30 more hours of suffering for these hardworking families trying to get by,” presidential spokesman Robert Gibbs said. In fact, state unemployment agencies are gearing up to restore the benefits now that passage of the measure is assured this week.
Many Republicans have voted in the past for deficit-financed benefits extension — including as recently as March and twice in 2008, during the Bush administration. But now they are casting themselves as standing against out-of-control budget deficits, a stand that’s popular with their core conservative supporters and the tea party activists whose support they’re courting in hopes of retaking control of Congress.
“We’ve repeatedly voted for similar bills in the past. And we are ready to support one now,” said Senate Minority Leader Mitch McConnell, R-Ky. “What we do not support — and we make no apologies for — is borrowing tens of billions of dollars to pass this bill at a time when the national debt is spinning completely out of control.”
Sen. Tom Coburn, R-Okla., announced a last-ditch — and futile — plan to cut $40 billion in other federal programs to pay for the measure. Because of procedural moves by Democrats, it would take a two-thirds majority vote to pass Coburn’s amendment.
The overall measure would reauthorize the extended benefits program through the end of November, providing payments to millions of people who’ve been out of work for six months or more. Maximum benefits in some states are far higher than the $309 a week nationwide average payment. In Massachusetts, the top benefit is $943 a week; in Mississippi, it is $235.
The extension started in February as one piece of a broader jobs package that also would have restored expired business tax breaks and helped state governments pay their bills.
That broader measure advanced in fits and starts. Then the political climate changed and it collapsed in June despite being cut back considerably.
Senate Majority Leader Harry Reid, D-Nev., pressed ahead with a bare-bones jobless benefits measure — only to fall one vote short because of Byrd’s death.
The White House has signaled it may seek another renewal of benefits in November if unemployment remains painfully high.

Wednesday stocks fluctuate on mixed batch of earnings news

Dow unchanged this morning at 10,230.

NEW YORK (AP) — Stocks fluctuated Wednesday as traders pored over a mixed batch of earnings reports. Apple Inc., Coca-Cola Co. and two major banks beat expectations, but Yahoo Inc. disappointed the market.
Traders were also wary ahead of congressional testimony later in the day from Federal Reserve Chairman Ben Bernanke. The Fed recently lowered its long-term forecast for U.S. economic growth.
Apple easily surpassed profit forecasts in its earnings report released late Tuesday. The company also raised its revenue outlook above analysts’ expectations. Coke, Morgan Stanley and Wells Fargo all beat analysts’ forecasts, but Yahoo’s shares sank after reporting disappointing results. Other technology stocks were mostly lower, except for Apple, which rose sharply.
Traders have grown skittish over the past week because of weaker-than-expected revenue at major U.S. companies including IBM and Johnson & Johnson. Investors are focusing on revenue as companies report their results, believing that companies’ sales are a good indicator of how the overall economy is doing. With the second-quarter earnings season now about halfway through, the results have been mixed, sending the stock market swinging erratically over the past week.
In midday trading, the Dow Jones industrial average rose 3.33, or 0.03 percent, to 10,233.29. The broader Standard & Poor’s 500 Index fell 0.68, or 0.06 percent, to 1,082.80. The Nasdaq composite index fell 6.24, or 0.3 percent, to 2,216.25.
Advancing shares were ahead of losers by about 4 to 3 on the New York Stock Exchange, where volume was light at 402 million shares. Low volume can cause exaggerated swings in stock prices.
Stocks of materials producers were broadly higher after Freeport-McMoRan Copper & Gold, a major mining company, reported revenue that easily beat analysts forecasts. Freeport’s shares gained $2.50, or almost 4 percent, to $66.82.
Among other companies reporting earnings, Morgan Stanley jumped $2.45, or 9.7 percent, to $27.67. Apple rose $7.22, or 2.9 percent, to $252.11. Coke rose 94 cents, or 1.8 percent, to $54.18, while Wells Fargo rose 80 cents, or 3.1 percent, to $26.71. Yahoo dropped $1.23, or 8.1 percent, to $13.97.
Stocks are coming off two days of gains. The Dow rose Tuesday by more than 75 points after falling nearly 150 early in the morning.
Traders are trying to get a read on the economy through companies’ profit reports, but earnings have been mixed over the past week. Profits are mostly improving, but sales are not growing fast enough at some companies to reassure investors the recovery is picking up momentum.
More certainty about the health of the economy could come from testimony by Bernanke. He is scheduled to begin two days of testimony before Congressto discuss the Fed’s view on the strength of the economy.
Bernanke is likely to say the economy isn’t headed back into recession, but he is also expected to be cautious about near-term growth. Bernanke will likely repeat a pledge that the Fed will provide any support needed to further boost the recovery.
Bond prices edged higher, pushing their yields slightly lower. The yield on the benchmark 10-year Treasury note, which helps set rates on mortgages and other kinds of loans, fell to 2.94 percent from 2.96 percent late Tuesday.
Overseas, Britain’s FTSE 100 rose 1.4 percent, Germany’s DAX index rose 0.4 percent, and France’s CAC-40 gained 0.7 percent. Japan’s Nikkei stock average fell 0.2 percent.