A high-level panel of experts that has been helping to shape President Barack Obama’s response to the economic crisis will step into the public view on Wednesday at a meeting to discuss energy issues and job creation.
Obama announced the creation of the 16-member Economic Recovery Advisory Board, led by former Federal Reserve Chairman Paul Volcker, in February, but its work had been entirely behind-the-scenes.
Wednesday’s meeting, scheduled for 10:00 a.m., will be open to the media and carried via a live video stream on the White House website. It is the first of what are expected to be quarterly meetings by the board.
Topping the meeting agenda is Obama’s proposal to create “green jobs” in sectors of the economy aimed at developing cleaner energy sources.
Volcker’s role in advising Obama is of keen interest to many on Wall Street, where the 81-year-old former central banker remains a towering figure known for breaking the back of runaway inflation during the 1980s.
Volcker has continued to weigh in on public policy matters since leaving the Fed in 1987. He was a key adviser to Obama during the campaign and speaks frequently with White House officials on financial-regulatory and other issues.
But he has vented some frustration to associates about his level of access within the White House economic power center.
Obama’s inner circle on economic policy consists of National Economic Council director Lawrence Summers, a former Treasury secretary; current Treasury Secretary Timothy Geithner; Christina Romer, chairwoman of the Council of Economic Advisers; and Austan Goolsbee, a longtime Obama adviser who sits on the Council of Economic Advisers and is also chief of staff on the Volcker economic recovery panel payday loans.
‘TEAM OF RIVALS’
Some refer to the group as “team of rivals” because it consists of high-powered people who bring varying perspectives and personal styles.
In an interview with the New York Times magazine published this month, Obama said his economic team is marked by “an appreciation of complexity.”
He described Volcker as “somebody who has enormous influence over my thinking” and someone who can provide “counterbalance” in discussions.
The economic recovery panel, which includes Democrats and Republicans and people from business, academia, public policy and labor union backgrounds, is intended to give Obama some outside perspective on economic issues.
“The purpose of the board is not to work inside the White House, but to bring a diverse set of perspectives and voices from different parts of the country and different sectors of the economy to bear in the formulation and evaluation of economic policy,” White House spokeswoman Jen Psaki said.
She said the members of the panel have been conducting their own analysis to prepare for the discussion of energy issues.
Cisco Systems Inc Chief Executive John Chambers said on Monday that he would probably stay in his position for at least another three to five years.
Asked at a JP Morgan technology conference about his future plans — for example, if he would move into politics — the 59-year-old head of the biggest U.S. network equipment maker said he was more likely to teach.
“I love what I do. I’m going to retire here at Cisco and after that I will teach,” he said. “I intend to stay at Cisco for probably a minimum of three to five more years, assuming I can earn the shareholders’ trust, our employees’ trust, our customers’ trust, and assuming my health holds up low fee pay day loans.”
Since Chambers took the CEO role in January 1995, Cisco has grown from a company with $1.2 billion in annual revenue to nearly $40 billion, as the expansion of the Internet fueled demand for routers and switches that direct Web traffic.
(Reporting by Ritsuko Ando, editing by Maureen Bavdek)
More evidence emerged Friday that the recession is easing, with output by the nation’s factories, mines and utilities falling at the slowest pace in six months.
At least one area of the economy is flat, but that’s welcome news. Consumer prices were level in April after a slight dip the prior month.
Inflation usually doesn’t pick up until well after a recovery begins, noted Mark Vitner, senior economist at Wachovia. If the economy rebounds late this year, as many analysts expect, prices likely will be stable until 2011, he said.
Some economists have been concerned about the possibility of deflation. But most say that possibility appears remote because the Federal Reserve has responded with force to combat the downturn.
The Fed said output at factories, mines and utilities fell 0.5 percent last month, after revised declines of 1.7 percent in March and 1 percent in February. Analysts had expected a drop of 0.6 percent last month.
Still, the report showed U.S. industry remains weak. Industrial production has fallen in 15 of the 17 months since the recession began in December 2007 and is down 16 percent since then.
"Overall, yet another report that fits within the picture of an economy contracting more slowly but still far from an actual recovery," Paul Ashworth, senior U.S. economist at Capital Economics, wrote Friday.
A 1.4 percent increase in auto production, which came after huge reductions earlier this year, boosted overall results payday loan. But that won’t last as Chrysler and General Motors Corp. are shutting plants in May and June, which could send industrial production lower, economists said.
Also Friday, a Reuters/University of Michigan index of consumer sentiment rose to an eight-month high in May.
Meanwhile, the Labor Department said its consumer price index was flat last month, meeting expectations. The tame inflation performance reflected a second monthly drop in energy costs and a third straight decline in food prices.
Over the last year, consumer prices have fallen 0.7 percent, the largest 12-month decline since a similar drop for the year ending in June 1955.
Falling prices can be good for shoppers. But over the long term, they can erode wages and cause consumers to postpone purchases, leading to steep drops in production. But broad price declines aren’t affecting goods outside food and energy, economists said. Core inflation, which excludes food and energy, rose 0.3 percent last month. It was the biggest jump since July, but about 40 percent of the gain came from a huge rise in tobacco prices, reflecting higher federal taxes.
"Inflation’s not a problem if you don’t smoke," Vitner said.
No. 1 U.S. trucking company YRC Worldwide Inc plans to seek $1 billion in federal bailout money to help it cover its pension obligations, a spokeswoman said on Friday.
The company, which has been shedding jobs and closing facilities to cut costs in the face of a brutal U.S. recession faces an estimated $2 billion in pension obligations over the next four years, spokeswoman Suzanne Dawson confirmed
The move was first reported by the Wall Street Journal.
Its shares were down 2 percent, or 7 cents, to $3.20 in early electronic trading.
YRC will submit an application to the Treasury as early as Friday quick guaranteed personal loans.
In January, its unionized workers agreed to a 10 percent pay cut in return for a 15 percent stake in the company.
Over the past year, YRC shares have fallen 82 percent, a far steeper drop than the 43 percent fall of the Dow Jones Transportation Average .DJT.
(Reporting by Nick Carey in Chicago, additional reporting by Ajay Kamalakaran in Bangalore, writing by Scott Malone; Editing by Derek Caney)
British telecoms carrier BT cut its dividend and announced 15,000 further job losses on Thursday after its pension costs almost doubled and a 1.58 billion pound ($2.4 billion) writedown tipped it into a quarterly loss.
The writedown is to be taken at its Global Services unit, a supplier of IT services to multinational companies which the company had for years touted as its growth engine.
The writedown follows a thorough review of the division and some of its more over-optimistic contracts after two profit warnings.
Analysts said the statement should act as a “clearing of the decks” and provide a floor to the share price.
Analysts also welcomed the cost cutting by the former state monopoly and cash flow targets, but noted that the full-year revenue forecast of a fall by 4 to 5 percent was worst than expected.
BT’s shares were down 1.9 percent at 92.5 pence at 0810 GMT (4:10 a.m. EDT) after falling almost 60 percent in a year.
SECOND TURNAROUND
BT, which is seen by investors as a yield stock, last posted an annual loss in 2001 when it was forced to launch a record British rights issue and sell its mobile unit to reduce debt.
This time around its writedown in the fourth quarter meant it posted a full year loss of 134 million pounds compare car insurance prices.
“We expected a massive and complex set of results and we have not been disappointed,” said Daiwa analyst Michael Kovacocy. “The turnaround story continues, and we believe that today’s results have set a bottom in the share price and will allow for material upside moving forward.”
BT said profit before tax on an adjusted basis was down 40 percent and on a reported basis showed a 1.28 billion pound loss.
PENSION GAP
Britain’s biggest fixed-line telecoms provider also said it would have to almost double its pension contributions to 525 million pounds ($794.1 million) a year for three years.
It has been engaged in a triennial review of its pension and declined to give the review’s verdict on the deficit, saying it should provide the figure in the coming months.
It did however give its pension position at March 31 on an IAS 19 accounting basis, as a deficit of 4 billion pounds gross, compared with a surplus of 2.8 billion pounds last year.
IBM Corp is set to begin selling a long-awaited software aimed at helping companies analyze real-time data, ranging from traffic data to manufacturing processes, to find more efficient ways to run their business.
IBM, which has shifted its focus from computers to higher-margin software and services over the past decade, said the new software, named IBM System S, will be available from Friday following six years of development.
The software is designed to analyze streams of real-time data and could help financial institutions monitor transactions and analyze risks, or help hospitals monitor patients to detect problems early, the company said.
It could also help chipmakers, for example, monitor the entire manufacturing process which often involves 500-1,000 steps. IBM said the software could pinpoint errors to solve them before they multiply or lead to serious losses.
Nagui Halim, head of IBM’s stream computing project, said the software can be used for “anything that has a situation where vast amounts of data are available at real-time.”
“As businesses go more and more online, as more and more of what they do becomes available digitally, with cars, equipment and sensors no fax instant cash advance… there’s this rising tide of information,” Halim told Reuters.
“Generally people store the data, and they try to understand it later. What we’re saying is, it’s hard to do that, and by the time you get around to looking at it later the events of interest may be over.”
IBM’s software rivals include Oracle Corp and Microsoft Corp, as well as much smaller players like Tibco Software Inc.
The System S is due to be unveiled at IBM’s annual event for analysts later on Wednesday. Analysts attending the event, however, are likely to focus on the company’s overall business outlook.
Most analysts have said they expect IBM to reiterate its 2010 earnings forecast of $10-$11 a share, despite a recent slowdown in sales.
IBM’s first-quarter revenue fell 11 percent from a year earlier, but cost cuts helped limit the fall in net profit, and the company said it expects 2009 profit of at least $9.20 per share.
(Reporting by Ritsuko Ando, Editing by Ian Geoghegan)
Will a recession force Nestl
WASHINGTON — A House committee gave a lift to Boeing workers in St. Louis Thursday by allocating $3.1 billion for new aircraft — much of which will go toward manufacturing 11 C-17 cargo planes.
Following a recommendation by the Defense Department last month, President Barack Obama’s 2010 budget proposal calls for the cancellation of the C-17 program, which employs 1,000 in St. Louis. The proposal lists savings of $3 billion a year by canceling the program.
The House Appropriations Committee added three more planes to the eight proposed in supplemental defense spending for the rest of the fiscal year.
"There’s a little bit more life," said Rep. Jo Ann Emerson, R-Cape Girardeau, who sits on the committee cash advance now. "It’s got to go through the Senate, though."
Also Thursday, Boeing suffered the biggest cancellation yet for its delayed 787 Dreamliner, with a dropped order valued at $4.44 billion.
Boeing has grappled with weaker demand in recent months. Customers have canceled orders for 59 planes this year, all but two for the 787, a next-generation aircraft built with lightweight carbon composite parts. That’s left Boeing with a negative balance of one order for 2009.
The 787 remains Boeing’s best-selling new plane ever.
Wire services contributed to this report
President Barack Obama will likely explain his vision for a national infrastructure bank in the detailed budget he plans to release on Thursday, but analysts warn the bank will not be a comprehensive or quick fix for the nation’s road and highway problems.
In the proposed budget he released in February, Obama set aside $5 billion in fiscal year 2010 for an entity to “provide direct federal investment” and “foster coordination through state, municipal and private co-investment” in building and repairing the country’s physical capital.
“To think that the National Infrastructure Bank is the solution, or anywhere close to the solution, I think is extremely over-optimistic,” Robert Atkinson, chair of the National Surface Transportation Infrastructure Financing Commission, told the Reuters Infrastructure Summit on Wednesday.
In the February proposed budget, Obama presented an overview of his spending plans, including calling for the bank to receive $25.2 billion through 2019, but did not provide specifics. Budget Director Peter Orszag has said his office will give the public “full programmatic detail” on Thursday.
Based on what Atkinson’s government-backed commission found last year — that the country needs to invest $210 billion a year in infrastructure, or roughly three times its current rate — he does not think the bank provides the answer.
“The need is so great,” he said.
Many of the country’s roads and bridges have fallen into disrepair over the last decade, with one Minnesota bridge collapsing over a year and a half ago, and many say that the bank could not speedily fix their conditions.
Speaking to Reuters on Monday, the House of Representatives Transportation and Infrastructure Committee Chairman James Oberstar said the bank would not be established and operational for some time to come credit reports.
The Minnesota Democrat said he will draft the blueprint for the next half decade of federal surface transportation spending without including the bank, which some have likened to a Federal Reserve for capital projects.
Despite calling it a good idea, Oberstar has warned that the bank faces some political risks, such as finding long-term funds and avoiding directly competing with already established programs, such as the Highway Trust Fund.
This winter Connecticut Senator Chris Dodd said he imagined passing a bill to create the bank within the year. It would have an independent board to decide which projects receive backing and would create a new stream of dollars that would not compete with the trust fund.
POSSIBLE DELAYS
Ken Simonson, the Associated General Contractors of America economist who was recently appointed to the panel advising the National Surface Transportation Policy and Revenue Study, said Congress may further delay the project.
While Simonson said there is more support for a bank now than a few years ago, any provision to create it would likely be attached to a broader piece of legislation that could be held up in debate.
The bank would probably be funded through debt akin to the Build America Bonds included in the economic stimulus plan, and lawmakers’ appetite for increasing public debt seems to be waning, he said.
The United States recession could end in the second half of this year but will likely not give way to a robust rebound in growth, Janet Yellen, President of the Federal Reserve Bank of San Francisco, said.
“The good news is that, for the first time in a while, there is some good news to savor,” Yellen said in a speech to the Haas Business School of the University of California, Berkeley, on Tuesday.
“I am hopeful that the recession will end in the second half of this year due to aggressive monetary and fiscal policies, and the operation of typical business cycle mechanisms.”
Still, Yellen said that a raft of uncertainties still faced the United States, and that a robust, “V-shaped” recovery looked unlikely from what she said will probably end up being remembered as the worst downturn, domestically and globally, since the Great Depression of the 1930s.
Yellen quipped to an audience packed with business students that the recovery would hopefully be shaped “like a U, rather than an L.”
“I expect the U.S. recovery to be frustratingly tepid once it does get started,” she said, adding that unemployment will probably take “several more years” to return to long-run equilibrium levels.
“My forecast that output growth will turn positive in 2009 and proceed near trend in 2010 implies that the unemployment rate will rise from 8.5 percent now to around 9.5 percent by the end of this year.”
U.S. households are unlikely to repeat the “spending spree of major proportions” seen in the years prior to the recession, which started in December 2007, she said cheapest cash advance. “The deleveraging of household balance sheets could restrain spending for years.”
Yellen said recently released figures on first-quarter U.S. gross domestic product, while very weak, contained some positive signals such as the large decline in business inventories that many see as a prerequisite to a turn in the economy.
“The first-quarter data suggest that the necessary inventory correction may be quite far along,” she said, adding that recent data also hinted at a stabilization in the housing sector.
Yellen, a voting member of the Federal Open Market Committee in 2009, taught economics at Berkeley for many years and got a rousing ovation from the students packing the audience.
SKEPTICAL ON INFLATION RISK
Yellen said she was “quite skeptical” about the risk of inflation being kicked up by the Fed’s extraordinary efforts to restore credit markets by pumping up its balance sheet.
The suggestion that the Fed will find it politically difficult to pull the plug on private sector borrowers it has supported during the crisis — in other words, to draw down its balance sheet — was not persuasive, Yellen said.
“I want to assure you that the Fed is well aware of this danger and is readying the tools even now,” she said, referring to the risk of not removing monetary accommodation quickly enough.
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