Finance & Business World

Sales of existing homes fell in February after three straight monthly increases, an industry group said Monday.

According to the National Association of Realtors, homes sold at an annual rate of 4.88 million in February, down 9.6% from January and 2.8% lower than February 2010 sales.

The report was worse than economists had expected. A consensus of experts surveyed by Briefing.com had forecast an annualized sales rate of 5.05 million.

At the same time, the median home price declined 5.2% compared to the previous year, to $156,100.

"Housing affordability conditions have been at record levels and the economy has been improving, but home sales are being constrained," Lawrence Yun, NAR chief economist, said in a statement.

Yun said the housing market recovery is bound to be rocky, especially with the tight credit market.

NAR reported that all-cash sales went up to a record 33% of the total, up from 27% a year earlier instant credit report. It estimated the percentage of investor purchases hit 19%, the same level as a year ago.

"The decline in price corresponds to the record level of all-cash purchases where buyers — largely investors — are snapping up homes at bargain prices," Yun explained. "We’d be seeing greater numbers of traditional home buyers if mortgage credit conditions return to normal."

The decrease in sales was accompanied by an increase in supply. Inventory rose 3.5% to 3.49 million units, an 8.6-month supply at the current rates of sales.

Normally, a five or six-month supply is considered a good balance between supply and demand. 

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Pump prices will average $3.70 per gallon this spring and summer with a barrel of oil averaging $102 this year, the U.S. Department of Energy said Tuesday.

Conflict in the Middle East and fighting in Libya prompted government analysts to raise expectations for gasoline prices by 50 cents a gallon for the peak driving season in the Energy Information Administration’s monthly Short-Term Energy Outlook. The EIA boosted its per-barrel oil estimate by $9 for the year.

EIA sees pump prices peaking at $3.75 a gallon in June. But its report says there is “significant uncertainty surrounding the forecast” and pump prices could spike above $4 this summer, which would threaten the all-time high of $4.11 a gallon reached in July 2008.

On Tuesday the national average for a gallon of regular hit $3.52, according to AAA, Oil Price Information Service and Wright Express. That’s 40 cents higher than a month ago and 76 cents above a year ago. After settling at $105.44 a barrel on Monday, benchmark crude lost about 80 cents in Tuesday afternoon trading.

The Energy Department expects world oil markets to tighten over the next two years with the average oil price rising to $105 a barrel in 2012. It said uncertainty about oil production in North Africa and the Middle East, the world’s largest oil-producing region, is a major factor.

The government also expects oil production lost from Libya to be covered by increased production in other OPEC countries. Saudi Arabia, the biggest OPEC contributor, has said it will cover any shortfall caused by strife in the region.

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The cost of a plane ticket keeps jumping, and it seems the sky’s the limit for price. Why? Because you’re willing to pay.

The major U.S. airlines have hiked fares six times so far this year, already doubling the total number of increases for 2010, according to Rick Seaney, chief executive of Farecompare.com.

But consumers have continued to pay the increased fares, so the airlines have become bolder in driving the prices up even further.

The average roundtrip airfare between major U.S. cities has crept up to $311, which is getting awfully close to the spring-summer peak of $318 in 2008. This is an important benchmark for how high consumers are willing to go, Seaney said, and sticker shock could soon set in.

"I don’t expect prices to rise unchecked," he said.

But prices may have already overtaken 2008 levels. Seaney said that the average airfares of $318 in 2008 versus $311 today do not include ancillary fees for checked baggage, pet travel, non-alcoholic drinks, food and other services that were free in 2008. So many travelers are probably paying more to travel now than they were in 2008, or even 2001 — the previous peak no fax needed payday loans.

"I think airlines may be getting close to travelers’ wallet breakpoint," said Seaney. "When or if that does happen, airlines will begin pulling the lever on seat cuts and fee hikes."

But for now, airlines have been hiking up fares, practically on a daily basis, said Tom Parsons, travel pricing guru at BestFares.com. They also hiked up fuel surcharges by more than 20% since 2008, even through oil prices are down about 28% since their 2008 peaks.

The airlines have also cut capacity, meaning they eliminated their least fuel-efficient flights. This has been a highly successful strategy for airlines, allowing them to fly fuller planes and provide fewer choices for consumers.

"I wouldn’t touch an airline ticket right now," he said. "Don’t blink. Let the airlines blink first." 

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Alex Bilodeau, gold medal skier, is helpfully sitting for a photograph just hours after glad-handling at Union Station while handing out bowls of Quaker oatmeal.

Performing in videos, endorsing products, greeting the public: It

Starting in 1976 as a family-operated company that sealed local driveways, Byrne & Jones Construction Inc. has grown into a major provider of rubberized tracks and artificial turf football and soccer fields for high schools, colleges and professional training fields.

That work has become so much a part of Byrne & Jones’ business that the Maryland Heights-based company recently spun off a separate division strictly for building and maintaining sports surfaces in 10 Midwestern states, including Missouri and Illinois. The new Byrne & Jones Sports Division is headed by Britt Taulbee, a company executive vice president.

“Our construction company used to do the asphalt part of track and field installations, and then we’d wait for the actual turf and track surfaces from other companies,” Taulbee said. “But what we found over time was that because there were few companies that installed the surfaces that it became tough to schedule all those jobs.”

So Byrne & Jones sent some of its own employees for training in installing rubberized tracks and Field Turf, as well as other artificial track and field surfaces. The company also invested hundreds of thousands of dollars in specialized equipment to enable it to do entire installation jobs when schools and colleges would call for replacement of their old tracks and fields, Taulbee said.

“At first, we didn’t market it outside of St. Louis,” he said. “Then word got around about our work.”

Byrne & Jones, even before spinning off its sports division, has installed tracks and fields at dozens of area schools, as well as new artificial turf football fields for Southern Illinois University Carbondale, high schools in Topeka, Kan., a recreation field at Fort Campbell, Ky., and the training fields for the New Orleans Saints of the National Football League.

Two years ago, Byrne & Jones installed the artificial turf fields now used by St. Charles West High School and St. Charles High.

“We’re delighted to have two fields which can host an unlimited number of activities and are also safer for our athletes and more cost-efficient to maintain,” said Randy Charles, superintendent of the St. Charles School District.

The company’s new sports division consists of Taulbee, project manager Jameson Sheley and 16 employees divided into five crews: two teams that install rubberized tracks and three groups that install artificial surfaces for football and soccer fields, as well as rubberized tennis courts. That’s roughly a quarter of Byrne & Jones’ entire work force.

To date, Byrne & Jones has installed and maintained more than 1,000 athletic surfaces, including artificial and some natural turf fields, tracks and several tennis courts.

“While we are the largest commercial paving contractor in St. Louis, in recent years up to 20 percent of our business has come from schools upgrading athletic facilities,” said Brian Goggins, president of Byrne & Jones Construction.

“More and more schools are looking for ways to strategically manage their real estate assets, reduce maintenance costs and use their sports facilities as a college recruiting tool.”

Taulbee said the average new track at a high school or college would last about 20 to 25 years with regular maintenance. The average new artificial football or soccer field turf lasts about 10 to 12 years, he said.

Replacement and maintenance of an artificial track and field costs a school an average of nearly $1.2 million, Taulbee said. Though a huge number, that figure can prove to be a bargain for many schools over the costs of maintaining a natural turf field for the same period.

The easier maintenance of artificial surfaces also makes it possible for schools and colleges to rent out those fields and tracks to make more money, he said.

Installation and maintenance of artificial tracks and fields has become a big business nationally, Taulbee said. About 600 tracks and 800 artificial fields are installed annually throughout the United States, he said.

Byrne & Jones did nearly $6 million in artificial track and field business last year, before the sports division was created, Taulbee said.

“This year, we’re going for about $10 million,” he said.

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General Electric Co. is buying privately held Lineage Power Holdings Inc. in a deal worth about $520 million so its energy unit can gain a foothold in the power conversion space.

The Fairfield, Conn. company said Thursday that the purchase from The Gores Group LLC is another step in its energy expansion efforts. In October GE said it planned to buy energy infrastructure company Dresser Inc. It also plans to make a buyout offer for oil pipe maker Wellstream Holdings PLC ceramic flat iron.

The Lineage Power acquisition is expected to close in the first quarter.

Lineage Power, based in Plano, Texas, had 2010 revenue of approximately $450 million. It has almost 2,300 employees and manufacturing operations in China, Mexico and India.

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Thailand’s manufacturing output growth unexpectedly slowed in November, a sign producers may be anticipating easing global demand after a rebound lifted exports this year.

The industrial production index rose 5.6 percent last month from a year earlier, the Office of Industrial Economics said on its website today. That compares with a revised 6 percent increase in October and the 6.8 percent median estimate of 12 economists in a Bloomberg News survey. The revised October number was calculated by Bloomberg News based on data provided by the agency, which only gave the growth rate for November.

Europe’s debt crisis and U.S. unemployment that’s above 9 percent may cap overseas demand for goods by Asian manufacturers such as Bangkok-based Hana Microelectronics Pcl, which makes parts for computers and phones including Apple Inc.’s iPhone. Thai Finance Minister Korn Chatikavanij said last week Southeast Asia’s largest economy after Indonesia may expand more than 4 percent in 2011, slowing from this year’s pace.

“Industrial growth slowed as the recovery in the U.S. and Europe weighs down the demand for electronics exports,” Chandara Lim, an economist at Moody’s Analytics in Sydney, said before the report. “Tighter monetary settings could weaken private investment and slow manufacturing orders over the upcoming month.”

Rate Increase

The central bank raised its one-day bond repurchase rate by a quarter of a percentage point to 2 percent earlier this month, signaling policy makers view inflation as a bigger threat than slowing growth. Governor Prasarn Trairatvorakul said Dec. 24 Thailand can’t have “low wages, a weak baht and low interest rates forever.”

Thai export growth accelerated to 28.5 percent in November, and shipments should rise by as much as 28 percent this year, Commerce Minister Porntiva Nakasai said last week.

Still, the baht has appreciated more than 10 percent this year, the best performer in Asia after the Japanese yen and Malaysian ringgit, raising concern that Thailand’s goods may become more expensive relative to its regional rivals. Korn said Dec. 15 the baht will probably extend gains next year and capital flows will make the currency volatile.

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Chevron will buy natural gas producer Atlas Energy Inc. in a cash-and-stock deal worth $3.2 billion, the companies said Tuesday.

Including debt of about $1.1 billion, the deal is worth $4.3 billion.

Chevron Corp., based in San Ramon, Calif., is the latest major energy company to make a big acquisition in the natural gas sector, following Exxon Mobil and Royal Dutch Shell. Atlas is a big player in the Marcellus shale of Western Pennsylvania and elsewhere.

Until now, Chevron hasn’t made any significant moves to expand into America’s vast underground shale deposits. It’s waited while other energy companies have rushed to tap shale wells with new drilling technologies that can produce gas cheaper than before.

With natural gas prices continuing to languish, analysts say Chevron is striking at a time when it can get a good price for those assets.

“When the market is weak, that’s when it’s time to act,” Argus Research analyst Phil Weiss said.

Despite enormous supply and weak consumption, natural gas is expected to be in high demand in coming years because it can be found all over the U.S. and produces fewer emissions compared with other fossil fuels.

Atlas, based in Moon Township, Pa., near Pittsburgh, said that its shareholders will receive a package worth $43.34 per share, a 37 percent premium to the company’s closing price on Monday. The package includes $38.25 in cash for each outstanding share along with units of Atlas Pipeline Holdings.

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Initial filings for unemployment insurance fell to the lowest level in nearly three months last week, an encouraging sign ahead of the government’s highly anticipated monthly jobs report due Friday.

The number of first-time filers for unemployment benefits fell to 445,000 in the week ended Oct. 2, down 11,000 from the week before, the Labor Department reported Thursday.

The number was lower than economists’ forecasts of 455,000, according to consensus estimates by Briefing.com, but it still fell in a range that analysts say points to weakness in the job market.

"It’s a good data point for the week," said T.C. Robillard, a senior research analyst for Signal Hill Capital. "But, historically speaking, these are still relatively high levels for where we are in the recovery."

The last time initial claims ticked below 450,000 was during the week ended July 10.

But overall, the weekly number has been stuck in a tight range since last November, hovering in the mid to upper 400,000s and even ticking slightly above 500,000 in mid-August.

The most recent four-week moving average, which is calculated to smooth out volatility, was 455,750.

Economists say they’re looking for initial claims to fall to 400,000 or lower before they can say a jobs recovery has made noteworthy progress.

Businesses have been sitting on the fence when it comes to hiring, as they face uncertainty about the Bush tax cuts expiring at the end of the year and increased costs from health care reform.

More than 4,460,000 Americans continued to file ongoing unemployment claims in the week ended Sept. 25, the most recent data available.

On Friday, Wall Street will turn its attention to the government’s monthly jobs report. Economists polled by Briefing.com forecast the report to show the economy added no jobs in September, and that the unemployment rate ticked up to 9.7% from 9.6% in August. 

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If President Obama’s plan for the Bush tax cuts is enacted, the wealthiest residents of New York City would feel real tax rates of 50.7%, highest of any place in the country.

Right behind is Hawaii, where residents would pay 49.7%.

Those are some of the findings from a report issued Wednesday by the Tax Foundation calculating the so-called marginal effective tax rates under the Obama proposal.

The Obama proposal would let the 2001 and 2003 tax cuts expire for families earning more than $250,000 and individuals earning $200,000 and up. The top two tax rates would revert to where they were in the late 1990s: The 35% rate would go to 39.6% and the 33% rate would go to 36%.

The research group attempts to paint a fuller picture of what top earners would pay by including state and local income tax rates on top of federal rates.

California residents can expect a rate of 49.4%, with Vermont at 48.8% Maryland at 48.6% and New York state at 48.4% following close behind, according to the Tax Foundation. (New York City was the only local jurisdiction the group calculated separately; it otherwise blended local taxes into each state number.)

Overall, residents of 15 states can expect tax rates in excess of 47.3%.

The Tax Foundation arrived at its marginal effective tax rates by adding the expected federal rates to those already on the books in state and local municipalities.

There are important caveats. For one thing, the rates listed in the report are those faced by the highest earners on their self-employment income — that means income that comes in the form of business profits or investment revenue.

And a 50% marginal effective tax rate doesn’t mean that top earners will be paying 50% of their income to local, state and federal governments. Instead, the rate applies only to income made over and above the top tax bracket.

Finally, of course, some instead collect sales tax on purchases, a tax not included in the study.

The Tax Foundation analysis also found that if a plan favored by Republicans to extend all the Bush tax cuts becomes law, the range of top marginal tax rates would be approximately 5 percentage points lower in each state.

Under the rival Republican plan, Hawaii’s rates are set at 44.3%, California at 44.1%, Vermont at 43.3%, Maryland 43.1% and New Jersey at 43.0%.

And while this it is too late for states to change their tax rates for 2011, two cash-strapped states — Illinois and Washington — are toying with raising their income tax rates to cover future budget shortfalls. 

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