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Round-Up: Economic News

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[Posted by Mike Murray]

* Fed signals vote of confidence in economy

he Federal Reserve delivered a vote of confidence in the recovery today, declaring that economic activity is “leveling out.” The central bank also signaled that it would end one of its programs aimed at propping up the economy, and kept a key lending rate at a record low.

The Fed said it would gradually slow the pace of its program to buy $300 billion worth of Treasury securities so that it will shut down at the end of October, versus September. It has bought $253 billion of the securities so far.

* A congressman’s tough lesson

This week, it turned out that neither threats, nor TARP funds nor other bailouts influenced the lenders, sellers or buyers of Seaford’s parent, Hartmarx. The deal went through with Wells Fargo financing the London-based Emerisque Brands, but left out some 300 employees at Seaford’s Rock Island plant.

Our hearts go out to those workers, who are prime examples of working Quad-Citians doing everything right, then being cast aside by out-of-town corporate interests.

The decision is devastating for the workers and for the Quad-Cities, which cherishes every manufacturing job. It also has to devastate Hare, who cut his political teeth as a union organizer while he was cutting suit linings as a Seaford employee.

Still, that threat is hanging out there. Fueled by Hare’s rhetoric, Illinois State Treasurer (and U.S. Senate candidate) Alexi Giannoulis leveled his own threat to pull all state funds from Wells Fargo if it withheld credit from Seaford’s buyer. Technically, Giannoulis is off the hook. It appears Emerisque, not its lender, pulled the plug on Seaford

* Insurer Blue Cross to cut 650 jobs

The parent of Blue Cross and Blue Shield in four states, including Illinois, has announced it will shed 650 jobs as it prepares for operations after the expected adoption of health care reforms.

Chicago-based Health Care Service Corp. operates Blue Cross and Blue Shield plans in Illinois, New Mexico, Oklahoma and Texas. The company on Wednesday announced plans to reduce its work force about 4 percent by the first quarter of 2010.

* Ameren to lay off 80 at Illinois power plants

Ameren Corp. today announced plans to eliminate more than 80 jobs at three Illinois power plants, including 47 at the Meredosia power station about 20 miles northwest of Jacksonville. It was the second such layoff notice in three weeks.

* Wal-Mart posts flat 2Q profit; boosts outlook

Wal-Mart Stores Inc. on Thursday reported second-quarter income virtually unchanged from a year ago, but results beat Wall Street expectations.

The world’s largest retailer also raised the low end of its profit outlook as it benefits from a series of cost-cutting moves and draws frugal shoppers away from rivals.

Wal-Mart earned $3.44 billion, or 88 cents per share, in the quarter ended July 31. That compares with $3.45 billion,or 87 cents per share, in the year-ago period. Revenue fell 1.4 percent to $100.08 billion.

Analysts surveyed by Thomson Reuters projected earnings per share of 85 cents on revenues of $102.9 billion.

* For FBOP, $500M may not be enough to right the ship

Capital levels at the Oak Park-based company — with $18.6 billion in assets, mainly in subsidiary banks in California, Texas and Arizona and at Park National Bank in Chicago — have fallen to the point where the holding company is “critically undercapitalized.” That designation by law requires regulators to seize a lender within 90 days unless they specifically find another course to be preferable.

FBOP has been trying to raise $500 million in equity and debt for months, and more recently became embroiled in litigation with its own bank lenders, led by J. P. Morgan Chase & Co.

The continuing deterioration at FBOP, though, may mean that $500 million won’t be enough.

Based on its June 30 results, FBOP needs to raise between $900 million and $1.1 billion.

* Sara Lee Posts Smaller Quarterly Loss

The maker of Sara Lee breads, Jimmy Dean sausages and other foods said Tuesday that it posted a loss of $14 million, or a loss of 2 cents per share, compared with a bigger loss of $672 million, or 95 cents per share, a year ago. Excluding impairment charges of $207 million at its Spanish bakery business and $61 million in other charges, earnings per share were 29 cents.Revenue declined 10 percent to $3.16 billion.

* Durbin Backs High Speed Rail In Normal

Normal Mayor, Chris Koos said, “We’re currently in our region the fourth busiest Amtrak stop behind Indianapolis, Chicago and St. Louis and we’ve been told by the Amtrak people that we’re likely to overtake St. Louis in another year or so”.

Durbin says this is not the same high speed rail system sought earlier.
He says the goal is to make the existing Amtrak rail capable of traveling 110 miles per hour and is more realistic for shovel-ready stimulus dollars.

posted by Mike Murray
Thursday, Aug 13, 09 @ 9:01 am

Comments

I keep hearing about Highs Speed this and that but just how many passengers are we talking about per STOP or is it a mix of people and freight

Comment by JustMe_JMO Thursday, Aug 13, 09 @ 9:48 am
Re: Blue Cross

Hopefully the employees in Illinois, and elswhere, who will be let go won’t find themselves without access to quality medical care for too long. Otherwise they might understand all too well those 50 million americans who go without. I know that these 650 employees were just cogs in the wheel, and I don’t wish job loss on anybody who lives paycheck to paycheck like most people.

Comment by Will County Woman Thursday, Aug 13, 09 @ 10:43 am
“The maker of Sara Lee breads, Jimmy Dean sausages and other foods said Tuesday that it posted a loss of $14 million, or a loss of 2 cents per share, compared with a bigger loss of $672 million, or 95 cents per share, a year ago. Excluding impairment charges of $207 million at its Spanish bakery business and $61 million in other charges, earnings per share were 29 cents.Revenue declined 10 percent to $3.16 billion.”

Serves them right for buying the Best Kosher plant on the South Side and then putting the brand (and employees) out of business without giving anyone else a chance to keep it going, even though they were making a profit off it. As a result, we can no longer get our beloved and much-missed Best Kosher dogs at Sox games. Sara Lee officials defended the action by saying Best Kosher was profitable, but just not a big-enough business for a company like theirs. Guess they’re not missing that revenue and profit now, huh?

Comment by OldSmokey2 Thursday, Aug 13, 09 @ 1:54 pm