Money world

The number of first-time filers for unemployment insurance rose to the highest level since late February last week, according to a weekly government report released Thursday.

There were 484,000 initial jobless claims filed in the week ended Aug. 7, up 2,000 from an upwardly revised 482,000 the previous week, according to the Labor Department’s weekly report.

That’s the highest number since the week ended Feb. 20, when 486,000 people filed for first-time benefits.

Economists surveyed by Briefing.com had expected new claims to fall to 465,000.

Initial claims have been stuck in the the mid- to upper- 400,000s since November.

"It’s just more of the same," said John Canally, an economist with LPL Financial. "This data doesn’t break out of the range, and that’s going to continue until companies can see their way to adding some jobs."

Canally points to the latest productivity numbers released in a separate report on Tuesday that show companies may have stretched their employees too thin. The Labor Department said worker productivity fell 0.9% in the second quarter, the first decline in 18 months.

That data may mean employers need to start hiring again. But instead, companies have been spending on new equipment and capital - rather than their payrolls - as they remain skeptical of the economic outlook, he said.

"Companies have the cash. Their profits are good. They have credit if they need it. They just haven’t been willing to step up new hiring," Canally said.

Continuing claims: The government said 4,452,000 people continued to file unemployment claims for their second week or more, during the week ended July 31, the most recent data available.

That’s down from an upwardly revised 4,570,000 the week before.

Standard unemployment benefits usually last 26 weeks, and the continued claims number does not include those who have moved into state or federal extensions, or people whose benefits have expired but may still be without a job.

Meanwhile, the four-week moving average for weekly initial claims was 473,500, up from 459,250 the previous week.

The Labor Department tracks the four-week moving average of the weekly figures to smooth out the volatility of the measure.

The national unemployment rate currently stands at 9.5%.

State by state: Jobless claims in six states increased by more than 1,000 in the week ended July 31, the most recent state data available. Claims in Wisconsin increased the most, by 1,901. 

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Lending cash to individuals looking for cash advance or payday loans.

Hyundai Motor Co. announced Wednesday that it has set a goal to boost the fuel efficiency of its U.S. vehicle lineup to an average of 50 miles per gallon by 2025.

That target would put the the South Korean automaker more then 40% above the 35.5 miles per gallon level that U.S. government is pushing automakers to reach by 2016.

"Getting to 50 miles per gallon seems like a huge leap, but by making this commitment and aligning our research and development initiatives now, we know we can get there," said John Krafcik, Hyundai Motor America president and chief executive, in a statement.

Highway fuel efficiency for 2010 Hyundai models ranges from 36 miles per gallon in the subcompact Accent to 22 miles per gallon for the Veracruz, a sport-utility vehicle, according to the U.S. Department of Energy.

The 2011 Sonata, which went on sale earlier this year, achieves 35 miles per gallon on the highway.

The government says the leading fuel-efficient car for the year is the Toyota Prius, a hybrid that logs 48 miles per gallon on the highway. 

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Payday loans no faxing fall on the less risky side simply because the money loaned to you is a percentage of your next paycheck.

Family Dollar Stores Inc. ended the week on an up note, with its shares gaining value during a lackluster day on Wall Street.

Shares of the discount retailer gained 37 cents Friday, closing at $41.35.

The Dow Jones Industrials closed out the week at 10,465.9, gaining just over a point on Friday.

Among key public companies in the Charlotte area:

•Bank of America Corp. (NYSE:BAC) closed at $14.04, up a penny.

•Wells Fargo & Co. (NYSE:WFC), San Francisco parent of Charlotte-based Wachovia Bank, closed at $27.73, up 4 cents.

•Mooresville-based Lowe’s Cos. Inc. (NYSE:LOW) closed at $20.74, up 26 cents.

•SPX Corp. (NYSE:SPW) closed at $59.56, up 21 cents.

•Snack maker Lance Inc. (NASDAQ:LNCE) closed at $21.13, up 7 cents.

These stocks gave up ground Friday:

•Duke Energy Corp. (NYSE:DUK) closed at $17.10, down 7 cents.

•Nucor Corp. (NYSE:NUE) closed at $39.14, down 2 cents.

•Piedmont Natural Gas Co. Inc. (NYSE:PNY) closed at $26.62, down 33 cents.

•Concord-based Speedway Motorsports Inc. (NYSE:TRK) closed at $13.72, down 13 cents.

•Cato Corp. (NYSE:CATO) closed at $23.28, down 29 cents.

•Goodrich Corp. (NYSE:GR) closed at $72.87, down 8 cents.

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BNY Mellon, New York City, Tuesday reported second quarter net income of $658 million, or 54 cents per diluted share, nearly four times its second-quarter profit of $176 million, or 15 cents a year ago.

That was spot-on with the average estimate by 15 analysts surveyed by Thomson Reuters, whose range for BNY Mellon (NYSE:BK) was 50 cents to 58 cents.

For the six-month period ended June 30, BNY Mellon earned $1.2 billion, or $1 per share, compared to $498 million or 43 cents a year ago.

Second-quarter net income from continuing operations was $668 million, or 55 cents, compared to $267 million or 23 cents last year.

“Our focus on winning new business and providing exceptional client service resulted in solid growth in securities servicing fees and continued long-term asset inflows for our asset and wealth management businesses,” Chairman and CEO Robert Kelly said in a prepared statement. “Our conservative risk profile is reflected in our excellent credit quality and strong capital generation.”

BNY Mellon, Pittsburgh’s third-largest bank according to deposits, employed 7,143 here at the end of the second quarter.

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It has been years in the making, but shares of the private equity giant Kohlberg Kravis Roberts & Co. finally made their U.S. debut Thursday.

Shares of the New York-based firm, trading under the symbol "KKR", got off to a modestly higher start, before finishing nearly 3% lower on the New York Stock Exchange.

"Today’s NYSE listing is an important milestone for KKR, and will provide an opportunity for investors to share in the value being created by our firm," cofounders Henry Kravis and George Roberts said in a statement issued shortly after the market open.

KKR (KKR) is known mainly for its role in taking RJR Nabisco private in 1988, a deal that spawned the book and television movie "Barbarians at the Gate."

The company originally filed to go public in 2007, but subsequently delayed its offering. A year later, the firm made another run at an initial public offering, but was forced to scuttle those plans altogether with the U no faxing 1 hour payday loans.S. financial markets in turmoil in the wake of the collapse of Lehman Brothers.

The company then pursued the non-traditional route of going public through a takeover of its Amsterdam-listed investment fund. Thursday’s debut simply marks the migration of those European-listed shares to the NYSE.

Analysts have suggested that KKR decided to move its shares to a U.S. exchange simply to widen its pool of potential investors.

Whether that demand will be there or not however, remains to be seen. Shares of publicly-traded private equity firms, including KKR rival Blackstone Group (BX) and Fortress Investment Group (FIG), are off 71% and 87% respectively since their market debuts in 2007. 

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Sam’s Club, the members-only wholesaler owned by Wal-Mart, is testing out an online program to offer discounted loans to its small business customers.

The program is essentially a white-label arrangement with Superior Financial Group, the nation’s most active Small Business Administration lender. Superior Financial, based in Walnut Creek, Calif., specializes in loans of $5,000 and $25,000, often made through the SBA’s "express" program for smaller loans.

By applying for the loan through Sam’s Club as a member, small businesses will get $100 off Superior Financial’s loan packaging fee (typically $350 to $450, after the discount) and 0.25% off the market interest rate. Sam’s Club gets a $50 referral fee for each loan funded.

The new Sam Club’s venture launches amid a bleak credit landscape for small companies. Banks have slashed their lending portfolios and credit lines, leaving many companies scrambling to find the capital they need to operate. "Unable to find credit, many small businesses have had to shut their doors, and some of the survivors are still struggling to find adequate financing," a recent government study concluded.

That’s one motive for Sam’s Club to wade into the lending market: If customers are strapped for cash, they don’t shop.

Small businesses "are a big portion of our business, so if we can help small business, that helps us," said Hiren Patel, director of financial services at Sam’s Club low rates payday advance.

Rival wholesaler Costco has tried three times to pair up with small business lenders. "The results have been underwhelming in each iteration," said Joel Benoliel, senior vice president at Costco (COST, Fortune 500). Costco linked up with Key Bank in 2000, American Express in 2003 and Capital One 2007.

"The assumption is that there is this big need, and we are all about small business as our members, so we have really, really tried over the past decade," Benoliel said. "In each case, the main problem was the same: we had low member approval rates."

Businesses that already have an established relationship with their bank tend to apply for loans with that bank. Those looking to apply for a loan through an alternate avenue aren’t typically the most attractive customers.

"Maybe they will have success where we didn’t," Benoliel said of the new Sam’s Club venture. "The lending environment is entirely different since the last time we tried this in 2007."

The Sam’s Club arrangement is an open-ended pilot program. "We will monitor on a monthly basis, report back to our executives on a quarterly basis, and see where we want to go with this," Patel said. 

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The "Keep Austin Weird" campaign must have worked, because the Texas capital is among the country’s oddball cities that bucked the downturn.

In fact, Texas cities starred on the new list of recession-proof metro areas, with six of 21 spots, according to MetroMonitor, a quarterly report released by Brookings Institute’s Metropolitan Policy Program.

These 21 large metro areas were singled out by Brookings for keeping their labor and housing markets stable and posting robust economic activity during the past few years.

In fact, all but five of the 21 leading cities have economic output levels that top records set just prior to the recession.

"Most of these cities have some general characteristics in common," said Howard Weil, author of the report and a fellow at the Metropolitan Policy Program. "They didn’t experience huge housing bubbles followed by a crash, and their economies weren’t rooted in the auto industry."

Weil added that a number of cities are also government centers, like Austin, where job cuts have been limited and spending remains healthy.

Gross metropolitan product, a broad measure economic activity, has surged the most in the nation’s capital. In first quarter of 2010, the economy in Washington D.C. expanded by 6.3% from its pre-recession peak. Austin also touts considerable growth at 5.3%.

"We’ve seen a significant increase in government spending since the start of the recession, and even though it has been spread throughout other parts of the country, some of that extra spending stays in the D.C. metro area," Weil said. "But if government hawks succeed in cutting spending, we could see the growth in Washington slow down."

Meanwhile, as unemployment rates climbed higher in every major city across the nation during the recession, the jobless rate in Austin only rose to 7.1% in March 2010 from 3.5% three years earlier. During the same period, the U.S. unemployment rate spiked to 9.7% from 4.4%.

"We have a stable base of employment with the University of Texas, one of the largest universities in the country, and the second largest state government with 65,000 employees," said Austin Mayor Lee Leffingwell.

Similarly, job losses were muted in Austin, as employment in Texas’s capital city dropped by 2.3% from its pre-recession peak through the first quarter of 2010.

Leffingwell said that a decade ago, Austin worked to attract high-tech companies, and while some manufacturing jobs in the sector have since diminished, companies are still expanding their workforce, including Samsung Electronics, which recently announced a $3.6 billion project that boosts the company’s payroll by 500 permanent positions.

And during the last two quarters, Austin welcomed job growth, adding nearly 8,000 new jobs during the period and increasing payrolls by more than 1%. Augusta, Ga.; Jackson, Miss.; Dallas; and Honolulu also posted similar gains.

"We’ve worked hard to diversify our economy and are aggressively targeting companies focused on renewable energy, medical technology and digital media," Leffingwell said.

Earlier this year, Texas invested $1.4 million through its Texas Enterprise Fund to lure Facebook into opening its first office outside of Palo Alto, Calif., in Austin. The social media giant opened the office last month and is actively hiring for its online sales and operations team. Facebook said it plans to hire over 200 employees in Austin over the next four years.

Meanwhile, further south, McAllen, Texas, which also made the top 21, has been boasting job growth for the past four straight quarters, and employment in the city has only declined by a modest 1.1% during the recession.

Houston, another Texas city, is included among the recession-proof metro areas for enjoying the smallest slide in housing prices at just 0.5% through the first quarter of 2010 compared to three years earlier. Austin followed close behind with a 0.6% dip during the same period.  

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A proposed rule to stop financial firms from shopping for credit ratings will instead be postponed and studied, under an agreement finalized Wednesday by lawmakers negotiating a final Wall Street reform package.

The deal calls for a two-year study but then would mandate that the Securities and Exchange Commission adopt a system to independently match ratings agencies with firms that want securities rated.

The change is among the most controversial so far in two days of meetings of hammering out differences between House and Senate bills. Later on Wednesday, lawmakers also came to an agreement on new congressional reviews of the Federal Reserve.

The nation’s largest ratings agencies — Standard & Poor’s, Moody’s and Fitch — have been under fire for their role in the financial crisis. The agencies gave top ratings to toxic financial products, like bonds backed by subprime mortgages. Lawmakers are most concerned with preventing financial firms from fishing for top-notch ratings.

Lawmakers, particularly Sen. Chris Dodd, D-Conn., were concerned that the credit rating agency curb, which passed overwhelmingly in the Senate, would be tough to carry out. The measure originally required the SEC to appoint an independent panel tasked with creating a random process that matched rating agencies with financial firms.

The new measure leaves the door open for the SEC to figure out a better way to match rating agencies with financial firms. But if it can’t, the SEC is required to follow the original plan proposed by Sen. Al Franken, D-Minn., in two years.

Lawmakers on the negotiating committee said Franken indicated he could live with the agreement.

Rep. Barney Frank, D-Mass., said the House agreed to the measure on Wednesday.

The provision is not the only one in the Wall Street bill aimed at credit rating agencies. The final legislation is also expected to strip federal law of any provisions that suggest credit rating agencies’ seal of approval is necessary.

Auditing the Fed: The House bill subjected the Fed to ongoing audits, while the Senate had ordered a one-time audit of the central bank’s loans during the financial crisis.

The compromise lawmakers are agreeing to would subject the Fed to ongoing audits. But the audits would only review the Fed’s emergency and cheap loans, as well as open market transactions.

Also, the compromise may force the Fed to publicly disclose who it makes loans to, after two years.

Also, Senate negotiators are leaning toward dropping a measure they had wanted that would have made the head of the New York Fed presidentially appointed, instead of chosen by New York banks. 

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The number of pending home sales in Western Washington plummeted in May as federal tax credits for home buyers expired.

The number of pending sales in the 21 Western Washington counties surveyed by the Northwest Multiple Listing Service (NWMLS) fell to 5,242 last month, down more than 44 percent from 9,438 in April. In King County, the number plummeted to 2,169 from 3,855 a month earlier.

The number of new listings of homes also fell. In the 21-county NWMLS area, they fell to 9,385 in May from 12,664 in April. In King County, the number of new listings fell to 3,480 last month from 5,054 a month earlier.

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Making up for lost revenue under a new federal law that restricts interest rate charges, many credit card issuers have been slapping new fees on cardholders.

Among the highest I’ve seen are a $99 annual fee just for having the card and a $60 fee unless cardholders charge at least $2,400 in a year.

So, what to do? Are we better off canceling a card to avoid unwanted fees or will doing so cost us more in the long run?

"We are advised not to close credit card accounts we no longer use because it will hurt our credit score," wrote a reader in an e-mail representative of dozens I’ve received. "I don’t want to pay any fees. How does closing an account really affect my score?"

For the answer, I turned to Craig Watts, public affairs director for FICO, the company that developed the widely used FICO score (The name comes from Fair Isaac Corp\oration, named after founders Bill Fair and Earl Isaac).

First, a refresher. Lenders use our credit score — a number generally ranging from 300 to 850 — to help them determine how likely we are to pay back a loan on time. The higher our score, the more likely we’ll be approved for a credit card or loan at attractive rates.

In addition, insurance companies, wireless providers, landlords and employers are using credit scores — presumably, a measure of how responsible we are — to help them decide whether to do business with us and on what terms.

That’s why having a good credit score is important. The good news is that if we use only a fraction of our credit limit, closing a credit card account won’t have much of an impact.

The FICO score formula weighs a number of factors on our credit bureau report. The most important is whether we pay on time.

You can go to www.myfico.com/CreditEducation/WhatsInYourScore.aspx for a complete list.

If we have one or more credit cards, the formula considers things such as how long we’ve had each account open, whether we pay on time and the "utilization rate," which is the account balance divided by the credit limit. For example, if we charge $2,000 and our credit limit is $10,000, our utilization rate is 20 percent.

The lower the utilization rate, the better. The formula also considers the utilization rate for all our cards combined. This is the part of the formula most likely to be affected if we close a credit card account.

For example, I have three credit cards, each with a $10,000 credit limit.

I typically charge $2,000 a month on one card and little or nothing on the others. My overall utilization rate is 6.67 percent ($2,000 is 6.67 percent of $30,000). For an explanation of utilization rate, go to www.myfico.com/crediteducation/questions/Credit-Cards-And-Score. aspx.

If you have high balances on one or more credit cards and you close one or more unused accounts, this can increase your overall credit utilization rate and damage your FICO score, Watts said. "To avoid that, you want to close credit accounts when your overall credit utilization rate is very low," he said.

For example, if I were to close one of my rarely used cards, my utilization rate would rise from 6.67 percent to 10 percent ($2,000 in charges and an overall $20,000 credit limit). That rate would still be quite low. Although the FICO site does not recommend a specific utilization rate, many consumer advocates recommend keeping it to less than 50 percent, or even 33 percent.

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