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Looking for Some Good News – The Saga Continues…
Location: Blogs Russ Henke |
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| Posted by: Russ Henke |
4/28/2007 6:08 AM |
Recent blog entries in this space have dealt with
headlines in the news that affect the daily lives
of Americans in particular, and many more people
everywhere. The latest news has not been encouraging.
Here are several more recent news items for readers’
consideration:
- The worst economic growth in four years is raising
concern that troubles in the US housing market will
spread and throw the country into a recession before
the year is out. The economy practically crawled at
a 1.3% pace in the opening quarter of 2007, the US
Commerce Department reported on April 27. The
reading on gross domestic product in Q1 2007 was
the weakest since the 1.2% pace in Q1 2003, right
before the US-led invasion of IRAQ. The 1.3% GDP
growth in Q1 2007 was far weaker than the already-
sluggish 2.5% rate in Q4 2006. The country’s
bloated trade deficit alone shaved a half-percent
off the Q1 GDP. These reports come as George W. Bush
continues to suffer from mediocre poll ratings from
the public on his economic stewardship.
- Even though the economy further slowed in Q1 2007,
inflation picked up. The inflation gauge tied to the
GDP report and closely watched by the Fed showed that
even core prices – which exclude the faster rising
cost of food and energy -- rose at a rate of 2.2% in
Q1 2007, up from 1.8% in Q4 2006.
- Optimists say that the sluggish GDP, weak housing
markets and high inflation are “balanced” by the news
of the Dow Jones industrials rising to record highs
in each of the last three days April 25, 26, and 27,
now standing at 13, 120.94. Of course, these optimists
are likely part of the 5% of Americans who most benefit
by wealth generation in stocks, while 95% of Americans
struggle mightily with the other declining factors.
- In 2005, nine major US airline carriers outsourced
62% of the $5.5 billion they spent on maintenance,
according to the US Transportation Department. In 2006,
the amount of outsourced work hit 64%, an all-time high.
Outsourcing accelerated rapidly after the 2001 recession
resulted in $40 billion in losses reported by US carriers.
To cut their losses, the airlines slashed 130,000 jobs,
including thousands of highly skilled aircraft mechanics.
In April 2007, the Aircraft Mechanics Fraternal
Association said the number of mechanics and related
workers it represents at United Airlines alone, has
fallen to 5,600 today, from 15,000 in 2001. Outsourced
foreign and domestic repair stations are supposedly
certified by inspectors from the Federal Aviation
Administration (FAA). However, last month, the US
Transportation Department's own inspector general,
told Congress that the FAA's safety inspection regime
is now riddled with flaws that weaken its oversight
of repair stations, both at home and abroad. He
further stated that the FAA doesn't have enough
inspectors to do the job; inspectors don't visit
stations often enough, especially overseas, in part
because the FAA's travel budget is too small; the
agency inexplicably pays much closer attention to
the airlines' maintenance bases than to distant
overseas contractors. He also said that US carriers
even use repair stations at home and abroad that
have not been certified by the FAA at all.
- Not surprisingly, on April 27 Chevron reported its
earnings surged yet again to start 2007 as the company
cashed in on lucrative refining margins and higher
gasoline prices. The 18% increase in Chevron's Q1
profit delivered still another reminder of the oil
industry's moneymaking prowess while hapless motorists
dig deeper and deeper into their pocketbooks. Chevron
earned $4.7 billion in Q1, compared with net income
of $4 billion at the same time last year. Chevron
turned a higher profit in Q1 despite a 12% decline
in revenue, down to ‘only’ $48.2 billion. In the
western US alone, Chevron's Q1 ‘refining margin’
climbed to $26.69 per barrel, a whopping 46% increase
from the same time last year. Chevron has ‘earned’
$45 billion during the past three years, with its
profit growing progressively higher each year.
Chevron's stock price has increased by more than 80%
over the same period, creating about $75 billion
in shareholder wealth. Chevron was the fourth of
world's five largest publicly traded oil companies
to release first-quarter earnings between April 23
and 27, following BP PLC, ConocoPhillips and Exxon
Mobil. Combined, the four companies earned $22.2
billion in Q1 2007 alone.
- Oh yes, a gallon of regular gas is now $3.49
in the San Francisco Bay Area.
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