Irene likely to lead to higher insurance premiums
WASHINGTON (AP) _ The $7 billion in estimated losses from Hurricane Irene compound the vast damage caused by weather in the U.S. this year. Yet despite billions they've paid out for floods, tornadoes and earthquakes, big insurance companies can expect another profitable year.
And their customers can expect higher premiums.
The stocks of major insurers shot up on Monday as investors celebrated Irene's less-than-expected damage. The storm didn't even cause most analysts to adjust their profit estimates for insurers.
In part, that's because insurance companies have been raising premiums this year, especially for customers in high-risk areas. Homeowner and auto policies cost 5 to 10 percent more than they did a year ago, according to research by Gregory Locraft, an industry analyst with Morgan Stanley.
Airlines slowly bringing back service in the East
NEW YORK (AP) _ Irene is gone, and East Coast airports are reopening. But it will take at least several days to get hundreds of thousands of travelers stranded by the storm to their final destinations.
Behind the scenes, ground crews worked through the night to get planes ready, air traffic controllers prepared for a deluge of landings and takeoffs and extra pilots were called into work.
Airports in New York, Boston and Philadelphia bustled Monday after being closed for part or all of the weekend. The week before Labor Day is usually busy for airlines, so they struggled to cram travelers stranded by Irene onto already-packed planes.
To make matters worse, more than 1,600 flight were cancelled Monday, adding to the nearly 12,000 grounded this weekend, according to flight tracking service FlightAware. The service estimates that 650,000 passengers have been stuck on the ground since Irene hit, but some experts think it's a million or more.
Crews rush to restore power after Irene slams East
NEW YORK (AP) _ Utilities scrambled Monday to restore power to more than 4 million customers still left in the dark by Hurricane Irene.
Nearly 8 million homes and businesses lost power because of the storm this weekend, but power companies have reconnected 3.6 million of those customers to the grid.
Repair crews struggled with uprooted trees, collapsed bridges and flooding, and it could be a week or more before power is fully restored.
Of the almost eight million who lost power, 4.4 million remain in the dark.
Northeastern cities were still surveying the damage. The storm ranks among the worst in terms of power outages. Vermont experienced its worst floods in a century. Parts of New Jersey were cut off by swollen rivers. Half of Connecticut Light & Power customers were in the dark.
Consumer spending rebounds, rose 0.8 percent in July
WASHINGTON (AP) _ Consumer spending grew in July by 0.8 percent, the largest amount in five months. That followed a decline in June and helped ease fears that the U.S. economy is on the verge of another recession.
Americans bought more cars and spent more last month to cool their homes during a long heat wave.
Personal incomes increased 0.3 percent last month, the Commerce Department said. That's slightly higher than the modest 0.2 percent in June, the weakest growth in seven months.
Economists said the spending report was a strong sign that the economy rebounded in July after growing at an annual rate of just 0.7 percent in the first half of the year _ the slowest pace since the recession officially ended two years ago.
Contracts to buy homes fell 1.3 percent in July
WASHINGTON (AP) _ The number of people who signed contracts to buy homes fell in July, further evidence that the depressed housing market remains a drag on the economy.
The National Association of Realtors said Monday that its index of sales agreements fell 1.3 percent in July to a reading of 89.7.
A reading of 100 is considered healthy by economists. The last time the index reached that level was in April 2010, the final month that buyers could qualify for a federal tax credit.
Contract signings are usually a reliable indicator of where the housing market is headed. There's typically a one- to two-month lag between a sales contract and a completed deal.
Obama taps labor economist for top White House job
WASHINGTON (AP) _ Facing a public deeply dissatisfied with his handling of the economy, President Barack Obama on Monday tapped a prominent labor economist to join his cadre of advisers and help steer a fall jobs agenda that will be critical to the president's re-election bid.
In nominating Alan Krueger as chair of the White House Council of Economic Advisers, Obama gains an economist with expertise in the labor market and unemployment, a key drag on the U.S. economy and Obama's presidency. Krueger, a former Treasury Department official and Princeton University economist, has advocated for hiring tax credits for businesses and increased government spending on infrastructure, two programs Obama aides are considering proposing this fall.
His appointment also caps a wholesale makeover of Obama's economic leadership team during the past year. Several high-ranking advisers, including Lawrence Summers, Christina Romer and Austan Goolsbee, have all left the administration, leaving Treasury Secretary Timothy Geithner as the only top official remaining from the president's original economic team.
Bank of America sells half of its China bank stake
NEW YORK (AP) _ Bank of America Corp. is selling half of its stake in China Construction Bank Corp. to raise cash and shore up its capital base.
The nation's largest bank by assets said Monday it will sell 13.1 billion shares in the Chinese bank for $8.3 billion to a group of investors it declined to name. The sale, which had been expected, will generate a gain of $3.3 billion for Bank of America.
The news came four days after the bank, based in Charlotte, N.C., got a $5 billion investment from Warren Buffett's Berkshire Hathaway Inc., which provided a big boost to Bank of America's battered stock. The billionaire investor has made investments in other major companies such as Goldman Sachs Group Inc., helping restore confidence in them when they were out of favor.
Drought, high demand makes hay hard to find
A scorching drought in the southern Plains has caused hay prices to soar, benefiting farmers to the north but forcing many ranchers to make a difficult choice between paying high prices or selling their cattle.
Ranchers in much of Texas, Oklahoma and even Kansas have to pay inflated prices for hay and then shell out even more to have it trucked hundreds of miles from Iowa, Missouri, Nebraska or South Dakota. Their only other options are to reduce the size of their herds or to move cattle to rented pastures in another state.
Parts of Texas haven't received any rain since last fall, and forecasters predict the drought will last at least through November. The situation isn't much better in western Oklahoma, southern New Mexico and parts of southern Kansas.
Officials say only a handful of Texas' 254 counties received enough rain to grow hay this year, so significantly less is available at the same time demand has skyrocketed because pastures are parched.
That's why the average price of hay climbed to $170 per ton this summer from $112 per ton last July, according to Department of Agriculture statistics. Many ranchers are paying much more because the price doesn't include shipping costs.
By The Associated Press(equals)
The Dow Jones industrial average rose 254.71 points, or 2.3 percent, to close at 11,539.25. It is now down just 0.3 percent for the year. It had been down as much as 7.4 percent for the year on Aug. 10.
The Standard & Poor's 500 index rose 33.28 points, or 2.8 percent, to 1,210.08.
The Nasdaq composite index rose 82.26, or 3.3 percent, to 2,562.11.
The Russell 2000 index, a benchmark for small companies, rose 32.86 points, or 4.7 percent, to 724.65.
Benchmark oil rose $1.90, or 2.2 percent, to finish at $87.27 per barrel in New York. Brent crude, used to price international varieties, increased 52 cents to end at $111.88 per barrel in London.
In other Nymex contracts, heating oil rose less than a penny to finish at $3.0173 per gallon, gasoline futures fell 1.65 cents to end at $2.7695 per gallon and natural gas fell 8.2 cents to finish at $3.830 per 1,000 cubic feet.