Posts for March 1, 2010

March 1, 2010

Last week's economic reports were decidedly mixed, with five of nine indicators decreasing. (To see all of last week's indicators, see the Latest Economic Reports section below.)

While some of the negative reports, such as consumer confidence and weekly jobless claims, were likely affected by inclement weather, weak data on the housing market as well as sluggish manufacturing orders (outside of aircraft) are early indications that the economy is slowing from pace of late last year.

On that note, the Commerce Department's second estimate of fourth quarter GDP upwardly revised the pace of economic growth in the final three months of last year from its initial estimate of 5.7 percent (annual rate) to 5.9 percent, with faster exports and business investment more than offsetting slower consumer spending, housing and government spending.

Despite the lackluster reports last week, the trends remain positive. The chart above shows distribution of the economic indicators (four week average) included in the Monday Economic Report over the past year, with positive reports in green and negative reports in red.

The share of negative reports peaked at 83 percent at the end of last March, the final month of the first quarter of 2009 when GDP fell at an annual rate of 6.4 percent. After that time, the share of negative indicators fell dramatically to less than one-quarter at the end of last June and then to a low of just 10 percent in late September.

The share of negative economic indicators then rose to 36 percent in the fourth quarter of last year and then to 40 percent in the first quarter of this year. Since many of the indicators the Monday Economic Report tracks are forward-looking, the gradual rise in the negative share over the past six months signals that the economy will likely decelerate in the first half of this year from the rapid pace of growth attained in the fourth quarter.

Dave Huether

Chief Economist

National Association of Manufacturers

PACE OF U.S. MANUFACTURING GROWTH SLOWS

March 1, 2010 – Today in Manufacturing.net
ISM manufacturing index read 56.5 in February, slightly slower than pace of growth in January, and weaker than the 58 level expected by economists... continue the article at this link http://www.manufacturing.net/article.aspx?id=244320

JANUARY SPENDING UP, INCOME GROWTH SLOWS

March 1, 2010 – Today in Manufacturing.net
Personal spending rose 0.5 percent, slightly better than expected, but incomes edged up only 0.1 percent, significantly lower than expected 0.4 percent gain... continue the article at this link http://www.manufacturing.net/article.aspx?id=244308

BILL WOULD FORCE DISCLOSURE OF SENSITIVE BUSINESS INFORMATION

March 1, 2010 – NAM Newsline

In an effort to crack down on phony shell corporations used to launder money for crime and terrorism, a bill (S.569) was introduced that would force all privately-held corporations and limited liability corporations (LLCs) to disclose to their state of incorporation who their beneficial owners are, along with a significant amount of sensitive personal information. The NAM is concerned that due to expansive state right-to-know laws, this overly broad bill will expose this sensitive beneficial ownership information to the public, with little regard to the privacy or safety concerns of small and medium-sized business owners.

The NAM has sent a letter to Chairman Lieberman (I-CT) and Ranking Member Collins (R-ME) of the Senate Homeland Security and Governmental Affairs Committee outlining our concerns for S.569. Click here to see the letter. http://documents.nam.org/is/ltr-mas-LiebermanCollins-CorpDisclosure-8-11-09.pdf

For more information, contact Marc-Anthony Signorino at msignorino@nam.org.

THE PAYCHECK FAIRNESS ACT

March 1, 2010 – NAM Newsline

The Paycheck Fairness Act, H.R. 12, seeks to alter the Equal Pay Act (EPA) to include unlimited punitive and compensatory damages. This would expose employers to increased threats of litigation by making it significantly easier for plaintiffs’ attorneys to file class action suits.

Workers in the U.S. are already adequately and effectively protected from discrimination through remedies available under existing law. The EPA protects men and women from pay disparities in jobs that require equal skill, effort and responsibility and are performed under similar working conditions. H.R. 12 eliminates current caps on punitive and compensatory damages in claims made under the EPA and exposes employers to unlimited damage awards even when unintentional pay disparities may have occurred.

The Paycheck Fairness Act would also change the procedural requirements for bringing class action suits under the EPA, resulting in a significant increase in the number of plaintiffs in class actions. Removing the caps on damages sought by plaintiffs would likely prompt employers to protect themselves by purchasing expanded legal liability insurance. That added burden of insurance would increase the cost of doing business in the United States and may result in a reduction of employees’ wages and benefits and/or the hiring of fewer workers. The Paycheck Fairness Act would almost certainly lower wages and cost jobs for American workers.

For more information, contact Keith Smith at (202) 637-3045 or ksmith@nam.org.

SURVEY: CHINESE MANUFACTURING GROWTH SLIPS

March 1, 2010 – Today in Manufacturing.net
Growth in China's manufacturing slowed in February amid efforts to curb overcapacity in some industries and cool inflation, two surveys showed... continue the article at this link http://www.manufacturing.net/article.aspx?id=244288

HEALTH CARE REFORM WEEKLY BRIEFING

March 1, 2010 – Aon Consulting

Last Week in Washington

Congress returned from the President’s Day recess and everyone’s attention was focused on the health reform summit that President Obama hosted at the Blair House last Thursday. Key developments are summarized below:

White House Releases Health Care Reform Proposal

On Feb. 22, three days before the health reform summit, President Obama released a $950 billion health care reform proposal that would extend health care coverage to 31 million Americans. The proposal is based on legislation passed by the Senate in December but with changes to garner the support of House Democrats for passage. The proposal includes a revision of the proposed tax on the premiums of high cost "Cadillac" health insurance plans that would now become effective in 2018, a modified version of the Senate's "free rider" penalty tax on employers, an individual mandate, and various insurance reforms. The plan does not include the controversial public option, which was included in the House bill but not the Senate legislation.

Health Summit Yields No Bipartisan Agreement

The historic televised health summit held Feb. 25, during which President Obama and congressional Democrats and Republicans debated health care reform for more than six hours, did not lead to any substantive bipartisan agreement on reform legislation. Republicans repeatedly called for beginning anew with a clean slate, and the President and Democratic congressional leaders rejected that possibility.

House Republicans arrived armed with their own version of a health reform bill that encourages small businesses to join together to buy insurance, gives federal money to states to run high-risk pools for those unable to obtain private insurance and limits damages in medical malpractice lawsuits. The Republican plan would cost $61 billion and cover 3 million people over 10 years.

The summit closed with President Obama saying Democrats and Republicans likely could agree on several reform issues, and he called on Republicans to provide solutions over the next four to six weeks on how to extend coverage to more Americans than under the House GOP bill. He stated that if a bipartisan agreement cannot be reached, "Then I think we have to go ahead and make some decisions. We cannot have another yearlong debate on this."

The President and Congressional Democrats are now weighing their options for moving forward with health reform, including whether to use the budget reconciliation process in which only a simple majority vote would be needed to approve legislation in the Senate, instead of the 60 votes usually needed to end debate on a bill. The President is expected to announce his plans for moving forward with health care legislation the week of March 1. It is anticipated that the President will outline any changes that he wants made to the Senate's version of the legislation and will encourage Congress to pass those changes using reconciliation. The reconciliation process, however, is fraught with difficulty and passage is by no means guaranteed. It is likely that no Republican will vote for health reform, but the bigger challenge will involve securing the votes of moderate and conservative Democrats. A potential roadblock was revealed Sunday, when Senator Kent Conrad (D-ND), chairman of the Senate Budget Committee, during an appearance on CBS’ "Face the Nation" stated that "reconciliation cannot be used to pass comprehensive health care reform."

House votes to repeal the antitrust exemption for health insurance companies

On Feb. 24, the House voted to end health insurance companies’ exemption from federal antitrust laws. The provision passed with broad bipartisan support, with only 19 Republicans voting against it. The nonpartisan Congressional Budget Office, however, indicated last year that because states already investigate health insurance companies, repealing the exemption would not significantly reduce premiums. It is unclear whether the Senate will take up the legislation.

What to look for this week:

Momentum to enact comprehensive health care legislation has increased as a result of the President’s health summit. The President is expected to release his vision of the path forward on health reform mid-week. House and Senate Democratic leaders will then begin planning their next steps.

In Case You Missed It

Senator John McCain (R-AZ) and White House Health Reform Director Nancy-Ann DeParle discuss health care reform on NBC’s "Meet the Press" with David Gregory.

House Speaker Nancy Pelosi (D-CA) discusses the future of health care reform on CNN’s "State of the Union" with Candy Crowley.

Senator Kent Conrad (D-ND) discusses reconciliation on CBS’ "Face the Nation" with Bob Schieffer.

RMP FILES FIRST “SINGLE ITEM” RATE CASE

March 1, 2010 – UAE Monthly Newsletter

On February 1, 2010, Rocky Mountain Power (RMP) filed an application with the Utah Public Service Commission (PSC) to recover nearly $34 million in its first allowed “single item” rate case. During the 2009 General Legisla-tive Session, Senate Bill 75 passed, permitting utilities to file “single item” rate cases to recover the costs of major plant additions.” Previously, utilities were required to recover such costs in a full general rate case.

RMP’s filing requests approval of alternative cost recovery of its investment in the Ben Lomond to Terminal Transmission Line and the Dave Johnston Generation Unit 3 environmental measures. Approval of this request would result in a retail rate increase of $33.7 million for Utah customers.

RMP has asked that the $33.7 million in additional revenue re-quirement be deferred (with interest) until January 1, 2011, at which time it will request that the $33.7 million plus interest, together with an addi-tional undisclosed rate increase resulting from another single-item rate case to be filed in August for the second phase of the Energy Gateway transmission project (and perhaps other resources) will be added to rates.

The Ben Lomond to Terminal phase of the Energy Gateway trans-mission project has a capital cost estimated at about $268 million and an in-service date by June 30, 2010. Approximately $109.3 million will be allocated to Utah. The Dave Johnston Generation Unit 3 environmental improvements have a capital cost estimated at $293 million and an in-service date by May 31, 2010. Approximately $112.6 million will be allo-cated to Utah.

RMP is proposing to defer the rate increase until January 11, 2011. The company will include its rate spread proposal related to this rate case with its second single item rate issue to be filed in August 2010. RMP will allocate any revenue increase from those two applica-tions combined based upon the cost of service study results as deter-mined in the PSC’s 2009 General Rate Case Order. The PSC just is-sued its order in this rate case on the revenue requirement and cost of service allocation.

NEW NAM MEMBER SERVICE – COMMERCIAL OFFICERS FORUM

March 1, 2010 – NAM Newsline

This new series of meetings is an extension of the NAM’s work helping our member companies increase their exports to major world markets. The NAM has arranged with the U.S. Commercial Service for member companies to meet at the NAM’s headquarters to gain market intelligence and share their company concerns. For companies that do not have Washington offices, dial-in will be available. Look for announcements of upcoming meetings. For further information or if you would like to ensure that you are on our mailing list, contact Pat Mears, Director of International Commercial Affairs, at pmears@nam.org.