Apartment Rents Rise as Sector Stabilizes

The Wall Street Journal

Apartment rents rose during the first quarter, ending five straight quarters of declines and signaling the worst may be over for the hard-hit sector.

Nationally, the apartment vacancy rate stayed flat at 8%, the highest level since Reis Inc., a New York research firm, began its tally in 1980. Local markets, such as Houston apartments, generally followed the national lead, although there were exceptions.

Reis tracks vacancies and rents in the top 79 U.S. markets, and rents rose in 60 of them, led by Miami, Seattle and New York—all cities that have notched big rental declines in the past year.

Rents increased 1.6% in the first quarter in Miami and 0.9% in New York. The gains came during what is usually a seasonally weak period for apartments and suggested that landlords may have some momentum heading into the peak spring and summer leasing season.

"Deterioration seems not to have just been arrested but reversed," said Victor Calanog, director of research for Reis. "Several markets have bottomed and may be on track to recovery," he said.

Nationally, effective rents, which include concessions such as one month of free rent, rose 0.3% during the quarter compared with a 0.7% decline in the fourth quarter of last year and a 1.1% drop in the first quarter of 2009. Vacancies are tied to unemployment, because many would-be renters move in with family members or double up during a downturn.

"We clearly hit an inflection point in all of our markets in January and February," said Jeffrey Friedman, chief executive of Associated Estates Realty Corp., which owns and operates 12,000 units in the eastern U.S.

Renters are also staying put longer: the average renter now stays for 19 months, up from an average of 14 months, said Mr. Friedman, and despite low mortgage rates and greater home affordability, fewer renters are leaving to buy homes.

"This is the first time in many, many years that it feels like even people who could afford to buy are making the investment decision not to," Mr. Friedman said.

Difficulty in obtaining financing for new construction of Dallas apartments, meanwhile, has limited the supply of new units that will be added in the coming years. Those fundamentals have landlords and investors excited about the potential for rents to pop once the economy gathers steam.

Still, Mr. Calanog said that a "slow recovery" was likely and that landlords shouldn't expect "galloping rental growth" until the job market firms up, particularly because younger workers that are more likely to rent have borne the brunt of job losses.

Others warned that gains were fragile and that landlords could continue to offer concessions to fill units.

"Rent reductions are not over yet," said Hessam Nadji, managing director at real-estate firm Marcus & Millichap. He said he didn't expect to see sustained rental growth until the second half of the year.

Barely half of the 22,000 units in buildings that opened their doors last quarter were filled, and landlords may cut deals because they face deadlines to pay back construction loans. "That's where renters are going to find deals," Mr. Calanog said.

Portland, Ore., posted the largest rent decline, at 0.7%, followed by Las Vegas, San Diego, and Southern California's Inland Empire. Those three markets have all seen an uptick in home-buying activity, particularly among the low end from first-time buyers and investors.

South Florida, meanwhile, appears to show signs of stabilizing after a painful years-long slump prompted by heavy overbuilding. Rents gained 1.1% last quarter in Palm Beach and 0.8% in Tampa-St. Petersburg.

"That market has been so bad for so long that many people had started to forget about it," said Alexander Goldfarb, an analyst at Sandler O'Neill & Partners LP.

Biggest Annual Rent Gains

Rank	Metro Market	12-month Effective Rent Growth
1	Colorado Springs	2.5%
2	District of Columbia	2.0%
3	San Antonio apartments	1.5%
4	Dayton	1.4%
5	Little Rock	1.3%
6	Chattanooga	1.2%
7	Austin	1.0%
8	Suburban Maryland	1.0%
9	Louisville	0.8%
10	Pittsburgh	0.8%

Kids Starting to Feel Pinch of Parents' Unemployment

The Wall Street Journal

Bank of Mom and Dad Shuts Amid White-Collar Struggle

FAIRFIELD, Conn.—When Maurice Johnson was laid off a year ago from his six-figure salary as a managing director at GE Capital, it wasn't his future he was worried about.

It was his children's.

The family income of the Johnsons is a fifth of what it used to be. And the children are about to feel the pain. Mr. Johnson's two oldest are attending his alma mater, Johns Hopkins University, at an annual cost of $50,000 apiece. And his youngest daughter, 15 years old, recently began her own college search. Mr. Johnson isn't sure whether he'll be able to help her to go to college, or even to get the older kids to graduation.

Mr. Johnson, who watched his own father struggle as an engineer without a college degree, was determined to do better for his own children.

"We saved like crazy from the minute they were born," he says. "Then, it all fell to pieces."

Many families such as the Johnsons—upper-middle-class professionals—are suddenly downwardly mobile. For years, they used rising family wealth to help foot the bill for college, down payments for houses and start-up cash for children's careers. But pay cuts, layoffs and the decadelong flatlining of the stock market mean many families can no longer help their children.

This comes as young adults could use a financial helping hand more than ever. The unemployment rate for workers ages 16 to 29 was 15.2% in March, the highest rate since 1948, according to the Bureau of Labor Statistics.

"It's almost a double whammy," says Ann Huff Stevens, an economics professor at the University of California at Davis. "If a parent goes through a job loss, they're going to contribute less. And there's a direct effect because kids themselves are earning less, too. A recession like this might have some lasting effects for parents and kids."

In general, highly trained and educated workers are faring better than those without degrees in this labor market. The unemployment rate for college graduates is 5%, compared with 9.7% overall. In general, the employment picture is improving, with employers adding 162,000 jobs in March, the biggest monthly gain in three years.

Even so, the average length of unemployment, 31 weeks, is at its highest level since 1948. There were a total of 2.3 million unemployed college graduates in March 2010, 1.45 million more than in March 2007, with heavy layoffs in white-collar sectors such as finance.

In the long run, the drop in parental aid could make young adults a more financially resilient generation, like children of the Great Depression. But for now, economists worry that without parental cash, young adults may put off entering the housing market, settling into career paths and having families.

"Now, not only do parents no longer have the money to help their children out, but banks will no longer lend to home buyers without the income to support repayment," says Cheryl Russell, a demographer and author of "Americans and Their Homes: Demographics of Homeownership."

The rate of home ownership among people ages 25 to 29 fell to 37.7% last year, from a peak of 42% in 2006, according to the U.S. Census. Home ownership for those under 25 fell to 23.3% from 26% in 2005, the lowest rate for any age group.

Indeed, the bank of Mom and Dad is closing at a time when young people are having trouble borrowing from traditional lenders. Some 22% of young people between the ages of 18 and 34 said they've been turned down for a mortgage, loan or credit card in the past year, according to a February survey from FindLaw.com, a legal marketing and information site. That's double the percentage of any other age group in its survey.

As a result, many young people are now moving home to save on rent. About 21% of young adults say they've either moved in with a friend or relative, or had a friend or relative move in with them because of the economy, according to a study from the Pew Research Center.

In past recessions, women would re-enter the work force to help prop up household income, says Katherine Newman, a Princeton University sociology professor. But now, more women are working and themselves experiencing layoffs. Before the 1990 recession, 57.4% of American women worked, and in the next two years, some 1.1 million more entered the work force. Today, it's the reverse. On the eve of the latest downturn in 2007, 59.3% were working and 2.6 million more women were unemployed. Women's overall participation rate in the work force has remained flat since then.

Many parents who were set to retire are now delaying it to compensate for battered retirement accounts, leaving even fewer openings for younger workers to fill. There are an additional 500,000 workers over the age of 65 in the work force now compared with 2007.

"We may have well given up on the idea that our kids will do better than us," Prof. Newman says. "But the idea that they should do as well, that's something we haven't given up on yet."

Before her December 2008 layoff from Bank of America Corp. as an executive recruiter, Diane Hayes bought a "dream house" for her family, which includes her three teenage daughters with disabilities, two with autism and one with Down syndrome. The 3,600-square-foot house in Orlando, Fla., had a pool in back that could be used for therapy and custom-designed rooms to accommodate five people into adulthood. "The pool was the only place we could all be together and enjoy ourselves," Mrs. Hayes says.

Her husband continues working as a writer, but without her six-figure income, the family was forced to sell the home in November. The Hayes had a $650,000 mortgage and sold the house for $375,000. Their lender forgave the difference as part of the sale, Mrs. Hayes said. But the family still has loans outstanding for $50,000.

They've since moved to a 1,200-square-foot, two-bedroom house nearby that they are renting for $1,200 a month. All three girls share one bedroom with bunk beds. The house is in the same neighborhood, so the family can use the same supermarkets and schools, hoping to ease the anxiety many autistic children face when adjusting to new environments.

The family had to cut the four different specialized summer camps that each child attended, at a cost of $1,600 for all three children per week. And they've been forced to eat into a nest egg designed to support the girls as adults.

 "With kids with disabilities, there's no cheap way out," Mrs. Hayes says. She adds: "Other people can send their kids to community college, have them get part-time jobs, and think 'maybe our son or daughter will support us'…We can't do that."

Last month, Mrs. Hayes found some temporary work as a recruiter. The income is lower than her Bank of America salary, there are no benefits and her brother has helped pitch in with day care. She says she's grateful for the opportunity, but knows it could be precarious. "We're not going to spend on anything," she says.

In other families, the gaps in financial support have become glaring between siblings. Ten years ago, when Patricia Bennett earned more than $100,000 a year selling risk-management software on Wall Street, she paid $30,000 cash for her now 28-year-old son's freshman year at Morehouse College in Atlanta with little hassle.

After being laid off in April 2009, Ms. Bennett now makes $9.75 an hour as a part-time cashier at Williams-Sonoma, in addition to doing volunteer hospice care. In January, she received a foreclosure notice on her home in Monroe, N.Y. Her youngest son is a sophomore at Lafayette College and will have to drop out next year unless he obtains more scholarships and loans.

Last year, Lafayette increased financial aid by 8.5% and cut its operating budget by 5% to keep pace with the increase in financial-aid requests and prevent students from leaving for financial reasons "There's concern about reality today and what's ahead," says Robert Massa, Lafayette's vice president of communications.

Ms. Bennett's husband, William, was unemployed as a salesman for two years before he started selling cars on commission in July of 2009.  Before they became eligible for health insurance with his new job, the family went without it for months at a time so that they could contribute around $1,000 for pocket money and bus tickets for their son to visit home.

The gap between their two sons' experiences is particularly frustrating for her. "It's a bitter pill to swallow," Ms. Bennett says.

Many parents are less able to help their children after graduation as well. Angelica Hoyos, a 26-year-old living in Los Angeles, has put her photography and sculpture career on hold since her parents pulled the financial plug earlier this year after the family's granite-countertop business suffered. Ms. Hoyos has moved in with her boyfriend, cut spending and earns about $1,000 a month doing free-lance design work and baby-sitting.

"My artistic career is put on the side because I have to make a living," she says.

For Mr. Johnson, the former GE Capital executive, not being able to see his children through college is particularly painful. Both he and his wife attended Johns Hopkins in Baltimore. When he decided to earn his masters in finance there decades ago, he says he had little doubt about it being "a good value proposition."

The Johnson children always had part-time jobs in high school. But in college, they struggled for months to find part-time and summer work over the past two years. Finally, one landed a seasonal job folding clothes at Old Navy. Last year, the Johnsons didn't qualify for work study because the household income was too high. Since resubmitting their aid application, they have qualified. Their son got a work-study gig at a university office.

Johns Hopkins last year added $2 million in financial aid just to accommodate the surge of additional aid requests for its 5,000 undergrads. Some 61% of higher-education institutions reported an increase of 10% or more in financial-aid applications than the previous year, according to a September 2009 survey from the National Association of Student Financial Aid Administrators. More than a million more federal financial-aid applications were filed during the beginning of 2009 than in the beginning of 2008, with a 16.3% increase among dependent students.

"We had folks who never needed aid before and now they have one, two parents unemployed," says Vincent Amoroso, the school's director of student financial services. "And these are folks who used to make $100,000 or $200,000 a year who are coming to see us."

Mr. Johnson made up to $550,000 a year, including bonuses, before losing his job in March 2009. The Johnsons had stashed $250,000 away for college.

If that money isn't tapped sooner for household expenses, it might buy two years of schooling for each of his children, Mr. Johnson calculates.  Further expenses such as first homes and weddings are out of the question. "They're going to have to elope," he says.

In the summer of 2007, the Johnsons paid $1.5 million for their Fairfield home and took out a mortgage of $852,000. Mr. Johnson figures it could realistically sell for $800,000 today. Given the numbers, the family is trying to avoid moving and recently refinanced their house at a lower interest rate.

"It's emasculating," Mr. Johnson says. "I'm supposed to be providing for them, but I can't."

The children haven't talked about transferring to less expensive colleges yet. "I'm going to take it all day by day," says Kristian Johnson, 20, the oldest of the Johnson siblings. Now a sophomore, he says he's prepared to take out loans to finish.

Margot Johnson, 18, says her father's career experience has affected her goal as an economics major. "I want to study economics," she says, "but not something in the corporate world."

Mr. Johnson concedes that Elsa Johnson, the youngest, is "getting the raw end of the deal." By the time the 15-year-old daughter starts looking at colleges, most of the savings set aside for school could be gone.

Already passionate about fashion and design, Elsa says she'll opt for the least-expensive design school she can get into and is looking into paying for school herself. Until then, she's cut back on shopping trips and food and coffee spending with friends. She no longer asks for weekly allowances. "My parents are already stressed out enough," she says.

Meanwhile, Mr. Johnson continues to look for work and crunch numbers of the new household-budget reality. 

"I know, I know—cry me a river and then build a bridge and get over it, right?" Mr. Johnson says. "Still, there was a set of expectations we established, consciously or not, and they are not being met any more."

UAW Sues GM over Retiree Health Care Payment

 

DETROIT (AP) - The United Auto Workers union has sued General Motors Corp., saying the automaker owes it $450 million for retiree health care.

In the lawsuit filed Tuesday in federal court in Detroit, the UAW said that in 2007, GM agreed to pay $450 million to settle a UAW claim against auto supplier Delphi Corp. as part of Delphi's emergence from bankruptcy protection. Delphi is GM's former parts division.

The UAW said the agreement should still be in effect even though GM went through its own bankruptcy reorganization last year. The UAW said it demanded the payment from GM on Oct. 29.

According to court documents, GM responded with a letter rejecting the union's demand.

The UAW says the money should go to a union-run retiree health care fund.

UCLA Study: 1 in 4 Californians Lack Health Insurance

LA Times

The jump in 2009 to 8.2 million adults and children from 6.4 million in 2007 stems largely from job cuts and the loss of employer-sponsored coverage amid the recession.

Nearly 1 in 4 Californians under age 65 had no health insurance last year, according to a new report, as soaring unemployment propelled vast numbers of once-covered workers into the ranks of the uninsured.

The state's uninsured population jumped to 8.2 million in 2009, up from 6.4 million in 2007, marking the highest number over the last decade, investigators from UCLA's Center for Health Policy Research said.

People who were uninsured for part or all of 2009 accounted for 24.3% of California's population under age 65 -- a dramatic increase from 2007 driven largely by Californians who lost employer-sponsored health insurance, particularly over the last year.

Among those over age 18, nearly 1 in 3 had no insurance for all or part of 2009, the UCLA researchers found. The ranks of uninsured children also grew. The study was based on phone interviews from 2007, updated with current insurance enrollment data.

Adults over age 65, who are covered by the federal Medicare insurance program, were not included.

As a result of the insurance gap, many already strapped Californians have put off needed medical care and usually wound up crowding emergency rooms, receiving costly care on the run. Hospitals and insurance companies often pass on those expenses to customers with insurance, increasing the cost of healthcare and driving up rates for those who have coverage.

The new UCLA estimates arrive as President Obama and congressional Democrats scramble this week to finalize an agreement on healthcare reform. Democrats who are pressing the overhaul say it would expand health insurance to tens of millions of uninsured people across the country.

Yet even as leaders in Washington seek to expand coverage, California officials are wrestling with budget proposals by Gov. Arnold Schwarzenegger to cut or eliminate publicly funded insurance programs that critics say cover more than 2.5 million low-income children and their parents -- some of whom lost coverage because of layoffs.

California has one of the highest uninsured rates in the country, alongside Texas and other states with high unemployment. Because California's population is so large, however, it has more uninsured people than any other state.

The number of uninsured has swelled in tandem with California's unemployment rate, which rose to 12.3% in December from 5.7% two years earlier, and as employers shifted more healthcare costs to employees.

Bruce Kuhlmann of Santa Rosa was laid off in December 2008 from his job as a technology sales executive in Northern California. He has depleted much of his retirement savings to pay for care since he was diagnosed with cancer last month.

The father of three, including two college-age children, has found it difficult to buy insurance on the individual market.

 Kuhlmann, 58, worries about affording an operation that he believes will cost about $30,000.

"I've spent a fortune of my own money," Kuhlmann said in a phone interview as he prepared to undergo a medical procedure at Santa Rosa Memorial Hospital. "I have a house mortgage. It's hard to get a job because I don't feel so good. Everything is negative."

UCLA researchers said they were surprised by the big jump in the uninsured population from 2007 to 2009. The director of the health policy center, E. Richard Brown, said the state's 8.2 million people without coverage was the highest number he had seen in nearly three decades of studying the issue.

"California's situation is pretty dire with respect to healthcare coverage," Brown said.

The numbers of uninsured and California Bluecross health insurance quotes are likely to climb as the state's jobless rate is expected to remain in the double digits well into next year.

"The shocking increase in people losing insurance spotlights the problem that . . . coverage may not be there for us when we need it," said Anthony Wright, executive director of Health Access California, a Sacramento consumer group. "This adds more urgency to the debate over the pending health reform proposals, which directly address the insecurity Californians are facing."

Researchers said federal subsidies for laid-off workers helped some people who lost jobs and coverage. Yet even so the loss of insurance affected young and old alike.

The percentage of uninsured children grew to 13.4% in 2009 from 10.2% in 2007. The increase would have been greater if not for insurance programs paid for by the state and federal governments. The number of uninsured children rose from 1.1 million to 1.5 million over the two years.

The study's lead author said that adults who lack the safety net face the most daunting prospects for California health insurance quotes.

"Being uninsured has real human consequences. . . . It is costly for all of us," said Shana Alex Lavarreda, director of health insurance studies at the UCLA research center. "It makes reforms of the system absolutely essential."

Electric Car Demand Means Polypore's Battery Parts Outpace Wind and Solar‏

Bloomberg

Polypore International Inc., which makes one of the key components of electric-car batteries, is climbing faster than most alternative energy stocks this year as investors bet on a global shift to low-polluting automobiles.

The company based in Charlotte, North Carolina, is about to finish the first quarter with a 46 percent increase to $17.34 a share, the top gainer on the WilderHill New Energy Global Innovation index. The benchmark of 86 clean-energy stocks sank 10.2 percent in the period, pulled lower by Vestas Wind Systems A/S, the biggest wind-turbine maker, and German solar developer Solarworld AG.

“Polypore is positioned to take a solid chunk of the growth in electric vehicles,” said Bryan Drab, an analyst at William Blair & Co. in Chicago who has a “outperform” rating on the stock. “They supply to most, if not all, the major makers of lithium car batteries that are going into electric cars.”

The company is the world’s biggest producer of porous membranes used in traditional lead-acid batteries for cars. It also makes the chemical separators for more potent lithium ATV batteries used in electric vehicles made by General Motors Co., Toyota Motor Corp. and Volkswagen AG.

The separators keep apart positive and negative charged electrodes while allowing the ions powering the battery to move within the unit.

This month, the company forecast electric vehicles will make up 3 percent of global car sales by 2012, and 6 percent by 2015, compared with about 2 percent now.

Investment Plan

Polypore plans to spend $102 million over two years to double production of separators for lithium cells. It competes with Asahi Kasei Corp. and TonenGeneral Sekiyu K.K., the Japanese unit of Exxon Mobil Corp. TonenGeneral and Asahi Kasei shares both have risen 10 percent since the beginning of March. Polypore gained 14.8 percent this month.

The three together provide 90 percent of the market for lithium separators, said Polypore Chief Financial Officer Lynn Amos. Polypore is also increasing output in Korea for cell-phone sized separators.

Founded in 1994, Polypore sold its shares at $19 in June 2007, rose as high as $29.26 in August 2008, and dropped to as low as $2.38 in March 2009 during the credit crisis and recession.

Another drag on Polypore’s shares was ruling from the U.S. Federal Trade Commission recommending the company divest most of its Microporous unit, the only maker of rubber-based membranes for lead-acid batteries. Polypore is appealing the ruling.

“The FTC complaint came out in September 2008, and we were concerned we’d be forced to sell at a loss during the banking meltdown,” Amos said in a March 26 interview. “At this point, we could probably make some money if we had to sell.”

Morgan Stanley increased its stake in Polypore to 1.48 million shares as of Dec. 31, or 3.3 percent of the company’s outstanding stock, according to data compiled by Bloomberg. Morgan Stanley funds control 2 percent of the company. The bank holds the rest for Van Kampen Investments Inc., the data show.

Erica Platt, a Morgan Stanley spokeswoman, declined to comment on the holdings.

Polypore also benefited from the extension of a contract with one of its largest customers, Drab said.

On Jan. 19, Exide Technologies renewed a contract that expired last year. Polypore plants have supplied the Milton, Georgia-based producer of batteries for more than 40 years, and the agreement extends the contract for three years.

Economy Adds Jobs at Fastest Pace in Three Years

WASHINGTON (AP) - The nation added jobs at the fastest pace in three years last month as factories, stores, hospitals and the census all brought workers on board - the surest sign yet that the worst employment market in a generation has finally snapped back.

The unemployment rate stayed at 9.7 percent for the third month in a row, the Labor Department said Friday. Economists actually consider that a hopeful sign because it means more people are encouraged and starting to look for work.

"This recovery is for real," said Chris Rupkey, economist at the Bank of Tokyo-Mitsubishi.

Overall, the economy added 162,000 jobs for the month. About a third of the gains came from the census, with much more to come: About 700,000 head-counters will be hired to tally the nation's population this spring.

Economists took heart that even aside from the population count, the private sector added 123,000 jobs for the month, the most since May 2007.

Hiring is not expected to be robust enough anytime soon to significantly bring down the unemployment rate. Economists think unemployment will probably still be above 9 percent by the November midterm elections, making Democratic and Republican incumbents in Congress vulnerable, particularly in hard-hit states such as Michigan, Nevada and Rhode Island.

President Barack Obama seized on the positive numbers in the jobs report and took partial credit for them. But with 15 million people still out of work, he also acknowledged that the economy will be recuperating for a long time to come.

"We are beginning to turn the corner," he told workers at a battery plant in Charlotte, N.C., that received government stimulus money. But he added: "We shouldn't underestimate the difficulties we face."

House Republican leader John Boehner of Ohio said a jobless rate near 10 percent is "no cause for celebration." The unemployment rate peaked at 10.1 percent in October, a 26-year high.

No one disputes that the job market is still bleak. Counting people who have given up looking for work and part-timers who would prefer to be working full-time, the so-called underemployment rate rose to 16.9 percent in March.

But Friday's report from the Labor Department at least provides firm evidence that the job market is on the right track, even if it will be a long journey for the millions of Americans who want work but cannot yet find any.

"The economy is moving in the right direction, albeit at a torturously slow pace," said Paul Ashworth of Capital Economics.

Economists do not expect the jobless rate to drop to something more normal - like 5.5 percent to 6 percent - until the middle of this decade.

In the meantime, economists are concerned that hiring now appears to be concentrated among large companies - a sign that small businesses, which typically lead job creation in the early stages of a recovery, are having difficulty getting financing from banks.

In March, the education industry led job creation, followed by health services and government. Those sectors, plus others like the hospitality industry, manufacturing and retail, will continue hiring as the recovery picks up, economists say.

For example, Sodexo Inc., a large food services company based in Maryland, plans to fill thousands of openings for cooks, servers, cashiers and other positions. Demand for food services is on the rise again at schools, hospitals and corporations.

"We're really very optimistic that this is not a blip," said Arie Ball, the company's vice president for human resources.

Although construction companies added jobs last month, it was seen as a temporary snapback from February, when snowstorms along the East Coast idled many construction jobs. The real estate market is still fragile in much of the country.

Other pockets of weakness include financial services, publishing and state and local governments, which are grappling with budget crises from coast to coast.

In Fairfax, Va., Merrifield Garden Center is looking to hire 100 people - more than it added last spring.

"With the attitude of the economy swinging around, we will continue to add positions here," said Peter Hogarth, the store's manager.

More of the applicants this year are people who were laid off from higher-paying white-collar jobs, Hogarth said.

Nationwide, average hourly earnings fell by 2 cents in March to $22.47. Stagnant wages are a big reason people are still hesitant to spend money, a drag on the overall economy.

The number of people out of work six months or longer reached 6.5 million in March, a new high. The number of people forced to take part-time work in March rose by 263,000, to 9.1 million.

The worst recession since the 1930s has wiped out 8.2 million jobs, making the competition for any openings fierce. On average, there are five or six unemployed people competing for each opening, according to government data.

Elaine Murszewski of Aurora, Colo., who was laid off by a software company a year ago, has found only openings for lower-paying jobs. Taking one would end her unemployment benefits, roughly $11 an hour, and force her to continue digging into savings to get by.

"I can't believe this," she said.

Paula Hartland, on the other hand, snagged a job last month in communications at Children's Healthcare of Atlanta after being laid off in January, and urged job-seekers to not give up hope.

"You kind of have to ignore all the negative news," she said. "You have to put all your time and energy into networking into those companies where you want to work."

Icahn Buys the Mortgage on Trump's Atlantic City Casinos

ATLANTIC CITY (AP) — Carl Icahn has bought the remaining half of the $500 million mortgage on the three Trump Entertainment Resorts casinos he's trying to buy out of bankruptcy.

He also won a $10 million interest payment in the transaction.

The billionaire investor, who previously owned 51% of the mortgage issued by Dallas-based Beal Bank, agreed last week to buy the remaining 49% at a 7.5% discount, according to court documents.

Icahn and Texas billionaire banker Andy Beal are facing off against Trump Entertainment bondholders and Donald Trump for ownership of the company's three Atlantic City casinos. Icahn wants to convert the mortgage into ownership of the casinos.

Trump bondholders have offered to buy the company for $225 million, giving Donald Trump as much as 10% ownership in return for letting them continue to use his name on the casinos.

A bankruptcy judge is expected to pick a winner by April 15.

Icahn told The Press of Atlantic City he always intended to buy the entire mortgage. He said he moved up the transaction to pocket the $10 million interest payment due Wednesday.

"The bank debt was going to be purchased by me anyway, so we did it earlier," he told the newspaper. "It's not unexpected. We just wanted to get the interest."

Vincent Intrieri, senior managing director of Icahn Partners, said owning the entire mortgage would make it easier for Icahn to get a New Jersey casino license if he succeeds in buying the company out of bankruptcy.

Service Industries in U.S. Probably Grew at Fastest Rate Since June 2007

Bloomberg

Service industries probably expanded in March at the fastest pace since 2007, a sign the U.S. recovery is broadening as the job market turns around, economists said before reports this week.

The Institute for Supply Management’s index of non- manufacturing businesses, which make up about 90 percent of the economy, rose to 54, according to the median forecast in a Bloomberg News survey before figures tomorrow. Readings of 50 signal expansion. Another report may show fewer Americans signed contracts to buy previously owned homes in February, indicating real estate remains the economy weak spot.

The manufacturing rebound that helped the U.S. dig out of the worst recession since the 1930s is starting to extend to other industries, benefiting companies such as Carnival Corp. and Best Buy Inc. A government report last week showed employment rose 162,000 in March, the most in three years, making a sustained recovery more likely.

“Services are making a slow and steady comeback,” said David Semmens, an economist at Standard Chartered Bank in New York and task management software theorist. “The job gains are encouraging. We’re going to be looking for momentum.”

The Tempe, Arizona-based group’s figures would follow a reading of 53 for February. The estimates of 63 economists surveyed ranged from 51 to 55. The projected reading would be the highest since June 2007.

The unemployment rate was 9.7 percent in March for a third month, the Labor Department reported April 2. Payrolls rose for the third time in the past five months and by the most since March 2007, signaling companies are becoming more confident that the economy is healing.

Reflecting the improvement in the services industry, the Standard & Poor’s Supercomposite Retailing Index has climbed 11 percent this year, outpacing a 5.6 percent gain in the broader S&P 500 gauge.

Best Buy Sales

Best Buy, the largest U.S. electronics retailer, is among companies seeing demand pick up. The Richfield, Minnesota-based merchant last month reported fourth-quarter profit that exceeded analysts’ estimates as discounts helped boost sales.

Carnival Cruises, the biggest cruise-line operator, last month raised its full-year profit forecast as ticket prices rebounded from 2009’s lows amid more bookings.

“The booking environment continued to improve,” Chief Executive Officer Micky Arison said in a March 23 statement. “We returned to top line revenue growth after a challenging 2009.”

Housing, which helped trigger the recession, has yet to show signs of a sustained rebound. The National Association of Realtors’ index of purchase agreements, or pending home sales, probably fell 1 percent in February after a 7.6 percent drop the prior month, according to the survey median. The report is also due tomorrow.

Fed Minutes

Minutes of the Federal Reserve’s March meeting, due April 6, may shed more light on policy makers’ assessment of the economy at the time they pledged to keep the benchmark interest rate “exceptionally low” for an “extended period.”

The Fed may report on April 7 that consumer credit increased in February for the second straight month. Economists also project Commerce Department figures on April 9 may show inventories at wholesalers rose in February for the first time in three months. 

Chrysler Whistle-Blower's Tip Brings U.S. Charges of Global Bribery by Daimler

The Detroit Free Press

WASHINGTON – Nine years ago, Chrysler auditor David Bazzetta was shocked to hear from DaimlerChrysler executives in Germany that the company regularly bribed foreign governments for business – even though they knew it violated U.S. law.

That whistle Bazzetta blew will finally be answered next week, when Daimler appears in a U.S. federal court in Washington on charges it spent hundreds of millions of dollars on payoffs to officials in 22 countries between 1998 and 2008. Several outlets reported that the company will pay $185 million to settle the charges, but the company and the U.S. Department of Justice declined comment.

So too did Bazzetta, 54, of Macomb Township, whose 2004 lawsuit first revealed the secret accounting system Daimler ran to pay off officials from Greece to North Korea, and included kickbacks to Saddam Hussein’s government under the United Nations’ “oil-for-food” program.

According to his lawsuit, Bazzetta, an 18-year veteran of Chrysler, warned about the payments to his boss. When he told Bazzetta to keep quiet, Bazzetta went over his head. When nothing was done, he was transferred, and eventually fired in January 2004, two weeks after his corporate protector retired.

At the time, DaimlerChrysler was trying to recover the aura that surrounded its creation, washed away by Chrysler’s struggles and anger in the United States that the “merger of equals” had given way to a German takeover of Chrysler.

The Justice Department said today that all told, Daimler’s bribes generated at least $50 million in pretax profits.

At the time of its 1997 purchase of Chrysler, Daimler had 200 accounts used for bribes around the world. By 2004, it had winnowed such accounts to 40, but the Justice complaint says the company only eliminated the practice after the launch of probes by U.S. officials.

The kickbacks weren’t just handed over in cash. Daimler paid for tourist trips for Chinese officials, and gave the son of a Chinese government official an internship, a four-month job and help getting him and his girlfriend German student visas.

The company also gave an armored Mercedes sedan worth 267,000 euros to a Liberian government official in 1999, and sent another worth 300,000 euros to a high-ranking official in the Turkmenistan government in 2003, likely late president-for-life Saparmurat Niyazov.

Daimler’s distributor also tried to get in Niyazov’s personal graces by spending $250,000 on translating 10,000 copies of his personal manifesto from Turkmen into German, delivered to Niyazov in a golden box. Daimler eventually sold 879 vehicles in the country from 2000 to 2008.

Bazzetta’s lawsuit sparked a probe in 2004 by U.S. Securities and Exchange Commission officials. The payments fell under the U.S. Foreign Corrupt Practices Act since DaimlerChrysler’s shares were traded in the United States, and several bribes were routed through U.S. bank accounts.

Daimler responded to Bazzetta’s suit in 2004 saying he had been fired because he falsified internal financial information and directed subordinates to do the same. It said Bazzetta's whistleblower claims had no merit because corporate officials were addressing the practice.

The automaker settled the suit out of court in 2005, but later admitted in 2006 that its own investigation had found “improper payments” in Africa, Asia and Eastern Europe, and that several employees had been dismissed.

The government and Daimler are set to appear before a federal judge April 1.

New England Floodwaters Drown Homes and Dreams

WEST WARWICK, R.I. (AP) - Stacey Marcure thought she and her family had survived the worst of flooding two weeks ago, when no more than 5 inches of water seeped into her basement. Then she woke to a fresh burst of heavy flooding spurred by record-setting rainfall that caused havoc in this former mill town and much of the Northeast.

Her family made it out safely Tuesday morning, though her husband had to be rescued by boat after he returned to raise valuables to the top floor. Now she's staying with relatives, unsure what will become of possessions such as her daughter's first communion dress - or the home that had been in her family for 70 years.

"It's definitely not going to be livable, at least not for a while," said Marcure, 38, a teacher's assistant.

The rains stopped Wednesday and the floodwaters began to recede in hard-hit Rhode Island, though what the governor called the worst flooding in 200 years could persist for several days and permanently close businesses already struggling in the weak economy.

Homeland Security Secretary Janet Napolitano plans to travel to Rhode Island on Friday to assess the damage, a department official told The Associated Press on Wednesday on condition of anonymity because the trip hadn't been formally announced.

The latest flooding there was far worse than an inundation earlier this month in the same areas, and the ripple effects were vast and still being tallied: Hundreds were forced from their homes and thousands of properties lost power. Bridges and highways were washed out from Maine to Connecticut and sewage systems were overwhelmed to the point that families were asked to stop flushing toilets.

Homes and cars were submerged along the banks of the Pawtuxet River, which flooded several blocks past its banks in many spots and crested Wednesday at 20.79 feet - 12 feet above its ordinary level of 9 feet.

Water flowed like a torrent around the Warwick Mall, with rapids encroaching outside an Old Navy and Macy's. Oil slicks floated on top of muddy water through neighborhoods.

Stonington, Conn., a coastal town on the Rhode Island border, was largely cut off as two of its three bridges went out. A bridge also gave out in Freetown, Mass., isolating about 1,000 residents.

A two-lane bridge in Coventry, R.I, where abutments washed out appeared safe from immediate collapse after the water rushing underneath it receded, said town manager Tom Hoover.

A stretch of Interstate 95, a main route linking Boston to New York, was still closed, though officials hoped to reopen it by Thursday afternoon, said Steve Kass, a spokesman for the Rhode Island Emergency Management Agency. Amtrak suspended some trains for a second day because of water over the tracks.

The heavy rain is the latest setback to Rhode Island, which has struggled for months with an unemployment rate nearing 13 percent - about three percentage points higher than the national average. Some of the areas worst hit were business districts.

Amy Kempe, a spokeswoman for Gov. Don Carcieri, said it was too soon to know the economic impact of the latest round of flooding to the state, which has a $220 million budget deficit.

But Angelo Padula Jr., a West Warwick city councilman, said he assumed the flooding was a death knell for his family business - an auto-restoration company founded by his grandfather 100 years ago.

"Two hundred sixty cars are all underwater, my building is under water, my office trailer is under water," he said. "We lost everything."

Padula's town was especially threatened. West Warwick is designated a "distressed community" by the state because of its many low-income residents and heavy tax burden. During the last round of flooding, businesses in that town alone were estimated to have missed out on $730,000 in revenue.

Every resident of Rhode Island, a state of about 1 million, was asked to conserve water and electricity because of flooded sewage systems and electrical substations. Health officials urged people exposed to floodwater to wear long sleeves and wash their hands regularly to avoid bacteria and viruses.

The waters either stranded hundreds of people or sent them to shelters. Many who stayed behind appeared shell-shocked.

Monica Bourgeois, 45, cried Wednesday as she stood outside her home in Cranston, where a sewer pump station gave out and hundreds of people had evacuated. The Pawtuxet had turned her lawn into a lake and flooded her basement with 6 feet of still-rising water.

"I have absolutely no idea how we're going to pay for this," she said. "I'm extremely, extremely worried. Do you know how much a new furnace costs? We're just praying to God for some help."

The flooding caps a month that set rainfall records across the region. Boston measured nearly 15 inches for March, breaking the previous record for the month, set in 1953. New Jersey, New York City and Portland, Maine, surpassed similar records. Providence registered its rainiest month on record, period, with a total of more than 15 inches of rain in March.

President Barack Obama issued an emergency declaration for Rhode Island, ordering federal aid for relief and authorizing the Federal Emergency Management Agency to coordinate efforts.

National Guard troops were deployed in Rhode Island, Massachusetts and Connecticut.

Life came nearly to a standstill in many parts of Rhode Island. Nonessential state workers were given the day off, and state officials asked schools and businesses to consider closing as well. The University of Rhode Island also closed.

Roman Catholic Bishop Thomas Tobin announced an additional $15,000 for clothing and food to flood victims, and residents were given a one-month extension to file their state and federal income taxes.

In Connecticut, two apartment buildings in Middletown damaged by flooding were evacuated. In Peabody, Mass., north of Boston, some residents were evacuated, and downtown businesses piled sandbags at their front doors and nearby streets were closed.

Demetri Skalkos, co-owner of McNamara's liquor store, said about 3 feet of water stood in the basement. He said he was worried about losing business over the traditionally busy Easter period.

"This is the Holy Week," he said. "If we don't do business now, when are we going to do business?"

EMI in Dire Straits

LONDON (AP) - Struggling music group EMI faces being taken over by its bankers after failing to clinch a deal to sell the North American distribution rights for its artists to Universal Music Group or Sony Music.

EMI, which has the Beatles, Coldplay, Lily Allen and Pink Floyd on its books, had hoped to raise around 200 million pounds ($304 million) by offering its rivals a five-year licensing contract.

A source close to both sets of talks, who requested anonymity because the discussions were private, said Thursday that they fell apart after a failure to agree on price. EMI declined to comment.

The collapse of talks leaves EMI battling to raise 120 million pounds by mid-June to meet its commitments on loans from U.S. bank Citigroup.

If funds can't be raised from investors and the loan goes into default, Citigroup could seize EMI and cause it to be sold or broken up.

EMI has been struggling to stay afloat since it was bought by private equity firm Terra Firma Capital Partners for 4.2 billion pounds on the eve of the credit crunch in 2007, saddling the company with debt.

Several big-name acts, including Radiohead and the Rolling Stones, quit the label amid the cutbacks and restructuring that followed.

Terra Firma, led by British financier Guy Hands, still owes some 3 billion pounds to Citigroup because of the deal and relations between the two have soured.

Hands is suing Citigroup in New York, alleging that the bank falsely claimed there were other bidders for EMI, encouraging the private equity firm to raise its own offer. Citigroup has denied the allegations.

EMI has fared worse than the three other major labels - Universal, Sony BMG and Warner Music Group - amid the decline of CD sales and the rise of digital music downloading.

Analysts have blamed Hands' relative inexperience in the music business for exacerbating the company's decline.

EMI earlier this year put its iconic Abbey Road studios up for sale after reporting a pretax loss of 1.7 billion for the year to March 31, 2009.

However, it shelved those plans after a public outcry led to the site being put on a protected list by English Heritage and said it would instead seek an investor to help rejuvenate the loss-making studios.

Adding to the company's woes, Pink Floyd successfully sued the company for selling individual tracks digitally and Chief Executive Elio Leoni-Sceti quit the group last month after just 18 months in the job.

Like Hands, Leoni-Sceti, who joined the company from consumer products group Reckitt Benckiser, had found his music industry experience questioned.

Charles Allen, the former chief executive of broadcaster ITV PLC, who was EMI's non-executive chairman, filled the vacancy by taking over as executive chairman.

Factory Orders Rise for 10th Time in 11 Months

Forbes

WASHINGTON -- Factory orders rose in February, bolstered by strong demand for industrial machinery and commercial aircraft. It was the 10th increase in 11 months as manufacturing continues to provide crucial support for the nation's economic recovery.

"We're not a red-hot economy," said Tim Quinlan, an economist at Wells Fargo. "But the recovery is still plodding along."

Manufacturers, which were hit hard by the recession, are benefiting from overseas orders and increased business spending on capital equipment. Quinlan estimates that factory orders fell by about 25 percent during the recession but have recovered about one-third of that amount since last spring.

The Commerce Department said Wednesday that new orders rose 0.6 percent last month, just ahead of analysts' estimates for a 0.5 percent increase, according to Thomson Reuters. Still, that was the lowest uptick since August 2009.

January's orders also were revised higher to show an increase of 2.5 percent, the department said.

Separately, a private company's report on payrolls Wednesday disappointed Wall Street analysts. Payroll provider ADP said that employers cut 23,000 jobs in March, well below economists' forecasts for a 40,000 gain.

Stocks were mixed after the data, which comes before Friday's employment report by the Labor Department. The Dow Jones industrial average fell about 21 points in midday trading though some broader indices ticked up.

In the factory orders report, economists were encouraged by a 2 percent rise in orders for capital goods such as computers and machinery following a sharp drop in January. That means businesses have started to increase their investment spending, economists said.

In addition, inventories rose by 0.5 percent last month, the fourth increase in the past five months and better than the 0.3 percent rise seen in January.

Auto makers and other manufacturers cut their stockpiles sharply during the recession, and rebuilding stockpiles will help fuel the recovery. Larger inventories also would indicate that companies are confident about future sales.

Still, inventories aren't growing as quickly as many economists would like.

"That suggests to me that firms are still cautious about their sales outlook," said Zach Pandl, an economist at Nomura Securities. He would like to see inventories increase at closer to a 1 percent pace.

Businesses reduced their stockpiles for warehouse material handling at a much slower pace in the final three months of last year, compared with the rapid drawdowns during the recession. That swing contributed about two-thirds of the fourth-quarter's economic growth. The gross domestic product increased by 5.6 percent in the fourth quarter, the fastest pace in six years.

Orders for big-ticket manufactured items, known as durable goods, also rose 0.6 percent in February, slightly higher than a preliminary estimate released last week. Machinery orders jumped 5.1 percent, driven by higher demand for heating and air conditioning equipment and turbines and other power generation gear.

Orders for commercial aircraft, a volatile category, jumped nearly 33 percent last month. But the auto industry continued to struggle, with orders for motor vehicles and parts falling by 1.7 percent, the second consecutive drop.

Nondurable goods, such as chemicals, food products and apparel, rose 0.3 percent, a healthier showing than many economists expected. Chemical orders, particularly of pesticides and fertilizers, as well as food products, led the increase.