Wednesday, August 27, 2008

Fewer without health insurance, U.S. Census says

By Ruth Mantell

WASHINGTON (MarketWatch) -- Even as the number of Americans living in poverty rose last year, fewer Americans overall went without health insurance and there was an increase in the median household income adjusted for inflation, the Census Bureau reported Tuesday. The number of people without health-insurance coverage fell to 45.7 million in 2007 from 47 million in 2006, the government said in its annual snapshot. The number of uninsured children also declined, slipping to 8.1 million from 8.7 million. Median household income, adjusted for inflation, rose 1.3% to $50,233 -- the highest level since 2000. Income includes items such as earnings, interest, alimony and unemployment compensation. For households at the 20th percentile, income fell 1.5% to $20,291. For households at the 80th percentile, income rose less than a percentage point to $100,000.

Meanwhile, following three years of annual declines in real earnings, both men and women experienced gains in 2007. The real median earnings for men working full-time and on a year-round basis rose 3.8% to $45,113, with women's earnings growing by 5% to $35,102. The poverty rate hit 12.5% in 2007, compared with 12.3% in the prior year -- not statistically different, according to the Census Bureau. The poverty rate reached 11.7% in 2001, when the economy was in a recession. The number of Americans living under the poverty line reached 37.3 million, including 13.3 million children. In the prior year, there were 36.5 million under the poverty line, 12.8 million of whom were children.

Cause for concern

Despite some good news in the data, there is also cause for concern, according to the Center on Budget and Policy Priorities, a policy and research organization that specializes in programs that affect low- and moderate-income families and individuals. In particular, the rate of those without health insurance hit 15.3% in 2007, up from 14.1% in 2001. "The data for 2007 are of particular concern given that the economy is now in a slowdown, and poverty is almost certainly higher now -- and incomes lower -- than in 2007," said Robert Greenstein, CBPP's executive director.

"The 2007 levels -- already disappointing because they are worse than those for the 2001 recession -- are likely to constitute a high-water mark for the next few years. This suggests that significant pain may lie ahead for many Americans," he commented in a statement. Dr. Nancy Nielsen, president of the American Medical Association, said in a statement that many patients are priced out of coverage, and that covering all Americans would be a "good first step."

"We advocate for a shift in tax incentives for health insurance so lower-income Americans get money to purchase coverage," she added. "We also want insurance-market reforms to provide individuals more choices and ensure coverage for high-risk patients." CBPP estimates that the absolute number of Americans and the percentage of the overall population who are uninsured can be expected to increase both this year and next. "The numbers of uninsured parents and children are likely to grow as employers lay off more workers and states consider cuts in their Medicaid programs to help balance their budgets during the economic slowdown," Greenstein said.

Tuesday, August 19, 2008

U.S. Producer Prices Surge More Than Forecast in July

U.S. Producer Prices Surge More Than Forecast in July (Update2)

By Timothy R. Homan(Bloomberg) -- Prices paid to U.S. producers rose twice as much as economists had forecast in July, reflecting the jump in energy and commodity costs that has since started to wane. The 1.2 percent increase in the producer price index followed a 1.8 percent increase the prior month, the Labor Department said today in Washington. Costs were up the most in 27 years from a year before. So-called core prices that exclude fuel and food rose 0.7 percent after a 0.2 percent gain in June. Oil prices have dropped 21 percent since the start of last month, copper is down 15 percent and corn has dropped 14 percent, helping ease the cost pressures on companies. Federal Reserve officials anticipate the economic slowdown, along with a stabilization in commodity costs, will help contain inflation.

``It's not a pretty number,'' said Stuart Hoffman, chief economist at PNC Financial Services Group Inc. in Pittsburgh. ``Today's PPI is a bit of an echo and maybe a little bit of a rude reminder of how much of a problem inflation was in July.'' Another government report showed builders in the U.S. broke ground in July on the fewest houses in 17 years, signaling the residential-construction slump will continue to hurt economic growth. Treasuries were little changed after the reports, with benchmark 10-year notes yielding 3.80 percent at 8:37 a.m. in New York, from 3.82 percent late yesterday. Futures contracts on the Standard & Poor's 500 Stock Index were down 0.9 percent at 1,270.20.

Housing Starts

The 11 percent decrease in housing starts to an annual rate of 965,000, the lowest since March 1991, followed a 1.084 million pace the prior month, the Commerce Department said today in Washington. Building permits, a sign of future construction, also fell. Prices paid to factories, farmers and other producers were forecast to rise 0.6 percent following a previously reported 1.8 percent increase the previous month, according to the median of 77 forecasts in a Bloomberg News survey. Estimates ranged from gains of 0.1 percent to 1.8 percent. Core prices were projected to rise 0.2 percent, according to the survey median. Producers paid 9.8 percent more for goods from July 2007, the biggest year-over-year gain since June 1981, compared with a 9.2 percent gain in the 12 months ended in June. Excluding food and energy, the increase was 3.5 percent from a year earlier, its biggest jump since 1991, compared with a 3 percent gain in the prior month.

Gasoline

Producers paid 0.2 percent less for gasoline, and diesel fuel gained 2.6 percent, the report showed. Natural gas costs were up 7.8 percent from the previous month. The wholesale-price report is based on figures for the Tuesday of the week that includes the 13th of the month. On that basis, a barrel of crude oil cost $138.74 on the New York Mercantile Exchange for July, up from $131.31 the previous month. August producer prices are likely to reflect this month's drop in the cost of oil, which traded at $112.11 a barrel earlier today. Oil futures prices reached a record $147.27 a barrel July 11. Food was 0.3 percent more costly, after a 1.5 percent increase the previous month, today's report showed. Prices for raw materials, or so-called crude goods, increased 4.2 percent, after a 3.7 percent rise the prior month.

Inflation Outlook

Fed policy makers in their statement on Aug. 5 indicated that they expect inflation will moderate in the second half of the year and into 2009. Still, the outlook for prices is ``highly uncertain,'' the central bank's Federal Open Market Committee said in a statement when it voted to keep its benchmark interest rate at 2 percent. Today's report showed passenger car prices gained 1.4 percent and light trucks increased 0.8 percent. The report also showed prices for capital equipment increased 0.8 percent. Consumer goods prices were up 1.2 percent. Producer prices are one of three monthly inflation gauges reported by the Labor Department. Import prices rose 1.7 percent in July and consumer prices increased 0.8 percent for the same period, the Labor Department said last week. Both figures were higher than estimated. Higher raw-material costs are outpacing price increases for some companies. Deere & Co., the world's largest maker of farm equipment, last week said higher prices for tractors and combines weren't enough to counter a $140 million increase in production costs for materials such as steel.

``Escalating raw-material costs are expected to have an impact on margins'' for the fourth quarter, the Moline, Illinois- based company said last week in a statement. Hershey Co., the largest U.S. chocolate maker, on Aug. 15 said it will raise prices to counter higher commodity costs. The changes will result in a roughly 10 percent increase across Hershey's entire U.S. product line, the company said in a statement.

Tuesday, August 5, 2008

Cablevision Systems mulls spin-off of units


By JEREMY HERRON

NEW YORK (AP) — Nine months after shareholders rejected the Dolan family's latest bid to take Cablevision Systems Corp. private, the cable operator said Tuesday it is considering options that could see it sell some of its diverse holdings. Chief Executive James Dolan, who has long criticized shareholders for undervaluing what is considered one of the strongest cable franchises in the country, said the Bethpage, N.Y., company may also buy back stock or pay a special dividend.

Dolan said Tuesday the company is "actively looking" at options to close the gap between operating performance and the market value of its shares. The company plans to hire investment banking firms. Its market capitalization stood at around $8.27 billion. The announcement comes a week after Dolan said investors are "significantly" undervaluing the company. The Dolan family controls Cablevision through a special class of shares and has tried to take the company private several times in the past few years. Its most recent attempt offered shareholders $36.26 per share, but that was rejected as too low in October 2007. Cablevision shares rose 7.5 percent to $27.82 in midday trading Tuesday.

Cablevision did not say which of its businesses it would consider selling. Analysts consider its cable franchise, which serves the affluent New York suburbs, one of the best in the business. The unit is the country's fifth-largest cable system and accounts for 75 percent of company revenue. It includes high-speed Internet and phone services that have helped beat back competition from phone companies and satellite TV operators. The company runs several cable television stations, including AMC, IFC and WE tv, as part of its Rainbow Media Holdings LLC unit. The market for popular cable networks has been hot in recent months, with General Electric's NBC Universal paying $3.5 billion for Weather Channel and $875 million for women's programming channel Oxygen. Cablevision paid about $500 million for independent film channel Sundance in June. The company also owns Madison Square Garden and the three sports teams that play there: basketball's New York Knicks and New York Liberty, and hockey's New York Rangers. But potential suitors may have trouble placing a value on the Knicks or Rangers because Cablevision has intertwined contracts among the teams, the arena and the regional sports network that airs their games.

"It will be next to impossible to assess the franchise values unless you know what the contracts are that they work under," said Andrew Zimbalist, a sports economist with Smith College.

Assuming the arena and cable contracts were broken, Zimbalist said the Knicks would be worth about $500 million and the Rangers about $300 million. He estimated average revenue for a National Basketball Association team is $150 million. Forbes magazine ranked the Knicks as the most valuable franchise in the NBA at $608 million in its 2007 rankings, which includes an estimate for the arena deal. Cablevision paid $300 million for the Knicks in 1997, the magazine said. Robert Johnson, the billionaire founder of Black Entertainment Television, paid $300 million for the expansion Charlotte Bobcats in 2003, one of the last NBA teams to be sold. Hockey's Edmonton Oilers, a storied franchise in a small media market, recently sold for about $200 million.

"There's a very special media market in New York for sports teams," Zimbalist said. "There is significant value over and above the average franchise because of the market."

Cablevision's other entertainment venues include Radio City Music Hall and the Beacon Theater, both in New York, and the Chicago Theater. Cablevision is unlikely to sell newspaper publisher Newsday Media Group, following its $650 million purchase of Newsday from Tribune Co. The acquisition closed in July. The company has paid a special dividend in past, returning $3 billion, or $10 per share, in cash to shareholders in 2006. The company took on debt to fund that dividend, which may not be an option now because of the credit crisis.

"We believe that Cablevision's options will be limited by the credit markets," said Goldman Sachs analyst Ingrid Chung in a note to clients.