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CNNMoney.com) -- An increasing number of economists agree with the government's response to the recession, saying they believe the economy is on the road to recovery, according to a survey released Monday.The majority of respondents, or 76%, do not believe a second stimulus package is necessary, said the report from the National Association for Business Economics. "This is almost certainly one of the fastest-moving and most controversial economic policy environments we have experienced in a generation," said NABE president Chris Varvares. Respondents expressed "an impressive degree of confidence in monetary policy," but their views on budget policies are "more vexing," Varvares added. The semi-annual survey includes responses from a panel of 266 economists.Fiscal policy. The number of economists reporting that fiscal policy is "about right" rose to 35%, marking the highest since March of 2008. That's up from 22% in March 2009. But 50% of those surveyed said fiscal policy is still too stimulus focused, up from 33% in March. Three-quarters said they would like to see more restriction over the next two years, but only 28% expect that. In fact, almost 42% of economists said they expect fiscal policy to become even more stimulus oriented. About 20% said the stimulus actually reduced growth during the past quarter. Stimulus outlook. About half of respondents said stimulus will add between 0.5 and 1.5 percentage points to gross domestic product growth in the second half of 2009. About a third said it would add less than 0.5 percentage points. GDP is the broadest measure of the nation's economic activity.About 58% said the stimulus will add between 0.5 and 1.5 percentage points to GDP growth from the fourth quarter of 2009 to the fourth quarter of 2010.The first revision of the second-quarter GDP showed the economy declined at a rate of 1% -- unchanged from the government's initial estimate.The Fed and monetary policy. Almost 70% of the economists said the Federal Reserve's current monetary policy is "about right." That's up from 63% in March and from 56% a year ago. But results were split on the central bank's moves over the next six months. Almost half said the interest rate policy should remain on hold, while 45% said it should become more restrictive. However, 56% of economists said the Fed would likely hold rates at current levels over the next six months, while 44% predicted an increase. First Published: August 31, 2009: 8:19 AM ET Lacker: US may not need all planned stimulus  U.S. between a deficit and a hard place   Economy shows stabilization: GDP down 1% 

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(CNNMoney.com) -- Earlier this year, public outrage boiled over with news of eye-popping pay to top executives on Wall Street. White House officials later acknowledged they had misjudged the velocity and volume of furor triggered by "bonusgate," which raised the profile of corporate executive pay.Could that happen now in health care?Some of the known salaries are pretty big. Last year, the head of Cigna (CI, Fortune 500) made $11 million and the head of United Health Group (UNH, Fortune 500) made $9.4 million, according to the Corporate Library.Fifty-two health and accident insurance companies have until Friday to turn over salary details on employees who make more than $500,000 a year.Last month, Rep. Henry Waxman, D-Calif., head of the House Energy and Commerce Committee, asked for the figures as part of a broader look at how health insurers operate.And last week, Sen. John D. Rockefeller IV, D-W.Va., who runs the Senate Commerce panel, also asked the biggest health insurers to cough up particulars of premium dollars spent on patient care.Some policy watchers believe the congressional push has the potential to shake things up. In fact, a controversy over CEO pay could renew debate over a public option, a government-run health insurance plan that would compete with private insurers.Public option advocates hope outrage over big-time salaries prompts a new rally for their case.The debate over pay"I think they will get some information that will surprise policyholders, because there's not a great deal of awareness of how much these executives do make," said Wendell Potter, a former Cigna vice president who now works for a left-leaning media group. "A lot of money they're paying in premiums is going to make executives richer and richer every year."But health insurers call the salary quest a politically motivated "fishing expedition" that distracts from other reform issues such as expanding access, controlling costs and improving the quality of care.They say it is the latest in a series of attacks against them as the debate to redo the nation's health care system enters the final stretch."These letters were sent at a time when the industry dared to raise questions as to whether there should be a government run plan," said Robert Zirkelbach, a spokesman for America's Health Insurance Plans, the industry's lobbying group. "Health insurance profits are not what's driving health care costs."Most executives of publicly traded companies draw their big pay checks from bonuses, stocks and options to buy and sell stocks at sweet prices. Their compensation is tied to profit levels and how the company is valued.In health insurance, profits come out of the pot of money left over after premium dollars are used to pay for patient care. The formula that accounts for how much of premiums are spent on patient care versus administration, marketing and profits is called a "medical loss ratio." And that's one of the things lawmakers want to know more about. In the early 1990s, health insurers spent more than 90 cents of every dollar collected on patient care, but that has been declining. In 2007, national publicly-traded health companies spent about 81 cents of every dollar on patient care, according to a PriceWaterhouseCoopers report.Advocates who want executive pay included in the reform debate want to reverse that trend and force insurers to spend more on patient care.Profits and patient care"These guys are operating on the sole basis that they want to retain as much as they can in premium dollars for their investors and their own pay," said Robert McGarrah, counsel for the AFL-CIO Office of Investment. "That's why we need a public plan, so we'll have a benchmark." America's Health Insurance Plans, the industry advocacy group, argues that the industry is not sacrificing patient care for profits. It points to the industry's ranking as 35th on Fortune's report on most profitable sectors returning a 2.2% profit in 2008. (In 2006, the sector ranked 21st and averaged a 7.1% profit.)But while health insurance might not be the most profitable of industries, even in an off-year like 2008, several top chief executives made more than $5 million, according to analysis by the Corporate Library, an independent corporate governance research firm.AHIP and other insurers say executive compensation should be debated across the board on Wall Street, not just for health insurance companies."While executive compensation is an important issue, the health care industry should not be singled out alone," said Chris Curran, spokesman for Cigna. "We have been diligently working on a plan that guarantees coverage for everyone ... without adding to the debt burden of the country that a government sponsored plan would create."But advocates like Potter say the difference between health insurers and other companies is that in health insurance, those dollars that go to reward top employees could be going to patient care."I think it's significant because Americans are spending more and more of their premium dollars on compensation for the executives and other highly paid employees," said Potter, now a senior fellow for the Center for Media and Democracy.The salary request is part of a broader investigation into the health insurers' business practices, following recent hearings into why health insurers drop some patients, congressional aides said.0:00
      /2:47Health insurance nightmare"As Congress continues to debate health care reform, it is important we have all of the facts," said Rep. Bart Stupak, D-Mich., who has led the push along with Energy Chairman Waxman.In the Senate, Rockefeller's inquiry went to the top 15 health insurers. The industry's answers are due Sept. 8.CNNMoney.com sought comment from a dozen of the bigger publicly-traded insurers, and all said they planned to respond to the requests."We have received the letter, are in the process of reviewing it, and have not yet determined a response, although we certainly take the request seriously," said Aetna's (AET, Fortune 500) Fred Laberge.  Have you recently been laid off? Lost most of your retirement or college savings in the stock market? Dealt with the loss of the family breadwinner with no life insurance? If you've been confronted with some challenge during this recession and would like to have an expert review your situation, send us an email and you could be profiled in an upcoming segment on CNN.  First Published: September 1, 2009: 1:46 PM ET






Finding cheap health insurance (stocks)  How Obama miscalculated on health care  White House may push health care without GOP 

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(CNNMoney.com) -- Manufacturing activity rose significantly in July, suggesting that while the sector remains in contraction, there's a possibility of growth in the current quarter, a purchasing managers' group said Monday.The Tempe, Ariz.-based Institute for Supply Management's (ISM) manufacturing index reading of 48.9 beat estimates from economists, who expected a jump to 46.5 from June's 44.8, according to a Briefing.com consensus survey.July's report marks the 18th straight month of contraction in the sector. Still, ISM signaled cautious optimism."Overall, it would be difficult to convince many manufacturers that we are on the brink of recovery, but the data suggest we will see growth in the third quarter if the trends continue," the report said. The month-to-month improvement indicates that the rate of contraction has slowed, but not reversed. Manufacturing is a key gauge of the strength of the overall economy.The monthly report is a national survey of ISM members, who are purchasing managers in the manufacturing sector. Index readings above 50 signal growth, while levels below 50 indicate contraction. Readings below 41.2 are associated with a recession in the broader economy. "Even though the index is still in contraction, it's above that recession threshold," said Sam Bullard, economist at Wachovia. "These numbers are stronger, and definitely significant."The data track new orders, production, employment, supplier deliveries, inventories, customers' inventories, backlog of orders, prices, new export orders, imports and buying policy. Of the 18 manufacturing sectors, six reported growth -- including categories such as transportation equipment, appliances and paper products. The 11 that reported contraction included machinery and food. New orders snap decline: The key new orders component jumped to 55.3 in July, from 49.2. New orders are an indicator of manufacturing activity in the near future. The rise in new orders broke nine straight months of decline, and "it's encouraging to see that index jump above the expansion mark," Bullard said. Employment: The employment component rose to 45.6 in July, up 4.9 points from the previous month. Despite the index's increase, it marks the 12th consecutive month of decline in employment. Consistent readings above 49.7 are generally tied to an increase in government data on manufacturing employment, the report said.  First Published: August 3, 2009: 10:08 AM ET Ford says it will post July sales rise  Hmm ... tastes like recession 

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(CNNMoney.com) -- The long-battered U.S. job market showed some signs of improvement in July as employers cut far fewer jobs from payrolls and the unemployment rate fell for the first time in more than a year, according to a government report Friday.The Labor Department reported a net loss of 247,000 jobs in July, the fewest job losses since August 2008. Economists surveyed by Briefing.com had forecast a loss of 325,000.The job loss in June was also revised lower -- to 443,000 job losses from 467,000.The unemployment rate fell to 9.4% from 9.5% in June, the first decline in that closely watched reading since April of 2008. Economists had expected unemployment to rise to 9.6%.The unemployment rate fell even as employers continued to cut jobs because the Labor Department estimated there were 237,000 fewer people it counted as unemployed. That decline in the labor force can be due to discouraged job seekers who have stopped looking for work, people who now consider themselves retired or those have gone back to school rather than applying for jobs."You can't lose jobs and have the unemployment rate decline unless folks are opting out," said Tig Gilliam, CEO of Adecco Group North America, a unit of the world's largest employment staffing firm. "That means unemployment is going to go back up again."0:00
      /3:17Stimulus impact on GDPThere were other signs of improvement in the report, however. The average hourly work week edged up to 33.1 hours, from a record low of 33.0 hours in June. The number of workers who wanted full-time work but could only find part-time jobs fell by 191,000, or 2%. That suggests that many workers who had their hours cut or were given unpaid days off in the current downturn are going back to full-time status.But there was also plenty of bad news to be found in the report.The number of people unemployed for more than six months continued to rise, reaching nearly 5 million people, a record high. The average time that an unemployed person has been out of work reached 25.1 weeks, the highest reading in the 61 years that this has been tracked by the Labor Department.The Labor Department also said that one reason for the declining number of job losses was because cuts had been so deep leading up to July that there were fewer workers to lay off during the seasonal shutdown that happens in some factories, such as those in the auto industry. Since the start of 2008, 6.7 million jobs have been lost in the U.S. Several economists said that while the report confirms other economic readings suggesting that the recession may be ending, it's too soon to predict a sharp gain in jobs in the near term."The dawn of an economic recovery is here," said Sung Won Sohn, a professor of economics at Cal State University Channel Islands. "The economy is in the process of bottoming, but the job market will lag behind. Businesses, which engaged in preemptive layoffs earlier, are not about to start hiring people."Mark Vitner, senior economist at Wells Fargo, agreed that job losses are likely to continue into early next year, with unemployment eventually rising to about 10% to 10.5%. He said the fact that unusual extended shutdowns in auto plants distorted these seasonally-adjusted numbers."We're not ready to break out the champagne," he said. "There's less improvement than meets the eye."Gilliam also doesn't expect to see overall job gains until late this year at the earliest."The glass is both half empty and half full in this report," said Gilliam.But Robert Brusca of FAO Economics said he believes there is more strength in the job market than many people are willing to acknowledge. He said that the government may even report an overall payroll gain for August next month."There is nothing about these numbers that suggest it's a fluke," he said.More jobs were lost in July in the manufacturing and construction sectors as well as in the retail and business and professional services industries . But there were net gains in the education, health care and leisure hospitality sectors. Government employers also added jobs.Average hourly wages edged up 3 cents an hour, to $18.56. That increase, combined with a slightly longer work week, lifted average weekly wages by 0.5%. But that still left weekly wages only 1% higher than they were a year ago, little better than the 0.9% rise posted for June. That increase was which the smallest increase in paychecks in 23 years.Talkback: Are you encouraged by the latest jobs report? Share your comments below. First Published: August 7, 2009: 8:41 AM ET






Jobs recovery: Wait till next year  15 worst office behaviors: fish! naked! nails!  Job losses ease but remain steep - ADP  Extreme job interviews 

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(CNNMoney.com) -- A key measure of consumer confidence jumped much more than predicted in August, as the job market outlook and business expectations improved, said a report released Tuesday.The Conference Board, a New York-based business research group, said Tuesday that its Consumer Confidence Index rose to 54.1 in August from an upwardly-revised 47.4 in July.Economists were expecting the index to increase to 48, according to a Briefing.com consensus survey. The measure is closely watched because consumer spending makes up two-thirds of the nation's economic activity.The index posted declines in June and July, but the reading "appears to be back on the mend," said Lynn Franco, a director at The Conference Board, in a prepared statement. "Consumers were more upbeat in their short-term outlook for both the economy and the job market in August," Franco added. But the reading for income expectations rose only slightly.Despite August's increase, the index remains at historically low levels. An overall reading above 90 indicates the economy is solid, and 100 or above signals strong growth. The report is based on a survey mailed to a representative sample of 5,000 U.S. households. The questionnaire asks whether respondents think current business conditions are good, bad or normal, about employment conditions, as well as if they expect employment or income levels to improve or deteriorate over the next six months.0:00
      /2:44Mixed signals on the recoveryJob market outlook. The percentage of respondents expecting more jobs in the next six months rose to 18.4% from 15.5%.Similarly, those saying jobs are "hard to get" slipped to 45.1% from 48.5% in August, while responses that jobs are "plentiful" ticked up to 4.2% from 3.7%.Earlier this month the Labor Department reported that 247,000 jobs were lost in July and the unemployment rate fell to 9.4% from 9.5% in June -- the first decline in more than a year. According to government figures, 237,000 fewer people were unemployed last month. That decline could be due to discouraged job seekers who have stopped looking, people who have now retired, or those have gone back to school. But the rate does include people who have exhausted their unemployment benefits or do not collect them. Income expectations. Consumers were only slightly more positive in their income expectations, Franco noted. Those expecting an increase in their incomes jumped to 10.6% from 10.1%. "As long as earnings continue to weigh heavily on consumers' minds, spending is likely to remain constrained," Franco said. Business conditions. Consumers anticipating business conditions to improve over the next six months increased to 22.4% from 18.4% in July, the report said. Conversely, respondents expecting conditions to worsen in the months ahead slipped to 15.8% from 19%.  First Published: August 25, 2009: 10:08 AM ET






Are you married to your financial opposite?  Consumer Spending Goes to the Dogs (and Cats) 

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(CNNMoney.com) -- The Securities and Exchange Commission overlooked "more than ample" evidence, including six complaints, that red-flagged the Bernard Madoff Ponzi scheme, an internal watchdog said Wednesday.A broad review of the SEC and its efforts at tracking Madoff found a "thorough and competent investigation was never performed.""Despite numerous credible and detailed complaints, the SEC never properly examined or investigated Madoff's trading and never took the necessary, but basic, steps to determine if Madoff was operating a Ponzi scheme," according to a 22-page SEC inspector general report.The report is a summary of a 450-page investigative report that is expected to highlight, in great detail, the different ways the agency missed the Madoff scandal. The full report is expected to be released Friday.Madoff, 71, was sentenced to 150 years in prison on June 29. He is incarcerated at a medium security federal prison in North Carolina. Judge Denny Chin of the U.S. District Court in Manhattan said he gave Madoff the maximum sentence based on the damage that Madoff inflicted on his thousands of victims. As in a classic Ponzi scheme, Madoff accepted funds from his investors and stole instead of investing it. He used fresh funds to make payments to other investors. The amount he stole, still under investigation, was likely in the billions of dollars.The summary released Wednesday cleared SEC agency staffers of "inappropriate" connections with Madoff. It said that a former SEC staffer's relationship with Madoff's niece did not influence their reviews of Madoff and his firm.But the report faults the agency for not adequately responding to complaints that date back to 1992 as well as two critical yet "reputable" media accounts that questioned Madoff's unusually consistent returns. The report says that the agency caught Madoff in lies but "disregarded these concerns.""Even when Madoff's answers were seemingly implausible, the SEC examiners accepted them at face value," the report said.The report added that the "most egregious" mistake was the failure of investigators to follow up on a tip that Madoff wasn't trading the volume of securities that he said he was trading. They had even asked for Madoff's "Depository Trust Company" account number, suggesting they intended to check with the independent clearinghouse. Even Madoff was spooked and thought at the time, "it was the end game, over." But the agency never followed through."A simple inquiry to one of several third parties could have immediately revealed the fact that Madoff was not trading in the volume he was claiming," the report said.Attorney Nancy Fineman interviewed Madoff this summer, and he talked about the piddle with SEC investigators who didn't follow up."He said he thought he'd come on Monday and he'd be shut down. And he wasn't, and he wasn't the next day, and he kept on defrauding," said Fineman of Cotchett, Pitre and McCarthy in San Francisco. "He knew that he was kind of a ticking time bomb since then." Several lawmakers on Wednesday seized on the inspector general's findings. Congress has been waiting for the report as it considers how to overhaul the financial regulatory system."The inspector general's report lays out the string of massive regulatory failures and incompetent investigations at the SEC that led to unimaginable loss for so many," said Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee. "We will use this report to learn what went wrong and figure out how best to get things right."Calls for actionThe final report is expected to be the most detailed picture yet of the SEC's failure to catch a Ponzi scheme so big that it touched thousands of investors.SEC Chairwoman Mary Schapiro said in a statement Wednesday that her office has beefed up enforcement in recent months and has begun "implementing the lessons learned." The agency has already shut down, by emergency restraining orders, more than twice the number of Ponzi schemes and frauds than the agency did last year, she said."The findings contained in the report reinforce my view that the many changes we have made since January will help the agency better detect fraud," Schapiro wrote.Schapiro was appointed by President Obama earlier this year. The former SEC chairman, Christopher Cox, asked Inspector David Kotz to delve into the Madoff scandal and the agency's failure to detect it last December. The Kotz report is also supposed to reveal whether internal agency policies failed to be enforced or were too weak to catch the scandal.In early March, Kotz told Congress that he planned, when his probe was final, to make recommendations ranging from disciplinary action to suggestions about how to avoid such mishaps in the future.CNN Radio Correspondent Steve Kastenbaum contributed to this report. First Published: September 2, 2009: 2:32 PM ET






SEC chief names four targets for scrutiny   5 fraud probes you haven't heard of 

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(CNNMoney.com) -- Whenever Alice Steinhardt walks into her office, her phone's message light is red.A foreclosure prevention counselor at Neighborhood Housing Services of New Haven, Steinhardt helps delinquent homeowners catch a break from their loan servicers. She usually gets more than a dozen calls a day, most from panicked homeowners, and a few from bank representatives she has been hounding on behalf of her clients.Somehow, she has to find enough time in her day, which usually stretches from 9 a.m. to well past 6 p.m., without a lunch break, to follow up on the calls. This is on top of meeting with clients, filling out and faxing loan modification forms and spending hours on the phone negotiating with servicers."The only way to really keep up would be to live here at the job," said Steinhardt, an artist by calling who has worked at NHS for seven years. "It's unrelenting."Like Steinhardt, other housing counselors around the country are trying to cope with an avalanche of troubled borrowers looking for help.The housing meltdown is into its third year, but counselors and servicers say their workloads are only increasing as the recession takes its toll and a growing number of distressed homeowners try to access President Obama's loan modification program.More than 13.5% of loans are delinquent or in foreclosure, up from 9% a year ago, according to the Mortgage Bankers Association. Prime loans, given to borrowers with the best credit backgrounds, are defaulting at the highest rates as unemployment continues to rise.CNNMoney.com spent a day in New Haven with Neighborhood Housing Services to chronicle how its five foreclosure prevention counselors are working to stem the crisis. The agency is on track to work with 1,000 clients at risk of losing their homes this year, double its 2008 caseload. Steinhardt has gotten 147 new clients since January.While many people from Obama on down have told servicers they must do more to help borrowers, the counselors in New Haven say they are arranging more workouts under the Obama plan than they ever have before. Sure, it can take faxing the same document several times, waiting a long time on hold or speaking to multiple representatives. But the counselors take that as a given by now."It's a world of difference," said Bridgette Russell, managing director of NHS' HomeOwnership Center. "Before, getting a modification was like pulling teeth. Now, modifications are not a foreign word. Slowly, but surely it's getting better."Rough road to modificationStill, the process is far from smooth. Russell herself had to scramble recently to rescue Clarence and Lena Cummings' application after their servicer told the New Haven couple their file was closed.0:00
      /3:02Bailout falls short for homeownersThe Cummings, who had been periodically out of work because of diabetes and asthma, were hoping to get out of their adjustable-rate mortgage that carried a 10.25% interest rate and a $1,921 monthly payment. They applied for a modification under the president's plan in March and called every few days to check their status. Meanwhile, they fell nearly $5,900 behind in payments.Always told their case was "in review," Lena Cummings was shocked to hear in mid-August that the file was closed because of outdated financial documents. A few days later, Russell succeeded in reopening the application by contacting the servicer and sending in updated information."It's been a long, long process," Russell said.Even when servicers are responsive, the calls aren't always quick and easy. One late August afternoon, Steinhardt spent more than 30 minutes on the phone with Carrington Mortgage Services trying to get modification application forms for another client.Tina Dowling came to NHS after falling $15,000 behind in her mortgage payments after a series of injuries kept her from her job in the New Haven Public Works department. On top of that, she had to evict a tenant from a rental unit in her house, temporarily depriving her of a much-needed income stream.Steinhardt and Dowling had met the previous week to compose a hardship letter to Carrington Mortgage. Dowling, who's looking to reduce her $1,874 monthly payment, came back to Steinhardt's cramped office for a call scheduled by a Carrington Mortgage agent. The New Haven resident wanted Steinhardt to do the talking.Looking for helpHere's how the next two hours unfolded.Steinhardt calls Carrington Mortgage, but the representative is not at her desk. She leaves a message, but doesn't stop there. The counselor speaks to three agents in order to get the necessary paperwork.Her efforts are almost derailed when the third agent initially says he can't talk to her because she doesn't know the password for NHS counselors. Fortunately, Dowling provides the necessary verification information.Very upbeat, the agent says he can e-mail the forms and prequalify Dowling in 20 minutes if she provides all the documents. Steinhardt closes her eyes and rubs her forehead as she recites her e-mail address.While they wait to make sure the e-mail arrives, Steinhardt and the agent go over the paperwork that must accompany the application.The e-mail never comes that afternoon, and the agent says the Web site doesn't have the most updated forms. Finally, he says he'll fax the documents and tells her to send the package to the original representative, who's handling the case. Steinhardt hangs up.After receiving the fax, Steinhardt and Dowling fill out Carrington Mortgage's hardship affidavit and the financial disclosure form. Though she found the call with the servicer very confusing, Dowling said she was relieved because "he sounds like he wants to help."At 4:56 p.m., she departs, promising to return within a few days with her 2008 tax returns, an insurance form and some recent pay stubs. Dowling delivers the documents a week later. After unsuccessfully trying to fax in the paperwork, Steinhardt e-mails it Wednesday to agent handling the case. The agent e-mailed back twice that she needs more documentation. Steinhardt hopes the file will be complete by Thursday afternoon.For its part, a Carrington Mortgage representative says the company takes care to ensure customers have the information they need to help the modification process go smoothly.For Steinhardt, the session with Dowling is all part of the job. A low-key woman who keeps candy on her desk to make distressed clients feel more at ease, Steinhardt said her interactions with servicers and borrowers usually don't frustrate her. Or, at least, she doesn't let it show."I always have a smile on my face," she said.Steinhardt's day, however, isn't over. She has to write down detailed notes on everything that transpired during the two-hour meeting to prepare for the next time she works on Dowling's case.And, of course, there are still seven voicemails to retrieve.Have you recently been laid off? Lost most of your retirement or college savings in the stock market? Dealt with the loss of the family breadwinner with no life insurance? If you've been confronted with some challenge during this recession and would like to have an expert review your situation, send an email to realstories@cnnmoney.com and you could be profiled in an upcoming segment on CNN. For the CNNMoney.com Comment Policy, click here.  First Published: September 3, 2009: 1:42 PM ET






Obama mortgage rescue: Only 9% getting help  U.S. to mortgage firms: Pick up the pace  Round 3: More help for homeowners  Obama widens mortgage refi program  Is Obama's foreclosure rescue plan working? 

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(CNNMoney.com) -- Rhode Island will be open for business Friday.State workers were scheduled to take their first of 12 furlough days ordered by Gov. Donald Carcieri. But a state Supreme Court justice temporary blocked the shutdown Thursday after several employee unions sued, arguing the move violated their contracts.More states are furloughing workers these days than at any time since the Eisenhower administration, but unions are increasingly fighting back. Rhode Island workers' victory Thursday is the latest in a string of legal actions aimed at stopping the shutdowns.Last month, a federal judge sided with government workers in Prince George's County, Maryland, who argued that a 10-day furlough violated their contract. After winning a similar ruling in July, Hawaii unions continue to battle Gov. Linda Lingle over her ongoing efforts to institute furloughs.A growing number of states are turning to furloughs in hopes of balancing their budgets. The recession -- and accompanying decline in tax revenues -- has wreaked havoc on state spending plans.Some 750,000 workers in 21 states are being affected by furloughs, said Sujit CanagaRetna, senior fiscal analyst at the Council of State Governments."It's the most number of furloughs we've seen in 50 years," he said. "It's a further indication of the gravity of the financial situation."Most governors work out agreements with employee unions in order to avoid legal action, experts said. They argue furloughs are more palatable than layoffs."Usually budget deals are negotiated," said Nick Johnson, director of the Center on Budget and Policy Priorities' state fiscal project. "It's unusual to wind up in court."But it may become more common. In Rhode Island, the two sides are returning to court next Friday for the full Supreme Court to review the unions' request.Carcieri, however, said Thursday that he has no choice but to reduce the state payroll. He has asked his department chiefs to identify the last 1,000 people hired and begin notifying them of impending job reductions."Preventing the state from moving forward with the shutdown days cripples our ability to address growing budget gaps," Carcieri said in a statement.Carcieri announced late last month that he would shut down the government for 12 days during fiscal 2010, which ends July 1. This equates to a 4.6% pay cut for public employees, but would save the state $21.6 million. The furlough was in part to slash $67.8 million from the budget.Union officials, however, argue there are other ways to address the state's fiscal shortfall, such as raising taxes."You cannot balance the state budget on the backs of state workers," said J. Michael Downey, president of Rhode Island Council 94 of the American Federation of State, County and Municipal Employees. First Published: September 3, 2009: 7:20 PM ET State budgets walloped again  Pennsylvania budget impasse takes toll on residents  Tax hikes and budget woes: States crunched  Recession realities: Stories from the frontline 

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(CNNMoney.com) -- So now the government's going to tell you what light bulb to buy, and it could be hazardous to your health.That was the takeaway from some conservative and libertarian-minded folks when the energy bill of 2007 mandated more efficient lighting that would lead to a gradual phase out of many incandescent bulbs. Europe's ban began this week and the new U.S. rules take effect in 2012.The concept of the government dictating light bulbs seemed too juicy for some groups to pass up. The fact that the more efficient fluorescent bulbs contain mercury - a highly toxic element - gave actual grounds for objection.But environmentalists point out that the increased electricity required to run a regular lightbulb from a powerplant produces a lot of mercury too.Nonetheless, criticism of fluorescent bulbs was fast and furious. "Everyone is being urged, cajoled and guilt-tripped into [replacing] Thomas Edison's incandescents," wrote the WorldNetDaily, a news Web site that bills itself as "a free press for a free people." "However, there is no problem disposing of incandescents...you can throw them in the trash can and they won't hurt the garbage collector...they won't kill people working in the landfills."The poster-child for the anti-fluorescent bulbers is Brandy Bridges, a mother in Maine who broke a bulb in her daughter's bedroom a couple years back.Bridges, aware the bulbs contained mercury, called state officials, who came over, did tests, and told her to have the room cleaned by a hazardous waste crew - to the tune of over $2,000. Maine officials eventually came to her house and cut out the carpet.This story has been widely circulated on the Internet, and sharp criticism of the government mandate continues today from email chain letters to rants on Capitol Hill. 0:00
      /5:42Betting on energy and techThe mandate, which doesn't ban incandescent bulbs but requires much greater efficiency that will effectively take most of them off the shelf, phases in starting in 2012. One in Europe began earlier this week.But much of the fear surrounding fluorescent light bulbs may be overblown.When contacted about the Bridges case, Maine officials said the advice to get a professional hazardous waste cleaner and remove the carpet was given before a policy on fluorescents was fully developed. They no longer tell people to call a hazmat crew or remove rugs, unless the homeowner is particularly concerned.Maine regulators, along with national environmental groups, consumer advocates and the federal government, all still recommend using the energy-saving bulbs.When it comes to safety, they say the amount of mercury in a fluorescent bulb is so small it should not present a health risk. According to the Environmental Protection Agency, the average fluorescent light bulb contains about 4 milligrams of mercury, over 100 times less than found in an old mercury thermometer.Consumer Reports just did extensive testing of the bulbs and found that many contain even less mercury - some had just 1 milligram."It's not something to panic about," said Celia Kuperszmid Lehrman, deputy home editor at Consumer Reports. "Tube fluorescents like we all have in our offices and schools have mercury too, and it's not like they evacuate a school every time a bulb breaks."Still, the bulbs should be handled with care if broken. EPA recommends several steps including cleaning up the glass with cardboard or another item that can be disposed of after, opening the window, and putting the remnants in an outside garbage can.If your town collects other household hazardous waste like batteries, paint or cleaning supplies, then you should dispose of the bulbs in the same manner. Home Depot and Ikea will recycle any old fluorescent bulbs, no mater where they were purchased.Also, if the light is close to small children or pets that may easily knock it over, it's probably best to use another type of bulb. Efficient, mercury-free incandescents like halogen lights, as well as LED lights will still be available after the new efficiency standards kick in.The benefits of using fluorescent bulbs, experts say, far outweighs any mercury risk.When it comes to mercury content, a fluorescent bulb ends up putting far less mercury into the environment compared to all the extra electricity required to run an inefficient bulb - four times less mercury, according to Noah Horowitz of the Natural Resources Defense Council.If the whole country switched to fluorescents, says Horowitz, it would eliminate the need to build 30 new coal power plants and save as much electricity as used by all the homes in Texas.Then there's the cost savings. Consumer reports estimates that each incandescent replaced with a $1.50 fluorescent will save an individual $56 in electricity costs over the life of the bulb. "You'd be hard pressed to find a better deal for your wallet or the environment," said Horowitz.Still, some people remain unconvinced.For starters, many say if fluorescent bulbs were really better, people would buy them on their own.For her part Bridges, contacted at her home in Maine, says she'll never go back to fluorescent bulbs and has little faith in experts telling her what's safe."Remember, at some point lead paint wasn't a big deal either," she said. Have you recently been laid off? Lost most of your retirement or college savings in the stock market? Dealt with the loss of the family breadwinner with no life insurance? If you've been confronted with some challenge during this recession and would like to have an expert review your situation, send an email to realstories@cnnmoney.com and you could be profiled in an upcoming segment on CNN. For the CNNMoney.com Comment Policy, click here.  First Published: September 3, 2009: 12:56 PM ET






Light bulb ban is no bright idea  Tricked-out jet combats Calif. blaze  Green tech investing is back  with a vengeance 

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(CNNMoney.com) -- As Michigan's economy worsened last year, Michael Hester decided it was time to leave the private sector to work in the prison system, figuring a state job as a corrections officer would be more stable."I left a better paying job thinking I'd have better security," he said. "I guessed wrong."On Aug. 8, Hester was laid off from his as job at Kinross Correctional Facility in Michigan's Upper Peninsula. In just one day, the town lost two of its four prisons and nearly 80 officers. One facility shut down, and two other prisons were consolidated into one. Thirty-five officers were laid off, and 43 were transferred to prisons elsewhere in the state, while about 1,000 inmates were relocated out of town or paroled.Hester made $15.23 an hour as a corrections officer. But now, on unemployment, he's afraid that he and his wife might lose their house."In another month or two, money's going to be real tight," he said. "I can't make another mortgage payment on unemployment. I've been looking around [for another job,] but there isn't much out there."Hester's former boss, Warden Jeff Woods, said that he worked hard to avoid layoffs over the past year by minimizing new hires as older workers retired.Despite Woods' efforts, that's still 200 fewer jobs in the community including the layoffs and transfers. "Those jobs are gone," he said.From military base to prison townLarry Palma came to Kinross as an 18-year-old recruit in the 1960s to serve at the local Air Force base. The town seemed bleak at first. "I got dropped off at the flagpole in the middle of winter at one o' clock in the morning," he said. "But then I learned to love it because I really love to hunt and fish." After he finished his military time, Palma decided to stay, and now he's the Township Supervisor.The Air Force built the base during World War II, and it was a major driver of the local economy until it closed in 1977. But town officials successfully lobbied the state to convert part of the abandoned facility into a prison."The prison system is what saved us from becoming just a no-man's land," said Palma.Barracks that were once temporary residences for airmen are now the permanent homes of convicts serving life sentences. The grounds where military personnel use to train and drill are now prison yards where inmates play basketball and lift weights. The remaining prisons, Kinross and Chippewa Correctional Facility, are surrounded by tall double-fences of gleaming razor wire. The now-shuttered Hiawatha facility stands empty, except for the personnel who are stripping it down for equipment that can be transferred to other prisons.Now Palma is concerned for its survival once again. "As far as the whole impact, we don't know how major it's going to be yet; we just know it's not going to be good," he said. "We know that it's not going to get better. We know that it's going to get worse."0:00
      /2:21Prison closure falloutKinross Deputy Supervisor Dorothy Johnson said the economic results have been "devastating" in this small town, whose 4,300 inmates outnumber its 3,600 residents.As a result of the closure, Johnson said the town no longer gets $20,000 a month for water utilities it used to provide to Hiawatha. The town will also no longer be eligible for nearly $30,000 in annual state revenue it received from the 1,000 inmates who were transferred elsewhere, as a result of the drop in population. Furthermore, those prisoners used to draw up to 5,000 annual visitors who would spend money in the town's stores, restaurants and gas stations.But the greatest damage, she said, is to the local real estate market. "For sale" signs have popped up all over town, but there are few buyers.Housing demand started to dry up in the spring, when rumors first emerged of the imminent closure, according to Joan Reed, associate broker and owner at RE/MAX Eagle Properties in Kinross."Potential homeowners and buyers definitely put the brakes on, not just because of a prison closure, but because of the potential for more," she said.Reed said the instability of the state prison system has changed the way realtors and lenders view officers, who were once considered prime candidates for loans.Now, she said, a typical corrections officer is considered "probably as a weaker candidate for financing, especially if the income of the family is solely dependent on the corrections officer's income."A tough job, but it pays the billsWarden Woods, who used to head Hiawatha and continues to lead the Kinross prison, said the average pay for a local corrections officer is about $24 an hour."In Michigan, that's a comfortable living," he said. "You're not going to get rich, but certainly you can pay your bills."And according to Jim Johnson, a union representative for corrections officers who has worked at Kinross for 21 years, the guards earn every penny."When you're in there, it's a different world," he said. "Some days are like being in combat in there. Other days are pretty easy, but still, the stress is always there."Johnson, who is married to Kinross Deputy Supervisor Dorothy Johnson, said a single guard watches over almost a hundred inmates in the prison's housing unit."As a corrections officer, when you walk in the door and you've got 96 inmates you'll be working with for eight hours, you better have good communications skills," said Johnson. "You can't just use brute force or you're not going to last. I've seen it tried."Johnson said 14 of the 35 laid-off officers have been hired back, but he is worried there will be another wave of pink slips, and former guards like Hester aren't expecting to get called back."I wish the decision makers in [the state capital of] Lansing would spend a day in a facility and see what's it like," said Hester. "Because they don't need to cut correction officers. It's a dangerous job."Still, Hester said he would gladly walk the yard again, if only to be able to pay his mortgage. He lives in Hessel, a farm-dotted area near shimmering Lake Huron, where bald eagles are a common sight. He doesn't want to leave it behind, but he realizes that he may have to, even if it means losing his home."I could put it up for sale, but it's going to sit there like everything else, because there's nothing selling right now," said Hester. "If I have to lose the house and look for a job somewhere else, I guess I will, but I don't want to leave Michigan. I was born and raised here. I hate to leave it. But I have to do what I have to do."  Have you suffered a setback because of the economy? What are you doing to overcome it and get back on track? If you've been confronted with some challenge during this recession but are fighting back, send an email to realstories@cnnmoney.com and you could be profiled in an upcoming segment on CNN. For the CNNMoney.com Comment Policy, click here.  First Published: September 4, 2009: 4:12 AM ET Need a job? Ask the Feds  When jobless benefits run out  Detroit's jobless economy: Startups take root  Solar brightens a bleak Michigan town  Hunger hits Detroit's middle class 

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(CNNMoney.com) -- Hundreds of thousands of first-time homebuyers across the country have begun to claim their tax credits, according to new government data released on Friday.So far, nearly 315,000 people have claimed the tax credit after filing an amended 2008 tax return, according to a Treasury Department report on the status of the Recovery Act. California led all states with 42,304 claimed credits.Eligible first-time homebuyers can claim the credit of up to $8,000 -- or 10% of the home's value, whichever is less -- on either an amended 2008 return or on their 2009 return.Treasury's figures more than likely sharply underestimate the real number of people who have taken advantage of the credit because many homebuyers have not yet claimed it on their tax return. According to a recent National Association of Realtors survey, about 1.1 million first-time homebuyers have used the credit. NAR expects that number to grow to about 1.8 million by the time the credit expires on Nov. 30. The discrepancy between Treasury and NAR probably stems from the fact that a majority of eligible first-time homebuyers have opted to wait to file for the credit on their 2009 returns, which they can file in early 2010.State-by-state data. The Treasury figures show how some of the hardest-hit states during the housing downturn are now among the states with the largest numbers of claimed tax credits.California, Georgia, Florida, Arizona and Michigan are all in the top 10, when it comes to claiming the credits. Though part of that is likely skewed by population figures, other large states like New York and Virginia have been left in the dust."We're seeing some big increases in many of the areas with the biggest price corrections," said NAR spokesman Walter Maloney. "That's no coincidence."A National Delinquency Report from the Mortgage Bankers Association showed that California, Florida, Arizona and Nevada combined accounted for 44% of all foreclosure starts during the quarter. Last quarter, the Cape Coral metro area in Florida recorded the largest decline in home prices: 52.8% to $84,000, according to a NAR report. After California, Texas and Florida were the next states with the largest number of claims, with over 29,000 each. Arizona had nearly 9,300 claims and Nevada rounded out the top 20, with 5,259.Most of the smaller states made up the bottom of the list, with Vermont's first-time buyers bringing up the rear, claiming just 351 credits. Applying for the credit is as easy as filing income taxes. First-time homebuyers just have to claim it on their return -- no other forms or papers have to be filed. National Association of Realtors estimated an extra 350,000 sales will occur this year, solely because of the credit. The National Association of Homebuilders, more conservatively predicted 165,000 extra home sales. First Published: September 4, 2009: 1:57 PM ET






Act fast! Homebuyer tax credit ends soon  New home sales blast past expectations 

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(CNNMoney.com) -- Happy Labor Day weekend. Or for the 1.5 million of you out there (including me) estimated to be taking a plane somewhere, good luck in the airport.As any frequent flier knows, the airline industry is, to quote Jimi Hendrix, "a frustrating mess." And about the only thing more frustrating than flying is trying to make money by investing in airline stocks. Most major carriers routinely lose money, despite the fact that they now seem to charge you extra fees for everything but the pleasure of breathing the pressurized air. JetBlue (JBLU) is the only big airline expected to post a profit this year. Just about every time the price of oil goes up (and it has soared about 45% since mid-February), the chances for airlines to make money shrinks. And many airlines have been in and out of bankruptcy almost as many times as the Duggar family pops out kids. So you might be surprised to know that airline stocks have far outperformed the broader market since stocks started rallying this spring. The NYSE Arca Airline Index has skyrocketed more than 80%. The banking sector is one of only a few industries to do better than airlines during this stretch. What gives? Do airlines have more room to run before they reach cruising altitude? Or are they about to finally start making their descent back to earth?Well, very much like banks, airline stocks were priced at overly depressed levels. So their bounce shouldn't be a huge surprise given that many investors now think the worst is over for the economy."The stocks have had an amazing move since March. But if you go back to that time frame, investors were thinking that the whole industry would go bankrupt," said Helane Becker, a transportation analyst with Jesup & Lamont Securities Corp. But the hopes of a global economic recovery haven't yet translated into an increase in air travel -- which means investors need to be cautious. Earlier this week, Continental Airlines (CAL, Fortune 500), US Airways Group (LCC, Fortune 500), United Airlines parent UAL (UAUA, Fortune 500), and American Airlines parent AMR (AMR, Fortune 500) all reported traffic declines in August from a year ago. The one exception to the rule was Southwest Airlines (LUV, Fortune 500), which announced Friday that traffic was up 1% from a year ago.0:00
      /3:51JetBlue's growth challengeTo be fair, the airlines all have been cutting capacity, which is good news since it should lead to lower expenses. But like other sectors of the economy, slashing costs will only take the stocks so far. Sooner or later, investors will demand to see signs of sales growth.That's not happening yet. The only major airline expected by analysts to post an increase in revenues this year is Delta Air Lines (DAL, Fortune 500) -- and that's only because of the big boost it got from its merger with Northwest last year. If the economic recovery is for real though, airlines could start to show increased revenue in short order. As annoying as all these new bag check surcharges are for customers, they could help lead the airline industry out of its rut. Craig Hodges, co-manager of the Hodges fund, which owns shares of Continental and Southwest, said it is not that much of a stretch to think that many airlines could become profitable if the economy keeps recovering and if oil prices either remain steady or don't head much higher."The airlines are finding a lot of new revenue sources. The problem is that it's not evident in their total sales because demand is still weak," Hodges said. "But if demand comes back and oil stabilizes, then airlines could start earning money again." Becker said that she also thinks sales should start to improve later this year and into 2010. But there are several wild cards that make her a little wary. "There could be a pullback in the stocks," she said. "Could the economy double dip and we go into another recession? We worry about that. The H1N1 flu could hurt global travel. And is corporate travel coming back?" That said, Becker doesn't think investors should dump all airline stocks. She said that of the major carriers, Delta is still a good buy. But she prefers some of the smaller, regional carriers as well that have more of a focus on domestic instead of international travel. She recommends Hawaiian Holdings (HA), Allegiant Travel (ALGT) and AirTran Holdings (AAI). All three reported a profit in the second quarter and are expected to make money for the full year. Profitable airlines? Imagine that. What's next -- on time arrivals and free pillows? A boy can dream.Talkback: What do airlines need to do to be profitable more consistently? Are there any airlines that you either enjoy flying with or think is a good investment? Share your comments below. First Published: September 4, 2009: 12:25 PM ET






`Watch video editions of The Buzz  Nothing blue about JetBlue  Southwest offers early boarding option for $10  Bankruptcy's repeat offenders 

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(CNNMoney.com) -- A key measure of consumer confidence jumped much more than predicted in August, as the job market outlook and business expectations improved, said a report released Tuesday.The Conference Board, a New York-based business research group, said Tuesday that its Consumer Confidence Index rose to 54.1 in August from an upwardly-revised 47.4 in July.Economists were expecting the index to increase to 48, according to a Briefing.com consensus survey. The measure is closely watched because consumer spending makes up two-thirds of the nation's economic activity.The index posted declines in June and July, but the reading "appears to be back on the mend," said Lynn Franco, a director at The Conference Board, in a prepared statement. "Consumers were more upbeat in their short-term outlook for both the economy and the job market in August," Franco added. But the reading for income expectations rose only slightly.Despite August's increase, the index remains at historically low levels. An overall reading above 90 indicates the economy is solid, and 100 or above signals strong growth. The report is based on a survey mailed to a representative sample of 5,000 U.S. households. The questionnaire asks whether respondents think current business conditions are good, bad or normal, about employment conditions, as well as if they expect employment or income levels to improve or deteriorate over the next six months.0:00
      /2:44Mixed signals on the recoveryJob market outlook. The percentage of respondents expecting more jobs in the next six months rose to 18.4% from 15.5%.Similarly, those saying jobs are "hard to get" slipped to 45.1% from 48.5% in August, while responses that jobs are "plentiful" ticked up to 4.2% from 3.7%.Earlier this month the Labor Department reported that 247,000 jobs were lost in July and the unemployment rate fell to 9.4% from 9.5% in June -- the first decline in more than a year. According to government figures, 237,000 fewer people were unemployed last month. That decline could be due to discouraged job seekers who have stopped looking, people who have now retired, or those have gone back to school. But the rate does include people who have exhausted their unemployment benefits or do not collect them. Income expectations. Consumers were only slightly more positive in their income expectations, Franco noted. Those expecting an increase in their incomes jumped to 10.6% from 10.1%. "As long as earnings continue to weigh heavily on consumers' minds, spending is likely to remain constrained," Franco said. Business conditions. Consumers anticipating business conditions to improve over the next six months increased to 22.4% from 18.4% in July, the report said. Conversely, respondents expecting conditions to worsen in the months ahead slipped to 15.8% from 19%.  First Published: August 25, 2009: 10:08 AM ET






Are you married to your financial opposite?  Consumer Spending Goes to the Dogs (and Cats) 

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(CNNMoney.com) -- Hundreds of thousands of first-time homebuyers across the country have begun to claim their tax credits, according to new government data released on Friday.So far, nearly 315,000 people have claimed the tax credit after filing an amended 2008 tax return, according to a Treasury Department report on the status of the Recovery Act. California led all states with 42,304 claimed credits.Eligible first-time homebuyers can claim the credit of up to $8,000 -- or 10% of the home's value, whichever is less -- on either an amended 2008 return or on their 2009 return.Treasury's figures more than likely sharply underestimate the real number of people who have taken advantage of the credit because many homebuyers have not yet claimed it on their tax return. According to a recent National Association of Realtors survey, about 1.1 million first-time homebuyers have used the credit. NAR expects that number to grow to about 1.8 million by the time the credit expires on Nov. 30. The discrepancy between Treasury and NAR probably stems from the fact that a majority of eligible first-time homebuyers have opted to wait to file for the credit on their 2009 returns, which they can file in early 2010.State-by-state data. The Treasury figures show how some of the hardest-hit states during the housing downturn are now among the states with the largest numbers of claimed tax credits.California, Georgia, Florida, Arizona and Michigan are all in the top 10, when it comes to claiming the credits. Though part of that is likely skewed by population figures, other large states like New York and Virginia have been left in the dust."We're seeing some big increases in many of the areas with the biggest price corrections," said NAR spokesman Walter Maloney. "That's no coincidence."A National Delinquency Report from the Mortgage Bankers Association showed that California, Florida, Arizona and Nevada combined accounted for 44% of all foreclosure starts during the quarter. Last quarter, the Cape Coral metro area in Florida recorded the largest decline in home prices: 52.8% to $84,000, according to a NAR report. After California, Texas and Florida were the next states with the largest number of claims, with over 29,000 each. Arizona had nearly 9,300 claims and Nevada rounded out the top 20, with 5,259.Most of the smaller states made up the bottom of the list, with Vermont's first-time buyers bringing up the rear, claiming just 351 credits. Applying for the credit is as easy as filing income taxes. First-time homebuyers just have to claim it on their return -- no other forms or papers have to be filed. National Association of Realtors estimated an extra 350,000 sales will occur this year, solely because of the credit. The National Association of Homebuilders, more conservatively predicted 165,000 extra home sales. First Published: September 4, 2009: 1:57 PM ET






Act fast! Homebuyer tax credit ends soon  New home sales blast past expectations 

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(CNNMoney.com) -- Happy Labor Day weekend. Or for the 1.5 million of you out there (including me) estimated to be taking a plane somewhere, good luck in the airport.As any frequent flier knows, the airline industry is, to quote Jimi Hendrix, "a frustrating mess." And about the only thing more frustrating than flying is trying to make money by investing in airline stocks. Most major carriers routinely lose money, despite the fact that they now seem to charge you extra fees for everything but the pleasure of breathing the pressurized air. JetBlue (JBLU) is the only big airline expected to post a profit this year. Just about every time the price of oil goes up (and it has soared about 45% since mid-February), the chances for airlines to make money shrinks. And many airlines have been in and out of bankruptcy almost as many times as the Duggar family pops out kids. So you might be surprised to know that airline stocks have far outperformed the broader market since stocks started rallying this spring. The NYSE Arca Airline Index has skyrocketed more than 80%. The banking sector is one of only a few industries to do better than airlines during this stretch. What gives? Do airlines have more room to run before they reach cruising altitude? Or are they about to finally start making their descent back to earth?Well, very much like banks, airline stocks were priced at overly depressed levels. So their bounce shouldn't be a huge surprise given that many investors now think the worst is over for the economy."The stocks have had an amazing move since March. But if you go back to that time frame, investors were thinking that the whole industry would go bankrupt," said Helane Becker, a transportation analyst with Jesup & Lamont Securities Corp. But the hopes of a global economic recovery haven't yet translated into an increase in air travel -- which means investors need to be cautious. Earlier this week, Continental Airlines (CAL, Fortune 500), US Airways Group (LCC, Fortune 500), United Airlines parent UAL (UAUA, Fortune 500), and American Airlines parent AMR (AMR, Fortune 500) all reported traffic declines in August from a year ago. The one exception to the rule was Southwest Airlines (LUV, Fortune 500), which announced Friday that traffic was up 1% from a year ago.0:00
      /3:51JetBlue's growth challengeTo be fair, the airlines all have been cutting capacity, which is good news since it should lead to lower expenses. But like other sectors of the economy, slashing costs will only take the stocks so far. Sooner or later, investors will demand to see signs of sales growth.That's not happening yet. The only major airline expected by analysts to post an increase in revenues this year is Delta Air Lines (DAL, Fortune 500) -- and that's only because of the big boost it got from its merger with Northwest last year. If the economic recovery is for real though, airlines could start to show increased revenue in short order. As annoying as all these new bag check surcharges are for customers, they could help lead the airline industry out of its rut. Craig Hodges, co-manager of the Hodges fund, which owns shares of Continental and Southwest, said it is not that much of a stretch to think that many airlines could become profitable if the economy keeps recovering and if oil prices either remain steady or don't head much higher."The airlines are finding a lot of new revenue sources. The problem is that it's not evident in their total sales because demand is still weak," Hodges said. "But if demand comes back and oil stabilizes, then airlines could start earning money again." Becker said that she also thinks sales should start to improve later this year and into 2010. But there are several wild cards that make her a little wary. "There could be a pullback in the stocks," she said. "Could the economy double dip and we go into another recession? We worry about that. The H1N1 flu could hurt global travel. And is corporate travel coming back?" That said, Becker doesn't think investors should dump all airline stocks. She said that of the major carriers, Delta is still a good buy. But she prefers some of the smaller, regional carriers as well that have more of a focus on domestic instead of international travel. She recommends Hawaiian Holdings (HA), Allegiant Travel (ALGT) and AirTran Holdings (AAI). All three reported a profit in the second quarter and are expected to make money for the full year. Profitable airlines? Imagine that. What's next -- on time arrivals and free pillows? A boy can dream.Talkback: What do airlines need to do to be profitable more consistently? Are there any airlines that you either enjoy flying with or think is a good investment? Share your comments below. First Published: September 4, 2009: 12:25 PM ET






`Watch video editions of The Buzz  Nothing blue about JetBlue  Southwest offers early boarding option for $10  Bankruptcy's repeat offenders