Impact of Houston’s economy is felt well beyond its area

 The Houston that was battered by Hurricane Harvey is an economic powerhouse whose influence reaches far beyond its region, leading many to worry about when its economy be able to stand up again.

Houston produces the plastic used in everything from sports cars to baby bottles and is part of a low-lying coastal region that supplies nearly a third of U.S. oil-refining capacity. As the fourth-largest U.S. city, with 2.3 million people, it is also headquarters for 20 Fortune 500 companies. “There’s nothing being sold, nothing being manufactured and nothing being shipped in a city with a $500 billion economy,” says Patrick Jankowski, an economist with the Greater Houston Partnership, which promotes regional economic development. “Nothing is happening in Houston except rescues and people watching people get rescued.” “Greater Houston is a major engine of the U.S. economy,” IHS Markit says. Its port is the second-busiest in the United States. Its two airports handle 26 million passengers a year. And its world-class cancer center processes 13,000 cases a week, many of them booked by patients flying in from abroad. If it were an independent country, Houston would boast the world’s 23rd-biggest economy, just below Sweden and just above Poland. Forecasters aren’t yet sure exactly how high the economic damage will go, how far it will spread or how long it will last. The more than 50 inches of rain that flooded Houston left much of the city underwater and its manufacturing base all but immobilized. Macroeconomic Advisers, a forecasting firm, calculates that economic damage from Hurricane Harvey could shave between 0.3 and 1.2 percentage points off the nation’s economic growth in the July-September quarter. Before the storm, the economy had been expected to grow at an annual rate of about 3 percent from July through September.

Largest US refinery Motiva may be shut up to two weeks: Report

A refinery operates during Hurricane Harvey near Seadrift, Texas, August 26, 2017.
Rick Wilking / Reuters A refinery operates during Hurricane Harvey near Seadrift, Texas, August 26, 2017.
Motiva Enterprises’ Port Arthur, Texas refinery, the nation’s largest, may be shut as long as two weeks for assessment of the plant and repair of any damage, sources familiar with plant operations said on Thursday. The 603,000 barrel per day (bpd) Port Arthur Refinery was shut on Wednesday due to flooding from Tropical Storm Harvey. In a statement to CNBC, Motiva said it “cannot provide a timeline for restart at this time.” The oil company says it will begin assessing the refinery “as soon as the local area flooding has receded,” although Motive is uncertain about how long it will take for floodwaters to diminish.

Wells Fargo uncovers up to 1.4 million more fake accounts

Wells Fargo has uncovered up to 1.4 million more fake accounts after digging deeper into the bank’s broken sales culture.

The findings show that Wells Fargo’s problems are worse than the bank previously admitted to when the scandal began almost a year ago. Wells Fargo(WFC) now says it has found a total of up to 3.5 million potentially fake bank and credit card accounts, up from its earlier tally of approximately 2.1 million. The additional fake accounts were discovered by a previously-announced analysis that went back to January 2009 and that reviewed the original May 2011 to mid-2015 period. About 190,000 accounts were slapped with unnecessary fees for these accounts, Wells Fargo said. That’s up from 130,000 previously. Wells Fargo also discovered a new problem: thousands of customers were also enrolled in online bill pay without their authorization. The review found 528,000 potentially unauthorized online bill pay enrollments. Wells Fargo blamed unrealistic sales goals placed on employees for encouraging the unauthorized bill pay and bank account openings. “We apologize to everyone who was harmed by unacceptable sales practices that occurred in our retail bank,” Wells Fargo CEO Tim Sloan said in a statement. Wells Fargo is trying to make things right by scrapping its sales goals, installing new management and paying out millions in refunds. Wells Fargo said it will now pay a total of $6.1 million to refund customers for unauthorized bank and credit card accounts, up from $3.3 million previously. The bank also promised to pay $910,000 to refund customers for the 528,000 potentially improper online bill pay enrollments. Additionally, Wells Fargo has agreed to a $142 million national class action settlement to cover fake accounts that were opened back to 2002. That settlement received preliminary approval from a federal judge in July.

 

Source: Lobbyist in Trump Tower meeting spoke to grand jury

WASHINGTON (AP) — A grand jury used by Special Counsel Robert Mueller has heard secret testimony from a Russian-American lobbyist who attended a June 2016 meeting with President Donald Trump’s eldest son, The Associated Press has learned. A person familiar with the matter confirmed to the AP that Rinat Akhmetshin had appeared before Mueller’s grand jury in recent weeks. The person spoke on condition of anonymity to discuss the secret proceedings. The revelation is the clearest indication yet that Mueller and his team of investigators view the meeting, which came weeks after Trump had secured the Republican presidential nomination, as a relevant inquiry point in their broader probe into Russian interference in the 2016 election. The meeting included Donald Trump Jr.; the president’s son-in-law, Jared Kushner; and his former campaign chairman, Paul Manafort. Emails released by Trump Jr. show he took the meeting expecting that he would be receiving damaging information about Hillary Clinton as part of what was described to him as a Russian government effort to aid the Trump campaign. The confirmation of Akhmetshin’s grand jury testimony comes after he spoke at length about his involvement in the Trump Tower meeting in an interview with the AP last month. Akhmetshin, a former Soviet military officer who served in a counterintelligence unit, is also a well-known Washington lobbyist. He has been representing Russian interests trying to undermine the story of lawyer Sergei Magnitsky, who died in a Russian prison and is the namesake of a U.S. sanctions law.

In addition to Akhmetshin, other attendees at the meeting included Russian lawyer Natalia Veselnitskaya, music publicist Rob Goldstone — who helped arrange the gathering — and a translator. Ike Kaveladze, who also goes by the name Irakly Kaveladze, also attended the meeting. Kaveladze works for a Russian developer who once partnered with Trump to bring the Miss Universe pageant to Moscow.

An email exchange posted to Twitter by Trump Jr. showed him conversing with Goldstone, who wanted him to meet with someone he described as a “Russian government attorney,” who supposedly had dirt on Clinton as “part of Russia and its government’s support for Mr. Trump.”

2 explosions rock flooded Houston-area chemical plant

CROSBY, Texas (AP) — A Houston-area chemical plant that lost power after Harvey engulfed the area in extensive floods was rocked by two explosions early Thursday, the plant’s operator said. Arkema Inc. said in a statement on its website that the Harris County Emergency Operations Center reported two explosions and black smoke coming from the plant at about 2 a.m. Authorities have not released information on how dangerous the explosions were or whether they sparked a fire at the Arkema plant in Crosby, Texas. An AP photographer at a roadblock about 2 miles (3 kilometers) from the scene could see no sign of a blaze at the chemical plant as the sun rose Thursday morning. The Harris County Fire Marshal’s Office said there had been “a series of chemical reactions” at the plant and advised people to stay away from the area. A plant spokeswoman said late Wednesday that the flooded facility had lost power and backup generators due to the flooding, leaving it without refrigeration for chemicals that become volatile as the temperature rises. The plant is about 25 miles (40 kilometers) northeast of Houston. “The fire will happen. It will resemble a gasoline fire. It will be explosive and intense in nature,” spokeswoman Janet Smith told The Associated Press late Wednesday.

 

Stations may run out of gas this Labor Day weekend

Trump’s Wall Street-friendly tax plan faces roadblocks on Main Street

President Donald Trump participates in a tax reform kickoff event at the Loren Cook Company in Springfield, MO, on August 30, 2017.
Jim Watson | AFP | Getty Images President Donald Trump participates in a tax reform kickoff event at the Loren Cook Company in Springfield, MO, on August 30, 2017. President Donald Trump today offered Americans an appealing description of the tax reform he wants – but none of the details.

 

There are good reasons for that.

As president, he hasn’t yet come up with a detailed tax reform plan. As a 2016 candidate, he did. But those details don’t match today’s description, and they represent the opposite of what Trump’s core supporters, as well as most Americans, say they want. In remarks in Springfield, Mo., the president called for tax reform in the name of “loyal, hard-working Americans and their families,” “middle-class families,’ “the forgotten people,” and U.S. companies struggling under tax burdens much higher than those in other countries. The result, he said, would be “a big, fat, beautiful paycheck” and restored pride for American workers – at the expense of “deep-pocketed special interests” and wealthy people like himself. The tax reform plan candidate Trump proposed indeed would increase take-home pay for workers in the center of the income scale. Depending on assumptions about economic growth and final legislative language, the conservative Tax Foundation estimated that the middle 20% of earners would see after-tax income rise by anywhere from 1.3% to 9%.But that plan, which would have cut the top personal rate and eliminated both the alternative minimum and estate taxes, gave the wealthy much greater benefits. The Tax Foundation said the top 1% of earners – such as Trump – would gain anywhere from 10.2% to 19.9%. The reason Trump skipped over those details, while suggesting his plan would accomplish something very different, is that Americans tell pollsters they want something very different. In a Gallup poll from April, six in 10 Americans overall said upper-income earners pay too little in taxes. They’ve said the same thing in Gallup surveys going back a quarter-century as income inequality has widened in the U.S. economy.

Continue reading “Trump’s Wall Street-friendly tax plan faces roadblocks on Main Street”

Economist who nailed the cost of Katrina thinks the final bill for Harvey could be larger

Getty Images A Coast Guard rescue boat carries US Army 82nd Airborne Division soldiers as it searches a flooded street in New Orleanss two weeks after Hurricane Katrina hit

Just two weeks after Hurricane Katrina ripped through New Orleans in 2005, economist Cary Leahey of Decision Economics Inc. sat down and wrote a report to his clients estimating that total damages would total $125 billion, making the storm the nation’s largest natural disaster ever. A dozen years later, Leahey’s estimate stands the test of time. In fact, the official government estimate of the cost of the storm is $125 billion in nominal terms, according to the National Oceanic and Atmospheric Administration or NOAA. Leahey now thinks that the damage from Hurricane Harvey could be “mind boggling” and rival or even exceed Katrina. Estimates he has seen from some major Wall Street banks are too timid, he said. “No analyst is willing to suggest that the impact on GDP growth will be worse than 0.5% to 0.75 percentage point reduction to GDP growth,” that was the ultimate impact of Katrina, Leahey said. But he said he is leaning towards thinking the drop in GDP could well be 1% or larger. There could be a potential one million workers dropped from payrolls in the September employment report, Leahey said. That would be four times the government’s unofficial estimate of the 230,000 lost jobs from Katrina. “The area affected by Harvey is four-to-five times larger in GDP and employment size than the coastal Louisiana area hit by Katrina,” he said. The Houston area represents 3.5% of GDP and 2.4% of employment, while New Orleans represented only 0.7% of GDP and employment.

Donald Trump Snubs Gary Cohn in Tax Policy Speech; Praises Daughter Ivanka

The president thanked “many distinguished guests” in his administration, including Secretary of the Treasury Steve Mnuchin, Secretary of Commerce Wilbur Ross, Small Business Administrator Linda McMahon. He also introduced and thanked several members of Congress, as well as the executives from the Loren Cook Company in Missouri where he delivered his speech. “Anybody I forgot?” Trump asked, before continuing with his speech. Despite traveling with the president to the event, Cohn, the former COO of Goldman Sachs, was not mentioned at any point in the speech, despite his efforts in the White House to promote tax reform. Trump also welcomed praised and thanked his daughter Ivanka Trump, who was in the audience. “Before I start, Ivanka Trump, I see my beautiful daughter’s in the audience. Stand up, honey,” Trump said as the audience cheered. “She’s working very hard. I’m very proud of Ivanka.” Trump’s daughter wants tax code reform to help make it easier for working mothers to pay for childcare. “It’s very, very important to everybody in this room, but so important to my daughter,” Trump said. “It’s one of her real big beliefs.” After the speech, White House aides defended Cohn to reporters who noticed the slight.

Trump Drops Deficit and Debt from Tax Cut Principles

President Trump on Wednesday outlined a framework for his administration’s plans to reform taxes in the U.S.One notable omission: concern over the effect of tax cuts on federal budget deficits and federal debt levels.

Trump’s speech emphasized overarching themes rather than details about tax cuts and other changes to the U.S. tax system. He announced four principles would guide his administration’s efforts on taxes: a tax code that is simple and easy to understand, a globally competitive rate on business taxes, tax relief for middle class families, and a tax break for corporate profits repatriated from abroad. This was a departure from the principles of tax reform announced during the 2016 campaign. During the campaign, Trump said his tax plan would be designed to meet “four simple goals.” Those were: tax relief for middle class Americans, simplify the tax code, grow the American economy with changes to corporate code, and not add to the debt or deficit of the federal government. What appears to have happened is that Trump dropped debt and deficit neutrality as a goal for tax reform, breaking the corporate goal into two different principles: lowering business tax rates and repatriating dollars. During the campaign, those were treated as a single goal. Deficit neutrality is a major concern inside of Washington, D.C. Many of the rules around legislation make it easier to pass laws if they don’t grow the deficit over the next decade. Ironically, this may mean that the government winds up taxing American workers more, even when incomes are stagnant, in order to avoid borrowing more, even when borrowing costs are at historic lows. Its not clear if the changes in the goals or principles underlying tax reform reflect a change of policy. That is, its not clear if the proposed tax plan will be built to not result in higher deficits or if the president was signaling that tax reform is too important to allow deficit neutrality to stand as an obstacle.