Business and Finance

The price of oil is lower Wednesday, after the government reported that supplies rose last week, as analysts expected.

Gasoline pump prices continued to climb, rising to a national average of $3.811 per gallon.

Benchmark crude fell by 61 cents to $106.10 per barrel in New York. Brent crude, used to price oil imported by U.S. refineries, fell 6 cents to $126.16 per barrel in London.

The Energy Department said that supplies increased by 1.8 million barrels last week payday advance lenders. Gasoline supplies fell by 1.4 million barrels as refineries sold off remaining stockpiles of winter gasoline blends. Supply levels were near analysts’ estimates.

The government also says energy demand remains weak. Demand dropped 5.4 percent for oil and 7.2 percent for gasoline compared with the same week last year.

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Rates to ship iron ore, the second- biggest cargo after oil, are poised to drop to the lowest level in a decade after China cut its growth target, signaling weaker demand from the world

The Federal Reserve is pushing back against some banks

First-time claims for unemployment benefits ticked higher last week, slightly dimming prospects for Friday’s employment report.

The Labor Department reported Thursday that 362,000 people filed for initial unemployment benefits in the week ended March 3, up from the previous week’s revised 354,000 claims.

Economists surveyed by Briefing.com had predicted 355,000 new claims would be filed.

About 3.4 million people filed for their second week of unemployment benefits or more in the week ended Feb. 25, the most recent data available.

Jobless claims are considered a key indicator of the job market’s strength. The number can be volatile from week to week, so economists often look to the four-week moving average as a broader gauge.

Lately, that figure has been on a gradual decline. But last week it rose slightly to 355,000, up from the previous week’s average of 354,750.

The worse-than-expected report on initial claims comes one day before the government’s monthly employment report is scheduled to be released.

A CNNMoney survey of 19 economists predicts that the economy added 210,000 jobs in February, down from January, when 243,000 jobs were added to payrolls.

Most of the gain will likely come from the private sector, where the prediction is for an addition of 225,000 jobs.

The unemployment rate is expected to remain unchanged at 8.3%  

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Federal Reserve Chairman Ben S. Bernanke spent six years pushing for an inflation goal. Now that he has it, some investors are betting he

WASHINGTON • U.S. service companies expanded in February at the fastest pace in a year, helped by a rise in new orders and job growth.

The Institute for Supply Management said Monday that its index of nonmanufacturing activity rose to 57.3, up from January’s 56.8 and the third straight increase. Any reading above 50 indicates expansion.

Expansion in the service sector coincides with the lowest unemployment in three years, five straight months of solid to strong job growth and rising consumer confidence.

The trade group of purchasing managers surveys roughly 90 percent of U.S. companies in all sectors outside of manufacturing. That includes retail, construction, financial services, health care and hotels.

Fourteen of the 18 industries that the survey tracks expanded in February. Real estate, rental and leasing, transportation and warehousing, construction, hotels and restaurants, and information technology firms were among those that reported growth.

Anthony Nieves, chairman of the ISM’s survey committee, said that most of the comments from the group’s members “reflect a growing level of optimism about business conditions and the overall economy.”

Companies expressed concerns about inflation and rising gas prices, Nieves said. A measure of prices paid by service firms jumped to the highest level in 11 months.

Still, the overall reading for the sector was the best since February 2011.

“February seems to be off to a strong start for the economy,” John Ryding, an economist at RDQ Economics, said in a note to clients. “The pickup in order growth was particularly encouraging,” he added, because it indicates that growth will likely continue.

A separate report showed factory orders fell 1 percent in January, the biggest decline in 15 months. Businesses sharply reduced orders for machinery, equipment and other so-called core capital goods, the Commerce Department said.

The decrease was largely expected after a tax cut expired at the end of last year. Even with the decline, orders have gradually been climbing back to near pre-recession levels.

Demand for services should continue to rise, according to the ISM report. A measure of new orders reached its highest point in a year.

The group’s employment index declined from its highest reading in six years. Still, it stayed at a level that suggests many service companies are adding workers.

That confirms other data that show service companies have stepped up hiring. The government said last month that service firms added 176,000 jobs in January, the most in four months.

On Friday the government issues its February jobs report. Economists expect another big month of job gains; the latest forecast predicts 210,000 total net jobs were added last month, according to a survey by FactSet.

Big job gains at service firms are necessary to reduce unemployment. Factories are creating a lot of new jobs, but the sector isn’t large enough to employ that many people.

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Even as lawmakers spent the fall debating its fate, the use of Missouri’s Historic Preservation Tax Credit surged at the end of 2011.

State officials authorized $90.8 million worth of the credits – which pay back a developer one-fourth of the cost to rehab a historic building – in the six months from July 1 to Dec. 31, 2011. That’s $18 million more than the entire 12 months prior and a pace similar to the program’s pre-recession heyday in the mid-2000s, when it funded the rehab of countless lofts, office buildings and single-family homes across St. Louis.

The quick clip of authorizations – which happen before a building is rehabbed (credits are cashed in after the project is done) – suggest that, after a few slow years, a new wave of redevelopment may be kicking off in St. Louis and Kansas City. But it also comes amid unrelenting pressure from Jefferson City lawmakers who say the historic tax credit, which is awarded to any rehab that qualifies, is gobbling up too much of the state budget.

The $91 million already approved this fiscal year is a bit higher than the full-year cap proposed in tax credit bills last fall — and well above the $75 million limit that a state tax credit panel endorsed in 2010. At this pace, authorizations would hit even the $140 million cap set on the program in 2009, before demand dried up in the recession.

A big reason for the surge is simple economics. Commercial real estate is starting to pick up. Building projects – including tax-credit funded rehabs – are moving again.

The activity also has Fred Lafser’s phone ringing. Lafser, a redevelopment consultant in Creve Coeur, does a lot of front-end tax-credit work, such as getting a building listed on the National Register of Historic Places and filing the historic credit application with the state.

“During the recession, people just weren’t calling with new projects. We went from the phone ringing all the time to the phone not ringing at all,” he said. “In the last six to nine months we’re getting a lot more phone calls.”

A company like Lafser’s will often start working nine months or a year before the state actually OKs a tax credit award, making him an early indicator, of sorts, for historic redevelopment. If Lafser is busy, the pipeline of tax credit projects likely will grow.

Still, it’s not clear that the state will hit its $140 million cap by July. Of the $90.8 million in authorizations through December, $3.9 million went to small projects that are exempt from the cap. And nearly two-thirds went to just two buildings: $31.3 million to turn the old Federal Reserve Bank of Kansas City into a hotel; and $27.5 million over four phases to renovate the Railway Exchange Building in downtown St. Louis. If no more large rehabs win authorization, there should be funds to spare.

Urban appeal

Of the 66 projects authorized for credits, just two – one each in Columbia and Boonville – were located outside the St. Louis or Kansas City metropolitan areas. In the 12 months ending last June 30, 15 of 125 recipients were outside the state’s two largest metropolitan areas, with much of the money going to two big projects in Springfield.

That urban-rural split helps to explain divisions in the General Assembly about the future of the historic tax credit. While The credits enjoy strong support from urban lawmakers – and House Speaker Steven Tilley, R-Perryville – Senate budget hawks, particularly from outstate districts, have long targeted them for cuts.

After last fall’s failed special session, few in Jefferson City expect anything to happen on the topic in this election year spring. Still, some are trying. Sen. Jason Crowell, R-Cape Girardeau, has filed a bill that would halt historic tax credit authorizations entirely for a year, and another that would place a one-year stop on redemptions of them.

In a recent hearing on the bills, Crowell blasted the credits, and the developers who use them, noting they consume more than $100 million a year from the state budget while funding for education gets cut.

“Our priorities are all screwed up,” he said. “If the No. 1 priority is rehabbing old buildings, and the hell with the children, it’s shameful.”

The historic program’s many supporters see it differently. They point to studies saying the credit drives enough investment to recoup its cost, and – coupled with schools and businesses – it has rebuilt both downtowns and neighborhoods across the state.

That’s what Brent Crittenden is trying to do.

An architect and developer, he was approved last year for about $1.6 million worth of historic tax credits to rehab 11 buildings in McRee Town, a long-battered neighborhood just north of the Missouri Botanical Garden. The biggest building is a new home for the City Garden Montessori school, and the rest will be rehabbed townhouses, with some infill new construction mixed in.

The townhouses are priced between $165,000 and the mid-$200,000s, which is comparable to similar-sized rehabs in many parts of south St. Louis. Absent the credits, Crittenden said, they would cost much more, too much to sell in this market. The project wouldn’t happen.

“It just wouldn’t make sense,” he said.

Where the money goes

Historic tax credit authorizations, July 1 - Dec. 31, 2012

County           Number         Value

STL City          50                $49.2 million

Jackson            9                $35.5 million

Clay                 3                $4.7 million

Boone              1                $1.2 million

STL County       1                $250,000

Cooper             1                $25,475

St. Charles       1                $17,500

Source: Mo. Dept. of Economic Development

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Higher oil prices are affecting U.S. growth but are currently not a reason to think the economy will stall, a top Federal Reserve official said on Thursday.

“It pushes people not to spend. This is one of the factors affecting consumer confidence and consumer spending,” John Williams, president of the San Francisco Federal Reserve Bank, said in a question-and-answer session after a speech in Honolulu.

“Given where oil prices have gone, it’s part of the story for (expectations of) modest growth.”

However, a severe supply shock in the Middle East would have a more negative impact if it sent prices sharply higher, he said.

Williams, a voting member this year on the Fed’s policy-setting panel, has supported recent moves by the U.S. central bank to bolster what he has termed as a “lackluster” economic recovery.

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Netflix’s key contract with Starz expired on Tuesday, causing a massive hit to its instant streaming catalog of movies and TV shows.

Pay-cable network Starz struck a four-year licensing deal with Netflix back in 2008. Netflix had been trying for months to negotiate a new contract, but talks fell apart back in September.

The Starz contract officially expired on February 28, so titles such as "Toy Story 3," "Scarface" and "Young Frankenstein" are no longer available on streaming from Netflix.

A significant amount of Starz’ content catalog is Disney (, Fortune 500) films, though it includes licensed titles from several other studios. Netflix spokesman Steve Swasey would not confirm how many titles were pulled.

Swasey implied that Netflix will be able to get some of those titles back by striking deals with other cable networks, saying that "only about 15 Disney titles are really non-replaceable."

"There’s always an ebb and flow of title availability, and there always will be," Swasey said. "There’s never a shortage of stuff. You’ll see more titles soon."

As of January, Starz content accounted for 2% of viewing time, Swasey said.

Still, the loss highlights two major problems for Netflix (): a streaming catalog that some customers complain is lackluster, and the increasing costs of content.

Before the talks fell apart last year, Netflix called the Starz contract "one of our most important deals" — because it was one of the few that gave Netflix streaming access to relatively recent movies.

Because Starz has licensing deals with several major movie studios, Netflix was able to piggyback on the arrangements and boost its catalog of recent releases.

Starz said it ended the contract talks because of "our strategy to protect the premium nature of our brand by preserving the appropriate pricing and packaging of our exclusive and highly valuable content."

Meaning: Starz wants more money. Netflix was able to score cheap contracts years ago, when streaming video hadn’t fully broken into the mainstream. Now that streaming video is so popular, providers are upping the price tag for their content.

Those increasing costs have set off a vicious cycle. In order to offset content charges, Netflix began charging separate prices for its DVDs-by-mail and streaming video plans in September 2011.

That raised the cheapest-possible bill for customers who want both services from $10 to $16 a month. Outraged customers left thousands of comments on Netflix’s blog, and in the third quarter of 2011, the company’s U.S. subscriber base fell for the first time in years.

Millions of customers stayed on, but some have complained of a too-small streaming catalog. Outright loss of content, like the Starz expiration, leaves angry customers asking why they’re paying more for less.

Netflix has been striking other deals to beef up its catalog. Last week, the company announced a multi-year agreement to get Academy Award-winning titles "The Artist" and "Undefeated," as well as other movies from The Weinstein Company.

Netflix is making an even bigger bet on TV, including studio-like moves. Last year Netflix licensed its first original series, "House of Cards," which stars Kevin Spacey and is due out in late 2012. In November, Netflix announced it would release a new season of the cancelled "Arrested Development" in 2013.

Meanwhile, studios now have a bargaining chip in the form of Netflix’s competitors. Beyond direct rivals like Hulu and kiosk service Redbox (owned by Coinstar ()), big tech players like Amazon (, Fortune 500) and Google (, Fortune 500) are jumping into the streaming game.  

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Orders for U.S. durable goods fell in January by the most in three years, led by a slowdown in demand for commercial aircraft and business equipment.

Bookings (DGNOCHNG) for goods meant to last at least three years slumped 4 percent, more than forecast, after a revised 3.2 percent gain the prior month, data from the Commerce Department showed today in Washington. Economists projected a 1 percent decline, according to the median forecast in a Bloomberg News survey.

The expiration at the end of 2011 of a tax incentive allowing full depreciation on equipment purchases may have prompted a slowdown in investment at the start of this year. At the same time, a strengthening auto industry may help keep factories at the forefront of the expansion that began in June 2009.