The auto industry is powering up to help the economy.

Surging car sales could boost economic growth this year by nearly a full percentage point, its biggest contribution to the economy in more than a quarter-century, according to a new analysis.

Pent-up demand from consumers who are feeling more sanguine about job security and income levels could drive sales volume to as many as 13.6 million vehicles this year, said Carl J. Riccadonna, senior U.S. economist at Deutsche Bank in New York.

That would be a 17% increase from the 11.6 million vehicles sold last year and could add as much as 0.8% to U.S. gross domestic product, the most since 1984, Riccadonna said.

The rise in car sales “appears to reflect an improvement in households’ confidence in the economic outlook,” Riccadonna wrote in a note to clients, adding that “households typically refrain from big-ticket purchases, such as autos, until they are more confident about their own economic prospects.”

Auto sales could keep rising throughout the year as consumers feel more confident in the economy and as lenders become more generous with credit, Riccadonna said.

-- Walter Hamilton

The Dow Jones industrial average ended its winning streak on Thursday, closing fractionally lower after rising for eight straight sessions.

But the broader market was mixed, as many investors still seem reluctant to take profits in this year’s strong rally.

The Dow slipped 10.60 points, or less than 0.1%, to end at 12,229.29. It had gained 416 points, or 3.5%, over the previous eight sessions.

The 30-stock Dow was hurt by computer networking giant Cisco Systems, which plunged $3.12, or 14%, to $18.92 after reporting that its quarterly profit margins narrowed because of higher spending on research and development.

But buyers pushed up stocks of other Dow index companies expected to benefit if the economic recovery continues, including Caterpillar, United Technologies and Du Pont.

U.S. stocks have gained this year from optimism about the domestic economy’s prospects, which has encouraged some investors to sell bonds in favor of stocks.

Wall Street also is winning as some investors shift away from emerging-market stocks because of Egypt’s turmoil and because of inflation concerns in countries including China and India.

The Dow is up 5.6% this year while the iShares MSCI Emerging Markets Index exchange-traded fund is down 5.4%.

-- Tom Petruno

California's Employment Development Department spent $22.9 billion on unemployment benefits in 2010, a record amount, the EDD said Thursday. The benefits, paid to 1.7 million Californians, average out to about $90 million each business day.

"The numbers are staggering and the need undeniable," said Pam Harris, chief deputy director of the EDD.

The state paid out $20.2 billion in unemployment benefits in 2009. That topped the previous record of $8 billion that the state paid out in 2008. Some of the increase can be attributed to the federal unemployment benefit extensions passed by Congress in 2008 and 2009.

Some more fun numbers: the state issued 41.2 million unemployment benefit checks in 2010, processed 7.7 million initial claims for unemployment insurance, and handled double the amount of claims processed by the second-highest state (Pennsylvania). It hired 1,000 people to slog through all those claims, and now employs 3,491, although customers have still reported having trouble getting through by phone.

The total claims processed in 2010 was a 19% increase from 2009 and more than two times the number of claims processed in 2008. California processed more than 16% of the nation's claims for regular unemployment insurance. The state's fund is about $10 billion in debt.

A report issued Wednesday by the National Employment Law Project and the Center for Budget and Policy Priorities urges President Obama to fix what activists call "broken" unemployment insurance trust funds. It proposes raising the amount of a worker's wages subject to the federal unemployment insurance tax and rewarding states whose funds are not in debt, among other things.

RELATED:

Unemployment payouts push California deeper in debt

Failure to pass unemployment insurance extension could cost billions

Jobless deluge EDD with questions, crash phone lines

-- Alana Semuels

Photo: A worker looks for a job at an Employment Development Department center. Credit: Mel Melcon / Los Angeles Times

After a one-day respite, Treasury bond yields rebounded Thursday as many investors remained wary of locking in current interest rates in an improving economy.

That won’t be welcome news in the housing market, where the surge in Treasury yields since October has pushed average mortgage rates above 5% for the first time since April.

The Treasury, borrowing to finance the federal deficit, wrapped up this week’s sale of $72 billion in bonds with an offering of $16 billion in 30-year securities Thursday, and investor demand was tepid.

The new 30-year bonds were sold at a yield of 4.75%. That was up from the 4.71% market yield on  previously issued 30-year bonds (charted at left) on Wednesday, and close to the 10-month high of 4.77% reached Tuesday.

Among other Treasury issues, the yield on the two-year T-note rose back to 0.84% from 0.80% on Wednesday.

The Treasury attracted relatively few investors to its sale of three-year notes Tuesday, but saw strong demand for the 10-year notes it sold Wednesday. Demand weakened again at the 30-year bond sale.

Some traders said bond yields faced upward pressure Thursday after the Federal Reserve detailed its plans for Treasury purchases over the next month. Total expected purchases were smaller than the market had anticipated.

The Fed in November committed to buying an additional $600 billion of Treasuries through June, an attempt to restrain long-term interest rates and help the economy. But as growth has accelerated in recent months, boosting inflation concerns, investors have demanded ever-higher yields on bonds.

You have to wonder where yields would be if the Fed wasn’t buying.

-- Tom Petruno

RELATED:

Rising rates stir debate on Fed's easy-money policy

San Francisco's 4-year-old, mandatory sick-leave law has gained wide acceptance among employees and their bosses, a new study by the Institute for Women's Policy Research says.

The voter-approved law, the only one of its kind in California, gives workers one hour of paid sick leave for every 30 hours on the job. Workers can accrue up to five days at any given time at companies with less than 10 employees and nine days at any given time at those with more than 10.

Surveys of 700 employers and 1,200 employees by the Washington institute found that two-thirds of employers support the San Francisco law, and only 1 in 7 employers complained that it affected their profitability.

The typical worker covered by the law used only three days per year to stay home sick or to care for children or relatives, the study said. One quarter of employees queried took no time off for illness.

"San Francisco's policy helped parents, workers with chronic diseases, low-wage workers and others with minimal impact on employers," said report co-author Vicky Lovell. "The paid sick leave ordinance serves as a model for the rest of the country."

A bill to expand the San Francisco program statewide is expected to be introduced this year in the state Legislature by Assemblywoman Fiona Ma (D-San Francisco). Similar bills failed in previous years.

"Nobody wins when workers show up to work sick," Ma said. "The lack of paid sick days is a public health concern. It harms children and families and decreases productivity at work."

It's important for workers to be able to stay home when they are sick, said Daniel Conway, a spokesman for the California Restaurant Assn. But arranging for time off should be left to informal arrangements between restaurant owners and their employees, he said.

"We're looking to give employers and employees maximum flexibility. That's something unique to the restaurant industry," Conway said."Mandates by their very nature negate that flexibility."

-- Marc Lifsher

 
Billionaire Larry Ellison has bought the Rancho Mirage estate of Edra Blixseth.

Most recently listed at $55 million, the purchase price was $42.9 million, according to the Desert Sun.

Called Porcupine Creek, the 249-acre desert property includes a Mediterranean-style villa, a private 19-hole golf course (with that extra hole available for playoffs), a swimming pool and four guesthouses. There is a driving range, clubhouse, lakes and views of the mountains and valley floors.

Interior features of the 18,430-square-foot main residence include painted domes, wall murals, antique stained glass, a sunken great room with a baronial fireplace, and a game room bar with old-fashioned beer taps.

In addition to the four guesthouses of 1,860 square feet each, there are four 600-square-foot casitas. The property originally came on the market last year at $75 million.

The golf course trophy property was constructed between 2000 and 2004 by timber moguls Tim and Edra Blixseth, who have since divorced. The sale was subject to Bankruptcy Court approval in Montana.

Ellison, founder and chief executive of Oracle Corp., is the world's six-richest person, according to Forbes. He also owns the nearby Indian Wells Tennis Garden.

Rick Hilton, Jeffrey Hyland and  Barbara Duskin of Hilton & Hyland, an affiliate of Christie's International Real Estate, in Beverly Hills, had the listing, the Multiple Listing Service shows.

-- Lauren Beale

Thoughts? Comments?

Photo: The golf course estate includes a 19th hole for playoffs. Credit: John Henebry

Hewlett-Packard Co. is looking to take on Apple Inc.'s blockbuster iPad, not using Google's Android operating system and not using Microsoft Windows 7, but on its own -- with its WebOS.

The world's largest computer company also rolled out two smart phones, the Veer and the Pre3, that run on the WebOS mobile operating system developed by mobile device maker Palm Inc., which HP bought for $1.2 billion in April.

At the time of that purchase, many speculated that HP wasn't buying Palm for it's name or its brand, but rather for WebOS in the hopes of creating an app-selling ecosystem across devices as Apple has done with the iPhone, iPod Touch, iPad and its iOS, which runs on apps bought through the iTunes App Store.

On Wednesday, the TouchPad, the Pre3 and the Veer -- each developed by the renamed HP Palm division -- were devoid of any Palm branding in name or on the gadgets themselves. Instead, the HP logo was stamped on the back of each device and the products will be marketed not as Palm products, but as HP products.

The TouchPad also has many specs that match up with the iPad, such as 3G and Wi-Fi connectivity, a 9.7-inch touch screen, a processor running at about 1GHz and a weight of 1.6 pounds -- the same as the 3G iPad.

The similarities between the two tablets isn't a mistake, said Sarah Rotman Epps, a tech analyst at Forrester Research.

"What HP has to overcome is that the only apps out there built for tablets right now are really built for the iPad," Rotman Epps said. "If your tablet is going to succeed, it needs apps, and making the screen on the TouchPad the same size as the iPad should make it easier for developers to port apps over" to it.

For more information on HP's new products and Rotman Epps' take on the moves, head over to The Times Technology blog.

-- Nathan Olivarez-Giles

twitter.com/nateog

Commercial airlines reported improved performance in several categories in 2010 but passengers filed nearly 25% more complaints compared with the previous year.

The nation's largest airlines reported a slightly improved on-time rate and lower rates of lost luggage and ticketed passengers who were denied boarding in 2010, according to statistics released Thursday by the U.S. Department of Transportation.

The 18 largest carriers reported an average on-time rate of 79.8% in 2010, up slightly from 79.5% in 2009, according to the agency.

But during the same 12 months, the number of complaints filed by airline passengers with the Department of Transportation jumped nearly 25% to 10,985 from 8,821 in 2009.

Most of the complaints involved flight cancellations and problems with reservations and baggage. Customer service was also the source of many complaints.

Among other statistics:

• The rate of mishandled luggage dropped to 3.57 per 1,000 passengers in 2010 from 3.99 in 2009.
• The rate of ticketed passengers denied boarding because of overbooking dropped to 1.09 per every 10,000 passengers in 2010 from 1.23 in 2009.
• In December, three domestic flights were delayed on airport runways for more than three hours, compared with 34 flights in December 2009.
• Delta Air Lines had the highest rate of complaints, an average of 2 for every 100,000 passengers.
• Southwest Airlines had the lowest rate of complaints, an average of 2 for every 740,740 passengers.

-- Hugo Martin

Photo: United Airlines passengers line up at the ticket counter at Los Angeles international Airport. Credit: Los Angeles Times

Here's your throat-clearing Thursday roundup of consumer news from around the Web:

--Foreclosures may be on the wane (at last). But just in case, California officials are cooking up a plan to assist "underwater" homeowners who owe more on their mortgages than their homes are now worth. According to RealtyTrac, there were more foreclosure actions in January than in December, but when compared with January 2010, the pace is sharply lower. That's a good thing, but more than 100,000 struggling homeowners could still get help from a $2-billion program that California is launching, including about 25,000 borrowers with underwater loans. The Keep Your Home California program, which uses federal funds reserved for the 2008 rescue of the financial system, is intended to fend off foreclosure for about 95,000 borrowers and provide moving assistance to about 6,500 people who do lose their homes.

--If you're flying on US Airways, you'll want to travel light. According to Bloomberg, the airline will almost double its charge for each checked bag weighing more than 50 pounds, to $90. The change takes effect March 1. US Airways says the fee hike simply brings the carrier in line with rival airlines. Oversized bags and those weighing more than 70 pounds will cost $175, up from $100. The new rates apply on flights within the U.S., Canada, Latin America and the Caribbean, with higher charges on other routes.

--A pretty interesting rumor is making the rounds. According to the Wall Street Journal, Google and Facebook have held talks with Twitter about acquiring the social-networking service. And the talks reportedly value Twitter at as much as $10 billion. The Journal says the buyout talks so far have gone nowhere. But what has Silicon Valley buzzing is the notion that Twitter, which lost money last year, is worth up to $10 billion. We should all be so lucky.

-- David Lazarus

Photo: Help may be coming for distressed homeowners. Credit: Joe Raedle / Getty Images

Businesses and industry trade groups brought their complaints about what they called overly burdensome regulations to Capitol Hill on Thursday as House Republicans continued their push to reduce government's role in the economy.

"Whatever we can take off our overhead ... is going to make us more competitive," Jack Buschur, president of an 18-employee electrical contracting company in Minster, Ohio, told the House Oversight and Government Reform Committee. He said some of the labor and environmental regulations that apply to his firm are "extremely expensive and a large inconvenience."

Rep. Darrell Issa (R-Vista), the committee's chairman, said he called the hearing to listen firsthand to complaints. He recently solicited letters from hundreds of businesses and associations about regulations to revise or repeal.

"We hope to find a way to have regulatory reform [and] keep America safe while at the same time giving Americans opportunities to get competitive jobs here and in exports around the world," Issa said.

Republicans aren't the only ones focusing on reducing regulatory burdens. President Obama last month ordered government agencies to weed out onerous regulations.

Buschur, one of two small-business heads who testified at Thursday's hearing, said he spends about 20% of his time dealing with government regulations that are so complex he has to pay attorneys or business groups to decipher them.

Another executive, Michael J. Fredrich, president of MCM Composites of Manitowoc, Wis., complained about the time it took him to deal with cases filed with the federal Equal Employment Opportunity Commission by two former employees alleging discrimination when they were fired.

"Each of those two cases took at least one week of my time," Fredrich said.

Regulations such as those by the Occupational Safety and Health Administration make it difficult for his company, which makes parts for commercial aircraft, to compete with manufacturers in Mexico and other countries, he said.

"It's difficult to compete if we increase that burden," he said. "We should focus on reducing that."

Republicans on the committee said that's what they wanted to do. . . .

Inflation fears jolted the typical rate on a 30-year mortgage past 5% this week for the first time since last April, according to Freddie Mac's weekly survey of lenders across the nation.

Freddie Mac, the giant home finance company, said lenders were on average offering 30-year home loans at 5.05% fixed to low-risk borrowers who paid 0.7% of the loan balance in upfront fees.

That was nearly a quarter-point higher than last week's 4.81% . Last year at this time, the 30-year fixed rate mortgage averaged 4.97% in the Freddie Mac survey.

Nearly all fixed-rate loans are processed into mortgage bonds for sale to investors by Freddie Mac and its sister company Fannie Mae.

As the economic recovery strengthens, buyers of these and other fixed-income securities have begun to worry that a resurgence of inflation could cut into their earnings, and are demanding high yields by way of compensation. The concerns are emerging despite reassurance from Federal Reserve Chairman Ben Bernanke, who told Congress that inflation in the U.S. is at bay despite rising global food and oil prices.

Fixed home-loan rates tend to track the yield on the 10-year Treasury note, which rose above 3.6% this week after falling below 2.4% just four months ago.

The 15-year fixed-rate mortgage was being offered at 4.29% on average this week with 0.7% in upfront lender fees, Freddie Mac said, up from last week, when it averaged 4.08%. A year ago, the 15-year loan, favored by many home refinancers, averaged 4.34%.

Rates on 1-year adjustable mortgages and hybrid loans that become variable after five years at a fixed rate moved higher as well, Freddie Mac said.

The group's chief economist, Frank Nothaft, said the positive economic news behind the move in rates included a 3.6% increase in non-farm productivity, the most since 2002; an unexpected drop in January's unemployment rate from 9.4% to 9.0%; and service industry expansion at the fastest pace since August 2005.

RELATED:

 Fed chief Ben Bernanke says he's not worried about inflation

-- E. Scott Reckard

Image credit: Freddie Mac

As expected, investors in Wells Fargo & Co. were not happy about the unexpected -- that is, the largely unexplained departure of Howard Atkins as chief financial officer.

Wells Fargo shares fell 97 cents, or nearly 3%, to $33.13 on Wednesday, a day after the bank abruptly disclosed that Atkins, generally well-regarded on Wall Street, was retiring.

The big San Francisco bank waited until after stock markets closed Tuesday to announce that Atkins had taken an unpaid leave. Wells Fargo explained only that it was for personal reasons, not because of problems with the bank's finances or financial reporting.

Wells said Atkins, 59, would quit altogether in August, his 10th anniversary with the bank, when his retirement benefits vest fully. It said the company's chief administrative officer, Timothy Sloan, had been named CFO effective immediately.

The mysterious event generated waves of speculation and warnings from analysts that the stock would likely be under pressure at least until Sloan signs off on the bank's official annual financial report in a few weeks.

Sample headlines: "CFO's Departure at Wells Fargo Bewilders Wall  Street" (Wall Street Journal); "Wells Fargo Investors Want Answers"  (thestreet.com); "Markets don't like Wells Fargo CFO Howard Atkins' retirement (bizjournals.com). 

"The timing is very bad since the bank is in the middle of the year-end disclosure and audit cycle," wrote Christopher Whalen of Institutional Risk Analytics, adding, "this event suggests instability in the internal systems and controls."

 The fact that Wells immediately named Sloan as Atkins' successor "somewhat mitigates these concerns," Whalen said.

RBC Capital Markets analyst Joe Morford said in an interview that his phone had been ringing off the hook. By the end of the day, he said, there were no clear answers to why Atkins had departed, only a slew of questions.

But Morford, who said Sloan seemed a solid replacement, opined that in the end it might not matter anyway because Wells Fargo's top executive and financial teams had worked together closely for so long.

"There's a lot of very good people at Wells," he said.

RELATED:

Abrupt departure of Wells CFO may leave investors wondering

-- E. Scott Reckard

Photos, from top: Wells Fargo mystery retiree Howard Atkins and his replacement, Timothy Sloan. Credit: Wells Fargo & Co.