Contingency Plan Could Split GM in Two
In the event that General Motors Corp. is unable to reach an agreement with bondholders and the United Automobile Workers (UAW) union, the Treasury Department has given the automaker until June 1 to lay the groundwork for a bankruptcy filing. Currently running on $13.4 billion in federal aid, GM needs to convert about $28 billion in debt into equity and come to a settlement with the UAW to avoid bankruptcy. CEO Fritz Henderson insists GM can still reorganize outside of court but will prepare for a bankruptcy filing as well.

One plan under consideration would split the company into a "good GM" and a "bad GM." The considered-"good" brands — Chevy and Cadillac, for example — would be sold to a new company in as soon as two weeks and set up with approximately $5 billion to $7 billion in government financing. Presumably, the new company will be led by GM's current management team.

So-called "bad GM" — Saturn, Saab and Hummer — would be left behind in bankruptcy court and potentially liquidated. According to the New York Times, the bad portion of GM "may require as much as $70 billion in government financing, and possibly more to resolve the health care obligations and the liquidation of the factories, according to legal experts and federal officials."

Auto Suppliers Guaranteed $5 Billion
Embattled automotive suppliers are now on a $5 billion government scheme to guarantee product payments, the U.S. Treasury Department announced on Thursday (via AFP). Under the auto supplier support program, General Motors Corp. will put in 2.5 billion and Chrysler LLC $1.5 billion in an effort to stabilize payments to their suppliers. The remaining $1.5 billion will remain available in case needed.

This program guarantees money owed to auto suppliers for products they ship even if the automakers go bankrupt. Ford Motor Co., which has so far declined federal aid, opted not to join the program saying it will pay suppliers from its own funds.

Wind Turbine Industry Growing in the U.S.
U.S. manufacturers could potentially cash-in on the growing wind turbine market, industry insiders say. "Wind is positioned to help take a lot of those manufacturing jobs that have been lost, especially in the auto industry, and move them into the work we're trying to do,'' Roby Roberts, a senior vice president with Vestas, the world's largest wind turbine maker, told the Miami Herald.

Vestas, which produced about one-fifth of U.S. wind turbines, said that by 2010 it plans to make all of its turbines in the U.S. According to the U.S. International Trade Commission, at least 11 blade manufacturers and 16 tower manufacturers have plants or plan to open plants in the U.S. The new plants could add 4,000 jobs.

Wind turbine imports have leveled off from $2.4 billion in 2007 to $2.5 billion in 2008, according to Customs data reviewed by McClatchy. "That could indicate more U.S. production taking up some of the demand at a time when wind energy grew dramatically," the Miami Herald notes. The American Wind Energy Association (AWEA) estimates that the share of U.S.-made parts in wind turbines grew from 30 percent in 2005 to almost 50 percent in 2008. "Wind turbine and turbine component manufacturers announced, added or expanded over 70 facilities in the past two years, including over 55 in 2008 alone," according to the AWEA's annual wind industry report. "These manufacturing facilities, once fully online, represent 13,000 new direct jobs and nearly $2 billion in investment."

Continuing Unemployment Claims Set Record, Again
After hitting an 8.5 percent unemployment rate in March, initial unemployment claims eased slightly in the week ended April 4, from 674,000 the previous week to 654,000, the Labor Department reported Thursday. The four-week moving average decreased by 750 to 657,250 from the previous week's revised average of 658,000.

"The small amount of good news is that it appears as though the trend in claims over the last eight weeks has leveled off, but there is nothing here to suggest that the drop in employment is anywhere near the bottom," Stuart Hoffman, chief economist at PNC Financial Services Group, tells Reuters.

Continuing claims for unemployment reached another record for the week ended March 28, increasing by 95,000 to 5.84 million. "These continuing claims have gained for 12 consecutive weeks, and have reached new weekly records since late January," MarketWatch adds. "The four-week average of continuing claims rose 146,750 to a record 5.65 million."

Currently, there seems to be no bottom in sight for continued unemployment benefits claims. According to a recent Blue Chip Economic Indicators survey, the U.S. economy is set to emerge from recession in the second half of this year but unemployment will rise well into 2010.

Workers aged 45 and over form a disproportionate share of the long-term unemployed — those out of work six months or longer, the New York Times reports. Laid-off workers in this age group were out of work 22.2 weeks in 2008, compared with 16.2 weeks for younger workers. They also typically experience a much steeper drop in earnings. Yet, while government statistics show that older workers this recession have had a lower unemployment rate than younger workers, the unemployment rate in March for workers aged 45+ was 6.4 percent, the highest since the Bureau of Labor Statistics began tracking unemployment in 1948.

Tough 2009 Predicted for Eurozone
A recent revision of fourth-quarter activity for the eurozone show a 1.6 percent drop in Gross Domestic Product (GDP) compared to the third quarter. Eurostat revised down its previous estimate of a 1.5 percent contraction.

The eurozone went from economic growth into recession during the third quarter of 2008, when GDP fell 0.3 percent for a second consecutive quarter. Exports plunged 6.1 percent and investments dropped 4 percent in the final three months of 2008.

Economists predict a similar decline in the first quarter of 2009. "Stabilization in some leading indicators, such as purchasing managers' indexes for manufacturing and services, point to a bottoming out of output, however, toward mid-year," Joerg Radeke, an economist at the Center for Economic and Business Research, said to MarketWatch.

Still, a difficult year is anticipated for the eurozone. IHS Global Insight will likely forecast a 4 percent contraction of the eurozone economy for 2009, the result of soft retail sales, a struggling manufacturing industry and a contracting service sector.

U.S. Food Safety Progress Stagnates
On the heels of the recent peanut and pistachio recalls, the Centers for Disease Control and Prevention (CDC) announced last week that the safety of the nation's food supply has not improved over the past three years. In the case of salmonella, which was recently found in peanuts and pistachios, infections may be increasing.

According to the CDC, 16 of every 100,000 people in the U.S. had cases of salmonella infections in 2008. In 2005, it was 14 people per 100,000. Although not a significant increase, it has not decreased, indicating that "progress has plateaued," Dr. Robert Tauxe, deputy director of the CDC division of Foodborne, Bacterial and Mycotic Diseases, told CNNhealth.com. "This indicates to us further measures are needed to prevent future illness."

The most recent case of salmonella contamination was announced March 24, when Kraft Foods notified the Food and Drug Administration (FDA) about its tainted pistachios. The salmonella strains were traced to California-based Setton Farms — the second-largest pistachio processor in the U.S.

Two people have reported illnesses that could be related to pistachios, although the CDC is still conducting tests to determine whether they are connected to the pistachio recall. (For a complete listing, click HERE.)

The FDA is advising consumers not to eat any pistachio products, but not to throw them out, either. As additional recalls are likely, having products that could be turned in would allow for easier tracing of contamination.