>> tom: planes, trains and automobiles still grounded from the carolinas to canada after a blizzard buried the northeast with snow. the storm paralyzed travel and put a damper on post-holiday shopping. you're watching "nightly business report" for monday, december 27. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by: this program is made possible by contributions to your pbs station from viewers like you.

captioning sponsored by wpbt >> tom: good evening and thanks for watching. susie gharib is off tonight, and she's missing out on an historic storm in the eastern section of the country. snow, snow and more snow. the massive storm stranded travelers, closed roads and made it impossible for people to get to work-- or the mall. all three new york city-area airports have been closed all day. just now starting to reopen. nearly 1,000 flights there were cancelled today, and passengers are expected to be stranded for days. one airline analyst predicts the storm and its aftermath could end up costing the airlines alone as much as $100 million. 30 inches of snow has fallen in some places, and for already cash-strapped municipalities this storm is bad news. in new york city, for example, storm cleanup generally costs the city $1 million per inch of snow.

but, the storm has been good news for anyone selling shovels, snow blowers, or anything to remove the piles of snow. shares of home depot, toro and snow mobile maker polaris all moved higher today. still, all that snow on the ground is bad news for retailers in northeast. it comes at the end of a very busy holiday shopping season overall. as erika miller explains, for many, it ended up being a green christmas after all. >> reporter: this was the best way to get around new york city today. so it's no surprise many stores in the northeast opened late, or didn't open at all. unfortunately for many merchants, the storm came at a crucial period. on average, stores ring up 10% to 15% of holiday sales in the week between christmas and new year's. but scott krugman of the national retail federation points out some will actually benefit from the blizzard. >> clearly the online sector is showing a lot of strength.

and any time harsh seasonal weather, the internet becomes a perfect outlet for anyone who can't get to the malls. >> reporter: but for mall retailers, the storm will mean a delay in gift card redemptions. those sales aren't counted until the cards are actually swiped. on top of that, consumers who redeem gift cards typically spend an extra 25% more than their value. the good news is the storm came after christmas, not before. in addition, experts say sales momentum was strong up through christmas eve. all told, retailers are expected to ring up holiday sales gains of 3% to 5%, potentially the best results since 2006. but analyst dana telsey says there are some standouts. >> we think the big winners were definitely luxury goods. we saw all across the country lines at many of the jewelry stores. luxury goods were selling at full price and they were running out of items. jewelry worked. apparel and accessories worked. and certainly the ipad and the kindle worked. >> reporter: she hopes the

extension of the bush tax cuts will encourage consumers to keep spending in the new year. but others worry the momentum may not continue. >> even though we are out of recession, the consumer still needs a little bit more proof. and once you get beyond the holiday promotions and the discounts, how do you maintain that level of spending with such high unemployment? and i think that's going to be a big theme for 2011. >> reporter: if he's right-- you may see more thrift. after we dig out of the snowdrift. erika miller, "nightly business report," new york. >> tom: here are the stories in tonight's n.b.r. newswheel: stocks were mixed after starting out in the red, as a new round of interest rate hikes in china renewed worries of slowing global growth. at the bell, the dow fell 18 points, the nasdaq rose a point, and the s&p 500 gained a fraction. light doesn't begin to describe today's trading activity. fewer than a half billion shares crossed the big board, and barely over a billion traded on the nasdaq.

just in time for your long drive home from grandma's, gasoline prices are at a two-year high. the average price for regular is now $3.05 a gallon, according to the energy department. that's up 7 cents from the previous week, thanks to rising crude oil prices. and, prices may be heading much higher. john hofmeister, the former president of shell oil, says americans could pay five bucks for a gallon for gasoline by 2012. >> reporter: i'm darren gersh. still ahead, a brighter hiring outlook for the class of 2011, but what about the rest of us? we'll look at where the jobs will be next year. >> tom: it has been more than three years since the first economic fractures began showing up in the housing market. since then, more than seven million jobs have been lost, median home prices have fallen more than 20% and government debt has exploded more than 50% to almost $14 trillion. raghuram rajan is the author of "fault lines: how hidden fractures still threaten the

world economy," and finance professor at the university of chicago booth school of business. and he joins us tonight from downtown chicago. welcome to "nightly business report", nice to see you. >> thanks. >> tom: let's tackle, employment jobs first. is the federal reserve strategy of low interest rates and buying government bonds the right one to create job opportunities? >> i think not really. i think it was the right one at the beginning of the recession. but right now the problem is many of the job losses are in areas like construction, which aren't going to come back. what we really need to think about is how to get people we used to be in that industry back into the work force. and the kinds of things we need to think about are worker retraining, reskilling, those are things that can't be done through just the fed holding interest rates down. so my sense is the fed has pretty much done what it could, and we have to think of new ways of getting the 9.5% unemployed back to work. >> tom: even though the fed has one of its two mandates as full employment, are you saying the

federal reserve in 2011 is impotent when it comes to trying to lower the unemployment rate? >> i think the fed can't do it. certainly can't do it alone. what we really need is to think about other ways, direct attempts to try and get these people back to work, and typically it means that they have to find new skills, because you look across states in the united states, the states suffering the biggest unemployment, according to a colleague of mine, are states that had the biggest runup in construction. these are states where jobs, job losses are primarily in construction. that industry is not going to come back soon, and you're not going to get those jobs back by keeping interest rates low. >> tom: you mentioned construction twice when it comes to unemployment. how mr. the housing industry, we've seen some signs of stable says. a year ago the median price, we're going to take a look of a home, $170,000 last moment it was $170,600.

how confident that this could hold are you? >> well, these numbers go all over the place. part of the problem really is the great overhang of houses that are waiting to be foreclosed on or are in the process of foreclosure. and those will definitely have an effect on house prices or are already having an effect on house prices. so it's very hard to say that we've seen the bottom right now, and we're going to see stabilization and growth after this. but clearly this industry has come a long way down, and there's more, there's not that much more to go on the way down. >> tom: you talked about foreclosures, in fact there's been a lot of programs out there trying to minimize foreclosures, and the whus has had a plan since april of 2009 that i want to take a look at its results, mornls resultsing in about a half million permanent modifications. but just since july of this year there's almost been the same amount of bank repossessions, so is there more work to be done on the part of the federal government to stem the tied of foreclosures? >> significantly more. because i think we need to think

of a new solution and that solution will have some elements of principal waiver. we have to recognize that some of these houses are so deeply under water that people residing in them have no hope of paying off the mortgages, have no desire to pay off the mortgages, and at the same time it's better to keep those people in the houses rather than push them out if in fact they can service a lower amount. so how to get those principal waivers without in fact telling people who are able to service mortgages to start stopping payments and try and get a good deal. that's really the question we have. >> tom: try to answer that question when it comes to the taxpayer responsibility. should there be any at all, because clearly we've seen the federal government and its debt explode. the promises have exploded with fanny mae and freddie mac, and does the taxpayer still play a role in trying to right the foreclosure problem? >> well, i would think that the banks should take much of the hit, and the taxpayer should be essentially a last resort.

how to make that possible, i think we really need to think of clever ways of both making the banks take the hit but also recapitalizing them so that in fact they don't collapse at the same time. this is something we need to pay more attention to. >> tom: all right, we appreciate those ideas and look forward to speaking with you in 2011. rajan, author of "fall line," professor at the chicago booth school of business.

>> tom: more now on employment. as we just mentioned, the greatest challenge facing the economy in the near future is job creation. but with unemployment still hovering around 10%, could job growth be right around the corner? darren gersh takes a look at the outlook for employment. >> reporter: if you want to know the hiring outlook for next year, just look outside today: frigid with just a moderate warming expected. that's economist heidi shierholz's forecast for jobs in the new year. >> the good news is those big improvements will come in 2012, i believe, but 2011 is going to look a lot like this year did in the sense of, we'll see growth, but it is going to be sluggish, it's going to be stop-and-go. it's not going to be fast enough to start bringing the unemployment rate down substantially. >> reporter: one reason for that? states face another 2011 budget shortfall estimated at $140 billion. economist ken goldstein says that means more job cuts are

likely. >> what it says is the number of teachers, the number of cops, the number of firemen, the number of social workers, for example, absolutely already has gone down and there's likely to still go down further somewhat. >> reporter: still the economy managed to create roughly one million new jobs this year, and should do better in 2011. but outplacement specialist john challenger says, if you want work, you might have to go with the flow. >> in line with what the census showed us, there is continued migration of the population to the sunbelt, to the west, and the jobs flow where the people go. >> reporter: challenger isn't expecting a lot of layoffs next year, because companies are already thinly staffed. that means they could hire more if the demand is there. but for now, they are adding temp jobs-- employers added 357,000 temporary help jobs over the last 12 months. >> there's concern that

companies have built a bifurcated workforce. their core, permanent workers and their temporary workers they bring on when they have surges in business-- when it slows down, they leave. that seems to be a permanent aftereffect of this recession. >> reporter: if you are looking for a leading indicator of job market recovery, ken goldstein says watch seattle and charlotte. those cities have relatively strong local economies that could support hiring in the coming year. >> so at least there's a chance that they might be the first two to spark some improvement, then watch that slowly spread eastward and westward until it becomes a national trend, perhaps by spring, maybe by summer. >> reporter: and what about a healthy wage increase? economists say, for most workers, that will also have to wait until 2012. darren gersh, "nightly business report," washington. >> tom: tomorrow, we continue our look ahead to next year, focusing on housing. there are signs that the market

is poised for a comeback, but there are still areas of weakness. we'll take a look at whether real estate is ready for a rebound. between the snow storm and the holidays, the new york stock exchange saw the lightest trading volume of the year. let's take a look at what was moving in tonight's "market focus." financial stocks put in the best gains of the major sectors, thanks to a.i.g. the bailed-out insurance giant has been working to pay back taxpayers. a.i.g. shot up better than 9%, and on a light volume day for the markets, a.i.g. stock traded three times its daily average. the firm has locked up three credit lines that will replace emergency funding put in place by the federal reserve. when credit dried up for a.i.g., it had to be bailed out, but today's news is another indication of its restructuring. other big financial stocks helped limit the losses for the

dow industrials. bank of america was up 1.6%. b. of a. is the best-performing dow industrial stock so far this month, up 21%. j.p. morgan gained 1.4%. and american express added just under 1%. energy was in focus today, with china's decision to raise bank interest rates, hoping to dampen inflation there. oil prices worldwide cooled slightly on that news, over concerns of less energy demand from china. the drop today came only after the front month of oil futures hit a new two-year high. over the weekend, kuwait's oil minister said the global economy could handle $100 a barrel oil. oil service companies took the brunt of what selling there was in energy stocks. weatherford fell more than 2%. halliburton and national-oilwell dropped more than 1% each. all three of these stocks have seen gains of over 20% so far this year.

so maybe some profit-taking as well. while gasoline prices have been climbing, shares of electric car maker tesla have hit the brakes. tesla came public in late june, the first u.s. automaker to go public since the 1950s. back then, it was at $17 dollars per share. the stock hovered around $20 until rallying early last month. but in the past week, the stock is down 20%, losing 15% today, the same day the stock's lock-up period expired. the lock-up period restricts certain shareholders from selling stock. now that it expired, selling picked up. from one form of transportation to another-- shipping. dry-ships operates ocean-going cargo ships. shares sprung a leak today. d-r-y-s stock fell 7% on heavier volume. it is expanding into the ocean- tanker business by buying a dozen ships for almost $800 million. this new business may be spun off in some way next year. it will pay for the ships with debt and cash, worrying some investors. finally, two drug developers--

repros therapeutics and alimera sciences-- saw big volume pops today, even though their shares were moving in opposite directors. repros jumped more than 36% thanks to positive test results for a uterine tumor treatment. alimera, though, fell 9%. the f.d.a. will not okay an experimental eye drug in its current form. and that's tonight's "market focus." >> tom: playing in the football bowl game over the next two weeks or so can mean national

exposure for a college, but it can also be costly. tonight our look at the business of sports begins with the price to play during bowl season and rick horrow is back with us. always nice to see you. >> happy new year. >> tom: you too as well. more than a dozen schools last money on their football bowl appearances. bowl championship series, $17 million or so in payout others the conference, they give to it the schools. so u. conn is a good example, ex posh we are the big east championship. they have 17,500 tickets they're guaranteed to sell, they didn't sell them. it's a long trip down from storrs, connecticut to arizona, they may lose money play montgomery the bowl game. >> tom: last year they found of all large athletic departments, 12% were profitable, almost 9 of 10 lost money. so when you take a look at the u. conn example and other colleges, what are these bowl games mean for those student

athletes? >> first of all a lot of money for the schools themselves, 212 million in guaranteed payouts, that's an important stimulus plan. and each of these athletess gets gr 500 of gets of goodies to go to these games and participate. so who says student at leasts -- years ago when i was involved in the orange ago we got beef, that's all we got. -- beads. >> tom: electronic arts has been behind the madden franchise since 1988. the madden nfl video game among the best sellers, but it's now subject to a class action lawsuit alleging price gouging. >> we got the snow laden video here for our northeast neighbors and the bottom line is that the e. after brnd for video games is a tremendous brand. it's not the00 million unit, but it is 70 million unit for the madden brand. and you never know what happens in a class action lawsuit. >> tom: meantime stock has struggled.

this lawsuit claims that anti-competitive behavior because of the exclusive deal with the nfl. do these types of licensing deals wind up costing consumers? >> certainly another risk, because e. a. has to spend a lot capital for that fee and then they've got to am or tiz it. they raise prices. so you can't argue it's legally anti-competitive, but you can argue that the consumers may have to pay more. >> tom: speaking of paying more, baseball has a record season come this spring, seven player contracts, we're going to take a look, are in the 9-digit realm here, $100 miami or more, ranging from 5 to 8 years. we're almost talking about a billion dollars for seven players over less than a decade. how will fans pay for this? >> i know some players are very happy, jason weather and guys like that. and by the way those are guaranteed dollars, compared to only one last year. so it's clearly ramping up. how do you pay for it, you raise the prices of tickets until you can't pay any more and maybe television. >> tom: it got to be television, ultimately we're talking about more advertising, longer games because of more advertising,

does this ultimately lead to pay per view for full league coverage? >> everybody wants to cut, but that's where the revenue is, and then you say what is the next step. there is always this search for new revenue, maybe pay per view, they're denying it now. through let's tune in later. >> tom: the 1988 orange bowl committee selectman, always remember the bowl. rick horrow is the c.e.o. of horrow sports ventures. >> tom: here's what's coming up tomorrow: we'll get an update on home prices from the s&p/case-shiller home price index for october. we'll also see the conference board's december consumer confidence index. and our word on the street is "technology." gregg greenberg from thestreet.com joins us with three tech stocks expected to soar in 2011. if you "talk to chuck" you might want to give him get well wishes. charles schwab, founder and chairman of his namesake company, is recovering from heart valve replacement surgery. the procedure was done friday. schwab expects to be sent home from the hospital in a few days.

schwab started the company almost three decades ago as a traditional brokerage, then moved it to a discount pricing strategy a few years later. h&r block is losing one of its most profitable services. the company will not be making what are called "refund anticipation loans" this tax season. regulators told the bank that underwrites h&r block's loans to stop. those loans are controversial, coming with high interest rates and fees. analysts say canceling the service could cost h&r block a big earnings hit, especially since rival tax prep firms can still offer those products. euu@

we heard one take earlier in the program on tackling our nation's unemployment, what about debt load?. it's closing in on $14 trillion. tonight's commentator is convinced we can get a handle on all those i.o.u.s. he's mark zandi, chief economist at moody's analytics. >> of all our nation's economic worries, none are scarier than the federal government's record budget deficits and mounting debt load. unless we make big changes soon, our economic pain and suffering will get worse, much worse. i'm optimistic we will make those changes. particularly encouraging is the intellectual consensus forming

on how to do this. consider the recent proposals from two different bipartisan commissions formed to tackle these budget issues. while the proposals will not become law, they lay down important benchmarks and establish the basis for a healthy debate. the key point of agreement is that both government spending cuts and tax increases are necessary. as important, there is agreement that the focus should be on spending restraint. an examination of other periods of fiscal austerity here and abroad suggests that adjusting spending is better for an economy than raising taxes as a means of reducing deficits. with regard to taxes, the proposals scale back the loopholes that riddle the tax code. and the corporate tax code is made more competitive. on spending, social security is nudged from an entitlement to an insurance policy. that is, people would receive benefits as they are needed. and government health care spending is given a clear budget. global investors still have faith in america-- look at our low interest rates, and the fact that investors still run for safety in u.s. treasury bonds when there is trouble anywhere

in the world-- even here. this is with good reason. we have been in tight spots before and have always come through. we will do so again. this is mark zandi. >> tom: that's "nightly business report" for monday, december 27. i'm tom hudson. goodnight everyone. stay warm and we'll see all of you again tomorrow night. "nightly business report" is made possible by: this program was made possible by contributions to your pbs station from viewers like you.

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