>> susie: no matter where you look, things look shaky for the economy-- jobs, housing, consumers, gas prices... >> i think when you add it all up, we're probably looking at a soft patch lasting through the end of the summer. >> tom: "soft patch" or "hiccup," economists question what's going on in the economy. you're watching "nightly business report" for wednesday, may 18. 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 >> susie: good evening, everyone. federal reserve policymakers are divided about when to start raising interest rates. according to the minutes from the fed's latest policy meeting, one camp is worried about inflation, the other's concerned the economy is slowing down, tom. >> tom: susie, another measure of the nervousness is the bond market, where investors often seek shelter during tough economic times. bond mutual funds have seen more than $10 billion in new money in the past two weeks. and the yield on the 10-year treasury is closing in on 3%. that's the lowest rate since december. >> susie: besides the activity in the bond market, there are other signs the economy has hit a soft patch.

suzanne pratt reports. >> reporter: it's wednesday afternoon at this mall in garden city, new york, and you could play catch in the parking lot. a slow shopping center is hardly conclusive evidence of a weak economy, but some experts say it's no surprise given other signs of lackluster activity. the housing market remains in the cellar. sales are down at the nation's go-to store. and, job growth is still far too slow to put millions of americans back to work. economist ed yardeni also points to the recent increase in weekly jobless claims and weakness in the auto sector because of parts shortages in japan. >> the auto industry actually saw a very sharp drop in production in april and, as a result of that, they're not hiring and they're holding back 'til they can get the parts. so, i think, when you add it all up, we're probably looking at a soft patch lasting through the end of the summer. >> reporter: and, don't forget those higher prices at the pump. some say they've upset our

financial state of mind. >> we all drive down the road and we see that price all the time, and so it gives an immediate sense of how things are doing and how were doing. and, at $4 a gallon, a lot of people are hurting and they cut back. >> reporter: other experts are more optimistic about the economy right now. they point to the stock market's resiliency and strong corporate profits. even with significant headwinds, expectations for second quarter profits continue to improve. at the beginning of the year, analysts predicted a 10.6% gain in s&p 500 earnings in q2, today they're expecting to see a 14.5% increase. for s&p's beth ann bovino, feeling good about the recovery is all about jobs. >> we've seen now for the last three months, over 200,000-plus in jobs in new jobs added to the payrolls. and that wasn't government, that was largely private payrolls. that's a big plus in our mind.

>> reporter: talk of a soft patch may be heating up, but so far there's been little chatter about a double dip recession. you may recall that was the big worry a year ago, when the economy last downshifted into slow motion. suzanne pratt, "nightly business report," new york. >> tom: the economy isn't looking any brighter for teenagers. researchers at northeastern university say only one in four teens will have a job this summer. that makes it one of the worst times for summer hiring since just after world war two. diane eastabrook reports many teens will need to get aggressive and creative if they want to pick up extra spending money during their break from school. >> reporter: for the past couple of months, 18-year-old melissa godar has been pounding the pavement, looking for a summer job in retail. so far, she's found nothing. >> a lot of them, they're either not hiring because they just hired already, or they're not looking for anyone new because they already have people.

>> reporter: getting a summer job, whether it's making burgers, lifeguarding or working a cash register, could be a lot harder for teens this summer. in fact it's been getting tougher over the past decade. about half of kids between the ages of 16 and 19 had summer jobs in 2000, but last year only about a quarter of them did. the situation isn't expected to improve this summer. outplacement expert john challenger studies job trends and says several factors are conspiring against teens. first, many small businesses are still tightening their belts and holding the line on hiring. second, many local governments don't have money for jobs at parks or swimming pools. and third, many adults are vying for positions typically held by kids. >> the competition is really stiff this year. there are a lot of people, a lot of college kids, a lot of grads who are looking for jobs to make ends meet to get their foot into the workplace. and so this year's teens are

facing much more competition than usual. >> reporter: kathy burns recently hired three teens to work at the toy store she manages. she says there was a lot of competition for those three openings. >> to date, we've probably had at least 30 applications and people of all ages. >> reporter: careerbuilder says teens should think outside the box when job hunting this summer. some of the nearly 3,000 employers it polled had openings in office support, customer service, information technology, and research. and challenger says if no one will hire you, hire yourself. >> they might start their own businesses. start a baking company, start a technology company where you go to people in neighborhoods and offer your services. >> reporter: challenger advises teenagers who don't have jobs already to keep looking into the summer. he says hiring continues to improve, and many of the businesses that typically hire teens tend to have high turnover. diane eastabrook, "nightly

business report," downers grove, illinois. >> susie: here are the stories in tonight's n.b.r. newswheel: those fed minutes we told you about helped the blue chips snap a three-day losing streak. the dow rose 80 points, the nasdaq was up 31 and the s&p 500 added 11. trading volume fell, 881 million shares moving on the big board and about two billion on the nasdaq. oil prices topped $100 a barrel on disappointing weekly supplies. stockpiles were flat week over week, where an increase was expected. in new york trading, oil prices rose sharply-- up $3.19 or 3% to $100.10 a barrel. >> cyber secure problems for sony. it found a security hole in a website set up to help users of its play station network that was hit by a data breach last month. sony temporarily pulled the website off line to fix it.

>> tom: still ahead, tonight's "street critique" plays defense. hilary kramer has two defense- contracting stocks she says are worth watching. >> susie: gas prices are up. food prices are up. and now you can add health care to that list. a new study by price waterhouse coopers says american businesses can expect to pay 8% more for healthcare coverage of their employees this year and 8.5% more in 2012. joining us now with more, mike thompson, a principal at p.w.c., the big consulting firm. hi, mike. >> hi. >> susie: all right. so 8% increase, that's a lot. but your research shows that it could have been a lot higher because many people, many of them unemployed during the recession, postponed going to the hospital or to their doctor. so now that the economy is improving a bit, more people are employed, should we get ready for a big jump in health care costs? >> i wouldn't say a big jump. i think what we've had over this past year has been a

moderation of health care costs, largely as you indicated due to decreased utilization by people. i think going -- go ahead susie. >> susie: no, go ahead, finish up. >> i think in 2011 and 2012 we'll see some increase in that in terms of utilization. we're already starting to see some increases in utilization vis-a-vis what's been a trough over the past year or so. >> susie: and you said in this study that there are a lot of steps that companies are taking to keep the health care costs down, let's take a look at what you said in your study. they are signing up for health plans that require bigger deductibles, higher deductibles, they are increasing the deductibles for physicians at hospitals if you go outside of the plan's network. increased use of generic drugs as opposed to the blockbuster drugs and promoting wellness programs. so, mike, how much do these

factors really save money? >> well, they have had an impact, and as one of the reasons that employers have gone in that direction. you know in the past i think employers often were focused on just increasing the amount that employees were paying in their premiums coming out of their paychecks. but what we've found this year is the focus has been less on increasing what employees are paying out of their paychecks and more about desensitizing them to the cost of the care that they are utilizing. and because of that i think employees have in fact used less care or they've been more thoughtful in which care they seek, or which treatment they seek. >> susie: now, employees are paying a bigger chunk of their health care bill, even though employers are paying the bulk of it. what do you see in terms of the trends of bringing costs down, looking ahead? >> well, if you look ahead, i think that you have to think not just in terms of the changes that have happened with health reform so far,

which have been largely related to improving access and establishing kind a minimum floor as it relates to the benefit plans, but really the structural changes that are happening in the system. not just through health reform but through all the stake holders, and i think what the focus is, is to reward higher value in the system, to actually encourage providers and patients to seek the right care at the right time, at the right price. >> susie: talking about reform, the obama health reform having kick -- hasn't kicked in yet. but when they do, what is your sense of what it's going to mean for prices, whether you're a business or whether you're a beneficiary, an employee who is going to be using the health care system, is it going to be better or worse, or about the same? >> i think some of the changes that are coming out of health reform are part of the solution, and i think, but i think the solution is really wholistic. it really requires employers

and health plans and providers, frankly to systematicly transforming the system to better reward value, and to deliver value in terms of how care is delivered. i think the other element that employers are very much focused on is asking employees to take personal responsibility on two fronts, one is to take better care of their own personal health and well-being. because if they do they'll feel better for one, two they'll be more productive and three they won't need as much health care. but secondly i would add, they are also asking them to engage more actively in how they get their health care, and be more thoughtful in that process. >> susie: okay, we're going to have to leave it there. a long topic of a lot of interest. thank you so much for sharing with us today. >> thanks. >> susie: we've been speaking with mike thompson of p. w. c..

>> tom: there always are exceptions to the rule, and a food distributor based in miami is one when it comes to employee health insurance costs. >> reporter: transnational foods imports and ships more than 200 products to wal-mart, dollar general and supervalu stores across the country. it also sells its own pampa brand products like peaches and evaporated milk to those stores. it covers 100% of the health premiums for its 23 employees in the u.s. like many small companies, it has seen its health insurance costs rise. last year, premiums were up 12%. this year, they increased 19%, but company controller juan uribarne just received the quote for next year's premiums-- down 3%. >> when i requested an explanation on the increases last year, they told me, "well you're having a lot of employees who were sick, a lot of employees who had babies-- gave birth to new babies." last year we had three babies in the company, so i was expecting an increase because of our babies, but actually there was a reduction. i honestly don't understand the way it works.

>> reporter: he tells me he spent a day going through the new quote, making sure the deductible remained the same, the doctor network didn't change, that his carrier hadn't made some mistake by giving him a price decrease for health insurance. >> i was very, very surprised. at the very end, when i found everything was the same, i was surprised. >> tom: the small drop will save transnational about $15,000, not enough to add a new job. still, uribarne says he wants to sign the deal right away.

>> susie: tom, a new stock will be trading here on the big tomorrow, linked-in. it priced tonight at $45 a share, at the top of its range. it's expected to be one of the hottest i.p.o.s this year. >> tom: demand for shares has been high. lots of chatter around this, the career networking site is seen as a barometer of the social media sector. only big i.p.o. this year. let's take a look at tonight's market focus. stocks snapped their losing streak. grain prices continued moving higher, helping material stocks lead the rally today. we're going to pull out and let's start with the past 90 sessions of the s&p materials sector exchange traded fund,

here it is, bouncing more than 2% on heavier volume. material stocks had seen some profit-taking with the recent commodity volatility. we saw a bit of a reversal with the sector today. with the rally in the sector. fertilizer maker c.f. industries led the charge, up more than 4%. seed maker monsanto jumped almost 4% and miner freeport mcmoran gained 3.8%. here's what may have helped these stocks. grains and metals rallying. wheat jumped another 7%, over $8 a bushel. corn is at $7.5 per bush as the lower mississippi river reopened to barge traffic, and silver recovered almost 5%. back above $35 an ounce. speaking of silver, kodak is a big silver user with its film division. shares jumped more than 15%, and continue the rally started last week after it won a favorable patent decision against apple. shares are at their highest price since february on this

180-session chart. volume jumped sevenfold. there was some small insider buying, but also market rumors of short-covering fueling the rally. some retail earnings hit the tape today. target's result came in a nickel more than estimates, thanks to a big jump in profits at its credit card division. the company admitted it needs to see same-store sales increase to make its numbers for this quarter. target stock has been disappointing over the past year. that's the best way to put it. today, it fell 1.6% on heavy volume. while it remains above its most recent 52-week low, shares are down more than 17% from this high in early january. office supply retailer staples surprised investors with a weak first quarter. the company missed estimates and lowered its earnings outlook due to weak sales. share prices saw investors sold hard, driving the stock down 15%. volume expanded eight-fold. on this big move down. the selloff pushed the stock below its low last august

to a new 52-week low. it's now only about $2 above its post-recession low of 2008. the staples news hit rivals office depot and office max. both are at near their lowest prices this year. allstate stock didn't move much today, despite it spending about $1 billion for two online insurance agencies from white mountain's insurance group. white mountain jumped to a post- recession high. finally, hershey stock slid almost 3%. c.e.o. david west is leaving the candy maker to run privately held del monte foods. share price losing almost 3% today. and that's tonight's "market focus."

>> tom: america's most wanted terrorist is dead and defense spending is under pressure, but tonight's "street critique" guest isn't afraid to play offense with a couple of defense contractors. she's hilary kramer, editor of gamechangerstocks.com. a couple of defense stocks, beginning with harris, communications and radio gear operator. but shares are well off their recent highs after reporting lower margins and slower sales growth. are you concerned that it could be trying to catch a falling night? >> not when it comes to harris, tom. h. r. s. harris is a defense contractor in this very fast growing secure radio frequency sector. and in it we know that when it cops to defense spending, when it comes to defense focus it's not about big fighter jets any more, but it's about data collection, understanding

behind enemy lines and that's where harris comes in. >> tom: what about flish systems, another one of our defense choices, makes infrared sensors and gear, this stock has been rallying nicely at a two and a half year high. what's the catalyst to push it from these prices? >> you have the growth, 30% increase in revenue, in the most recent reporting quarter, so that is $373 million in revenue, and similar to harris, that was radio frequencys, but here you're talking about infrared sensors, and when it came to catching osama bin laden, it wasn't done with big tanks, matter of fact this is the first time since world war ii that there are no tanks being produced this year. it's all about this kind of sensor technology. flir, for example, also makes night vision goggles, so this is the sweet spot, in and the big defense companies would love to make an acquisition of a company like flir, or to get into the growing area that

harris is in. >> tom: fair enough. let's get to some of your feedback, questions about a previous energy pick, satcon technology. gina wrote i'm joining the sa satcon party, why is it tanking? and another one, what would be your recommendation for someone holding satcon at a loss. you liked it back in october, the share price has been moving lower despite a nice rally today. >> well, satcon technology is going to move with oil. oil is below $100 a share. but there's always going to be demand, even if there's margin pressure let's say on solar companies or the wind makers which are tough businesses, saftcon as an inverter maker in the largest solar inverter manufacturer in the world is still an integral key part of the puzzle when it comes to uploading clean energy into the traditional electric grid. and when, satcon was funded by a private equity funds and

they always have exit strategies. so i see some real opportunity for satcon, but you're always going to have volatility when it comes to these kind of companies in the sector of clean energy. >> tom: do you even the two defense contractors and satcon? >> yes, i do, and i'm waiting on harris and flir, i think they're very attractive for those big caps like northrup group mon. >> tom: you with always follow along on the website. send is us a note by twitter, and of course we're on facebook as well. we'll feature more questions next week. hour guest this evening, hilary kramer with gam gamechangerstocks.com. watching for tomorrow: >> susie: here's what we're watching for tomorrow: weekly jobless claims and the april reports on existing home sales and leading indicators. on the earnings calendar. quarterly results from teen retailers including aeropostale, buckle and wet seal. speaking of teen retailers, is the sector hot or not? we'll get the outlook for shops that cater to young consumers.

>> susie: the securities and exchange commission today proposed tougher new rules aimed at overhauling credit rating agencies. some of the measures try to hold firms like moody's and standard & poor's more accountable, but the proposals would not change the industry's fundamental conflict of interest-- rating firms can be paid by the very companies they are rating. credit raters have been faulted for compounding the damage from the subprime mortgage meltdown. >> tom: what size loan will you need to buy a house? and how much will it cost you to pay it back? those are the main questions answered on two new mortgage forms unveiled today by the consumer financial protection bureau. the documents detail money needed for closing costs and monthly payments. they also spell out which costs can increase over the life of your loan. the agency wants the public's feedback on which version is easier to understand. you'll find a link on our website.

>> susie: and finally, if you missed out on royal wedding souvenirs like kate and will chocolates and tea towels, here's another piece of memorabilia up for grabs-- and it will turn heads. it's the hat that princess beatrice wore to the royal wedding. the tea rose-colored, ring and bow-shaped design is up for grabs on ebay.

bidding has topped $30,000. the auction ends may 22, susie, and proceeds go to charity. it comes with free shipping. i have to say i love looking at the hats at the wedding. >> tom: i'm not sure it's going to give me the sun protection i need this summer though. that is "nightly business report" for this wednesday night. thank you for joining us. it is may 18th. i'm tom hudson, have a great night, susie. >> susan: thank you tom. thanks for watching everyone, hope to 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. captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org

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