>> announcer: this is "nightly business report" with tyler mathisen and sue herera. fiscally fit? new economic reports show whether the consumer is in good financial shape heading into the holiday shopping season. managing the millions of travelers. what one airline is doing to help things run smoothly during what's expected to be the busiest thanksgiving since 2006. worth the cost? you won't believe how much the nation's largest public pension fund pays for the privilege of investing in private equity. but maybe it's worth it. all that and more tonight on "nightly business report" for wednesday, november 25th. good evening, everyone. the consumer is king, at least it is at this time of the year, when many start shopping for the holidays, and that's because consumer spending accounts for nearly two-thirds of all

economic activity. and today, a rash of economic reports from jobless claims to personal income and spending gave us a look at just how fiscally fit americans are heading into the biggest shopping season of the year. steve liesman breaks down the data. >> reporter: a torrent of economic data released early ahead of the holidays presented an economic puzzle. how can the same data both bring down the outlook for growth and consumer spending, and yet, keep economists upbeat about the holiday selling seasony for the answer, you have to delve into the data and keep your rose-colored glasses handy. the bad news, consumer spending, consumer sentiment and new home sales came in below expectations. some of the data included downward revisions to prior reports. so, consumers not as upbeat, and they aren't spending a whole lot ahead of the holiday season. ug. and all of that prompted wall street to lower their growth outlook for the fourth quarter from 0.3% to 2% as updated in the rapid update. ug again. but the data also showed jobless

claims falling and personal income surging 0.4%. private-sector wages, they had their best gains since may. now some simple math. if income rises strongly and spending doesn't, it can only mean one thing, the savings rate has to go up. that's exactly what it did. savings hit its highest level since 2012, and oddly, that's what makes economists optimistic. economist ian shepardson says the savings rate spike will prove temporary because consumers are well placed for holiday spending. with job growth looking healthy, consumers should be in good financial shape for the holiday season. >> what i would say is one of the things we've been sort of pounding the table on for quite a while now is the idea that wage gains, while they're modest, to be sure, they're still gains. and the reality is, in that sort of backdrop, it's really easy to sort of build a case around consumption continuing to move along at about a 3% run rate. >> reporter: no one can say for sure if consumers will part with their newfound wage gains or savings in sufficient amounts to make it a green christmas for

retailers, but the stock market thought so. in one telling sign of how investors answered today's economic puzzle, they drove up the pricesth for consumer stock. for "nightly business report," i'm steve liesman. jessica borne joins us now to tell us who will be the winners and losers among retailers as consumers get ready to hit the stores tomorrow and friday. she's a consumer reporter. how are you? >> good, how are you? >> there is no doubting how important the christmas selling season is for retailers, but i wonder whether we make just too doggone much of black friday and this fir weekend because things seem to be on sale all the time, from halloween forward. >> that is true, and unfortunately, the customer knows that, so it's been pervasive for years. the customer knows to wait for black friday, so the weeks leading into black friday are very dead in the mall. the traffic levels are down and the customer is waiting because they feel that if they wait

until black friday, they're going to get a better deal, even though the promotions in the mall are elevated heading into the holiday. >> how much promotional activity do you think we're going to see? because the consumer is also, you know, they're used to that, they expect it. they all want to get a good deal. how much discounting is going to have to happen? >> well, right now in the week leading into black friday, most of the retailers started their black friday promotions with storewide percentage off sales and boeing bogo sales, but the glut of cold-weather inventory that hasn't sold and the weather hasn't turned seasonal this year, so those items will take a steep discount on black friday and i think they will actually take away from the traditional gift-giving items, because much of the focus will be on these steep discounts of up to 60% off, potentially, on those cold-weather items. >> which retailers are hot in your view, and which are not? >> right now we like jcpenney. you wouldn't have heard us say that a few years ago, but they've actually really repaired their customer base.

they've brought back the sales and couponing. it's working. we like the new ceo. we think they're well positioned for holiday. another retailer we really like is ulta, a cosmetic brand, mostly off mall. and they've really changed the landscape of how female shoppers buy cosmetics and fragrance and beauty items, and it hasthe department store scrambling to figure out that open sell model and we think they're well positioned. >> who is behind the eight ball a little bit or struggling? >> there's a few retailers that are struggling. i would say gap and old navy are one of the more recent ones that we've turned negative on. they really are without any major fashion direction right now, and there are so many other retailers doing fashionable basics better that the competitive landscape is just too much for them to overcome right now. >> jessica, have a great thanksgiving. >> thank you. >> jessica borne with merchant forecast. more details now on the sales of homes that steve liesman mentioned in his report. the commerce department reports that sales surged nearly 11% in october to a seasonally adjusted annual rate of 495,000, but that

number was slightly below estimates. however, the number of properties for sale was the highest since early 2010, alleviating some of the concerns over a lack of inventory. the rebound in october follows a plunge in september sales. and orders for longlasting manufactured goods rose in october after two months of weakness. durable goods orders increased 3% last month, and that was much more than expected, led by a surge in demand for commercial aircraft and transportation equipment. a key measure of business investment within the report also snapped back. stocks closed really narrowly mixed on this last full trading day of the holiday weekend. the dow jones industrial average rose one point to 17,813. >> yee-hee! >> exactly. the nasdaq was 13 points higher and the s&p 500 fell a fraction of a point. oil prices rallied after a smaller than expected rise in crude oil inventories was out and a decrease of the number of u.s. rigs. domestic crude rose 17 cents.

as investors in the u.s. head into the thanksgiving holiday, tensions between russia and turkey ratcheted up today. turkey accusing russia of deceit, russia saying it will continue to fly missions near turkish air space, and the economic ties that bind these countries run very deep. hadley gamble reports tonight from istanbul. >> reporter: we're just over 24 hours since a turkish military f-16 shot down a russian aircraft, and that pilot that survived the crash is speaking out. he's now said that he received no warning before his aircraft was shot out of the sky and that's in direct contradiction to what we've heard from turkish authorities who said that they warned the russian aircraft repeatedly to stay out of their air space. the tit for tat over where the plane was actually flying when it was shot down continues. we've heard from erred erred er

turkey, but the question remains, if you're going to blow another aircraft out of the sky, how else will this bee perceive? the economic lifeline between turkey and russia is under pressure tonight. behind me you can see the bosphorus where east meets west. any russian military hardware that's going to move into the eastern mediterranean will come through this strait. you have to also remember, this is a major lifeline in terms of the oil and gas trade between the two countries. turkey has a $25 billion-a-year energy import bill from russia. this is a major economic relationship. they have trade, tourism and energy as well. so, the big question is going to be whether egos are allowed to trump economics. for "nightly business report" in istanbul, i'm hadley gamble. french president francois hollande returned to paris where he met with german chancellor angela merkel and where the two laid flowers at a memorial site in the city. meantime in brussels, the manhunt for those involved in the paris attacks has widened just as the lockdown in that city begins to ease.

now a report from brussels' capital. >> reporter: two key developments in the story here in brussels. first, the ongoing manhunt in place since the paris attacks over ten days ago just expanded. the belgian authorities now looking for a second man. his name is mohammed abrimi. he was seen two days prior to the paris attacks on camera in a gas station with the key suspect of this manhunt originally, a man called salah abdeslam. so, two men now being hunted by the belgian authorities. and the reminder of just why the security alert level in this country remains at the highest level. now, despite that, the other development is the lockdown measures that have been in place for the last four days eased today. we saw schools reopening, literally with a great deal of police presence, but we also saw the subways opening, around 50% of them actually by midday today were open. we went down there and talked to

travelers just to get a sense of whether or not they were still fearful, whether they were just glad to get back to work, or whether or not they felt that the authorities overreacted to the risks here. listen in flp was some mixed opinions. >> i'm feeling okay. yesterday i went to my work, but today i decided to take the metro because i think it's okay. >> i think it might have been a little bit over the top, just because i was under the impression that there was some concrete action to be taken. they arrested 16 people but released 15 yesterday, so it just makes it sound like it was a little bit pointless overall. however, i think a lot of people were scared, and ultimately, it's good to reassure people, or at least try and take some action to try and prevent future danger. >> reporter: let me contrast what that man there was saying about this overreaction. i spoke to a woman today who said, hang on a second, if we're still operating at this high security level, if we're still fearful of an imminent terrorist atta

attack, why are we opening schools and why is the subway coming back to normal? what's the situation here? are we at risk or aren't we? i think that's a fair question in the circumstances and actually underscores the level of uncertainty still remaining in this city of brussels. but for now, what we see is the highest security level remaining in place, the lockdown measures removing, and of course, an expanded manhunt, two men now being sought by police. for "nightly business report," julia chatterley in brussels. still ahead, why authorities aren't taking any chances on safety this upcoming holiday weekend.

as shoppers and retailers prepare to get into the holiday spirit, they are also confronting the harsh realities of terrorism. officials keep saying there is no credible threat to so-called soft targets, but as scott cohn reports from san jose, they're not taking any chances. >> reporter: upscale shops, open-air elegance, silicon valley's santana row is a magnet for new money, but it's also the kind of place that security professionals call a soft target, which, in light of the paris attacks, is not lost on shoppers here. >> it happened in paris, it happened in big places, so why not in san jose? we're in the middle of, like, technology. >> reporter: some security here is visible, but most isn't, a balance all mall operators are constantly trying to strike. the nation's largest mall

operator, simon property group, says all its efforts are closely coordinated with local and national law enforcement, and each center has its own detailed plan.ty this isn't new for mall operators, and it isn't abstr t abstract, either. terrorists killed 67 people at a shopping mall in nairobi two years ago. u.s. homeland security officials say the biggest threat remains overseas. the message from the president, reassurance. >> i want the american people to know entering the holidays that the combined resources of our military, our intelligence and our homeland security agencies are on the case. they're vigilant, relentless and effective. >> reporter: officials say shoppers should be vigilant, too. security experts say that should include having your own escape plan when you're in a public place. plenty of people are undeterred. >> i'm not going to let terrorism, you know, determine what events i go to or shopping for my family or loved ones, so, not going to happen. >> reporter: the international

council of shopping centers has high hopes for this holiday season in the u.s., forecasting about 3% growth and sales approaching $500 billion, that forecast before the paris attacks, but so far, there are no plans to revise it. scott cohn, "nightly business report," san jose, california. >> security will also be tight at the macy's thanksgiving day parade, the biggest in the country. the company and the city of new york are taking extra precautions to protect the millions of spectators expected to line that parade route. courtney reagan has our story. >> reporter: the safety of the more than 3 million macy's thanksgiving day parade participants and spectators is always a top priority, and following recent terrorist attacks, it's front and center for the parade's 89th anniversary. the retailer says it works closely with law enforcement, as it does every year, on comprehensive security plans, saying, "as with any public event in new york city, security elements are extensive, from the very visible presence of law

enforcement officers to wide-ranging, behind-the-scenes security operations. the safety of our participants and spectators is the top priority for us and our agency partners." the nypd is the lead security agency for the parade, and commissioner bill bratton says that the number of officers trained to deal with an active shooter situation has increased from 100 several years ago to more than 500 today, and that number ramps up even further for an event like the parade. and while the u.s. state department has warned americans to "avoid public places," bratton says new york city is a special case. >> in new york, we're here in coveraging. come down and join the crowd, be one of the 3 million enjoying thanksgiving. it's how new york city works, how it's always worked and how it will work. >> reporter: the enhanced concern isn't stopping macy's from holding the annual parade, and it's not the first time some have questioned whether or not the show should go on. >> i have been challenged in the past that in 2001 and in 2008 to

eliminate the parade and eliminate the fireworks by different groups of people that think why should you be spending money at this period of time. it's because the country needs an uplift. >> reporter: and macy's gets a brand equity uplift at the most important time of the year. while the retailer won't disclose how much it spends on the parade, brand experts argue the return on investment is worth it. >> think of how much money is spent on commercials for the super bowl and think of the on-air presence that macy's gets. the value is -- i don't think you can count the value. it's incredibly valuable for macy's and for its brand. >> reporter: macy's isn't the only beneficiary. the floats and balloons sponsored by big qucompanies wi most appearing in the parade for three straight years. new floats this year include ocean spray, kfc and hallmark. so, while safety is getting extra attention this year, the man in the big red suit will be coming down 34th street as planned. for "nightly business report," i'm courtney reagan in new york

city. deere's earnings fall, but not as much as expected, and that is where we begin tonight's "market focus." the farm machinery maker posted results that topped estimates, despite weak conditions since crop prices are low. the company also offered a better outlook, saying it is prepared to deal with a worsening slump in demand for its gear. shares rose nearly 5% to $80 on the button. hormel announcing its board approved a 2-for-1 stock split. the move has to be approved at the firm's annual meeting in january. the firm says it thinks the split will put its stock price in a more attractive range for a number of investors. shares 3% higher today, $73.55 the close. donaldson cut its earnings guidance for the year, this after the filtration manufacturer reported a more than 30% decline in profits. the company blamed reduced customer demand and currency headwinds for the disappointing quarter. despite that, the stock was up nearly 3% to $31.28. and the private equity and

asset manager american capital has hired goldman sachs and credit suisse to help it undergo a strategic review of its options. the company will consider a sale of its whole business or units and will hike its share buyback program. the stock popped 9.5% to $15.22. universal display saw its shares rise on a report that apple plans to switch to a new type of display, which the company produces for its iphones starting in the year 2018. shares rose 7% to $51.95. sony says it has now sold more than 30 million playstation 4 consoles. the firm says the system has sold faster than any of its predecessors. the stock fell more than 1.5% to $26.51. and pandora announcing adele is bringing her latest album, "25," to its service. news of the album's availability comes after adele said earlier that she had decided against making her album available on other services, like apple music

and spotify. shares of pandora up 4.5% to $13.82. and a panel that advises the food and drug administration announced that biomerin's data on an experimental drug was not persuasive enough to warrant approval. the fda hasn't officially voted to approval for the medication, which treats a muscle disorder. nevertheless, shares fell 2% to $96.06. the nation's largest state pension, the california public employees retirement system, also known as calpers, says that it paid $3.4 billion in performance fees to private equity managers since 1990 and $700 million last year alone. now, that's on top of standard management fees that totaled $414 million last year. so, will this disclosure lead to tougher scrutiny of private equity investments and put pressure on managers to cut their fees? joshua gotbalm is former director of the pension benefit guaranty corporation and a guest

scholar of economic studies at the brookings institution. joshua, welcome. good to have you with us. >> good to be here. >> why did this stand out so much, what calpers did, and why did it take them so long to do it, to reveal what they pay in performance fees to private equity? >> i think the fact is that calpers is doing their job. what their job obis, is to revi the whole $300 billion-plus that they are responsible for and ask, where are you getting value for money? and they've done this -- they are doing this review continually. about less than a year ago, they did this review and decided hedge funds were not getting value for money. we're going to cut back dramatically on hedge funds. in the case of private equity, what they found was that even though the fees are very high, that the returns are so high that even after fees, it's worth

it, from their perspective. let me give you a for instance. calpers says that over the last 20 years, their investments in regular stocks have averaged about 8% per year compounded. their investments in private equity after admittedly really high fees have returned 50% more than that, about 12% per year compounded. so, my view of this is, calpers is doing their job. what's different and important and which we should encourage is that they are providing more detail and more information about the fees they're paying than most pension funds have ever provided. >> right. >> and i'm hoping that that sets a new standard for honesty and disclosure, because that's how you actually make sure you get value for money. >> i'm sure it would put pressure to get people to disclose to get other managers to disclose. you have an issue, though, not necessarily with calpers, who you say is doing their job, but with congress.

>> i think there's a separate question here, which is private equity has always been a high-cost form of investment. it's because private equity firms don't just trade stocks and bonds, they buy the company, they put management in, make operational changes and at some point sell the company either through the stock market or in a private sale. if they are successful, they make very high fees, and that's why you need professionals like calpers to scrutinize and make sure those fees are justified. the flip side of it and the reason why some folks are ticked off is that, unfortunately, congress has said that private equity firms and hedge funds, after they make those very high fees, don't get taxed as much as the rest of us. they get taxed at the capital gains rate, rather than at the ordinary income tax rate. >> and those fees are what we refer to, am i correct, joshua,

as carried interest? and that's the carveout for those fees, correct? >> yes. >> but finally, just to tie it off, it sounds like you're saying, i should -- if i'm a calpers investor, i should be happy that they're paying these high performance fees because it means they've got better performance. >> i think if i'm a calpers pensioner, i should be happy that the folks at calpers are doing their job, they're sharpening their pencils and they're making sure that if they pay high fees, which they are -- >> they're getting back -- >> -- they're getting real value for it. >> all right. >> and here they are. >> all right, josh. have a great thanksgiving. joshua gotbalm with the brookings institution. coming up what some airlines are doing to manage the rush of fliers during this very busy holiday travel weekend.

an update on a story we told you about in september. touring pharmaceuticals became a lightning rod for criticism after it hiked the price of a 62-year-old drug by 5,000%. today the firm said it would offer medication that's called deraprim to hospitals at what it calls a significant price cut. touring says it will cut the price by up to 50% for hospitals and offer smaller pill boles. it will also give free starter packs to physicians to improve access in emergency situations. the annual thanksgiving travel rush is on, and this year, aaa estimates more than 47 million people will travel at least 50 miles this weekend. the overwhelming majority by car, but millions more will be flying. phil lebeau reports from inside the united airlines operations

center. >> reporter: from security lines to lines of planes waiting to take off, this thanksgiving will be the busiest for airlines since 2006. so, travelers are already packing a healthy dose of patience. >> you're going to notice there's going to be a backup in the line, but for me, it's priceless, you know. peace of mind is priceless. >> reporter: with the economy doing better, the number of people flying is up 3%, so airlines like united are adding more workers and flights. in fact, here at united's operations center, the airline has scheduled another 140 red-eye flights for saturday morning and sunday morning as more people look to fly when the airports and skies are less crowded. >> customers are more savvy in traveling, and they really want to expand the time, the holiday they have with their family and friends, so it gives another option. and you know, hopefully, you get a little sleep on the plane, too, but when you get back, you're rested from the holidays. >> reporter: while the terror hiattacks in france may be prompting some tourists to stay away from traditional

destinations, flights to europe are still full. this year, about 10% of those traveling for thanksgiving will be leaving the u.s. >> we're closeloo the record, and more importantly, we're at the highest amount since the recession, since those peak volumes. so, it's a great sign of consumer confidence and a good time to fly. >> reporter: and a good time to be with family and friends. phil lebeau, "nightly business report," chicago. >> that does it for us. i'm sue herera. happy thank giving. >> and happy thanksgiving from me. i'm tyler mathisen. we'll see you for a special edition here tomorrow on "nbr."

narrator: tonight on "quest, elephant seals dive deeper, swim farther, and hold their breath longer than almost any mammal. find out what scientists have learned about how they accomplish such remarkable feats. also, why is the universe expanding? a mysterious force called dark energy could be behind it. and for more than 80 years, the hetch hetchy aqueduct has been supplying drinking water to bay area residents. now crews are trying to rebld the water system before the next big earthquake. ♪ announcer: support for "quest" is provided by...