>> tom: when it comes to paying more for food and gasoline, consumers are feeling squeezed. and economists see the effects of higher inflation too: >> if you drive a car or eat you've got big problems. >> susie: we look at what paying more in gas stations and grocery stores is doing to the economy. you're watching "nightly business report" for friday may 13. 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. thank you. captioning sponsored by wpbt >> susie: good evening, everyone. inflation is heating up and we can put the blame squarely on food and fuel costs. tom, retail prices in april hit their highest level in two and a half years. >> tom: susie, the increases were in line with what economists expected. still, the consumer price index jumped 0.4% last month in large part because of higher prices at the pump. take out food and energy and the core-rate rose a very modest 0.2%. >> susie: higher prices may not yet be visible in all areas of the u.s. economy. but, as suzanne pratt reports, paying more for food and fuel is taking a toll on consumers.

>> reporter: it's no surprise to most shoppers in this new york grocery store that it's getting expensive to put food on the table. after all the cost of yogurt, milk, eggs and meat all rose last month. many say those higher price tags are affecting their household finances. >> they're higher than they were. and, i'm on a really low budget, so it's pretty tight. >> i'll take an extra moment to consider what i'm buying now than perhaps in months or years past. >> reporter: and, it's not just food. prices at the pump are still over $4 a gallon in many areas of the country. that's despite a recent drop in the cost of crude oil. on an annual basis, consumer prices 3.2% are higher than a year ago-- the biggest gain since october 2008. economist david wyss says policymakers have little control over the price of food or fuel. >> so, there's not much the fed can do to improve the weather and i don't think there's much

ben bernanke knows how to do to improve the middle east. >> reporter: the confusing thing for many americans is that economists say we don't really have a big inflation problem. that's because higher food and fuel costs aren't pushing up wages or the price of other goods and services. but, make no mistake more money spent on eat and driving means consumer have less cash for other things. that means less economic growth. and, without a robust economy, unemployment stays high because companies are reluctant to hire. some experts say the economy is essentially stuck. >> we're seeing these high costs imposed on us by the world economy really that are cutting into our purchasing power. we've already got interest rates shoved as low as they can go and we still can't get any really traction on the growth side. i think we're going to see a slow slog as we try to get our way out of this. it's going to take a while. >> reporter: it may take a while, but less purchasing power

isn't going to stop everyone from eating well this evening. >> i just paid a lot of money for some salmon that i'm going to make tonight for my wife and myself. >> reporter: suzanne pratt, "nightly business report," new york. >> tom: here are the stories in tonight's n.b.r. newswheel: stocks closed lower on renewed concerns about europe's financial crisis. signs that debt troubles in countries like greece are larger than originally forecast upended financial markets friday, sending the dollar up nearly 1%. fears of a deepening financial crisis overshadowed the inflation data that suzanne just told us about. the dow lost 100 points, the nasdaq lost 34.5 points and the s&p 500 off nearly 11 points. big board volume closes out the week below 900 million shares. while nasdaq volume fell under two billion shares. in the aftermath of the japan

still ahead, tonight's market monitor predicts the stock market will heat up again this summer. eugene peroni is back as our market monitor guest. and coming up, our pumped up prices series looks at how higher gas prices hurt non- profit organizations. >> susie: the people who oversee the funding of social security and medicare are warning that changes need to be made sooner, rather than later to give future retirees a chance to prepare for them. medicare will run out of money in 2024, amid higher projected health-care costs and lower payroll taxes. that's five years earlier than previously thought. social security reserves will be drained in 2036, one year earlier than previous estimates. as darren gersh reports, the

news will step up the pressure to make changes. >> reporter: medicare and social security did not have a good year. the cost of medical care rose faster than expected and payroll taxes fell further than forecast due to a weak economy. there was some good news-- life expectancy for older americans increased slightly. but that increases the benefits paid by social security and medicare. treasury secretary timothy geithner, a trustee of the programs, says the new forecasts show why changes must be made. >> while social security and medicare have sufficient resources to meet their obligations for at least the next decade, it is important that we put in place reforms to strengthen these programs. social security and medicare benefits are secure today, but reforms will be needed so they will be there for current and future retirees. >> reporter: medicare's condition worsened the most. costs were higher than expected

last year, leading government forecasters to predict the hospital insurance trust fund will run out of money in 2024-- five years earlier than predicted last year. while medicare spending is on an unsustainable path, the brookings institution's gary burtless pinning down future medical costs is hard to do. >> it's growing faster than the price of most other service providers, but the question is how much faster and will eventually those excess cost increases for medical care slow down so the rate of increase is closer to the prices we pay for other services. >> reporter: the outlook for the social security trust fund did not change much, but the program's cash flow did. for the first time in more than 25 years, benefit costs now exceed tax revenues and will for decades to come. last year, social security ran a cash deficit of $49 billion.

a $41 billion deficit is projected for this year and another $20 billion gap by 2014. to cover those deficits, social security will have to dip into its $2.6 trillion trust fund. heritage foundation analyst david john says that trust fund is made up of special treasury bonds which will be redeemed with other federal borrowing. >> they have the full faith and credit of the united states government, so they will be paid. but that's money that has to come out of general revenues that would otherwise go to something like schools or roads or defense or something along that line. yes it will be paid, but there will be a cost in other areas. >> reporter: the most immediate financial challenge for social security is disability insurance. that program covers ten million people and has a separate trust fund that will run out of money in 2018. if congress doesn't act, that would force deep cuts in benefits. darren gersh, "nightly business report," washington, d.c. >> tom: oil giant exxon mobil is

shutting and emptying some of its oil pipelines in louisiana on increased concerns about the mississippi river flooding. it comes as the army corps of engineers decides sometime this weekend whether to open up part of the mississippi river. if the morganza spillway in louisiana is opened, it will inundate hundreds of thousands of farmland acres and swamp thousands of homes. but it would spare larger cities like new orleans and baton rouge. swollen by weeks of heavy rain and melted snow, the mississippi river has been breaking high- water records. an insurer's research group predicts this flood will go down in history as a multi-billion dollar catastrophic event. a full damage assessment cannot be made until the water has receded in many places.

>> susie: bats global markets filed to go public today and already there's speculation that this upstart electronic exchange operator could be a takeover target. the i.p.o. comes at a time of big mergers between global stock exchanges. but bats, located in kansas isn't as well known as its larger rivals like the nyse and the nasdaq. the company, which runs the bats exchange, registered with the securities and exchange commission to sell $100 million worth of shares in the offering. no word on a price range, share size or timetable for the deal. >> they've got to be hoping for a better market condition, certainly this week, it was

really choppy here on the exchange. >> tom: it certainly was, and it was led by that choppiness we saw in commodities and of course the u.s. dollar as well as we're kind of at the tail end of thearianing season here, susie. let's go ahead and roll out this friday market focus. stocks sank in late morning trade, never to recover, as the u.s. dollar strengthened over worries about greece government debt. with so much focus on the u.s. greenback, let's start with the past 180 sessions of the dollar index. after pushing lower for months, the dollar has began to perk up, which has hit commodity prices. lots of focus on yahoo today. shares another fell 3.6%. volume was very heavy, about five times average. shares are down 11% from this high a week ago.

the trouble surrounds yahoo's 43% ownership of chinese internet commerce firm alibaba group. questions continue around alibaba's online payments business called ali-pay. yahoo claims ownership of the payment business was transferred to another company controlled by alibaba's c.e.o. alibaba hasn't confirmed that specifically but tells dow jones the business was restructured and transferred to comply with new chinese government regulators. back to yahoo's, this is the past 12 months. the drop since last week brings the share price down to this level of resistance, which it had broken out of last month after its earnings call. it's a different kind of trouble at semiconductor technology licensing firam rambus. shares dropped hard to a new 52

week low, falling almost 18%. volume surged. an appeals court ruled against rambus in its patent fight against chip makers micron and hynix. the court decided rambus wrongly destroyed documents in its legal cases against the two. rambus initially lost its case against micron, but won against hynix. patents, a u.s. international trade commission judge ruled. the ruling is a win for kodak

gamestop corp. hit their highest point since 2009 after n.p.d. there were several new stocks hitting the tape this week. the three raising the most money were kosmos energy. it's an oil and gas explorer, focused on africa. it came public at $18. r.l.j. lodging is a hotel real estate investment fund. it began at $18 and phoenix new media hit the market at $11. it is an internet, mobile device and television news content provider in china. and that's tonight's market focus.

>> susie: the national average price of a gallon of regular gas is holding steady at $3.98, according to the a.a.a. that's the same as a week ago and just 13 cents below the record average price of $4.11. as we continue our series "pumped up prices"-- anna olson looks at how non-profit organizations are feeling the pinch of high prices at the pump. >> reporter: each morning, volunteers at washington d.c.'s food and friends load up cars filled with meals, then deliver them to people like joni webster. she is recovering from breast

cancer. she says food and friends saved her life. >> i don't know what i would do without them. they've been great for me. >> reporter: the organization's 10,000 volunteers help make life easier for the people they serve. but executive director craig shniderman says higher gas prices are causing some volunteers to think twice about helping out. >> we have thousands of volunteers here, wonderful people who out of the goodness of their hearts go to those gas stations, fill up those tanks, and do those deliveries. but it's a squeeze. >> reporter: jim burruss pays for his own gas to make deliveries. he's trying to conserve these days by taking routes that save him miles. >> we just filled up. it was $50 some dollars. it used to be $30 something. >> reporter: high gas prices are also affecting how organizations like food and friends spend money. in january, it cost $4,000 to fill up these vans. in april, $5,800.

and as prices rise, food and friends says money that could be used to feed people is being used for gas instead. to put that into perspective, that increase in cost is enough to feed one person three meals a day for two and a half months. the center for nonprofit advancement's glen o'gilvie thinks these costs could be catastrophic for many groups suffering from the downturn. >> with an organization that has established its expense category around transportation, to use transportation for its purpose, to have that category double could be a breaking point. >> reporter: but shniderman says his clients need him. he's prepared to do more fundraising than ever to keep his doors open. >> life is so much more difficult for people we serve than even for us as fundraising individuals and organizations or volunteers, and we'll all step up and do what we need to do to get the deliveries done. >> reporter: volunteers like burruss say they'll make sacrifices like doing less personal shopping if it means sticking with food and friends.

>> the reward is greater than the cost. it really is a feel good type of place to volunteer. >> reporter: anna olson, "nightly business report," washington. >> tom: here's what we're watching for next week: our friday market monitor guest is jeff everett, president of everkey global partners. we'll also see quarterly results from several retailers including: home depot, j.c. penney, target and wal-mart. monday, beyond the scoreboard looks at the n.b.a. playoffs and the television money winners between disney and time warner. >> susie: it seems many people weren't talking to chuck last month. charles schwab says its clients withdrew half a billion dollars in assets in april. analysts say it's the first month of client asset outflows in ten years. schwab-- the biggest u.s. online brokerage, says customers withdrew the money to pay taxes and that trading activity slowed from a year earlier.

market pros watch money flows at schwab and other online brokers because it helps measure investor confidence. >> tom: video game sales saw a double digit increase last month, thanks to the release of several popular titles. total video game spending rose 26% to $503 million, according to the n.p.d. group. despite the strong industry-wide bump, sales of sony's playstation three rose much slower than its main competitor, microsoft's x-box 360. sony has been working to restore some service in its playstation network after 100 million customer accounts were hacked.

worries about inflation and european government debt hit stocks today but tonight's market monitor expects the rally to continue this summer. he's eugene peroni, senior vice president at advisor asset management. geerng always nice see you. welcome back. >> tom it's great to be here. thank you. >> tom: we have to say congratulations. last fall when you were last with us you predicted the dow jones industrial average would hit 12,500. we're just above it. do you expect a new high before the end of the year? >> i do. but over the short run, i think we will see some consolidation. i think the dollar is going toen here a bit. if you're looking at the volatility index, i think there is some rally potential in that which would imply some weakness

over the short run. but i think it will be mostly garden variety weakness taken in the perspective of the nice gains we've seen here over the last several months. >> tom: garden variety means 5-7% of pullback in the major indices? >> with respect to the dow we're looking at it to hold pretty close to the 12,000 level, although we do recognize the moving average is a little below that area. i would say somewhere between the 12,000 and upper 11,000 area is a likely support. >> tom: you mentioned the u.s. dollar strengthening lately. we mentioned it earlier in the program, and commodity prices have been volatile because of that. do you see an impact on earnings for the rest of the year as the commodity prices continue to swing around? >> you know, there could be some impact on the actual earnings, but the analysts seem to be pretty conservative, somewhat restrained. so i think the environment for companies to continue to generally beat street expectations remains quite good, and that, i think, is the most important factor fueling the

market going forward, that anticipation of bn expected results. >> tom: when talking about commodity price swings, folks will look at the industrial and material sectors. you like a material stock, ce, a specialty material maker. you can see the rally it's had since labor day. what fuels is t from the low 50s here? >> well, any stock we choose for any of our portfolios has to be one of many stocks in that same sector that looks attractive. krerks lanise, is not attractive in its chemical-related or materials-related field but there are many others that also look similarly attractive. we do like celanese's unuke characteristics but it is part of a strong group. >> tom: how about amazon.com, the online retail beheming on the had a bit of a hiccup at the end of the first quarter but has been able to break out above 200. >> you know, even though the consumer seems to be discounted with respect to the economy and the market and so on, the

consumer discretionary group has done very well since the bottom between october of 2008 and march of '09. and it continues to look very good. not just brick and mortar but also a company like amazon that, as you mentioned. of course it's online. so we do like amazon individual characteristics, but here again, the consumer discretionary group continues to show very favorably technically. >> tom: you also like health care which finally has shown some signs of life in terms of its sector price performance this year after being a laggard last year. edward life skanss, e.w., one of your choice here. heart disease treatment is its area in science. why edwards? >> well, it is unique. in that it does offer products and services for the late-stage cardiovascular disease. but here, again, its subcategory in health care looks very good and the overall health care sector looks very good.

it's not something receipt because of migration into defensive growth while the market corrects. this has been ongoing for many years. we like the health care group. i think it's gained an extra kick because of the focus looking for other opportunities other than the cyclicals, materials, metals, and under investigation. so this should give the health care group a bit more boost. many of the subcongratulations of health care continue to show very prom naptly on our charts, on our money flow characteristics. >> tom: let's tack a look at the previous picks you had on november 12. you liked these four stocks. c.f., up 4%. eaton whiting petroleum up 17.5. three for four. do you still like this quartet? >> i do. i like it as far as the individual holdings are concerned and even as a little micro-grouping of four stocks present several different leadership congratulations of the market. >> tom: how about disclosures for the stocks we mentioned

tonight ueugene? >> yes, any of the stocks that were mentioned are held in our unit investment trust and in managed accounts or by me personally, mostly, though, through involvement in the investment trust products that we offer. >> tom: our full disclosure there with our market monitor this friday night, eugene peroni with advisor asset management. >> susie: and finally, there are just a few hours left in the only friday the 13th in the year 2011. how the date came to be unlucky is not known, but some factors are hard to ignore. market crashes happen more frequently on friday than any other day of the week, according to the "wall street journal." and no one's really sure why the number 13 is associated with bad luck. but one thing is for certain: friday the 13th rolls around at least once a year every year. and next year tom, we'll have three of them. >> tom: three's a lucky number so next year all three of the friday the 13th will be lucky, right? is that the way that works, i think. >> susie: i hope so

that's "nightly business report" for this friday, may 13. i'm tom hudson. have a great weekend everyone you, too, susie. >> susie: good night, tom. i'm susie gharib. goodnight, everyone. we hope to see all of you again next week. "nightly business report" is made possible by: this program was made possible by contributions to your pbs station from viewers like you. thank you. captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org