captioning sponsoredy wpbt >>usie: $787 billion, that's how muchhe u.s. is spending to stimulate theconomy. but with unemployment nearg doub digits, and the economy looking worse,ore and more people are calling f a second stimulus. >> jeff: key to the economic recovery, gettg americans spending. but that's tough to do wn wages are agnating or taking hi in other ways. >> sie: if you browse the web using internet explorer d a windowbased p.c, you could be at risk. crosoft says tre's a curity problem with its software that cod let hackers take over ur computer. jeff: then, putting a new face on the lipsck effect. american cosmetics fms are ping to do just that in chin as thelobal recession has womethere looking for small

luxuries. >> sus: i'm susie gharib >> jf: and i'meff yastine. pa kangas is off tonight. this is nightly business rort for mond, july 6th. "nightly business repo" is made possible by: this program was made ssible

by conibutions to your pbs station from vwers like you. thk you. >> susie: good eveng everyone. what shape is theconomy really in? that what investors were asking today as ey evaluated comments or the weekend from the obama administrationthat it quote "misread" the natios economic problems. commodity ices, like oil, go, copper and wheat tumbled on concerns thu.s. economy is not y recovering. day, the a.f.l.-c.i.o., the nation largest labor group, newed its call for another stimulus packa to boost the econy. erika miller lookst the new debate about smulus. >> repter: many economists are clamoring for more govnment stimulus to help the rovery ga traction. not bob brusca. >> i tnk this is jumping the gun. i think it's notnly jumping e gun, but it's probably something th's unnecessary.

and if we think back tthose thriing days when they put that big stimulus ogram togetherlet's remember how much they haggd. les remember all the junk that got int. and let's asourselves, why do we think it would be any diffent this time? reporter: he points out tha so far, only 10% of e $787 llion stimulus package passe in februarhas hit the economy. at's more... brusca thinks the economis not arly as weak as most people believe. >> i really ink we're close to the d of recession. i ink we are going to cap the risen the unemployment by the d of the year. i think we'rgoing to have job growth occurring bore the end of the year. >> reporter: b other econists-- like john albertine-- have a vtly differenview of the economy. >> i think we are in a precariousituation. i think the economy is, in ft, is notnly not getting better, but i ink it is deteriorating. we are not sing the banking sector lding. we are not seeing consumer spending. we a not seeing business investing. >> reporter: that's y he thinksovernment help is needed immediately, b not same the

same type of mmoth spending plan passed rlier this year. he favoreliminating social security taxesor people making less than $1,000 a year. he concedes at would boost the fedel deficit by hundreds of billions of dolls. >> in the short n it will add to the deficit. but in the long term, i ink it will help migate the deficit by getting this onomy moving again. getting a recoverynderway, and causing this to be a j creatingecovery, not a jobless recove. >> reporter: few politicia are readto back a second stimulus plan jusyet. and manynalysts think it will be fall-- at the earliest- before that chges. not soon enough for ose who think it's needed righnow. erika miller, nightlbusiness report, new rk >> sie: as we mentioned oil prices fell day on worries of a longerhan expected recession. in new york trading,ugust crude futures dropped $28 or 4% to $64.05 a barrel.

some traders say investo who bought into the market on expectations of an ecomic recovery a cashing out. others s the oil market was simply orvalued. >> jf: the weakness in oil fed into the samworries in the stock market. the dow open on the weak side, losing 74 points in the rly part of the session. the financials led the way lor; bank of america and tigroup shares finished down more than 3%. instors rotated into defensive issues like mercand procter and gamble; that helped e dow rally back from the lo, while the nasdaq continuedo struggle and stocksnded the day mixed. the dow rose 44.13 to 83.87. thnasdaq fell 9.12 to 1787.40. and the s&p 500 addetwo points close at 898.72. in the bond mark, the 10 year note fell 2/nds to 96-26/32nds putting the yield at 3.51% peent.

>> psico is boosting its investment in russia, planng to spend a bilon dollars over e next three years despite russia recession pepsi calls e area a "attractive grth market." pepsico and pepsi bottling group will open a new $180 million factory in rsia later this week. pepsi already operes seven ants there a has invested more than $3 billion in the market over the past decade. >> susie: a former comter programmer of goldn sachs has been charged withdownloading seitive computer codes. goman found the alleged theft by monitoring emplee emls. th firm has not commented

specificly on the case, but both reuters and dow jones are reporting neither goldman's clients nor its busiss have be hurt by the incident. >> sie: furlough. it's bece a dirty word for millions of american wkers these days unpaid time off is extenng ma summer vacations this year as businses try to fight the recession. but it'slso a less obvious way employers are cutting wage and asarren gersh reports, that could affect theventual shape the economic recovery. >> reporter: tay was not a good time renew a driver's license inichigan, or for that tter maine or connecticut. budget pressures ford those states to furlough mt of their worker all, 25 stes have implemented furloughs or a considerinthem. and many private secr mpanies have also extended "unpaid vacations." dy stoermer has seen in it happen to colleagu. >> six months, four mont, two eks, it depends on the perso it dends on the job and what they need them to do >> repter: labor economists like katryn ko consider a

rlough one way to cut employ pay witht cutting the employee. >> ihink the furlough has alys been around. it'sust been known as the layofff blue collar workers, whent's white collar worke, then it tends be known as the rlough more directly. >> reporter: but because t government calculates ges on an hourly basi a furloughed worker is unlily to show up as receiving a wage c, even though hisr her annual compensati has clearly been trmed. ko says that means the impact of furloughs on coensation is being under-reported. i think it does not sw up inany of the wage calculations that we have >> reporte and the caulations we do have are already dropng. kobe compiles thb.n.a. wage end index which is signaling smaller wage hikes ithe next six months. in fact,maller than anything tracked by government compensationtatistics in more than 30 year >> i think it is posble it could a ways below 2%.

so i think we haven't seen tt sort of slow down inages in a lo time. >> reporter: and the are signs employers intend to ep a lock on wes for somtime. tson wyatt found one in five employers sueyed plan to keep salary reductions de in this recession. anone out of four employers who have forced workers toake furloughs eith don't know if they will, or don't plano let works eventually make up their lost pay. all this hasconomists like dean baker woring about a downward spiral. >> so that means worke have less money in their poets, they'll obviouy be buying less. so that's gointo reduce mand d therefore cause more firms to lay offorkers, or even in some cases, gout of business. >> reporr: the one saving grace in all this is tt inflation has been tame in recent month so wages for most workers who do keep their bs are lding steady. at leastor now. darren gersh, nightly buness report, washgton.

>>usie: a security warning tonight from microsoft ckers are targeting a hole i its windows xp a windows servers 2003ystems. vulnerable computers cane infected jusby visiting a web te that's been hacked. ifot fixed, cyber thieves can retely take control of victims'omputers. the probms are specific to microsoft's "videoctive x ntrols" on olderersions of internet explorer. microsoft is working on ftware patch for the securit flaw. >> jeff: mrosoft shares were among the nasdaq most acve. we'll sethem as we take a at some stocksn the news tonight.

>> sie: another headache for cafornia as it grapples with a massivbudget crisis. fitch today cut its tings on the state's genal obligation bonds by two notches. the ratings agency specically cited californ's inability to reach budget compromise. legislators have been delocked r more than a month over way to close the state's $26 bilon budget gap. until a deal can be rked out, fitch says its keepi the ste's ratings on watch for downgrade. >> jeff: municipal bon were once a safe haven for inveor cash. but that reputation s tarnished by the proems of muni bond insuro, the credit isis and the impact of the recession. as wcontinue our series,"viving the economy what'shead," munis are making a comeback. billion dollars a week, every weekas poured into them since e start of the year, despite

some ooing worries. >> reporterthe murmur of ices and telephones. thsound of municipal bonds, being boug and sold. th's what brokers at south- florida-basef.m.s. bonds are focused on. founder mmy klotz says the phones have been rinng eadily, with a lot more intest from potential customers since st year's stock-market meltdown. >> they noticed a distinion beeen bonds and equities, whh was that bonds continued pay interest no matter what thmarket value was. and that left impression on people that ey won't soon forget. so we've seea lot of new buyers gravitate tour market. >>eporter: that's not to say that muni bonds were untouch. late last year, prices pnged and elds soared as insurance companies and other institions sold mis to raise cash. attracted buyers likwarren buffett, who doubledhe size of berkshire haaway's muni bond portfolio to $4 billn this year.

indidual investors have been busy too, adding more th $17 billion in municipal bondto their holdings since the beginningf e year, according to recent federal reserve data. t as the budget woes of california and oer government entities show, investors mt oose wisely, says envision capitas marilyn cohen. >> we started seng a mild recovery, january,ebruary. we were rocking. thgs really came back. and then once the news heaines once againot bad again in california, we virtual got back to ere we were in prices and yields in californ. but at isn't true for other states. >> reporte cohen says the threat of defaults in the ni market is real. the number odefaults hit a reco last year. but she sees the bigst risks mostly for small, low-quity issuers ofovernment debt. m.s. bonds analyst jay abram sees a similar picture. >> cities and statesill typilly talk about cutting programs, talk abouteducing service on train lines. they'll talk about reducinthe number of times garbage gets picked up.

but i ver hear a discussion of mae we should cut back on our debt servi. they know the conseqnce would be tooreat. >> reporter: the obama administration's stimulu program also helping the market, creating a new class of mun: "build america bonds." unlike tradition munis, the income from these bondis taxable. but abrams sayhe's noticed individu investors are now buying "build amera bonds" for their i.r.a. accounts. this shelters the income from taxes, while proving some stability in portfols burned bytock market losses. >> jeff: some muni watchs see the tax-freetatus of municipal bonds as anoth long-term positi. they say if federaincome tax rates climb, more invests will want to buy munis a way help keep some income tax- free. >> susie: tomorr, top political economt c. fred bergsten joinss for a priew of this ek's g-8 summit in italy. >> susie: the obal advertising market is expected to t bottom later this year, accordi to a

key advertising focaster. "zenith optimedia" cut i global ad spending eimates for 2009 as companies ntinued to cut adrtising spending in the first half. the rm says the second quarter saw some improvent, and predicts t ad market in the u.s. and europe willecover in 2011. >> jeff:he obama administrationaid today it's confident general motorsill emerge from baruptcy by the end of the month. yesterday, a feder judge gave the automaker the gohead to sell its assets to a new coany. exchange for a $50 billion investment in g., the u.s. governnt will hold a 60% stake. the government's auto taskorce predicts the new g. could sell shes by the first half of next ye.

>> susie: toght's commentator wishes china and india ctinued economic success he justin fox, business and economics coluist at time mazine and author of "t myth of the rational market." >> only two of theorlds 15 biggest economies are lily to gr in 2009: china's and ina's. meanile, of course, the rest of the globe is going thugh the worst wnturn since the 1930s. this juxtaposition means tt e global balance of economic power may behifting faster

than almost anyonexpected. th their billion-plus poputions, china and india now em destined to become the worlds bigge economies, ahead of the u.s., sooner ther than later. th's a scary prospect for many americans. the litical ramifications, and the environmenl ones, are hard to predict. but in pure econom terms, it wouldn't necessarily bbad news at a. for one thg, a country doesn't need to havehe world's biggest economy to have its most vibran most prosperous economy. justecause the u.s. is no longer all-important dsn't meant will no longer be competitive. but the really big rson to sh china and india continued economic sucss is that strong growth there offerthe only attractiveath out of the worlds current ecomic predicament. after a generation of overextending themsees, erican consumers are taking timeut, saving more and spending less. this is exactly what ty should be doing. but u. consumers have for years been the global onomy's driving force. to avoid a pronged downward spiral, somebody has got tpick up somof their spending slack.

it's probay not going to be japan or western eure, which have bn hit even harder by the downtu than the u.s. that leaves cha, india and a few other emerging market countries suchs brazil and indonesia, which also are weathering thelobal recession well. long may their economiesrow. i'm juin fox >> jeff: recapng today's market a mixed day on wall street... the dow ined 44 points. while the nasdaqost 9 points. to lrn more about the stories in tonig's broadcast, to watch our streaming video and take part in our day blog, go to ightly business report" on pbs.org. you can also eil us at nbr@pbs.or >> susie: and finally tonit, ca it "the lipstick effect". it w a trend during the great depreson that saw a rise in cosmeticsales, as women turned from big purchaseso more affordable luxuries. with t current economic crisis hitting consumeraround the globe, some americ cosmetic firms are hopi for a "new" lipstick effect inhina. shanon van sant reportfrom shanghai. >> reporter: mei gworks for mary kay cosmetics

she sells beauty pducts out of her home in a shghai suburb. mei one of a growing sales force of 350,000 indepdent beautyonsultants in china. she joed the company in 1995, one year after my kay smetics entered the chinese rket. hehome features a mary kay statue, anmei recalls when she met the flboyant texas entrepreneur on a tripo the >> ( translated ) i was not very good at english so a i can say is my kay, i love you, i love you, i love you. >> rorter: the story of mary kay's triumph ov poverty and transformation into a succsful entrepreneuras inspired thousands of chinese women e company expects china to overta the u.s. as mary kay's largest market whin five year in 2008, mary kay china sa50% les growth over 2007. andespite the economic downturnthe first two months of 2009 saw a 30increase over the year befor mary kay china'sresident, paul k, says direct selling goes in a down econy, and sales haveemained strong.

>> even wi the downturn we are growing very ft. 2008 is still a recordear. >> repter: it's a challenge u.s. cosmeti companies are facing in china,aintaining sales growth when wer chinese are joining e middle class. cal shen, general manager of ese lauders china affiliate, says the enomic downturn heightens chinas importae in estelauder's global strategy. >> i just think it makeshina even more important and more strategic, because think that around the world this is growth area. >> theompany has eight brands in china, and opened ts development ceer in 2005. >> herehe company tests products like mascara a foundation spifically forhe asia market. it's the company's second largest search center insia, and their rearch is paying off. in fcal year 2008, the company's sales china grew

41% over 2007. estee lauder has counters 32 chinese citiesand during the economic dowurn carol shen says the company is shifting strategies fm further expansion to penetrati. >> in the next 12 to8 months we are going to deeper in the cities we are alady present , rather than oping in a lot re new cities. >> reporter: theompany will heighten brand awareness tough advertising anpromotions. but carol sh says estee lauder will maintn its one brand, one world philosophy. >> wbelieve our products are safe, high performance, t at the same time ey have pirational qualities and we wa to keep that aspirational qualy and we don't believe th will change from market to market. >> reporter: insration may be whatraws women to mary kay. e company gives national sal directors a stylish, orange suit, and top saleearners like mei gu get aink cadillac. paul makays the company's message of female emporment appeals to women ichina, and mary kay will contin its

expansion despite the econic downturn. >> think as the china market contins to grow, the second and third d fourth tier cities, more and more ople will be a partf it, so the geograic expansion is still our focus. >> reporter: that ans more won like mei gu and pink cadillacs on the road china. shannon vasant, nightly business report, shanghai. >> jeff: tt's nightly business report for monday, jul6th. i'm jeff ytine goodnit everyone. and goodight to you susie. >> susie: goodnighjeff. i'm susigharib. we hope to s all of you again tomorrowvening. "nightly business repo" is made possiblby:

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