captioning sponsored by wpbt >> paul: the job picture is getting less bad, according to two top wall street firms. we get the white house's take on the nation's job market a day before the release of the government's employment report. coming up, our interview with christina romer, president obama's top economic advisor. >> there will have to be a very clear dividing line, clearly, between the government's role and the private sectors role. >> susie: the regulator in charge of fannie mae and freddie mac considers the future of the mortgage giants. we hear from the federal housing finance authority's james

lockhart. >> paul: while retailers have been promoting "back to school" sales for over a month, the buying bonanza hasn't materialized. the latest retail reports show consumers are still holding tight to their wallets. microsoft says "windows 7" is ready to go. how does it compare with the competition and is it worth the upgrade. our tech guru has a preview. i'm paul kangas. >> susie: and i'm susie gharib. this is "nightly business report" for thursday, august 6. "nightly business report" is made possible by:

this program was made possible by contributions to your pbs station from viewers like you. thank you. >> susie: good evening, everyone. a more upbeat projection on the job market from two wall street powerhouses. goldman sachs and deutsche bank sharply revised their forecasts on the number of jobs lost american businesses cut in july, a day before the government releases its report. deutsche bank now expects 150,000 jobs were lost last month. goldman is expecting 250,000.

over the past eight months, the labor department has been reporting monthly job losses of more than half a million. this could be welcome news for the obama administration, but white house economist christina romer says it is still not enough. >> we do know we are going to lose jobs almost surely tomorrow. that's hundreds of thousands is, you know, what the market expectation is. so the important thing to say is, 250,000 is a terrible number. so what we're really looking for is that wonderful day when it actually turns positive. >> susie: we'll have more on where christina romer thinks the economy might create new jobs later in the program. >> paul: despite deep discounts, the start of back-to-school season started with a thud last month. discounters like ross, t.j. maxx mall stores fared much worse, where a double-digit sales skid continued at macy's, j.c. penney and abercrombie and fitch. but the news wasn't all bad. among the retail winners: discounters like ross, t.j. maxx and marshall's, which posted sales gains that beat analysts' estimates.

a major concern now is that a new sense of frugality is taking hold and parents are focusing on basic necessities like school supplies. some analysts anticipate this pullback in spending may extend in to the christmas shopping season. >> paul: those disappointing retail sales put wall street on the defensive as did profit taking in the financial, tech and commodity sectors. an hour into trading, the dow was off 40 points with the nasdaq down 18 points. the market recovered over half its early losses as investors digested a better than expected reading on weekly jobless claims. but stocks fell short of a positive close on investor caution ahead of tomorrow's employment report. the dow dropped 24.71 to 9,256.26. the nasdaq fell 19.89 to 1,973.16. the s&p 500 lost 5.64 to 997.08. in the bond market, the 10 year note gained 3/32 to 94 29/32

putting the yield at 3.75%. >> susie: what should be done about fannie mae and freddie mac? that's a question being hotly debated in washington. according to a report today in the "washington post," the obama administration is considering a variety of options to overhaul the two mortgage giants. the treasury department has committed $400 billion to keep fannie and freddie afloat. until policymakers figure out what to do next. stephanie dhue has more. >> reporter: with $400 billion taxpayer dollars guaranteeing the debt of fannie mae and freddie mac, some experts think throwing toxic assets into a bad bank could help fix the mortgage giants. james lockhart directs the

federal housing finance agency, which oversees the mortgage firms. he says that scenario would ensure their debt obligations are honored. >> they will be protected and there will be liquidity in the secondary market, then we can decide what we want fannie and freddie to look like in the future. >> reporter: there are three key options. one: a full nationalization of the firms. two: turn over to the private sector. and three: re-creating them once again as government sponsored entities. lockhart, who's soon to leave the agency, favors option three, but says it's not an easy job. >> if it's done, it has to be done properly, and we didn't do it properly. obviously, in the past, there will have to be a very clear dividing line, clearly, between the government's role and the private sector's role, there will also have to be a very clear division what their mission is and we have to be clear that they don't have a mission that causes them to take too much risk. >> reporter: whatever the final choice, observers predict a major political battle.

brookings fellow doug elliott says home prices and mortgages matter to middle class america and major financial institutions. >> there are fundamental economic interests here, which means you are going to have a lot of people lining up to support a large mortgage effort with as much government subsidy as possible, implicit or explicit. >> reporter: one question is what will happen to common shares of fannie mae and freddie mac, which currently trade on the new york stock exchange. >> as we come out of conservatorship, they'll be a decision made, and it could be that they have absolutely no value. >> reporter: as policymakers grapple with the future of the mortgage giants, their job will be helped or hindered by how the companies toxic assets are perform. the administration says it will unveil plans for the mortgage giants in february. stephanie dhue, "nightly business report," washington. >> paul: oil traders who make false or misleading statements will be fined a million dollars a day. that's the bottom line of a new rule issued today by the federal trade commission. the agency says it's cracking

down on practices that can drive up prices at the pump. the american petroleum institute slammed the ruling saying the new fines are 100-times higher than the current rate of $11,000. today's decision comes as price fluctuations in the oil markets have raised questions about manipulation. the new rule goes into effect in november. >> susie: there's a lot of buzz about the release of "windows 7." some microsoft customers were able to download preview copies of the software giant's new operating system today. retail customers will have to wait until october. how good is it and will "7" be

microsoft's lucky number. here's our tech guru scott gurvey with some answers. >> reporter: is "windows 7" a hit or a miss? that is the multi-billion dollar question. i've been testing various pre- release versions since the start of the year and i'll say, hit. there are new features and a new look. the images are softer, smoother. the interface guides you along. hover over a minimized program, a preview appears, snap the mouse, the screen is restored. right click and you get a context menu of things you can do. even macintosh fans might be impressed. gadgets can live anywhere in the screen. a libraries folder takes a little getting used to but is effective in combining your work, even if it is stored on different computers in a network. but the biggest news is under the covers, "windows seven" is more stable, faster and smaller than vista. it ran well on my old laptop, which couldn't handle vista. pcmag.com's lance ulanoff agrees with my review and notes this time, microsoft has played down the hype.

>> basically they're saying this is an operating system that works. it gets the job done. it's going to be learner. it's going to work on the hardware that you currently have. you won't necessarily have to upgrade to run it. i think they're going to right the windows ship with this operating system. >> reporter: so the verdict: if you're buying a new computer, yes, get "windows 7." in fact, that's the best way to do it. if you are already running vista, yes. the upgrade is virtually painless and you will be pleased you did it. still running xp, now it gets interesting. the answer is, maybe. a lot of people, including a lot of companies, skipped vista. if you not only skipped vista, but are also still running an xp era computer, you really do want to consider getting a new p.c. you can try to upgrade your xp box. but it isn't easy. you can only do a clean install, which means you have to reinstall all your programs and transfer your files and

settings. i doubt many individuals users will go through this tedious and tricky process. and i'm not sure many corporate customers will either. "windows 7" is worthy, but most people may wait until it is time to buy a new p.c. to find out why. scott gurvey, "nightly business report," new york. >> susie: twitter is up and running again after a major service interruption this morning. the micro-blogging site fell victim to a hacker attack. in what's called a "denial of service." the hackers allegedly disrupted the site by enlisting millions of computers to access it simultaneously. experts consider this type of cyber attack to be relatively unsophisticated. twitter currently has more than 30 million users-- that's up from less than two million over a year ago. >> paul: susie, users of social networking giant "facebook" also had some problems this morning. but things were back to normal by the afternoon. now let's take a look at our stocks in the news tonight.

>> susie: more now of our interview with christina romer, the president's chief economist. today, she defended the obama administration's stimulus package, saying it's saved half a million jobs. given the hefty price of the recovery plan, washington bureau chief darren gersh asked romer whether such a big package was producing the number of jobs she expected. >> it's also a number that is reflected in a lot of the private forecasters getting the same kind of number. you know t is very much, we knew this was the plan that would ramp up that had bigger affects as we go forward. and that is certainly what i talked about this morning is

some of the reasons it would ramp up. so you know, we are very much on track for getting the money out as fast as, you know, as possible. but obviously there are a lot of people suffering. so the more we can do, the faster we can do it, the happier certainly i will be. >> given where we are now in this half a million figure do you still think the recovery package will end up saving or creating 300 million jobs. >> it is still a very good estimate it was based on a very sound methodology and so i do absolutely anticipate that will be the case. you know, again, that was always as of the end of 2010 quarter 4. so that captures this idea that the affect does ramp up, do increase. you know, we know, for example, the composition of the stimulus is changing. we had a lot of the tax cuts, the state fiscal relieve early it turns much more into government investments. and those tend to have a bigger effect on jobs. >> two sectors that usually show a lot of job growth coming out of recession are construction and autos. but many economists believe those two sectors won't create a lot of jobs this

time. what do you think? >> you know, they will certainly be expanding. the cash for clunkers program, for example, has been a tremendous success and we do see production schedules, for example, ramping up for the auto industry for the third quarter. but i take, which is true from your question is we are going to be looking to other sectors, right. so if, for example, consumers aren't going to be buying as much as they might have in the past because they are going to be saving more, we will need other things like our net exports or our business investment to come in and fill that gap. >> what two or three indicators are you going to look to towards the end of the year to decide whether or not we need a second stimulus package. >> the gold standard has got to be job creation. what we need to be seen, you know, what has been the hallmark of this recession is just the tremendous job loss that is just so painful for the american people and just such a tragedy. so the absolutely the thing we're going to be watching is is that shrinking. it's got to shrink before it

turns positive. are we seeing the kind of progress that we anticipate that we need to have. >> on foreclosures a little bit different but there is some discussion that the administration might be considering the idea of allowing people to stay in their homes and rent as opposed to get foreclosed and kicked out is that under discussion and is that an idea that might work? >> you know, right now we are still working, concentrate on getting the foreclosure mitigation program that we have working and under way. and we're very cleesed that we're seeing those ramping up to 20,000, 30,000. that is certainly a really important thing because the more of those we process the more people are getting their loans modify. >> but is this idea of right to rent under discussion? >> you know, we are constantly evaluating all of our program its and trying to think if there is a way it could work better. so we're thinking about lots of things. >> christina romer, chair of the president's council of economic advisors, thank you. >> great to be with you. >> paul: tomorrow, our friday

market monitor guest is richard steinberg, president of steinberg global asset management. >> susie: two prominent exchanges said today that they will stop the controversial practice of flash orders. nasdaq o.m.x. group and bats global markets said today they'll stop using them on september 1. flash orders give big brokerage firms a split second advantage on trading before rest of the market. earlier this week, the s.e.c. said it's considering a ban on flash orders. >> paul: plastic shoe company crocs regained its footing late today. shares of the company jumped more than 30% late in after hours trading to about $5.50 a share when the company adjusted quarterly results beat wall street estimates. also bolstering shares, crocs' vow to return to profitability next year and a bullish third quarter outlook. crocs' c.e.o. says customers are responding well to new products.

>> susie: here's a look at what's happening tomorrow. the labor department releases the july employment report. analysts expect to see that 320,000 jobs were lost. also, quarterly results from a.i.g. >> susie: from vs to ls to ws, there's been lots of talk about the shape of an economic recovery.

tonight's two ways to play takes on recovery and re-sizing. here's kevin depew of "minyanville" and "minyanville's" kevin depew. >> our economy is in a severe economic downturn, and while most recessionary shocks of this type have been followed by quick, v-shaped recoveries, this one has been so deep and painful that the majority of economists aren't looking for anything more than a mild recovery at best. and that's the problem. when is the last time the majority of economists were correct? the thing is, we've been here before. many times. yes, the economy is in bad shape, but to say the eventual recovery will be weaker than usual is to make the classic wall street mistake of saying, this time is different. it's never different. >> it's true, i don't believe in a v-shaped recovery, and here's why. beyond the headwinds of private- sector de-leveraging, high unemployment, and further deterioration in credit quality still to come. i think there's a more profound test facing this country-- and that's the enormous resizing of the american economy. by resizing, i'm referring to the need to bring us economic capacity down to a much lower

level of long-term domestic demand. choose just about any industry in america and you will see too much capacity. our debt excesses enabled it and now our debt destruction will require the elimination of it. >> paul: recapping today's market action: investors sell on caution ahead of tomorrow's employment report. the dow dropped 24 points and the nasdaq lost almost 20 points. to learn more about the stories in tonight's broadcast, to watch our streaming video and to take part in our daily blog, go to "nightly business report" on pbs.org. you can also email us at nbr@pbs.org. >> susie: and finally tonight, a taxi driver in vermont is giving new meaning to the word "fare." he let's passengers pay whatever they think is "fair." not surprisingly, the name of his cab company is "recession ride." since the "pay what you want" service began in june, driver eric hagen says he hasn't been short-changed, and business has been good.

he's even taken a c.d. from a musician as payment, and a $10 supermarket gift card. paul, hagen spent the early part of his career on wall street and maybe that's where he learned there's more than one way to do business. >> i hope he learned on wall street not to accept any collateral debt obligations. >> that might be a little too sophisticated for a taxi driver. >> susie: that's "nightly business report" for thursday, august 6. we want to remind you this is the time of year your public television station seeks your support. >> paul: support that makes programs like "nightly business report" possible. >> susie: thanks for joining us and don't forget to support your public television station. i'm susie gharib. goodnight, everyone. you too, paul >> paul: goodnight, susie. i'm paul kangas wishing all of you the best of good buys. "nightly business report" is made possible by:

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