UAW members ratify GM labor contract

WASHINGTON (CNNMoney.com) -- The United Auto Workers union Friday overwhelmingly ratified a labor deal with General Motors that included concessions, but is not enough to keep the company out of bankruptcy.

Seventy-four percent of UAW members voted for the contract, which will allow the company to cut costs and "eliminate the wage and benefit gap" with competitors, according to the UAW president and a statement from GM.

"I think it's a disgrace we had to do anything," said UAW president Ron Gettelfinger during a press conference. "We tried to inflict the least amount of pain possible on our retirees."

It was widely expected that rank-and-file members would ratify the revised labor deal, even as General Motors (GM, Fortune 500) seems destined for bankruptcy.

The deal greatly reduced the amount of money that GM is required to contribute to union-controlled trust funds to cover health care costs for hundreds of thousands of retired union members and their families.

In return, the trust fund will receive a 17.5% stake in the reorganized GM starting next year, and the right to buy an additional 2.5% stake in the company.

0:00/3:24GM's fuel efficiency challenge

In addition, the fund will receive $6.5 billion in preferred stock that pays a 9% interest rate, and GM will owe it an additional $2.5 billion. GM will not have to contribute more than $20 billion in cash it owed the trust fund.

The union will have to reduce retiree health care coverage. But the union did not agree to any wage or benefit cuts for the 61,000 UAW members working at GM. However, the job protections for those members were reduced and GM has announced plans to cut hourly employment by about a third to 40,000 by next year as it shuts more than a dozen plants.

The union did win guarantees that GM would build its new small car at a factory that has previously been closed. And the company agreed to put four closed plants on "stand by" status to be restarted if demand for autos bounces back.

The union agreed not to fight plans to import some small cars from outside of North America, such as GM's growing manufacturing base in China.

0:00/02:46Coming to U.S.: GM's Chinese cars

UAW members at Chrysler had already voted overwhelmingly in favor of contract revisions. The union won assurances the company would not use the bankruptcy process to try to gain more painful concessions from hourly workers. A federal judge is weighing Chrysler's restructuring plan. 

Ugh! Gas hits $2.50

NEW YORK (CNNMoney.com) -- The price of gas, rising for the 33rd straight day, has reached $2.50 a gallon, motorist group AAA reported Sunday.

The spike of more than 20% in a month is hitting Americans in their wallets and causing concern among some experts.

The jump in one of consumers' staple purchases comes at a fragile time for the economy. Recently some measures of housing, spending and credit have hinted that the most severe parts of the recession may be easing.

At the same time, gas has jumped in price as the American auto industry is on the verge of a dramatic reshaping amid plummeting vehicle sales.

According to AAA, the national average price for a gallon of regular unleaded gas has edged up to $2.502, from $2.488 the day before.

Late spring is typically a time of year when people drive more. But rising gas prices could cause people to stay home. That would mean less spending, which could dampen governments efforts to stimulate the economy.

0:00/2:24Summer pump jump

"There's way too much optimism about a driving season lift," said Tom Kloza, chief oil analyst for the Oil Price Information Service.

Kloza said the impact will be especially painful in economic "sore spots" like California, Florida, Arizona and the rural South.

Currently, the highest gas prices are in Hawaii, where prices average $2.789 per gallon, and Alaska, where the average is $2.751.

In the lower 48, the highest prices are in two of the states hardest hit by the recession: California ($2.746) and Michigan ($2.745).

Michigan suffers the highest unemployment rate in the nation -- 12.9%. California is close behind at 11%.

The next most expensive states for filling up are:

Illinois, $2.692 Washington, $2.677 Wisconsin, $2.647 New York, $2.634 Indiana, $2.618 Ohio, $2.618 Connecticut, $2.615

The cheapest gas can be found in South Carolina, where the average is $2.309 a gallon.

Despite the recent surge, the average price of a gallon of gas remains well below its all-time peak of $4.114 on July 17, 2008.

But the repercussions of the 2008 gas spike are still being felt.

Last year's gas price spike severely hampered demand for SUVs and trucks, hastening the downward spiral for the Big Three automakers.

Chrysler filed for bankruptcy on April 30 and is awaiting a ruling from a federal judge as to whether it may sell its assets and form a new company. General Motors (GM, Fortune 500) is expected to file for bankruptcy next week and its stock price is trading below $1 a share for the first time since the Great Depression. 

Consumers gain clout in Washington

WASHINGTON (CNNMoney.com) -- Meet Washington's new power brokers on the economy: Consumer advocates.

They are rubbing shoulders with the president at bill-signing ceremonies and getting face time with economic chief Larry Summers. A few are even returning calls from lawmakers whose offices they used to hound.

After eight years of getting the cold shoulder, consumer groups are relishing their new role in the policy-shaping spotlight. Consumer advocates celebrated their biggest legislative victory in years when President Obama signed the credit card bill.

Now they're gearing up for the next big battle: regulatory reform.

"I assure you that when you see our whole vision of our regulatory reform going forward, consumer protection is not a side issue," said Treasury Secretary counselor Gene Sperling on Thursday during a speech at a conference at the Federal Reserve.

On May 7, Summers invited 15 to 20 advocates to the White House to solicit ideas about reshaping the nation's patchwork regulatory system to prevent future financial collapses, according to four participants.

One group, the New America Foundation, a left-leaning think tank sensitive to consumer causes, has had at least a dozen conversations with top White House officials in person and over the phone, according to policy director Ellen Seidman.

Pam Banks, policy counsel for Consumers Union, has seen the inside of both the White House and the Treasury Department in the last several weeks.

"I can say for a long time, there were few consumer groups that had seen the inside of the White House or the Treasury," said Banks. "Now sometimes you go to these meetings, and they say: Tell us what's on your mind. And then they start taking notes ."

President reaches out

Political experts say the ascendancy of consumer activists should come as no surprise; President Obama, during his campaign, pledged to tap them. In addition, he spent his early years working as a community organizer on Chicago's South Side and worked with advocacy groups as an attorney.

But the swift consumer victory on credit cards caused the financial sector lobby -- and even a few consumer advocates -- to do a double take.

Several tough provisions attacking credit card practices, such as allowing consumers to fall two months behind on a bill before seeing a rate hike, made it into the final bill. And that happened despite heavy lobbying by the banking industry to block such provisions.

Consumer advocates say the Senate, in particular, is a tough sell for them, even though the Democrats currently have control of 59 seats. But having President Obama on board "gave us the extra push," said Ed Mierzwinski, a 20-year veteran consumer advocate for National Association of State Public Interest Research Groups.

0:00/1:05'Consumer-friendly' credit

Of course, the financial sector has hardly lost its grip in Washington. In the same weeks that credit card legislation was advancing, financial sector lobbyists fended off a provision in the Senate that would have allowed bankruptcy judges to modify underwater mortgages. And they, too, have been visiting with top White House officials.

The financial sector is not intimidated by consumer advocates, said Scott Talbott of the Financial Services Roundtable, which represents the largest financial services companies. But companies recognize that the stars have aligned to give consumer advocates a bigger, more visible stage.

"With Democrats in control and the wave of populism that has swept through, consumer protections are on everybody's tongue," Talbott said.

Next up: Regulatory reform

One area of regulatory reform that consumer advocates are particularly keen on is a new panel that would regulate mortgages and credit cards. The White House supports the idea of creating a so-called Financial Safety Products Commission, say consumer advocates and legislative aides.

"These are ideas that are not new to us, but haven't been vogue in Washington and they're getting more credence," said Caleb Gibson of the liberal think tank Demos, which has been working on the blueprint for such a commission.

Consumer groups want a strong and independent agency that publicly monitors mortgages and credit cards in a transparent way. But they don't want it to preempt strong consumer laws already in place in some states and localities.

The idea was one that caught the president's attention months ago. While appearing on Jay Leno's "The Tonight Show" in March, Obama used one of the arguments used by proponents.

"When you buy a toaster, if it explodes in your face, there's a law that says, you know, your toasters need to be safe," he said. "When you get a credit card or you get a mortgage, there's no law on the books that says, if that explodes in your face, financially, somehow you're going to be protected."

Consumer advocates say the president embraces consumer protection issues, often far ahead of his own advisers and lawmakers.

"This president gets it on our issues," Mierzwinski said. "And that's great for us." 

States race clock on $19B in stimulus

NEW YORK (CNNMoney.com) -- Some 14 states have only a few weeks left to gain approval for highway projects or risk losing millions of stimulus dollars.

All states have until the end of June to "obligate" half their share of stimulus funds for road and bridge improvements. If they don't, the federal Department of Transportation will redistribute half the leftover money.

That means states must gain approval for their projects from the Federal Highway Administration, an agency of the Department of Transportation. The money doesn't actually have to be spent, which can take months as projects go through the contracting and construction process.

States are sharing $26.6 billion for highway infrastructure projects, though only $18.6 billion is subject to the June deadline. The road allocations are among the earliest of the $280 billion in funds going to states and municipalities as part of the $787 billion recovery act.

While many states have safely cleared the hurdle, several have to buckle down in coming weeks if they hope to reach the 50% mark.

Alaska has only obligated 6.3% of its $122.8 million in funds, while Ohio has gained approval for only 15.7% of its $648.2 million share, as of May 22, according to the department.

These states' progress stands in sharp contrast to places such as Wyoming, which has already won approval of 97.5% of its $110.3 million share.

Federal transportation officials are in close contact with their state counterparts to review and sign off on applications, said Joel Szabat, who co-leads the recovery effort for the department. They are approving nearly $1 billion in projects a week, nearly twice the typical rate.

More than 3,500 projects nationwide have already received the nod. Some states have dozens of projects approved in a day.

"One of our biggest focuses is that every state meets that deadline and is not penalized," Szabat said. The agency is "highly confident that every state will have over 50% obligated by the time the 120-day deadline comes around."

Ohio's unusual path

Ohio transportation officials know they are moving at a slower pace than many of their peers elsewhere in the nation. That's because they took a unusual path to decide what projects to fund, said Scott Varner, the state department's spokesman.

The state received 4,600 ideas after soliciting proposals from cities, counties and people. It then narrowed the list down to 2,200 eligible for federal funding, before choosing 200 to invest in.

The Buckeye State is also seeking to fund some non-traditional projects as part of its highway allotment. For instance, it won approval to spend $6.8 million on replacing a shipyard crane in Toledo, which supports ship maintenance and vessel construction projects and will create or save 187 jobs. It is also hoping to get the okay on a $20 million investment in design work for Cleveland's Opportunity Corridor, aimed at improving access from the city's central east side to the freeway.

These initiatives required closer collaboration with federal officials since they aren't the typical road repaving and bridge replacement work, Varner said.

"It did take a little more time in part because we had to work with our Federal Highway Administration office in Ohio," he said.

Still, state officials say they are not concerned they will miss the deadline. They are receiving approval for millions of dollars worth of projects a week, and have more than $50 million before federal reviewers now.

"We know which projects we have planned to meet the 120-day deadline," Varner said. "We think we're on target."

Still, the delay has meant shovels have yet to hit the Ohio roads. The state has awarded two contracts and expects to approve up to 20 more by week's end. Construction should start within the next month.

Wyoming working double-time

In Wyoming, transportation officials have sped up their contracting process in recent months. Work began on some projects in early May.

Normally, it can take six weeks for the state to advertise projects and for contractors to submit bids. Now it takes only three weeks. Also, the Wyoming Transportation Commission meets twice a month to award contracts, rather than just once.

As a result, the state has obligated nearly all of its stimulus funds for highway projects. And, officials feel that the rapid pace has brought in more competition, especially from out-of-state companies. Instead of having just two or three bidders per project, it is now seeing seven on average. And bids are coming in below estimates, freeing up money to fund more projects.

"If we could get our jobs out the door quicker, we felt we could get more competition from contractors," said Del McOmie, chief engineer for the Wyoming Department of Transportation. 

Troubled mortgages hit record high

NEW YORK (CNNMoney.com) -- Despite all the hand-wringing and attempts to contain the foreclosure plague, the problem still spread during the first three months of 2009, as the number of foreclosure actions started hit a record high, according to a quarterly report.

The National Delinquency Survey released Thursday by the Mortgage Bankers Association (MBA), reported the largest quarter-over-quarter increase in foreclosure starts since it began keeping records in 1972. Lenders initiated foreclosures on 1.37% of all first mortgages during the quarter, a 27% increase from the 1.08% rate during the last three months of 2008 and a 36% rise from the first quarter of 2008. All told, more than 616,000 mortgages were hit with foreclosure actions.

Delinquencies, the stage in which borrowers have fallen behind on payments but have not yet received foreclosure notices, also hit record highs, with the seasonally adjusted rate at 9.12% of all loans, up from 7.88% last quarter.

The ugly report was sobering but not unexpected, according to Jay Brinkmann, MBA's chief economist. He pointed out that foreclosure rates had grown little during the previous three quarters, even as the number of homeowners falling behind on mortgage payments continued to soar.

"We suspected that the numbers were artificially low due to various state and local moratoria, the Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500) halt on foreclosures, and various company-level moratoria," he said in a prepared statement.

0:00/2:13Recession's end in sight?

"Now that the guidelines for the administration's loan modification programs are known, combined with the large number of vacant homes with past due mortgages, the pace of foreclosures has stepped up considerably."

And it looks like that pace may continue to increase. There has been a big jump in the number of loans that are 90-days or more overdue, which is a very bad sign since those delinquencies often progress into foreclosure starts. The number of loans 90 days past due rose to 3.39% of all loans, up from 3% a quarter earlier and is more than double the 1.56% level of 12 months ago.

Brinkmann said many seriously delinquent mortgage borrowers have already given up and moved out of their homes, and that these homes constitute a large share of all foreclosures.

"Lenders are not proceeding against any foreclosures they think can be saved," said Brinkmann, "only against vacant properties and others they think have no chance of succeeding."

Prime problem

The nature of these troubled loans is also changing. The mortgage meltdown was ignited back in 2007 by defaulting subprime loans, especially adjustable rate mortgage (ARMs). Now prime loans are the biggest problem.

"The original delinquency and foreclosure problems had a lot to do with loan terms - the toxic mortgages with interest rates that reset higher," said Nicholas Retsinas, the director of Harvard's Joint Center for Housing Studies. "Now we're back to the more traditional reasons why loans go bad. If people don't have jobs, they can't pay their mortgages."

Subprime mortgages were usually issued to the least credit-worthy borrowers and potential payment problems had been offset for years by the hot housing market.

Double-digit home-price increases had enabled cash-strapped borrowers to pay their bills by tapping their added home equity, through cash-out refinancings or home equity loans. Once home prices began to fall, those options evaporated and subprime mortgages began to default at higher rates. The delinquency rate for subprime ARMs reached nearly 28% during the first quarter.

Over the past 12 months, however, as the turmoil in the overall economy increased and job losses mounted, the percentage of foreclosure starts for prime, fixed-rate loans, which account for the majority of all mortgages, have more than doubled, to 0.61% from 0.29%.

"For the first time since the rapid growth of subprime lending, prime fixed-rate loans now represent the largest share of new foreclosures," said Brinkmann.

"I don't see how it can't get uglier," said Dean Baker of the Center for Economic and Policy Research. "Unemployment will continue to go up and you'll have a lot of people out of work, prime workers in their 40s and 50s, who will exhaust their resources."

They'll have no shot at saving their homes unless they can get new work.

Regionally, the biggest contributors to the record foreclosure rates are the so-called "sand states," California, Florida, Arizona and Nevada. These four, which represent less than 18% of the nation's population, account for 46% of foreclosure starts. More than 10% of all mortgages in Florida are in foreclosure.

Those states had much higher rates of subprime lending than average. California, for example, which accounts for 13% of U.S. mortgages, had 18% of all subprime ARMs outstanding during the first quarter. These states also endured severe home price declines, forcing more homeowners into delinquency.

The fact that delinquencies and foreclosures continue to rise is terrible news for the overall economy, according to Pat Newport, a real estate analyst for IHS Global Insight.

"Just about every number in the report is a record high," he said. "It indicates that the problems with the banks will continue for a long time."

Brinkmann displayed little optimism for the immediate future, saying the level of mortgage defaults will not begin to fall until after the employment situation improves.

"MBA's forecast, a view now shared by the Federal Reserve and others, is that the unemployment rate will not hit its peak until mid-2010," he said. "Since changes in mortgage performance lag changes in the level of employment, it is unlikely we will see much of an improvement until after that." 

Health reform: A $1 trillion question

NEW YORK (CNNMoney.com) -- If President Obama has his way, health care reform will be finalized this year. Key Senate and House committees are planning to mark up legislation in June, and the House is aiming to vote on the issue by August.

And while the specifics of how to fix the nation's health care system are far from final, the debate over how to pull it off will turn on a key question: How to pay for it.

The total cost of overhauling health care is estimated at over $1 trillion, and the administration has made it clear that it doesn't want the overhaul to add to the already giant federal budget deficit.

Senate Finance Committee Chairman Max Baucus, D-Mont., one of theleading legislative players on the issue, last week laid out the likely elements in any health reform package. He also identified some of the main options for how to pay for it.

A system overhaul will guarantee coverage for most of the 47 million people currently uninsured, Baucus said at a Kaiser Family Foundation forum. And there's a good chance that a government-funded public health plan option will be added to the mix of plans offered by private insurers, Baucus said.

The final legislation is also expected to lay out requirements for minimum benefits; prohibitions against denying someone coverage due to a pre-existing condition; and guarantees for affordable, quality health care, he said.

House Ways and Means Chairman Charles Rangel, D-N.Y., another key player, echoed what Baucus outlined at a National Coalition on Health Care conference on Wednesday.

In terms of reimbursing doctors and hospitals, the focus for insurers is likely to shift from paying for the volume of services provided to reimbursements based on positive health outcomes.

When it comes to paying for all those changes, it'll be all hands on deck. Consumers, employers, health care providers and others in the industry will be asked to contribute. "We'll pay for it in a balanced way," Baucus said.

But "balanced" may not guarantee bipartisanship support in the House and Senate. In fact, deciding exactly who pays what - and figuring out how much reform costs can be taken care of through greater efficiencies and increased competition - will be among the hardest issues on which to find consensus.

Here are some of the leading ideas that could most directly affect health consumers' wallets:

Tax part of employer contributions to health insurance: Right now, if you get your health insurance at work, any money your employer contributes to pay for premiums is tax-free income to you.

It's the costliest tax benefit the government offers, reducing federal tax revenue by $226 billion last year, according to the Joint Committee on Taxation. And it's a break that many officials, including Obama, say they are reluctant to change.

But tax and health care experts agree it's not only a costly incentive but one that offers the biggest tax break to high-income workers and to employees with the most expensive plans, which include union workers. Plus, they say, divorcing consumers from the true cost of their health care encourages them to buy more care than they might need and that, in turn, contributes to growth in costs.

Baucus has said lawmakers are considering limiting - but not eliminating - the tax-free exclusion in some way.

Limits might be based on the cost of a plan, an employee's income or some combination of the two. Another option would be to convert the exclusion to a tax credit or deduction. Lawmakers are also considering whether to grandfather in existing plans that unions won through collective bargaining agreements.

How much revenue can be raised is entirely dependent on the option chosen. There are no official estimates available from the Congressional Budget Office yet, but the Tax Policy Center estimates that capping the exclusion at the average cost of health insurance in 2009 ($5,370 for individuals; $13,226 for families) and adjusting that cap for inflation every year could raise $848 billion in revenue over 10 years.

Impose Medicare tax on state and local government employees: Currently the wages of some state and municipal employees are not subject to the 2.9% Medicare payroll tax that other workers and their employers pay. Lawmakers may decide to subject all such employees to the tax.

Tax sugary and alcoholic drinks: One option under consideration would standardize and increase the federal tax on alcohol. Another would impose a new federal tax on beverages sweetened with sugar, high-fructose syrup or other ingredients. Diet sodas and other artificially sweetened beverages, however, would not be taxed.

Change or eliminate Flexible Spending Arrangements: Currently, employees get a tax break for money contributed to FSAs. The amount they may contribute is unlimited, although the employer may set a limit. And the money may be used for a host of health-related expenses that insurance doesn't cover, as well as for dependent care expenses.

Lawmakers are considering either limiting how much money may be contributed or getting rid of the accounts entirely.

Modify Health Savings Accounts: Individuals with high-deductible health insurance policies may set up HSAs to which they and their employers may contribute money tax-free. Earnings on those contributions are tax-free, as are withdrawals used for qualified medical expenses.

Lawmakers may opt to limit the amount of money that may be contributed to HSAs or to boost the penalty for making withdrawals for non-medical expenses. They also may require third-party certification that the withdrawals were used for qualified expenses. 

The upside of the downturn

(Fortune Magazine) -- The recession that followed World War II was hard on everybody, but it was especially tough for Bill Hewlett and Dave Packard. Supplying equipment to the government had been a big part of their young company's business, and that revenue mostly disappeared when the war ended.

Beyond that problem, the overall economic contraction that followed the drop in government spending meant that companies - HP's (HPQ, Fortune 500) other class of customers, since it didn't then sell to consumers - weren't buying either. The firm faced a crisis of survival.

It was one of those moments when the behavior of a company's leaders in a brief period will determine its future for a very long time. As biographer Michael S. Malone has documented, Hewlett and Packard had built their business from the beginning on the principles of loyalty and trust, but in these circumstances they realized that they simply could not avoid mass layoffs. They fired 60% of their employees.

Among the survivors, though, something curious happened. Those who remained were forced to stretch themselves in new ways. The company's manufacturing chief turned himself into a knockout marketer and was so successful that he remained in that role for the rest of his career. Even Packard himself found muscles that no one suspected he had. Though never considered a genius engineer - that was Bill Hewlett's role - Packard returned to the lab at this time when the company was desperate for new products, and he invented one. It was a voltmeter, the beginning of a product line that would serve the company quite profitably for 50 years. Packard never invented any more products; his genius was managing the company. But when a dire situation pushed him beyond his apparent abilities, he excelled.

This recession is much worse than the one following World War II, and for millions of people globally it's a time of deep personal trials. Truly everyone is being stress-tested. Yet of the many opportunities that arise out of troubled times, the most valuable of all for many businesspeople are the opportunities for personal growth, particularly for developing as a leader. But the growth isn't automatic. Achieving it demands that we respond in the right ways.

How leaders view crisis

Turmoil presents the ultimate leadership opportunity, but for every inspiring story of James Burke and the Tylenol crisis, there's at least one less heralded tale of a leader who blows it. Coca-Cola (KO, Fortune 500) CEO Douglas Ivester happened to be in Paris in July 1999 when news reports said that cans of bad Coke had made several Belgian schoolchildren sick. Ivester, a brilliant financial executive with a sharply analytical mind, quickly determined that all production procedures were being followed and that his products did not pose any health risks. He got on his plane and flew back to Atlanta. But more people got sick, images of suffering children dominated TV news, politicians demanded action, and the mess eventually cost Coke millions of dollars plus years of distrust and bad will from all its stakeholders. It also contributed to Ivester's getting fired within months. In a crisis, he turned out to be a manager, not a leader.

So what does true leadership under unimaginable stress look like? It can be boiled down to four actions. They're simple to state and may seem deceptively simple to do, but they aren't. Finding the strength to take these steps will contribute significantly to any leader's growth.

1) Be seen early and often. This most basic requirement is important for a fundamental reason that is often forgotten: People want to be led. The reasons we crave leadership are deep. We want the leader to be a repository for our fears. When people are desperately worried, they want to know that someone with greater power than theirs is working to solve their problems. Thus, successful leaders in a crisis first make emphatically clear that they are present and on the job. This kind of visibility isn't easy, because the leader in a crisis has a million things to do, most of which require being on the phone or meeting with small groups. In a business crisis, lawyers may be advising the leader not to make any public statements. Yet it must be done.

Michael Dell's company was not large or well established in the early 1990s when he was scheduled to appear at a conference where I was moderating. The day before, Dell (DELL, Fortune 500) had announced unexpectedly terrible results. The stock had plunged, and some people wondered whether Dell himself, who wasn't yet 30, could lead his organization past this. The situation was so serious that most of us at the conference assumed he wouldn't show up. But he did, appearing unfazed and explaining his plan. Simply appearing reassured his constituencies and increased their confidence for the future.

2) Act fast. It's amazing how people who would be at one another's throats in good times will accept that in a crisis, decisions have to be made. Leaders in a crisis must not lose their rare opportunity to act. The difficulty is that just when decisions are most easily accepted, they're hardest to make. All business decisions are made with incomplete information, and that's especially true in the heat of a crisis. At the same time, the stakes are much higher than usual. Every instinct tells you to decide more slowly than usual, yet it's vital to decide more quickly.

3) Show fearlessness. When Robert the Bruce led the Scots against the English at the Battle of Bannockburn, he led them literally, riding a horse in front of the rest. As legend has it, a mounted English knight spotted him, lowered his lance, and charged. Bruce stopped and didn't move as the knight thundered toward him. Then, at the last moment, he stood in his stirrups, turned sideways, swung his battle ax, and split the passing knight's helmet (and head) in two. Bruce's troops were so inspired that they roared into battle and won the greatest victory in the history of their nation.

We want our leaders to show us that they're not afraid. In business that means facing bad news head on without cringing. The effective leader announces trouble in unvarnished terms - people can smell evasion a mile away - then explains confidently how it will be defeated. Fearlessness can be shown more tangibly as well, when a leader cuts his own pay or, even more powerfully, uses his own money to buy company stock, as several CEOs have done in this recession.

Note that the advice here is "show fearlessness," not "be fearless." A prominent CEO, who didn't want to be quoted for obvious reasons, told me, "Any CEO who isn't terrified in this recession has no sense at all." To suggest that you be fearless would be ridiculous. But what counts is what you show. Robert the Bruce was probably terrified. It didn't matter.

4) Tell a story that puts the crisis in context. Extensive research has shown that how people are affected by stress depends heavily on the way they see it. Those who see stressful events as bad, abnormal, and inescapable tend to suffer from them much more seriously than do people who see those same events as normal, interesting elements of life from which they can learn and to which they can respond. Some research has found that members of the first group suffer much worse health than those in the second group. The first group burns out more quickly and performs much worse than the second, even though both are subjected to the same stress. A critical question for leaders is whether they can help everyone in the organization respond more like members of the second group. The answer seems to be yes.

When the stock market was dropping in late 2008, I asked Charles Schwab about it. He began his answer by saying, "I've been through nine of these darn breaks. This happens to be the most pervasive in terms of how it has spread through the economy." He went on to explain how it differed from previous market declines and how the market would eventually climb back up. This was precisely a group-two response, starting with the idea that what some investors considered financial Armageddon was really just part of a very long pattern. His overall message was that this is interesting and something to which we're all capable of responding.

***

These four steps may require you to stretch beyond your comfort zone. And that is exactly the point. Research has established that what turns average performers into great performers is a process of being continually pushed just beyond their current abilities, and then responding to the new challenges with focused efforts to overcome them, accompanied by abundant feedback about the results.

But constantly attempting what you can't quite do, which is the essence of the process, is a recipe for trouble in most jobs. It means that you will inevitably make mistakes and have failures. Now if you ask accomplished businesspeople, as I have often done, whether they learned more from their successes or their failures, 100% of them will say the latter. But most employers don't want to hear that your mistakes have been an absolutely necessary part of your growth. They just want you to perform.

So that's what most people do in their jobs, operating entirely within their comfort zones and as a result not getting any better. We know this not just from observing it in our own workplaces but also from considerable research showing that most people improve rapidly in the early days of a given job, then plateau, and may continue for years thereafter without progressing.

Seen against this backdrop, the precise nature of this opportunity is clear. The recession, by pushing everyone past the limits of his or her current abilities, places us all on the first step of the process. Whether we take the next steps is for each of us to decide.

Five moves to make now

Certain practices that are always valuable for a business actually become easier to adopt in a recession.

1) Evaluate employees better. In good times it's easy for employees to look like stars, so evaluations tend to become less rigorous. Managers are fooled into believing they've assembled all "A" players. In tough times it's much easier to distinguish the true stars from the third-stringers. Just as important: With the unemployment rate rising, employees are much more inclined to take evaluations seriously.

2) End guidance. Telling investors what quarterly earnings are likely to be, then talking that number up or down as the quarter progresses, and then contriving to beat it - that corporate game has never served a useful purpose and can lead to much harm as managers feel pressured to hit announced targets. That's why such respected firms as Aetna, General Electric, Intel, and Unilever have stopped giving quarterly guidance in recent months.

3) Manage for value. In good times your company's performance is probably attractive almost any way you look at it. Now it's more critical than ever to focus on what really matters, which is earning a return on your company's capital that exceeds the total cost of all the capital in the business. If that seems painfully obvious, please stop and reflect on whether you or anyone in your business is being paid explicitly for achieving that goal. Most employees at every level are paid to hit other targets - salespeople have sales quotas, plant managers have quality goals, even the CEO may be focused on reported earnings per share. None of those goals is the same as value creation.

4) Expand your mind about risks. The most dangerous risks your company faces are the ones no one wants to address. That is always true; now the trauma of this recession has made it far easier than it has been for years to talk about unimaginable risks.

5) Mine employees for ideas. Potential improvements can hide in a million places. Staples recently found $21 million of efficiencies in the way it runs its warehouses. When I asked CFO Christine Komola how they knew where to look for the savings, she replied immediately, "Ask the associates. They know." 

Durable goods see biggest gain in 16 months

WASHINGTON (Reuters) -- New orders for long-lasting U.S. manufactured goods rose more than expected in April, posting their biggest gain in 16 months, according to government data on Thursday that suggested the recession was winding down.

April's 1.9% increase was the biggest percentage advance since December 2007, when orders rose 4.1%, the Commerce Department said.

However, March orders were revised sharply lower, falling 2.1% from the previously reported 0.8% decline.

Analysts polled by Reuters had expected overall new orders to rise 0.4% in April, and orders excluding transportation to ease 0.3%.

New orders excluding transportation climbed 0.8% in April after declining 2.7% in March, boosted by orders for communications equipment, machinery and fabricated metal products.

However, there were some dark spots in the report. Civilian aircraft and parts tumbled 6.8% after surging 7.5% in March.

Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending, fell 1.5% in April. The prior month was revised to show a 1.4% decline, previously reported as a 0.4% gain. 

Consumer confidence jumps

NEW YORK (Reuters) -- U.S. consumer confidence soared in May to its highest level in eight months as severe strains in the labor market showed some signs of easing, though Americans' moods remained depressed by historical standards.

The Conference Board, an industry group, said on Tuesday its index of consumer attitudes jumped to 54.9 in May from a revised 40.8 in April, the biggest one-month jump since April 2003. Economists had been looking for a much smaller rise to 42.0.

Fewer Americans said jobs were "hard to get," the survey found, with that measure slipping to 44.7% from 46.6%. Those saying jobs were plentiful climbed to a still meager 5.7%, but that was still higher than April's 4.9%.

"Consumers are considerably less pessimistic than they were earlier this year," said Lynn Franco, director of The Conference Board's Consumer Research Center.

The data was in line with other evidence suggesting that, while the economy continues to contract in the current quarter, the pace of deterioration has abated somewhat.

U.S. stocks extended their rally after the data, with the Dow Jones industrial average up 120 points or 1.5%.

The survey offered mixed messages regarding Americans' propensity to spend money. The proportion of those who said they planned on buying a car over the next six months rose to 5.5%, its highest in at least a year.

But fewer intended to buy homes -- only 2.3%, a tough break for one of the hardest hit sectors in the country's economic crisis. A separate report on Tuesday revealed U.S. home prices dropped 18.7% in March compared to a year earlier. 

G8 energy leaders urge stable oil prices

ROME (Reuters) -- Consumer nations on Sunday urged producers to keep oil prices stable or risk derailing a fragile global economic recovery, as top exporter Saudi Arabia forecast prices eventually moving towards $75 a barrel.

Group of Eight energy ministers were meeting in Rome against the backdrop of a price rally that has sent oil prices to a six-month high of more than $60 a barrel.

"If oil prices do spike up considerably, that would be a factor in delaying economic recovery," U.S. Energy Secretary Steven Chu told a news conference.

Italian Energy Minister Claudio Scajola said: "A low oil price helps in times of economic crisis but discourages investment and does not guarantee a future of stability. It is necessary to have an equitable and not volatile price that can guarantee global economic growth and also the possibility of investment."

Oil prices have almost doubled from last December's low and risen well above the $50 level that Saudi Arabia has said it could live with to help nurse the world economy back to growth.

Algeria's oil minister said an output cut was unlikely when OPEC meets in Vienna on Thursday. Saudi Arabia, the biggest and most influential player in the 12-member producer group, also said OPEC would "probably stay the course."

Saudi Oil Minister Ali al-Naimi offered the prospect of prices and demand eventually rising but declined to speculate on when prices would hit the $75 level producers say is needed to encourage investment.

"Demand will pick up eventually when the economy recovers," Naimi told reporters. "Eventually could be tomorrow or it could be 10 years from now, but eventually it's going to happen, but when I don't (know)."

Algeria's Energy Minister Chakib Khelil predicted oil prices could touch $70 per barrel by end-2010 if the economy recovered, but warned recent price rises were being driven by speculation and a weak dollar rather than fundamentals.

Energy leaders at the summit agreed the financial crisis had dealt a sharp blow to investment in production for the long term. The International Energy Agency warned investment in oil and gas production would fall 21 percent in 2009.

Italian oil company Eni's president, Roberto Poli, said the "magic range" for prices high enough to spur investment without hurting the economy was $60-$70 per barrel, while Edison CEO Umberto Quadrino put that at $60-$80 per barrel.

"The experience of the last price cycle demonstrated that to ensure steady economic growth, prices should not rise higher than $75 per barrel," Poli said. "Oil price instability and unpredictability are the worst enemies of any well- thought-out plan to build a different energy future."

OPEC ministers are expected to make no change to oil supply at their Vienna meeting as higher prices ease their concerns about overflowing fuel inventories and the deepest fall in demand for years.

A senior Gulf source has said the group will stick to its current targets, but stress the need for full compliance.

But Iran's OPEC governor said higher oil prices were lulling some OPEC members into a false sense of security. Venezuela said oil markets were over-supplied but it was too early to tell whether an output cut was needed. 

$1.2 billion for summer jobs

NEW YORK (CNNMoney.com) -- With teen summer employment expected to hit its lowest level since 1948, the federal government is pumping $1.2 billion in stimulus money into job training programs for youth.

The funds are aimed at providing disadvantaged 14-to-24-year-oldyouthwith job training skills and schooling to better prepare them to continue their education or enter the workforce.

States are now implementing summer work programs to put their funding to use. Some are devising brand new efforts to train young adults, while others are expanding existing initiatives. The workers, who must be low income and meet certain at-risk criteria such as being a dropout or disabled, will be paid at least minimum wage.

The youth training program is getting a considerable portion of the $4 billion in stimulus funds set aside for job training. The rest of the funds are going to help unemployed adults get back to work.

"We also have to invest in our young people to make sure they gain work experiences for the future," said a senior Department of Labor official. "Hopefully it can put them on the path to working or returning to school better prepared."

Harder for youth to land jobs

The stimulus funds reverse a long decline in federal support for such endeavors. In fiscal year 2009, the government set aside $1 billion for youth workforce funding, down from $1.5 billion eight years earlier. Meanwhile, summer youth employment rates have been falling for much of the decade as 20-somethings and retirees vie for jobs that typically went to teens.

"Summer employment has been an access point for youth to learn basic workforce skills," said Jonathan Larsen, policy associate with the National Youth Employment Coalition. "These skills are very important to employers."

Youth training programs are a key element in assisting disadvantaged young adults secure and maintain employment, which often translates into a better paycheck throughout their lives, said Joe McLaughlin, senior research associate at the Northeastern Center for Labor Market Studies. Such initiatives also encourage many youth to continue their education.

Only 51.4% of the high school dropouts were in the labor force in 2006, compared to 76.4% of recent graduates, according to the U.S. Census Bureau.

In Spokane, Wash., for instance, more 18-to 24-year-olds are coming to local career centers saying they cannot find jobs, said Dawn Karber, youth program and development manager for the Spokane Area Workforce Development Council. And more high schoolers are having trouble finding part-time work.

"For kids with barriers, finding employment is already difficult," she said. "In this economic environment, it's increasingly hard."

The recession, however, could make it tough to find positions for the young adults. Even though the feds are providing the funds, companies, governments and nonprofits may be reluctant to participate. "They may have a hard time finding supervisors to manage the summer jobs programs," McLaughlin said.

Indiana's 21st Century Conservation Corps

Harkening back to the Civilian Conservation Corps of the Great Depression, Indiana is hiring 2,000 young adults to form the Young Hoosiers Conservation Corps. The state launched the initiative specifically for the $21 million in youth stimulus funds it is receiving.

Participants, who will earn $8.50 an hour for 16 weeks, will build trails, restore Department of Natural Resources properties and rehabilitate historic buildings at recreation areas, state forests and parks.

If successful, the effort will continue next summer with the remaining funds.

The Hoosier State created the conservation program because officials wanted to use the federal funds to make tangible improvements. The corps are expected to build up to 110 miles of new trails, rehabilitate more than 1,100 miles of existing trails and restore 2,600 acres of natural habitats and 40 structures.

"The governor wanted to leave a lasting legacy, something that will outlive the stimulus dollars," said Marc Lotter, a spokesman for the Indiana Department of Workforce Development.

Combining school with work

In Spokane, which is receiving $1.8 million, participants will get time on the job, as well as in the classroom. Those without high school diplomas will study for their GEDs, while working part-time. Those who finished school will split their summer on the job and in an education program, such as vocational training at a community college.

In addition, the participants will learn workplace ethics, social skills, resume writing and interviewing techniques.

More than 400 young adults will be placed at more than 70 employers and will earn $8.55 an hour. For instance, the city is creating a certified nursing assistant program, where young adults will earn credentials, while assisting in the care of patients. Others will be placed at Goodwill Industries, where they will recycle donated computers.

"We're trying to put kids into good training positions so that when the leave, they will be competitive in the workforce," said Karber.

Finding future careers

Summer jobs can help young adults figure out what careers are right for them, said Jeanne Mullgrav, commissioner of the Department of Youth and Community Development in New York City.

The city will spend $18.5 million of its $29 million allotment to provide paid summer jobs to 13,378 young adults for seven weeks, allowing it to serve a total of 51,000 youth this summer. The remaining funds will support paid year-round internships and training.

Some assigned to camps may find they don't want to work with children. Others who work in city agencies may discover public service is for them, Mullgrav said.

"You learn not only what you like to do, but what you don't like to do," she said. 

Is it really time to whip inflation now?

NEW YORK (CNNMoney.com) -- The nation has a 'flation problem. But it is deflation or inflation? Or maybe it's disinflation, stagflation or hyperinflation?

During this nearly year and a half long recession, deflation has been the major worry.

That's when prices are in a persistent state of decline, and the clearest example is in the housing market: home prices have been in free fall for some time. According to a report released Tuesday, prices dropped a record 19% in the first quarter.

But prices of many other assets, including stocks and commodities, have been rising lately. And so-called core consumer prices, which exclude volatile food and energy costs, have inched higher in the past few months.

0:00/2:47Inflation? Not yet

Still, the overall level of inflation remains well below levels usually evident in normal economic times. That's why some experts believe what we've got is disinflation, a reduction in the level of inflation.

Disinflation is not as bad a problem as deflation. But it still means companies don't have pricing power, which often leads them to cut back production and lay off workers.

At the other end of the spectrum, a growing chorus of economists are starting to fear an ugly return of inflation or even hyperinflation, a period where prices rise so rapidly that money is essentially worthless.

That's a condition that hit Germany hard during the Weimar Republic years between World War I and World War II. Inflation was so problematic that there were stories of people carting around wheelbarrows of money just to buy bread or milk.

Now that level of inflation seems unlikely. But concerns about inflation in general are valid.

Inflation rearing its ugly head?

Many experts are worried that the massive amount of government stimulus will eventually lead to higher prices because the Federal Reserve will simply print more money to finance various bailouts and programs. Doing so will devalue the dollar.

"What we're likely to see in the near-term are some beginnings of inflation back in the system," said Michael Strauss, chief economist with Commonfund, a money management firm based in Wilton, Conn. "We are worried about the size of the budget deficit."

And even though Strauss said he thinks inflation may be relatively low, he's worried about the possibility of stagflation, where the economy is hurt by both rising prices and sluggish growth, over the next few years.

Talkback: Are you worried about inflation?Leave your comments at the bottom of this story.

Investors are also starting to signal that inflation could be a concern.

The yield on the benchmark U.S. 10-year Treasury has risen from around 2.2% to 3.4% in the past six months. Higher long-term rates are often an indication that bond investors are more worried about inflation.

There are other telltale signs of inflation starting to perk up, too. The dollar has weakened during the past few weeks. Oil prices have shot substantially higher. The prices of other commodities, most notably gold, a classic hedge against inflation, have followed suit.

The inflation fears are being further fueled by the Fed's interest rate policy.

It has kept short-term rates near zero since December, and doesn't want to jeopardize the recovery by boosting rates too soon. Fed vice chairman Donald Kohn said as much in a speech last Saturday.

"The economy is only now beginning to show signs that it might be stabilizing, and the upturn, when it begins, is likely to be gradual," he said, adding that "it probably will be some time" before the Fed raises rates again.

That may spook some who believe that inflation will be an inevitable consequence of keeping rates low for a prolonged period of time.

But even though the stock market has soared since March on hopes that the worst of the recession is over, some economists think it's premature to make that declaration.

Why a little inflation may be a good thing

Oscar Gonzalez, economist with John Hancock Financial Services in Boston, said the government has to make a recovery the first priority, even if a byproduct of that is inflation.

"Inflation is a worry. But it's not the immediate fear for most consumers. People are more worried about not having a job," he said. "You still have to be more concerned about putting out the fire than the water damage from putting it out."

Along those lines, the job market is still incredibly weak. Companies have continued to cut jobs this year and as a result, hourly wages have risen only slightly during the past few months.

It's hard to have substantial inflation at a time when salaries are not rising dramatically since labor costs tend to be the driving force behind price gains.

With that in mind, there is some evidence to suggest that the fears of imminent inflation are overblown.

Craig Callahan, founder and president of ICON Advisers, a Greenwood Village, Colo.-based mutual fund firm, pointed out in a note to clients Tuesday that inflation pressures have actually eased following the past few recessions.

According to Callahan's research, the average increase in consumer prices in the two years leading up to the past four recessions was 7.2% a year. But in the four-year period following those recessions, consumer prices rose just 3.9% annually.

Of course, there is no guarantee that this pattern will play out again. This recession is substantially different in nature, and more severe, than those of the past few decades.

But Callahan wrote that it makes sense that prices would remain in check following a downturn and could serve to counteract some of the inflationary pressure from fiscal stimulus.

"Perhaps workers become more docile in their wage demands. Perhaps coming out of recession businesses try to regain market share rather than raise prices," Callahan wrote. "Whatever the reason, we believe, based on past recessions, inflation should remain controlled for a few years."

Hopefully he's right and you can keep your wheelbarrow in the garden where it belongs.

Talkback: Are you worried about inflation? 

Relax. The U.S. isn't a deadbeat

NEW YORK (CNNMoney.com) -- It looks like after two months of ignoring the risks that remain for the economy and markets, Wall Street has finally found something else to worry about: the possibility that the United States could lose its AAA credit rating.

Thursday was one of those rare days when stocks, bonds and the dollar all fell. Stocks recovered slightly Friday morning ahead of the Memorial Day weekend, but Treasurys and the greenback were lower again.

The sell-off was partly sparked by Thursday's news that rating agency Standard & Poor's had decided to place the sovereign rating of the United Kingdom on "negative watch."

S&P did not actually downgrade the United Kingdom. Like the United States, it still has an AAA rating, the highest that a country, municipality or corporation can have.

Nonetheless, the move was viewed as a precursor to an eventual downgrade. And investors went one step further to assume that if Britain was being put on notice, then the "colonies" might be next.

White House spokesman Robert Gibbs said Friday that the Obama administration was "not concerned about a change in our credit rating."

But downgrade fears were heightened because the highly respected bond guru Bill Gross, who manages the Pimco Total Return fund, said in published reports that the United States could lose its AAA rating in a few years, if not before then.

0:00/1:21U.K. credit woes

If that actually happens, watch out.

For one, it would likely lead to higher interest rates across the board in the United States since a credit downgrade makes it more expensive for the borrower to issue new debt. It's not different than trying to get an attractive mortgage or credit card rate after taking a hit to your FICO score.

It would also be a huge psychological blow to the nation, and possibly lead to a further dip in investor sentiment. It has always been widely assumed that the United States would never lose its pristine credit rating.

Talkback: Should the U.S. lose its AAA credit rating?Leave your comments at the bottom of this story.

Even in the midst of this recession, many investors have continued to view the U.S. dollar and Treasury notes as safe havens, or at the very least, safer havens, than other assets. That might no longer be the case if the United States has its rating cut.

But let's take a step back. While I do think it's about time that investors woke up after this heady two-month rally and realized that not every bit of potential bad news is factored into the market (General Motors (GM, Fortune 500) filing for bankruptcy? No problem!), worrying about an imminent credit downgrade for the United States is probably premature.

Hard to default when you can print money

Jack Ablin, chief investment strategist with Harris Private Bank in Chicago, points out that even though the government's rising debt is a concern, it's not as if the United States is at risk for defaulting on its financial obligations.

"Any concern about an impending U.S. downgrade is probably way overblown," Ablin said "As long as our debt is denominated in dollars, the U.S. will be able to make the payments. We print the money."

If anything, Ablin said investors should worry more about the impact that more debt will have on the U.S. dollar, which has weakened as of late, and not the country's credit rating.

What's more, the notion that the U.S. could eventually lose its credit rating isn't really new news. It's been discussed for months. It's no secret that if the government's debt burden rises further and becomes even more burdensome, the credit rating agencies may be forced to take action.

In a report on May 9, S&P rival Moody's reaffirmed its stable rating on the United States but warned that "if the current upward trend in government debt were to continue and become irreversible, the rating could come under downward pressure."

Still, one economist thinks that it would be a mistake for the rating agencies to downgrade the U.S. just because of rising debt loads. That's because the credit ratings should not really reflect whether or not a nation has too much debt, but if default is a risk.

"It's true that the long-term budget outlook is deteriorating and that is a cause for concern," said Zach Pandl, economist with Nomura Securities. "Those problems should be addressed by policymakers. But the chances that the U.S. will default on dollar-denominated debt is almost zero."

Agencies trying to regain investors' trust

But the ratings agencies may be eager to prove to investors that they have teeth.

S&P, Moody's and other credit rating firms have been lambasted by many for not acting sooner to warn investors about the risks posed by subprime mortgages and other "toxic" assets that helped sow the seeds for the recession and credit meltdown.

"These agencies are certainly on their heels. There is no doubt about that. The level of confidence in credit ratings has been diluted," said Ablin.

So the credit rating firms have something to prove and they have been acting tougher in recent months. Several of them downgraded companies that previously had AAA ratings, including General Electric (GE, Fortune 500), Warren Buffett's Berkshire Hathaway (BRKA, Fortune 500) and Toyota Motor (TM). Before this crisis, it would have been unthinkable that any of those firms would have their ratings cut.

Now don't get me wrong. It's good that the ratings agencies are looking to be more proactive than reactive. And this is not to dismiss the many problems that the U.S. economy still faces. But of the many things left to still worry about, a credit rating downgrade should be at the bottom of the list.

After all, even though there has been a sell-off in bonds that has pushed long-term rates higher lately, the yield on the U.S. 10-year Treasury is still at a relatively low 3.4%. (Bond prices and yields move in opposite directions.)

Mike O'Rourke, chief market strategist with BTIG, an institutional brokerage firm, said if investors really are worried that the United States will have its credit rating lowered, then Treasury rates will go much higher from here. And he doesn't see that happening.

"If the 10-year yield was at 4.5 % to 5%, I would be more concerned. But we're barely off multi-decade lows," O'Rourke said. "The market is still indicating there is tremendous demand for U.S. Treasurys."

Talkback update: Greetings Buzz readers. There is a new way to post comments for this column. If you have a Facebook account, you can submit your feedback using the Facebook Connect feature that will appear at the bottom of the page. If you don't have one, it is free to sign up.

The good news is that reader comments will now appear immediately and on the same page as the column as opposed to a separate page. I trust that loyal Buzz readers will continue to actively share their thoughts with this new feature. And rest assured, I will still be using the best reader reaction as fodder for video installments of The Buzz.

So with that in mind, here is today's question for readers. Should the U.S. lose its AAA credit rating? 

Obama signs credit card crackdown

WASHINGTON (CNNMoney.com) -- President Obama signed a bill on Friday that makes it tougher for credit card issuers to raise fees and interest rates.

During a bill-signing ceremony at the White House, President Obama praised the new law, which was the culmination of several years of work by consumer groups and Democrats to rein in what they say are abusive practices that prey on consumers.

"We're here today for a bill that will make a big difference," said Obama.

Obama was joined by, among others, the bill's Democratic sponsors: Sen. Chris Dodd of Connecticut and Rep. Carolyn Maloney of New York. Sen. Richard Shelby of Alabama, a top Senate Republican who negotiated a final deal to pass the bill, also attended.

The House and Senate passed the legislation by overwhelming bipartisan margins earlier this week, despite strong objections by banking industry advocates who say it could result in tightened credit to Americans.

Shares of American Express (AXP, Fortune 500), Capital One (COF, Fortune 500) and Discover Financial (DFS, Fortune 500) traded lower on Friday.

The law also includes an unrelated measure allowing people to carry guns into national parks.

The credit card rules would take effect in February 2010 and are not retroactive, meaning consumers could still face rate hikes until then.

The rules makes it harder for people under age 21 to get credit cards. It would also ban rate hikes unless a consumer is more than 60 days late -- and then restore the previous rate after six months if minimum payments are made.

The bill marks a major loss for the banking industry.

Financial services representatives have decried the bill, saying it would exacerbate the credit crisis and force banks to drop some risky credit card holders. The American Bankers Association said the legislation would prompt banks to reinstate annual fees and higher interest rates for all card holders, an outcome that would penalize those with good credit who pay their bills on time.

President Obama said the bill was not designed to protect those who have been fiscally irresponsible, and that credit card companies deserve to make a profit.

"We do not excuse those, and do not condone folks who have acted irresponsibly," he said.

The credit card legislation has been a long work in progress. The House passed a bill in 2008 and again earlier this year. The legislation, which stalled in past years, was propelled by public outrage and pressure by President Obama. For example, President Obama held a special town hall meeting in New Mexico last week to highlight the problems of high fees and interest rates.

Nearly 80% of American families have a credit card, and 44% of families carry a balance on their credit cards, according to the White House.

In recent months, credit card companies have been raising fees and interest rates. From November 2008 to February 2009, rates increased from an average to 13.08% from 12.02%, according to a Federal Reserve Board report.

At the same time, more people are not able to make their credit cards payments and are walking away from debt, according to a Federal Reserve report.

During the speech, President Obama gave a special "shout-out" to Sen. Dodd and pointed out several times how Republicans had worked with Democrats on the bill. 

Retail Sales

NEW YORK (CNNMoney.com) -- Retailers logged a second straight month of sales declines in April as consumers continued to pull back on all types of unessential purchases, the government reported Wednesday.

The Commerce Department said total retail sales fell 0.4% last month, compared with March's revised decline of 1.3%.

Sales in March were originally reported to have declined 1.2%. Economists surveyed by Briefing.com had been expecting April sales to be unchanged from the previous month.

0:00/03:09Shoppers are back. Really?

"This is a disappointing report," Ian Shepherdson, chief U.S. economist with High Frequency Economics, said in a report.

"The downward revisions to March makes the story even more troubling," said Michael Niemira, chief economist with the International Council of Shopping Centers (ICSC).

Sales excluding autos and auto parts fell a surprising 0.5%, compared to a decline of 0.9% in March.

Economists had forecast April sales, excluding auto purchases, to rise 0.2% from the previous month.

Niemira said he was "puzzled" by the broad declines in core April retail sales given that many merchants, including Wal-Mart (WMT, Fortune 500), had reported much better-than-expected same-store sales earlier in the month that were partly boosted by a pick up in Easter-related shopping.

Same-store sales -- a key gauge of a retailer's performance -- measure sales at stores open at least a year.

"The government numbers don't mesh with retailers' April same-store sales results," he said. "We need to be cautious to not overinterpret these numbers because they don't capture the tone of what retailers are telling us. We could likely see upward revisions to April numbers next month."

The government report showed electronics sellers suffered a 2.8% sales decline in April, clothing sellers logged a 0.5% dip in monthly sales and sales at general merchandise stores slipped 0.1%.

Elsewhere, department store sales fell 0.2% and furniture sales declined 0.5%. Gasoline station sales dropped 2.3%

But building materials purchases rose 0.3% and sales at vehicles and auto parts dealers increased 0.2%.

"The categories that I had expected to be weak like cars and building materials were up and categories that I thought would increase such as general merchandise sales were down," Niemira said. "So these results were really mixed against my own expectations." 

$60 - oil's sweet spot

NEW YORK (CNNMoney.com) -- You've probably noticed it at the gas pump.

$1.88, $2.01, $2.21. Price data from the government over the last few weeks clearly show gas is on the rise. On Thursday it averaged $2.36 a gallon, according to the motorist organization AAA.

Gasoline prices rise with oil prices, which have also been on the march lately. On Wednesday they settled above $60 a barrel for the first time in six months.

There's been talk that these rising oil and gas prices may derail any budding economic recovery, as consumers put more money in their tank and less into their local economy.

But most experts say $60 oil isn't too much of a burden, and this mid-range price could ultimately prevent future spikes.

"This is a price level the U.S. economy can shoulder," said John Lonski, chief economist at Moody's Analytics. "It will not figure into the timing of the recovery."

The economy

Talk of a budding economic recovery isn't just talk, there are concrete numbers backing it up.

While unemployment remains high, fewer people have been filing new claims. Leading indicators ticked higher in April. And the Treasury yield curve is widening. Oil prices, which have been tracking the stock markets lately, rose mostly on news like this.

It's not unreasonable to think rising oil prices could snuff out these signs of hope. Unlike previous recessions, oil prices are much more closely aligned with stock prices, as commodities have became a popular investment vehicle.

0:00/4:00Oil: Demand will remain

"People think the price of crude is reflective of fundamentals, but more and more it's reflective of the economic expectations of the financial community," said Tom Kloza, chief oil analyst for the Oil Price Information Service, which gathers data for AAA.

This isn't necessarily a bad thing, but it does mean oil prices now rise along side stocks, which generally rise on the expectations of a recovery, not when the recovery actually kicks in.

Back to basics

But this aside, oil and gas prices are still well below where they were last year, and probably have substantial room to go higher before they start to hit consumer spending or sentiment.

Lonski said it would take gas around $3 a gallon, and oil prices near $100 a barrel before it had a wider impact on the economy.

Fortunately for drivers, and maybe the wider economy as a whole, most analysts don't think we're going there anytime soon.

For one thing, even though expectations of a recovery are higher, the fundamentals for crude remain terrible. There's much more supply than demand.

For another, oil and gas prices always rise this time of year in expectation for the summer driving season, so this recent gain isn't unexpected.

The rise this year has been the largest in history on a percentage basis, with retail gas prices up almost 50% since late last year and gasoline futures prices up a whopping $138%, said Kloza.

Because of this huge runup, and with summer driving season almost here, he thinks the price rally may be done.

"The numbers we saw yesterday might be the spring peak," said Kloza.

If he's right and oil doesn't runup too much higher or fall too much lower, it could be a blessing for everyone.

Oil at $60 a barrel, as opposed to the high $30s we saw earlier this year, is good if you're hoping for an economic rebound.

"It testifies that the world economy isn't falling into an abyss," said Lonski.

Moreover, $60 is generally the lowest number oil can sell for that will keep oil companies and countries working to bring new sources to market, said Adam Sieminski, chief energy economist at Deutsche Bank.

"You need $60 to get new investment," he said. "The longer you stay below $60, or even $80, the greater the potential for oil prices to spike and create problems for everyone two years from now."

So $60 seems to be a sweet spot for crude. But as Sieminski was quick to note, oil rarely stays at one price for long.  

Recycling bailout money: Is it right?

WASHINGTON (CNNMoney.com) -- Some lawmakers are questioning whether the Treasury Department has the power to recycle returned bailout dollars to fund new or expanded rescues for auto companies, life insurers and small banks.

Treasury Secretary Tim Geithner got pounded over his plans to reuse bailout money this week on Capitol Hill.

The question is whether the $700 billion Troubled Asset Relief Program, the law Congress enacted last fall at the height of the financial crisis, gives Treasury the legal authority to reuse the funds. Treasury says it's on sound legal grounds, but some lawmakers say Treasury should use the money to pay down the federal deficit.

The issue has surfaced publicly as more banks move to return TARP funds. Treasury estimates that it will receive about $25 billion in returned funds - some of which it will redeploy in helping other companies.

At this point, Congress isn't likely to try to formally tie Geithner's hands. But the dispute underscores lingering political sensitivity about TARP, which many lawmakers didn't want to approve in the first place.

At the time, Congress was loath to give Treasury too much leeway in how it spent the money. In fact, at first it released only half the money and gave itself a veto over the second $350 billion.

Geithner currently estimates that $123.7 billion remains, including the $25 billion in returns.

"I think the political rationale behind it is to avoid coming back to us for anything," Sen. David Vitter, R-La., said Wednesday at a Senate Banking Committee hearing.

Geithner said at public hearings on the Hill and in a Wednesday letter to Vitter that his staff has examined the question and agrees that the TARP law gives them flexibility to reuse TARP money.

"I'm being very careful to make sure, and I will always be very careful, that we're applying the letter and spirit of the law in this case," Geithner told the Senate panel. "I talked last night again to the people that were there in October and September in drafting legislation and looking at its interpretation, and they confirmed our reading of that flexibility."

0:00/5:35Inside Paulson's Treasury

Geithner points to parts of the federal law that allow Treasury to have as much as $700 billion "outstanding" and invested in troubled assets at any one time.

When a government TARP investment is repaid, Geithner said, the proceeds go into the Treasury general fund. That, in turn, "frees up head room" for other dollars to be used for other programs, according to Geithner's letter to Vitter. The returned dollars are then banked and "new funding is made available," he wrote.

However, Rep. Brad Sherman, D-Calif., said he believes that the law dictates that Treasury should bank returned bailout dollars.

He's among critics who highlight a paragraph in the TARP law that directs repayments to pay down debt - period.

Sherman asked U.S. Attorney General Eric Holder to give a legal opinion as to whether Treasury was correctly interpreting the law.

"I think the rule of law is breaking down, where we're getting to a point where we just do whatever seems popular with those with the most power as long as the public just doesn't know about it," Sherman said.

Sherman argues that if returned bailout dollars are going to be reused, they should go toward causes he deems more worthy, such as backing up cash-strapped municipalities in California to issue bonds.

Rep. Kevin McCarthy, R-Calif., has filed legislation that would require that any repaid bailout dollars be funneled directly to paying down the debt.

Senate Banking Chairman Chris Dodd, D-Conn., defended Geithner. He said that Congress, knowing there could be political consequences later, agreed last fall to "get resources out to do what we could."

"People can have a different look at history going back, but the idea was to provide some flexibility in all of that," Dodd said. "And as I recall very specifically, that was the intention at the time. But I appreciate the discussion and debates, of course." 

Stores that may not make it to recovery

NEW YORK (CNNMoney.com) -- The pace of store bankruptcies will pick up -- even if consumer spending rebounds -- in the next 12 months, industry experts say.

That's because most retailers face a severe lack of credit availability, which is now almost on par with the recession as the biggest threat to merchants' survivability, according to financial advisory firm BDO Seidman.

Retailers need a lot of cash to manage their operations, such as paying rent for leased stores, buying merchandise from suppliers and paying their employees.

According to BDO Seidman's new ranking of the top risk factors facing the 100 largest U.S. retailers, the recession ranks as the No. 1 threat, up a spot from last year.

However, access to financing, which ranked No. 11 in last year's list, jumped to No. 2.

0:00/02:05Economy is not yet recovering

"Historically, banks have liked lending money to retailers because of their strong, consistent cash flows," said Doug Hart, partner in BDO Seidman's retail and consumer product practice. "But as consumers have stopped spending, their cash flow is under siege."

"So banks are tightening their lending to retailers," he said.

In order for retailers to improve their credit standing, Hart said sellers either have to reduce costs, leading to layoffs, or increase sales, which is dependent on consumer spending.

Different funding: As cash-flow based lending dries up, lenders are offering money to merchants in a different way, said Love Goel, chairman and CEO of GVG Capital, a private equity firm focused on the retailing sector.

"It's called ABL financing, or asset-based loans," said Goel. "Banks are looking at the real estate that retailers own or the value of their inventory."

But even in that case, merchants are being squeezed by lenders as real estate values decline and lenders push up interest rates on loans. "If when business was good you could get 75 cents to 80 cents for every $1 of inventory, now you're getting 50 cents to 60 cents," Goel said.

"If you've bought $100 million in merchandise, you can maybe get $60 million in financing instead of $70 to $80 million," he said. "Merchants are struggling to bridge the gap."

Merchants are caught between a rock and a hard place. "Not only do they badly need money that they don't have, it's much more expensive to borrow money in this environment," Goel said.

Who's at risk?: Credit rating agency Moody's Investors service said earlier this month that credit conditions will worsen for sellers in the coming months.

The agency said in a report that it currently rates about 20% of retailers at "Caa1" or lower, "indicating our view that the number of defaults in the retail industry will rise in the next 12 months as the recession deepens."

Barneys, Blockbuster (BBI, Fortune 500), Eddie Bauer (EBHI), Claire's Stores, Guitar Center, Michael's Stores and Rite Aid (RAD, Fortune 500) are among the retailers that Moody's has rated "Caa1" or lower.

Goel said this serious cash crunch will force more sellers into bankruptcy and subsequent liquidation.

Although he didn't name specific companies, Goel said regional department stores, regional sporting goods stores, jewelry merchants, furniture stores and small consumer electronics sellers -- merchants laden with big amounts of inventory -- have the greatest risk of buckling due to the economy and lack of liquidity.

"We believe the [retail] market will lose 10 to 15% of the sales supply over the next year and a-half," he said.

Goel cited the home goods market, which included now-defunct chain Linens 'N Things, as being particularly hard-hit by the sales and credit crunch.

"About 18 retailers have filed for bankruptcy in that space, resulting in $6 billion in lost supply. That's just in the last 12 months," he said.

Goel estimates that as many as two-thirds of retailers -- that includes both poorly run and well-run sellers -- are vulnerable to the credit squeeze.

"Even well-run companies can't raise money to refurbish their stores or invest in customer service," he said.

If there is a silver lining, Goel said the latest retail shakeout will sift out the laggards, making the industry more competitive in all aspects of retailing.

"When the dust settles and the economy comes back, it will solidify the winners, and consumers will be buying better merchandise from well-run merchants," he said. 

Unemployment rate down in 21 states

NEW YORK (CNNMoney.com) -- The employment situation in the states showed signs of stabilizing last month.

The unemployment rate declined in 21 states in April, compared with the month before, while 11 states had no rate change, according to federal data released Friday.

The work situation, however, deteriorated in 18 states and Washington, D.C., last month, according to the Bureau of Labor Statistics.

A month earlier, unemployment rates rose in 46 states.

In April, Michigan once again led the nation with a jobless rate of 12.9%, up from 12.6% in March. Oregon, South Carolina, Rhode Island, California, North Carolina, Nevada and Ohio all had rates exceeding 10%.

Nationally, the unemployment rate rose to 8.9% in April, up from 8.5% a month earlier.

Missouri saw the biggest drop in unemployment, falling 0.6% to an 8.1% rate in April. Alaska followed with a 0.4% decline to 8%.

Some states, however, suffered rising rates. West Virginia fared the largest jump in joblessness, with its rate climbing 0.7% to 7.5% in April. Rhode Island and Ohio followed with 0.5% increases to 11.1% and 10.2% respectively.

State budget woes

States and their budgets have been hammered by rising unemployment rates. Income and sales tax revenues decline as people lose their jobs and rein in their spending.

Many state leaders are scrambling now to close last-minute budget gaps that opened when April tax revenues came in below estimates. The fiscal year in 46 states ends on June 30, and unlike the federal government, states cannot run deficits.

State and local officials are also working to deploy federal stimulus dollars that are starting to flow to them. The White House estimates that the funds have created or saved 150,000 jobs and will create or save another 600,000 by August. 

GM's tough road to avoid bankruptcy

NEW YORK (CNNMoney.com) -- It's coming down to the wire for General Motors.

With GM rapidly burning through its cash reserves due to hefty losses amid an historic slump in auto sales, President Obama said the Treasury Department would give the automaker the cash it needs to continue operations on the condition that GM restructure its debt or file for bankruptcy by June 1.

The automaker set a May 26 deadline for its bondholders to reach a restructuring agreement. As Tuesday steadily approaches, GM chief executive officer Fritz Henderson has repeatedly said that the difficulty in inking a deal makes a bankruptcy filing for the automaker "probable."

A spokeswoman for GM said Friday the company continues to plan for a bankruptcy, which is the likely next step if no agreement is reached.

0:00/02:53Remove GM from the Dow

A deal with bondholders is one of the last major hurdles for GM (GM, Fortune 500) to clear in order to avoid bankruptcy. GM has reached agreements with the United Auto Workers and Canadian Auto Workers unions that will allow the company to reduce some of its labor and retiree healthcare costs.

Rival Chrysler, which has also received billions of dollars from the federal government, filed for bankruptcy last month despite reaching a deal with the UAW, after several bondholders held out of the restructuring agreement.

So if GM cannot work out a deal with bondholders, it could file for bankruptcy as early as some time next week.

Bondholders key to avoiding Chapter 11

Still, bankruptcy is not a done deal.

"In very hostile negotiations, most of the progress is made at the 11th hour," said Edward Neiger, founder of Neiger LLP, a creditors' rights and bankruptcy law firm. "It's very hard to predict what the outcome will be until the 11th hour, when the parties often realize the alternative is worse for both of them."

To avoid bankruptcy, GM would need to convince the bondholders to accept a much reduced stake in the company.

GM's proposal would give bondholders a 10% stake in the automaker, even though they currently own about 40% of the company's debt. The Treasury would get about a 50% stake in GM.

Bondholders have issued a counteroffer that would give them a 58% stake in the company. The Treasury, however, would not receive any stake in GM, and the automaker would remain liable to pay back the that the government has lent it.

Late Friday GM said it borrowed an additional $4 billion from the US Government making a total of $19.4 billion borrowed from the Treasury Department.

Under both plans, the UAW would receive about a 40% stake in the company.

Henderson has suggested that it will be up to the government, not GM, to determine whether bondholders should get a better deal, but the government has not given any sign it will adjust its offer.

The Treasury has indicated it wants to protect the interest of the taxpayers who have given billions to the automaker. A spokeswoman for the Treasury said Friday the government continues to work with all stakeholders to reach an agreement.

But Rep. Jeb Hensarling, R-Texas, wrote in a letter to Treasury Secretary Tim Geithner Friday that more negotiations "must take place soon and at an expedited pace."

"Bondholders must have a seat at the table during negotiations in how the company would be restructured. The company, the government, the union and the bondholders should negotiate details of a reasonable debt-to-equity swap before stepping into court," Hensarling wrote.

Bankruptcy would be bad for investors, suppliers and dealers

Should GM file for bankruptcy, the court will determine just what debts will be paid to various creditors. Bondholders could end up with a better deal than GM's offer, and many appear willing to take that gamble.

GM's stockholders, however, would likely be cleaned out. Although many GM shareholders have essentially been wiped out already. The stock currently trades for about $1.40 a share, more than 90% lower than year-ago levels.

Auto parts suppliers could also take a hit. GM pays its parts makers an average of $2 billion a month. The company would be able to pay some of the money it owes suppliers, but only those whom the court determines to be "critical vendors."

The fate of many GM dealers could also be decided by a bankruptcy court. GM notified 1,100 of the 6,000 dealerships in its network that it would be terminating their contracts next year. Some of those dealers would likely close this year.

Some dealers are hopeful that state franchise laws could protect them from having to be shut down, but many legal experts have said that the dealers will face an uphill battle if GM actually does wind up filing for bankruptcy.

-- CNNMoney.com senior writer Chris Isidore and CNN Congressional producer Deirdre Walsh contributed to this story.  

The incredible shrinking dollar

NEW YORK (CNNMoney.com) -- The U.S. dollar has taken a beating in the past few months even as stocks have soared and investors have come to expect an economic recovery sooner rather than later.

The euro hit a 5-month high against the greenback on Wednesday while the British pound rallied to its highest level against the dollar since November. The dollar has also been weakening against the yen as of late.

It's an interesting phenomenon that, at first blush, might not make sense. The stronger the rally in stocks and the more that people talk about a potential end to the recession, the more ground the dollar... loses against other currencies?

But this does make sense. Despite the many problems facing the U.S. economy, traders had flocked to the dollar because of its relative safety. As bad as the U.S. economy was, it appeared that Europe's was in even worse shape.

Plus, there's the notion that since the U.S. led the rest of the world into this global economic crisis, it was likely that it would also be the first country to emerge from the recession.

Now that there are more signs that this is coming to fruition, investors have embraced stocks again. The dollar is no longer viewed as a place for jittery investors to park cash.

0:00/03:02Happy with higher oil prices

"The dollar is under pressure. As the economic situation in the U.S. seems to be stabilizing, the dollar is losing some of its safe haven demand. It's on weak footing," said Brian Dolan, chief currency strategist for FOREX.com, online currency trading site.

Talkback: Are you worried the dollar will get even weaker? Leave your comments at the bottom of this story.

So if the dollar deteriorates further, how will that impact the economy going forward?

The downside of a weaker greenback

The bad news is that a weaker dollar could lead to a continued surge in commodity prices, most notably oil. The weakening greenback has played a small role in leading crude prices back above $60 since oil is traded in dollars.

If oil prices stabilize around this level, it may not necessarily spell an end to economic recovery hopes. But if the dollar dips even more and oil prices skyrocket as a result, that has the potential to hit consumers hard. Nobody wants a return to last summer's record high gas prices of more than $4 a gallon.

"If the dollar were to continue to weaken and energy prices move much higher, it acts like a tax on the consumer," said John Derrick Director of research U.S. Global Investors Inc., money management firm based in San Antonio.

A much weaker dollar would also make the cost of other imported goods more expensive and diminish the buying power of anything purchased abroad. That's also not in the best interest of consumers.

Some benefits from the dollar's decline

But a shrinking dollar is not all bad news. Many big multinational companies based in the U.S. could benefit from further declines in the greenback since it would boost the value of their international sales and profits once translated back to dollars.

While that may seem like nothing more than a mere accounting trick, the importance of improving results for blue chip companies can't be overlooked.

With that in mind, an analyst at Deutsche Bank upgraded shares of McDonald's (MCD, Fortune 500) on Wednesday and cited easing currency pressures, i.e. a weaker dollar, as one of the reasons he's more optimistic about Mickey D's outlook.

Other big multinationals such as Procter & Gamble (PG, Fortune 500), Johnson & Johnson (JNJ, Fortune 500)and Coca-Cola (KO, Fortune 500) have been moving higher as the dollar has weakened and have also been upgraded by analysts.

Let's face it: We need American icons like these companies to bounce back. The only way for the market rally to have legs is for large, well-known firms to get back on solid footing.

Even though it's tempting to say that what happens on Wall Street doesn't affect you on Main Street, nothing could be further from the truth.

An improving stock market should eventually lead to higher levels of consumer confidence and, more importantly consumer spending. What's more, it's no coincidence that major companies issued massive layoffs falling steep plunges in profits and their stock prices. The job losses should abate and companies will start hiring again once their bottom lines improve.

Now of course, a weaker dollar is not a complete panacea for the U.S. economy's woes. Dolan points out that multinationals will probably report some favorable impact from currency fluctuations in the second quarter, but that will be partly offset by the fact that demand abroad is likely to remain weak due to the worldwide economic slump.

Derrick adds that some investors are likely to dismiss any profit gains from a falling dollar as transitory.

Still, there are clearly pros and cons to a weaker dollar. Everybody is hopeful that the U.S. economy is finally close to hitting bottom, and one sign that the recovery could be for real is if investors continue to sell the dollar and embrace riskier assets.

But one unfortunate side effect of a recovery is that the dollar could get dragged down further and spark more worries about inflation down the road.

Talkback update: Greetings Buzz readers. There is a new way to post comments for this column. If you have a Facebook account, you can submit your feedback using the Facebook Connect feature that will appear at the bottom of the page. If you don't have one, it is free to sign up.

The good news is that reader comments will now appear immediately and on the same page as the column as opposed to a separate page. I trust that loyal Buzz readers will continue to actively share their thoughts with this new feature. And rest assured, I will still be using the best reader reaction as fodder for video installments of The Buzz.

So with that in mind, here is today's question for readers. Are you worried the dollar will get even weaker? 

Summer's here. So are higher gas prices

NEW YORK (CNNMoney.com) -- With the Memorial Day weekend and summer driving season approaching, motorists are facing a familiar trend -- surging gasoline prices.

But while pump prices have increased more than 15% over the last 23 days, and are likely to go even higher over the coming weeks, experts don't foresee anything like the record levels of 2008.

"An overall increase is not abnormal for this time of year," said Bob van der Valk, a fuel-pricing analyst with 4Refuel Inc. in Lynnwood, Wash. "It will follow a similar trend, just starting at a lower price than 2008 did."

He also cited recent refinery fires in California, Pennsylvania and Illinois, curtailing supply, as a reason for the current spike.

The national average price for a gallon of regular unleaded gasoline increased Thursday to $2.362, up 2.8 cents in a daily survey compiled for motorist group AAA. That's the 23rd consecutive increase, during which the price of gas has increased 31.4 cents, or 15.3%. All 50 states and the District of Columbia have regular unleaded gas prices of $2 and higher.

0:00/2:24Summer pump jump

But the surge in prices is somewhat relative. The average price is down 38% from the $3.807 per gallon AAA reported one year ago. And it's down $1.75, or 42.5%, from the record high of $4.114 set last July 17.

Gas prices could increase to $2.41 this weekend, said Tom Kloza, publisher of Oil Price Information Service.

"That would be an astounding 50% increase from November," he noted. "We have never seen a similar percentage increase from winter to spring."

As a resultof the comparatively lower prices, van der Valk said he expected Americans will drive more this summer when they take time off.

That wasn't the case last year, when prices at the pump were volatile. Soaring prices curtailed travel, and by July 17 gas prices had risen already 35% year-over-year.

Consumers finally began to see a reprieve in August. But late summer brought Hurricanes Gustav and Ike, and gas prices shot back up in September, reaching more than $5 per gallon in some parts of the country. On Sept. 16, gas prices started declining amid weakening demand as the global economic slowdown took hold.

Barring major hurricanes or other unforeseen events, van der Valk expects the average price to peak around $2.75 by Labor Day. California and other West Coast states could see prices spike as high as $3, he added.

Kloza doesn't see quite as big a spike.

"If you believe in $3 gas, you believe in the Dow going back to 10,000," he said. "Fundamentals are the only way prices will move higher -- and I don't see that."

Instead, Kloza predicted average national prices will peak this year around $2.50 --and "we may be really close" to that level, he said.

And then, the cycle heads downward again.

"It could go below $2 by Christmas," van der Valk said. "People will say, 'Great, the gas companies are giving it away again.'" 

Hired! Do your homework, land a job

NEW YORK (CNNMoney.com) -- Even in the current job market, getting a pink slip doesn't always lead to long-term unemployment - especially if you're willing to do the extra legwork it takes to get hired these days.

When David Hudson was laid off from his computer programming job, he sharpened his skills, did his due diligence and took full advantage of the resources available to him.

Hudson, 40, was lucky enough to get a heads up before his employer gave him the ax. He was notified in early February that his firm would have to make cuts and his last day would be March 6. He made sure to use the time wisely.

"I put myself in the place of the employer," he explained. "What would the employer be looking for, what would catch their eye?"

For starters, Hudson researched the key words and phrases that hiring managers were looking for now, like "computer programmer," instead of the more outdated "IT professional," and described himself accordingly on his résumé before posting it to Dice.com, Careerbuilder.com and Monster.com.

It worked. Hudson says he received 20 or 30 calls or hits from his résumé alone.

As for networking, Hudson reached out to his friends and former managers, joined LinkedIn and his college alumni association at UCLA to gain access to more job listings. He focused his search on programming jobs in the Los Angeles area. With a wife and two sons, Hudson hoped to make the transition smooth.

Meanwhile, he brushed up on his software skills through books and online tutorials. And prepared a loose-leaf binder with alphabetized information on the companies he applied to and recruiters he was in contact with.

0:00/00:48Targeting your next job

One of the employers that contacted him early in his search was Edmunds.com, a Web site that covers the auto industry based in Santa Monica, Calif.

Immediately, Hudson familiarized himself with the company by watching the office video tour online. He also looked up current employees on LinkedIn and researched the relevant skills and current projects they listed.

When it came time for his interview, Hudson arrived in a suit even though he knew the office was business casual. He also prepared answers and anecdotes for every conceivable question he could think of in advance.

Jesus Robles, Edmunds.com's director of release management and Hudson's hiring manager, said the Senior Release Management Engineer position had been open for 5 months and they had received many, many résumés - "way more than normal," he said.

"When I saw David, it looked like he had done his homework; he was really good at responding to our questions, his skills were current."

Hudson got the job and started March 10. Technically, he had only been unemployed for three days.

Back in business

Our career experts agree that Hudson can credit his success to his analytic approach to the job search.

"This is a buyer's market out there right now," said Dan King, principal of Career Planning and Management Inc. in Boston. "Its not always the most qualified who gets the job but the one who knows best how to market their qualifications."

Like Hudson, job seekers need to sell themselves to potential employers. That means getting up to speed on relevant skills in demand, finding contacts with the company and putting your best foot forward at the interview.

Using job boards to get information on what employers are looking for, and incorporating that in your résumé with key words and phrases, is a smart way to get started, according to Barbara Safani, president of Career Solvers in New York.

Taking courses, webinars and tutorials to bone up those sought-after skills is also key - particularly for those that have been out of the job market for an extended period of time, she said.

"That's true in all industries but particularly in technology," she added.

Further, promoting yourself as a serious candidate during in-person interviews is not just about being prepared, but also presentable.

"Showing up in a suit communicates that it was important enough to him to make the right impression," King said.

Read updates on the people previously profiled in Hired! Join the Hired! group on Facebook .

Have you found a job recently? We want to hear from you. Send us an email and attach a photo. Tell us where you got hired and how you landed the job and you could be profiled in an upcoming story on CNNMoney.com. For the CNNMoney.com Comment Policy, click here .