About a third of Southern California travelers who planned to vacation during spring break said they will spend less than last year.

The efforts to save money this year were documented in a recent survey of nearly 660 members of the Automobile Club of Southern California.

Of the 24% who said they don't plan to take a spring break vacation, more than two-thirds cited the economic recession for influencing their decision.

The survey also found that more than half of those questioned said they planned to look for discounts and specials to save money on entertainment to save money during spring travel.

More than a third of those in the survey also said they planned to drive instead of fly, and about a third said they will cut back on shopping and souvenirs, according to the survey.

Only 15% of the Auto Club members surveyed said they planned to spend more during spring break than before the recession.

-- Hugo Martin

Photo: Vacationers in Lake Havasu dive from the cliffs during spring break. Credit: Los Angeles Times

Here's your tip-o-the-hat Tuesday roundup of consumer news from around the Web:

--When the going gets tough, the tough go cruising. At least that's the word from our friends at Carnival Corp., the world's largest cruise-ship operator. The company says its quarterly earnings climbed as bookings rose 8% for the next three fiscal quarters. And higher cruise prices did nothing to deter people from signing up for holidays at sea. "I think we are surprised by the strength of pricing that has come back this year," Howard Frank, Carnival's chief operating officer, told analysts. "Whether we can sustain the booking volumes is the next question." I'd be happy to help, if only I didn't get seasick ...

--Speaking of feeling a little green at the gills, Walgreen Co., for one, wishes you'd get sick a little more. The drugstore chain says its quarterly earnings took a hit because not enough people came in search of flu vaccinations and cold remedies. Swine flu might have reached pandemic proportions, but apparently most of us simply chose to ride it out. Walgreens delivered 2 million flu shots in the quarter ending Feb. 28, compared to 5 million in the previous three-month period.

--It's Free Cone Day at Ben & Jerry's. From noon until 8 p.m., you can stop by any participating B&J's outlet and score some free premium ice cream to celebrate the company's founding about three decades ago. Whatever. In times like these, free ice cream is a swell treat. But don't dawdle. Those who have taken advantage of past Free Cone Days say it can get a little intense near the closing bell.

-- David Lazarus

Sales of previously owned homes slipped 0.6% in February from the month prior, according to the National Assn. of Realtors in Washington.

Home sales have struggled since December, when they plunged 16.7% from the prior month, the result of lackluster activity following a surge last fall as buyers scrambled to take advantage of a federal tax credit for first-time purchases.

The tax credit of up to $8,000 for first-time buyers had an initial expiration of Nov. 30, though Congress extended it through April and expanded it to include up to $6,500 for current homeowners.

That extended credit has appeared to have little to no effect on the market to date.

Lawrence Yun, chief economist for the Realtors group, said weather played a factor in February sales.

“Some closings were simply postponed by winter storms, but buyers couldn’t get out to look at homes in some areas and that should negatively impact near-term contract activity,” he said. “Although sales have been higher than year-ago levels for eight straight months and home prices are much more stable compared to the past few years, the housing recovery is fragile at the moment.”

Previously owned homes sold at a seasonally adjusted annual rate of 5.02 million units in February, down from 5.05 million in January. That was 7% higher than the 4.69-million-unit pace of February 2009.

The national median price for all homes sold was $165,100 in February, which is 1.8% below February 2009. Distressed homes accounted for 35% of sales last month.

Inventory rose 9.5% to 3.59 million homes for sale, an 8.6-month supply at the current pace. Raw unsold inventory is 5.5% below a year ago.

“The key test for a durable recovery comes in the next few months as the tax credit deadline approaches,” Yun said. “If we see a surge in home buying comparable to last fall in the months leading up to the original tax credit deadline, then enough inventory should be absorbed to ensure a broad home price stabilization.” 

-- Alejandro Lazo

Los Angeles builder KB Home reported a narrower loss in the first quarter compared with the first quarter of 2009 and predicted it would return to profitability later this year.

The company said Tuesday it had posted a net loss of $54.7 million, or 71 cents per share, for the quarter ended Feb. 28, compared with a net loss of $58.1 million, or 75 cents per share, for the first quarter of 2009.

The company’s share price fell 3.6%, or 63 cents, to $16.81 in early-morning trading. The results underscore the difficulty facing the home-building industry this year, which faces competition from steeply discounted foreclosure properties.

Although the economic crisis of early 2009 may have subsided, the market for new homes is still uncertain. Sales of new homes plunged 11.2% in January from December to their lowest pace since 1963.

Even so, Jeffrey Mezger, KB Home president and chief executive officer, said the economic picture had improved over the same period one year ago.

"The operating environment for the home-building industry is better today than last year at this time," he said. "Encouraging data in recent months suggest that a number of housing markets may be stabilizing or starting to rebound, though we do not yet see, in many respects, a sustained nationwide recover."

Orders of new homes increased 5% to 1,913 in the quarter from 1,827 orders in the first quarter of 2009. The company ended the quarter with $1.29 billion of cash and $1.82 billion worth of debt.

Revenues declined 14% in the first quarter, totaling $264 million, down from $307.4 million in the first quarter of 2009. That was the result of an 8% decrease in homes built and a 6% decline in the average selling price to $197,700.

-- Alejandro Lazo

Greek uncertainty: There is growing disagreement in Europe about how to deal with Greece's debt woes, with Germany pushing Greece to look outside Europe for help. Planet Money provides a look at how this might affect the U.S.

Private equity fight: Big investors such as CalPERS are hitting back against the terms set by the private equity firms where they invest, according to the Wall Street Journal. 

Looking at bonuses: The Obama administration's pay czar, Kenneth Feinberg, is planning to look at the bonuses handed out by every company that received assistance through the Troubled Asset Relief Program. The review would be backward-looking, and Feinberg would likely not have any ability to change the pay that was given. 

Lehman fallout: The auditing firm Ernst & Young is defending its role in the Lehman Brothers mess, which centers on an obscure accounting tactic known as Repo 105. Meanwhile, there is broadening debate about how widely other firms used Repo 105 tactics.  

-- Nathaniel Popper

The stock market on Monday failed to express alarm over the Obama administration’s $1-trillion healthcare overhaul: The Dow Jones industrials edged up to a new 17-month high.

Now bond investors, who are providing the actual financing of the government’s massive budget deficits, will get a chance to register their approval or disapproval of the healthcare tab: The Treasury on Tuesday will sell $44 billion in new two-year notes, the first of three debt sales expected to raise a total of $119 billion this week.

Almost certainly, the Treasury’s auctions will go smoothly -- because investors’ appetite for U.S. bonds remains unsated even after the record dollar volume of debt offerings over the last year.

Wall Street may expect that Uncle Sam one day will be forced to pay far higher interest rates to borrow, but for the moment investors remain happy to accept an annualized yield of just 1% or so on a two-year T-note. The yield on existing T-notes was 0.97% on Monday, heading into Tuesday’s auction.

The Treasury also will sell $42 billion in five-year notes on Wednesday and $32 billion in seven-year notes on Thursday, probably at yields close to current market levels of 2.4% and 3.1%, respectively.

In theory, a fast way to bring political pressure for deficit reduction would be for investors to balk at buying Treasury debt, driving yields up sharply.

Instead, buyers keep swarming at every Treasury auction. When the government offered $44 billion of two-year T-notes for sale last month, it got $146 billion in bids.

“The demand part of the equation has been more than offsetting” worries about too much supply, said George Goncalves, head of U.S. interest rates strategy at Nomura Securities International.

Why are investors still such eager Treasury buyers? For one thing, the Federal Reserve continues to provide an anchor for interest rates by holding its key short-term rate near zero.

Continuing fear of a European government debt crisis stemming from Greece’s woes also has enhanced the haven status of Treasuries this year for investors worldwide, including foreign central banks.

And for many individuals, a guaranteed rate of return even in low- to mid-single-digits sounds better than gambling in the stock market after the crash of 2008.

Some day, investors may well look back at these mammoth Treasury auctions and wonder, “What were we thinking?”

But for now, the bond market's only question to Uncle Sam is: How much more would you like?

-- Tom Petruno

Photo: House Democratic leaders, led by Speaker Nancy Pelosi (D-Calif.), celebrate the healthcare overhaul bill's passage on Sunday. Credit: Yuri Gripas / AFP / Getty Images

California once again has increased the size of a planned debt offering, anticipating strong investor demand despite the state’s weak credit rating.

Treasurer Bill Lockyer late Monday said the state would try to sell $2.5 billion of taxable municipal bonds this week, up from what had been expected to be a $2-billion deal.

The proceeds mostly will fund infrastructure spending that voters have approved in recent years.

 About $1.6 billion of the securities will be so-called Build America Bonds, which are partly subsidized by the U.S. Treasury.

Lockyer on March 11 sold $2.5 billion of tax-exempt muni bonds, a deal that also was boosted by $500 million thanks to yield-hungry investors.

This week’s sale of taxable bonds will be aimed mainly at institutional investors such as pension funds. Individual investors typically are big buyers of tax-exempt muni bonds but not taxable issues. Lockyer is reserving just one security for individuals in this sale: the bond maturing in 2019.

For more on this week’s sale and some new controversy over the Build America Bonds program, see this earlier post.

-- Tom Petruno

Californians already know that if they go to certain chain restaurants -- the ones that have 20 or more locations in the state -- they will be treated to a list of calorie counts for the food they're ordering. (Some salads at California Pizza Kitchen have more than 1,400 calories, a shocker that could easily send a dieter scurrying to IHOP, where chocolate chip pancakes have fewer than 700.)

Now, the calorie counts move nationwide. Under a provision in the new healthcare package, restaurant chains with more than 20 outlets in the U.S. operating under the same name will have to post calorie information on their menus. Once signed into law by President Obama, the rules will also apply to buffets, retail stores and vending machines. Bar menus will have to show the calories in alcoholic drinks.

The restaurant industry associations have signed on to the legislation, and Mike Sicilia, spokesman for the California Department of Public Health, said the more information that consumers have, the better. But is there an argument for the other side? Is this a great idea or an example of a nanny state run wild?

For more, read the article here.

-- Sharon Bernstein

Long overshadowed by HBO and Showtime, Starz has seen a sword-and-sandal melodrama become its first original series hit, entertainment business reporter Joe Flint says. Read his story here and watch the video below.

What a difference a year makes.

Ford Motor Co. shares closed up 70 cents Monday at $13.99. That's a gain of 723% from the stock's low of $1.70 on March 6, 2009.  The reasons for the gain are pretty evident. Ford has passed General Motors Corp. to become the leading auto seller in the United States. Its market share is approaching 20%. And it was the only major U.S. automaker not to go through a bankruptcy restructuring last year.

Alan Mulally, Ford's president and chief executive, was rewarded richly for driving the automaker through the recession safely. He made $17.9 million last year, according to a calculation by the Associated Press based on government filings disclosed by Ford on Monday.

Mulally took a 30% salary cut to $1.4 million in February 2009, and he got no bonus for the second year in a row. But the value of his stock options and stock awards rose 9% to more than $16 million as the market improved and Ford's shares climbed later in the year.

It's unlikely that shareholders minded the huge payout. Those who stuck with the company saw huge gains in the value of their holdings. Anyone who stuck with GM or Chrysler Group lost virtually all of their investment to the bankruptcies.

-- Jerry Hirsch

Twitter.com/LATimesJerry

Photo: Ford CEO Alan Mulally. Credit: Jeff Kowalsky / Bloomberg News

Too little is done to make L.A.'s public transportation network a convenient and practical alternative to driving, consumer columnist David Lazaurs says. He has some ideas to make things better. Check out his column and video.

Retail gasoline prices climbed about 3 cents a gallon nationally and in California over the last week, the Energy Department said Monday as oil prices appeared to be stuck between $80 and $85 a barrel.

The average price of a gallon of regular gasoline in California rose 3 cents to $3.091, according to the Energy Department’s weekly survey of filling stations. Nationally the average price rose 3.1 cents to $2.819 a gallon.

Both averages were considerably higher than they were at this time last year, when gasoline was averaging just $2.154 a gallon in California and about $1.962 a gallon nationwide.

The only good news, analysts said, was that gasoline prices were probably near their peak for the year, barring a serious disruption in supplies.

Edgar Ang, an analyst for the Oil Price Information Service in Wall, N.J., said that no price surges were expected because summer-grade gasoline would be plentiful with imports arriving next month from Canada, Europe and the Caribbean.

Light, sweet crude oil for April delivery rose 57 cents, or 0.7%, to $81.25 a barrel on the New York Mercantile Exchange. Some analysts said that oil was due for a fall as the Euro lost ground in value compared with the U.S. dollar over continuing concerns about Greek’s economic collapse and the cost of a European bailout.

“With the Greece debt situation still overhanging the market and taking away some confidence from the Euro, the dollar should gain even more strength. For oil, that means the market is open to a wider correction,” said Phil Flynn, an analyst for PFGBest Research in Chicago.

-- Ronald D. White

Photo: Fuel pump visits are getting more expensive. Credit: Associated Press

Here's your misanthropically Monday roundup of consumer news from around the Web:

--Remember all that talk about "socialized medicine" and a "government takeover of healthcare"? Well, here's all you need to know about the reform package that cleared the House on Sunday: The stocks of health insurance companies and drug makers are all higher as a result. Why? Because extending coverage to an additional 32 million people is darn good for their business, and any move to bolster our dysfunctional healthcare system is seen as a big positive by investors. Turns out the sky isn't falling after all.

--PepsiCo wants to build a better potato chip. The company says it's developing a "designer salt" for its Lay's potato chips. The new-and-improved salt, the company says, will cut sodium levels by about 25% and thus make its chips healthier -- or less unhealthy. This is, of course, a good thing. High levels of salt can send your blood pressure soaring and increase your risk of heart disease. My question is this: If healthier chips are technologically feasible, why didn't they do it sooner?

--Computer maker Dell Inc. is leaping into the fast-growing smart-phone market. The company says it will soon start offering a rival to the iPhone and BlackBerry called the Aero. It will feature Google's Android operating system and use AT&T as its carrier. Competition is a good thing, so I'm sure we all welcome each new participant in the smart-phone sweepstakes. But you get the feeling that it's getting a little crowded out there. Let's hope the emphasis for the Aero and all other players is on innovation and not just iPhone imitation.

-- David Lazarus

Healthcare calculations. Everyone is speculating about whose pocketbooks the healthcare reform legislation passed Sunday night will hurt, and whose pocketbooks it will help. There seems to be a building consensus that pharmaceutical companies will be winners while insurance companies have a rockier road ahead.

Now to financial reform. The legislative agenda shifts on Monday to financial reform. Shortly before the Senate Banking committee opens hearings on the legislation, Treasury Secretary Timothy F. Geithner is giving a speech pushing reform at the American Enterprise Institute. Over the weekend, Federal Reserve Chairman Ben Bernanke played to the reform agenda by calling banks that are "too big to fail" "insidious" and pernicious."

Women on Wall Street. New York magazine asks how Wall Street might look different if there were more women around. 

U.S. lending worries. Bloomberg notes that the United States has to pay more for loans than Warren Buffett's Berkshire Hathaway Inc. The interest on Berkshire's two-year notes is 3.5 basis points lower than the rate on a similar Treasury bond. 

-- Nathaniel Popper

California plans to proceed this week with a sale of federally subsidized bonds to finance infrastructure projects, despite fears raised about the Internal Revenue Service's ability to claw back subsidy payments.

Treasurer Bill Lockyer hopes to sell $1.325 billion of so-called Build America Bonds, which pay taxable interest that is partially subsidized by the U.S. Treasury.

Questions were raised about California’s sale after Florida’s finance director, Ben Watkins, on Thursday canceled that state’s sale of $265 million of Build America Bonds that also was slated for this week.

Watkins said he pulled the deal because of concerns that the IRS could intercept subsidy payments for the bonds if the issuer owed the federal government money for programs such as Medicare.

Tom Dresslar, a spokesman for Lockyer, said California was aware of the IRS' ability to put a claim on subsidy payments but that the issue wasn't new. States and municipalities have sold more than $80 billion of Build America Bonds since the program was launched by the Obama administration one year ago. California has been the single biggest issuer of the bonds, which fund public-works projects.

"We're not going to shut down a job-creation machine on the idea that there may be [subsidy] offset issues later on," Dresslar said. In any case, California would be responsible for making full payments to investors, whether the U.S. paid its promised subsidy or not.

Under the Build America program, state and local governments issue taxable bonds at market interest rates, and the Treasury agrees to pay 35% of their interest cost for the life of the bonds. The arrangement generally has resulted in lower net interest payments for the issuers than if they sold standard tax-exempt municipal bonds.

Because the debt is taxable, the program also has provided state and local governments with new sources of investment demand: pension funds, life insurance companies and others that generally don't buy tax-free bonds. 

Lockyer this week also plans to sell about $675 million of taxable bonds that won't be issued under the Build America program.

The state this month has been ramping up debt sales for voter-approved infrastructure projects. On March 11 Lockyer sold $2.5 billion of tax-free muni bonds. Despite the state's weak credit rating (the lowest of the 50 states) investor demand was robust, reflecting the above-average interest rates California continues to pay to borrow.

Individual investors were eager buyers of the tax-free bonds. By contrast, the state typically aims to sell its taxable bonds, including Build America issues, to institutional investors.

This week's bond sale will be marketed to investors on Wednesday. The yields on the bonds will be set on Thursday.

-- Tom Petruno

Photo: California Treasurer Bill Lockyer

 

Though signs of recovery in the housing market are emerging, thousands of people in Southern California are in danger of losing their homes to foreclosure--someone of them even face losing two or three homes, Alana Semuels reports today. 

The problem is especially visible in areas that attracted speculative buyers during the boom. In Maricopa County in Arizona, which includes Phoenix, at least 283 individuals have received a foreclosure notice on two or more properties since 2006, according to data provided by RealtyTrac Inc.

Multiple foreclosures are "probably more common in this decade than they've ever been because everyone was running to get into the real estate investing business," said Rick Sharga, a senior vice president at RealtyTrac.

Television isn't the only thing to blame for our reliance on slogans to make political campaign points -- the deceptive sound bite is at least as old as Alexander Hamilton. What's different today, especially in a state like California where virtually the only way to campaign is via TV, is that the slogans are taken as policy statements, not advertising tropes.

As my Sunday column observes, such was the case with Arnold Schwarzenegger's "blowing up the boxes" promise, and such is the case with Meg Whitman's -- OK, almost everybody's -- pledge to root out waste, fraud and abuse in the state budget. This is nothing more than a naked appeal to the reflexive prejudices of voters who at the drop of a hat will gripe not only about inefficiency at the DMV, but also about the DMV being closed on Fridays because of state employee furloughs, which are necessary only because the same voters won't listen to reasonable debate on budget and tax policy.

The column begins below.

Meg Whitman will "root out fraud" and "cut wasteful spending." Carly Fiorina wants to eliminate "the billions of dollars of waste and bloat that sits in our federal budget." 

Ho-hum. Is it campaign time again? As the crocus heralds the coming of spring, the sure sign that we're working up to a major election is that we start hearing all about cutting the "waste, fraud and abuse" in government spending. 

Waste, fraud and abuse, or as I prefer to think of it, WFA, is the WMD of domestic politics. The search for WFA is handy for rallying the campaign troops, but the results on the battlefield tend to disappoint.

"Railing against waste in government is practically as old as government," says Tim Hodson, executive director of the Center for California Studies at Cal State Sacramento. "It's a comforting slogan that doesn't stand up to any sort of rigorous analysis. That's not saying you can't be more efficient, but it's not enough to fix the budget."

Read the whole column.

-- Michael Hiltzik

 
A plan unveiled Monday by Mayor Antonio Villaraigosa proposing a $2.50-per-month rate hike as of April 1 for Los Angeles Department of Water and Power energy consumers could result in electric bills rising 8.8% to 28.4% over the next year. Although some customers will turn off the lights and hope for the best, an increasing number of Southland homeowners are insulating themselves against rising costs with green options.

“I call it my green hedge on energy inflation,” says Ray Wyman Jr., 54, of his decision to install a 4.2-kilowatt photovoltaic solar system on the roof of his 2,000-square-foot home in Orange in June 2009.
 
The business writer’s peak season electric bills with Southern California Edison topped $180 in 2009. Since going solar, Wyman’s monthly electric bill is 92 cents.

“That covers my connection fee and tax,” he said. “As long as I am in positive territory on my power bank, I don’t pay anything. But even when the panels were hobbled by the rain in December and January, our bills were still 92 cents."
 
The average cost for a 5-kilowatt system is about $32,500, or $6,500 per kilowatt, said Jonathan Bass, a spokesman for SolarCity, a national solar provider.
 
However, Bass said tax credits and state-funded residential programs can bring the net cost of a system down to $12,000. The Federal Investment Tax Credit for solar systems covers 30% of net cost. [Update noon Sunday: An earlier version of this story said the Federal Investment Tax Credit for solar systems covers 30% of net cost but is limited to $2,000.] 

And based on 2008 residential installations, DWP reports that solar incentive payments for residential customers covered 30% to 50% of installation costs.

Rather than pay upfront, Wyman got a zero-down solar lease from SolarCity. The 15-year monthly lease costs him $95 a month (some start at $40) and includes all maintenance and system removal as an option at the end of the term.
 
Solar systems have a life of 30 to 40 years. Most standard panel manufacturer's warranties are good for 25 years. However, experts say it is important to consider your home’s orientation. South-facing roofs with minimal or no shade, for example, are ideal for solar production.

Bass said customers typically save 40% to 80% on their monthly electricity bills and average 15% net savings on their total energy costs, “meaning that their lease payment and electricity bill with solar is 15% less than their electricity bill was before they installed solar. So they are cash-flow positive from Day One,” he said. . . .

The key prosecution witness in the stock-options backdating trial of former KB Home chief Bruce Karatz completed his testimony Friday afternoon after four days on the witness stand.

Gary Ray, who served as KB's vice president of human resources from 1996 to 2006, told jurors in federal court in Los Angeles that he and Karatz carefully selected grant dates when the stock price was low so the options would be more valuable to themselves and employees.

In some instances, the executives waited months after the company's compensation committee had approved options before selecting a grant date, Ray said. Then they would look back and choose a date when the price was at a low point, he said.

"We never sat down and explained to the committee what we were doing and how we were doing it," Ray said.

Karatz, who served two decades as chief of the Los Angeles-based home builder, faces 20 charges of fraud and making false statements. He has pleaded not guilty and denied any wrongdoing.

Ray, 52, pleaded guilty last year to conspiracy to obstruct justice and agreed to testify against Karatz as part of a plea agreement. Prosecutors have said they will recommend leniency in sentencing in exchange for Ray's testimony. He faces up to five years in prison at his July 12 sentencing.

During more than seven hours of cross-examination, Ray acknowledged that he told numerous lies during his initial meetings with the FBI and federal prosecutors in 2008. Defense attorney John Keker spent much of his cross-examination pinpointing those false statements -- eventually drawing a rebuke from U.S. District Judge Otis D. Wright II.

"I think we've established the man's a liar," the judge said.

Ray explained that he initially denied wrongdoing during the government interviews because he "was not prepared to live up to and admit the mistakes I had made."

Testimony is scheduled to resume Tuesday.

-- Stuart Pfeifer

Photo: Former KB Home Chief Bruce Karatz. Credit: Nick Ut / Associated Press

The gap between the amount of money Wall Street executives think they should make and what ordinary citizens think such tycoons should earn "is a chasm," Kenneth Feinberg, President Obama's executive-pay czar, told business journalists in Phoenix on Friday. "It's like Pluto and Earth."

In his remarks to the Society of American Business Editors and Writers, Feinberg talked about his negotiations over top pay with the large banks and automobile companies that accepted federal bailout money.

He was careful not to offer his views on what executives should earn at companies that did not accept federal money. 

But Feinberg said he thinks bonuses for top officials should be in the form of stock that can be redeemed only over a set period of time, rather than immediately.

That way, he said, CEOs and others at the top would have an incentive to help their companies thrive over the long term.

-- Sharon Bernstein