captioning sponsor by wpbt susie: $787 billion, that's how mu the u.s. is spending to stimulate e economy. but with unemployment neing dole digits, and the economy looking worse, morand more people are calling for aecond stimulus. >>eff: key to the economic recovery, geing americans spending but that's tough to dohen wages arstagnating or taking ts in other ways. >>usie: if you browse the web using internet exploreand a winds based p.c, you could be at risk. microsoft sayshere's a security problem with its software that could t hackers take over youromputer. >> jeff: then, putting a new face on the litick effect. american cosmeticsirms are hoping to do just that in cha, as the glol recession has women the looking for small

luxuries. >> susie: m susie gharib >> jeff: and i'm jefyastine. paul kgas is off tonight. this is nightly businesseport for moay, july 6th. "nightly business rert" is made possible by:

this program was madpossible by ctributions to your p station fromiewers like you. ank you. >> susie: good ening everyone. what shape is e economy really in? th's what investors were asking today athey evaluated commentsver the weekend from the obama administrati, that it quote "misread" the natn's economic problems. commoditprices, like oil, ld, copper and wheat tumbled on concerns e u.s. economy is notet recovering. today, the a.f.l.-c.i.o., th nati's largest labor group, renewed its call for another stimulus pacge to boost the ecomy. erika miller loo at the new debate abouttimulus. >> rorter: many economists are clamoring for more gernment stimulus to help theecovery in traction. not bob brusca. >> ihink this is jumping the gun. i think it's n only jumping the gun, but it's probably something at's unnecessary.

and if we think backo those thlling days when they put that big stimuluprogram togeth, let's remember how much they haled. t's remember all the junk th got it. and let's k ourselves, why do we think it would be a dierent this time? >> reporter: he points out tt so far, only 10% othe $787 billion stimulus package pasd in februy has hit the economy. what's more... brusca thinks the econy is not nearly as weak as most peopl believ >> i reallthink we're close to thend of recession. i thinwe are going to cap the rise in e unemployment by the end the year. i think we're gog to have job growth occurring beforthe end of the year. >> reporter: but oer economis-- like john albertine-- have a vastl different vi of the economy. >> think we are in a precarious sittion. i ink the economy is, in fact, is not onlnot getting better, but i thinit is deteriorating. we are not seeinthe banking sectorending. we are not seeing consums spending. were not seeing business investing. >> reporter: that'why he thin government help is needed

immediately,ut not same the same type ofammoth spending plan passeearlier this year. he favs eliminating social security tax for people making less than 50,000 a year. he concedes thatould boost the federal ficit by hundreds of billions of dollars. >> in the short run will add to the deficit. but in the long term, i thinit will help mitiga the deficit by getting this econy moving again. getting a recovery undway, and causing this to be aob creati recovery, not a jobless recory. >> reporter: few politicns are rey to back a second stimulus plan jt yet. and ma analysts think it will be fall-- at the earlies- before that anges. not soon enough fothose who think it's needed rit now. erika miller, nighy business report, neyork >>usie: as we mentioned oil prices feltoday on worries of a long than expected recession. in new york tradin august crude futures dropped .68 or 4% to $64.05 a barrel.

some traders say invesrs who bought into the market on expectations of an enomic recoveryre cashing out. othersay the oil market was simplyvervalued. >>eff: the weakness in oil fed into the se worries in the stock market the dow oped on the weak side, losing 74 points in thearly part of the session. the financials led the w wer; bank of america and citigroup shares finished do more than 3% vestors rotated into defensi issues like mek and procter and gamble; that helpethe dow rally back from the ws, while the nasdaq continu to struggle and stoc ended the day mixed. the dow rose 44.13 to 24.87. e nasdaq fell 9.12 to 1787.4 and the s&p 500 add two points to close at 898.72. in the bond maet, the 10 year note fell 32nds to 96-26/32nds putting the yield at 3.51% rcent.

>>epsico is boosting its investment in russia, plning to spend a blion dollars over the next three years despit russ's recession pepsi calls the area "attractive owth market." pepsico and pepsi bottling group will open a new $180 million factory inussia later this week. pepsi already opates seven plants therend has invested more than $3 billion in the market ove the pas decade. >> susie: a former cputer programmer of goman sachs has been charged with downloading nsitive computer codes. ldman found the alleged theft by monitoring emoyee ails. e firm has not commented

specifally on the case, but bo reuters and dow jones ar reporting neither goldman's client nor its buness have en hurt by the incident. >>usie: furlough. it's bome a dirty word for millions of americanorkers these da. unpaid time off is extding ny summer vacations this yea as busesses try to fight the recession. but it's alsa less obvious way ployers are cutting wages. and as darn gersh reports, that could affect the evtual shape of t economic recovery. >> reporter: todayas not a good time to rew a driver's license in micgan, or for that matt maine or connecticut. budget pressures forced ose states to furlough most their works. in all, 25tates have implemented furloughs orre considerg them. and many private sector compies have also extended "unpaid vacations." judytoermer has seen in it happen to colleagues. >> six months, four mohs, two weeks, it depends on the pern. itepends on the job and what they need them to . >> rorter: labor economists

like katryn be consider a furlough one way to cut emplee pay wiout cutting the employee. >> think the furlough has ways been around. it just been known as the layo of blue collar workers, wh it's white collar worrs, then it tendto be known as the furlough more directly. >> reporter: but becausehe government calculatewages on an hourly bas, a furloughed worker is unlikelyo show up as receiving a wage cut, en though h or her annual compensaon has clearly been immed. be says that means the impac of furloughs on mpensation is being under-reported. >> i think it does nothow up many of the wage calculatio that we ha. >> reporr: and the lculations we do have are already drping. kobe compiles the b.a. wage trenindex which is signaling smaller wage hikes in thnext simonths. in fac smaller than anything tracked by government compensati statistics in more than 30 yes. >> i think it is psible it coulgo a ways below 2%.

so i think we haven't seenhat sort of slow down wages in a ng time. >> reporter: and tre are signs employers intend tkeep a lock on wages for se time. watson wyatt found one in fi employers rveyed plan to keep salary reductionmade in this recession. d one out of four employers who have forced workers take furloughs eier don't know if they will, or don't plan to t workers entually make up their lost pay. all this has ecomists like dean baker worryinabout a downward spiral. >> so that means workers he less money in their pocket they'll obviously buying less. so that's going to reduce dema and erefore cause more firms to lay off worrs, or even in some cases, go outf business. >> reporter:he one saving grace in all this is that flation has been tame in recent months, swages for most rkers who do keep their jobs are holdg steady. at least forow. darren gersh, nightly busine report, washingt.

>> sus: a security warning tonight from microsoft. hacks are targeting a hole in its windows xp and wdows servers 2003 sysms. vulnerable computers can be infected just byisiting a web sitehat's been hacked. if notixed, cyber thieves can remote take control of victims' comters. the problemsre specific to microsoft's "vid active x ntrols" on old versions of internet explorer. microsoft is working oa software patch for the secury flaw. >> jeff:icrosoft shares were among the nasdaq most tive. we'll e them as we take a at some stoc in the news tonight.

>>usie: another headache for lifornia as it grapples with masse budget crisis. fitch today cut itratings on the state's geral obligation bonds by two notches. the ratings agency spefically cited califoia's inability to reaca budget compromise. legislators have been adlocked for more than a month over ws to close the state's $26 blion budget gap. until a deal can bworked out, fitch says its keeng the ate's ratings on watch for downgrade. >> jeff: municipal bds were once a safe haven for instor cash. but that reputatiowas tarnished by the pblems of muni bond insurs, the credit crisis and the impact of the recession. ase continue our seriesreviving the economy what ahead," munis are making a comeback. a billion dollars a week, every week has poured into them since

the start of the year, despi some ongoi worries. >> report: the murmur of voices and telephones. e sound of municipal bonds, being boht and sold. at's what brokers at south- florida-bad f.m.s. bonds are focused on. foundejimmy klotz says the phones have been rging steadily, with a lot more inrest from potential customers sinclast year's stock-market meltdown. >> they noticed a distction tween bonds and equities, ich was that bonds continued to pay interest no matter wh e market value was. and that lefan impression on people thathey won't soon forget. so we've sn a lot of new buyers gravitateo our market. reporter: that's not to say that muni bonds were untoued. late last year, priceslunged anyields soared as insurance companies and other instutions soldunis to raise cash. attracted buyers le warren buffett, who doubl the size of berkshire thaway's muni bond portfolio to $4 biion this year.

individu investors have been busy too, adding more than $ billion in municipal bonds toheir hoings since the beginning of the ar, according to recent federal reserve data. but the budget woes of california and otherovernment tities show, investors must choo wisely, says envision capital's rilyn cohen. >> we started seeing mild recovery, january, febary. we were rocking. thingseally came back. d then once the news headlin once again gotad again in california, we virtually g back to wherwe were in prices and yields in california. but thatsn't true for other states. >> reporter: cen says the reat of defaults in the muni market is real. the number of deults hit a record lt year. but she sees the biggestisks mostly for small, low-qualit issuers of govnment debt. f.m. bonds analyst jay abrams sees a similar picture. >> cities and states wil typicalltalk about cutting programs, talk about reding seice on train lines. ey'll talk about reducing th nuer of times garbage gets

picked up. but i nevehear a discussion of maybe should cut back on our debt service. they know the consequencwould be too gre. reporter: the obama administration's stimulus program is ao helping the marketby creating a new class of mis: "build america bonds." unlike traditial munis, the income from these bos is taxable. but abrams ss he's noticed indivial investors are now buying "build amica bonds" for their i.r.a. accounts. this shelters the income fm taxes, while proding some stability in portfios burned stock market losses. >> jeff: some muni waters see the tax-fr status of municipal bonds as anoer long-term posive. they say if fedel income tax rates climb, more inveors will want to buy munias a way to help keep some income tax free. >> susie: tomoow, top political econist c. fred bergsten joi us for a eview of thiweek's g-8 summit in italy. >> susie: thglobal advertising market is expected thit bottom

later this year, accorng to a key advertising recaster. "zenith optimedia" cutts global ad spendingstimates for 2009 as companiecontinued to cut vertising spending in the first half. thfirm says the second quarter saw some improment, and predictshe ad market in the u.s. and europe wi recover in 2011. >> jef the obama administrati said today it's confident general moto will emerge from nkruptcy by the end of the month yesterday, a fedal judge gave the automaker the ahead to sell its assets to a new mpany. in exchange for a $50 billio investment in m., the u.s. govement will hold a 60% stake. the government's auto ta force predicts the new.m. could sell ares by the first half of ne ar.

>> susie: night's commentator wishes china and indiaontinued economic succe. he's jtin fox, business and economics columnisat time magazi and author of "the mh of the rational market." >> only two of the wors 15 biggest economies are likelyo grow i2009: china's and india' meanwhil of course, the rest of the globe is going throug the worst downrn since the 1930s. is juxtaposition means that the obal balance of economic

power may be shiing faster than almost anyone expted. withheir billion-plus populatis, china and india now seemestined to become the worlds biggest enomies, ahead of the u.s., sooner rath than later. that's scary prospect for many amicans. the polical ramifications, and the environmental es, are hard to predict. but in pure economic tms, it wouldn't necessarily be banews at all. for one thing, country doesn't need to have theorld's biggest economy to have its most vibrant, mt prosperous economy. just becse the u.s. is no longer all-important doesn mean it ll no longer be competitive. but the really big reasoto wishhina and india continued economic successs that strong growth there offers thonly attractive patout of the worlds current economi predicament. after a generation of overextending themselves ameran consumers are taking a time outsaving more and spding less. this is exactly what they ould be doing. but u.s. csumers have for years been the global econy's dring force. to avoid a prolong downward iral, somebody has got to pi up some ofheir spending slack.

it's probably t going to be japan or western europe,hich have been t even harder by the downturn tn the u.s. that leaves china,ndia and a feother emerging market countries such as azil and indonesia, which also ar weathering t global recession well. long may their economi grow. i'm stin fox >> jeff: recping today's maet a mixed day on wall street... the dow gain 44 points. while the nasdaq los9 points. toearn more about the stories in tonht's broadcast, to watch our streaming video anto take part in our ily blog, go to "nightly business report" on pbs.org. you can alsomail us at nbr@pbs.g. >> susie: and finally toght, ll it "the lipstick effect". itas a trend during the great deprsion that saw a rise in cosmets sales, as women turned from big purchas to more affordable luxuries. withhe current economic crisis hitting consums around the globe, some ameran cosmetic firms are hong for a "new" lipstick effect china. shanon van sant reports fr shanghai. >> reporter: mei gu wos for

mary kay cosmeti. she sells beautyroducts out of her home in a anghai suburb. mei is o of a growing sales force of 350,000 independe beauty conltants in china. she joinedhe company in 1995, one year after mary y cosmetics entered the chines market. r home features a mary kay statue, d mei recalls when she met the amboyant texas entrepreneur on a tr to the >> ( translated i was not very good at english so all ian say is mary y, i love you, i love you, i love you. >> reporr: the story of mary kay's triumph over perty and ansformation into a successf entreprene has inspired thousands of chinese wom. the company expects china to overke the u.s. as mary kay's largest marketithin five yes. 2008, mary kay china saw 50 salegrowth over 2007. and deite the economic downturn, thfirst two months of 2009 saw a % increase over the year befe. mary kay china president, paul mak, says direct selling goeup in a down ecomy, and sales

ha remained strong. >> even with t downturn we are growing very fast. 2008 is still a record yea >> rorter: it's a challenge u.s. cosmecs companies are facing in chin maintaining sales growth whefewer chinese are joininthe middle class. rol shen, general manager of tee lauders china affiliate, says theconomic downturn heightens chinas impornce in ese lauder's global strategy. >> i just think it mak china even more important and re strategic, becau i think that around the world this a growth area. >> the comny has eight brands in china, and opened this development centern 2005. >> he the company tests products like mascarand foundation ecifically for the asia market. it's the company's secon largesresearch center in asi and their resear is paying off. iniscal year 2008, the

company's salein china grew 41% over 2007. estee lauder has counterin 32 chinese cities, anduring the economic downturcarol shen sa the company is shifting strategies from rther expansion to penetration. >> in the next 12 to 18 nths we are going to go dper in the cities we are alreadpresent in, ther than openinin a lot more new cities. >> reporter: t company will heighten brand awarenesshrough advertising and protions. but carol shen ss estee lauder will maintain s one brand, one world philosophy. >> we beeve our products are safe, high performance, but the same time theyave aspitional qualities and we nt to keep that aspirational quity and we don't believe at will change from market t market. >> reporter: ipiration may be wh draws women to mary kay. the company gives national ses directors a stylish, orang suit, and top sas earners like mei gu get pink cadillac. paul m says the company's message of female emwerment appeals to womenn china, and

mary kay will contue its expansion despite the ecomic downturn. i think as the china market contues to grow, the second and thirand fourth tier cities, more and morpeople will be a pa of it, so the geogphic expansion is still our focus. >> reporter: thameans more men like mei gu and pink cadillacs on the roain china. shannon n sant, nightly business report, shanghai. >> jeff:hat's nightly business report for monday, jy 6th. i'm jeffastine goodght everyone. and go night to you susie. >> susie: goodnit jeff. i'm sue gharib. we hope toee all of you again tomorr evening. "nightly business rert" is made possie by:

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