Finance and Economic

How much is it worth to suffer through a terrifying cruise ship grounding?

Italian ship operator Costa Crociere SpA on Friday put the figure at euro11,000 ($14,460) plus reimbursement for the cost of cruise tickets and extra travel expenses, seeking to cut a deal with as many passengers as possible to take the wind out of class-action lawsuits stemming from the Jan. 13 grounding of its Costa Concordia cruise liner off Tuscany.

But many passengers are refusing to accept the deal, saying they can’t yet put a figure on the costs of the trauma they endured. And lawyers are backing them up, telling passengers it’s far too soon to know how people’s lives and livelihoods might be affected by the experience.

“We’re very worried about the children,” said Claudia Urru of Cagliari, Sardinia, who was on the Concordia with her husband and two sons, aged three and 12, when it capsized.

Her elder son is seeing a psychiatrist: He won’t speak about the incident or even look at television footage of the grounding.

“He’s terrorized at night,” she told The Associated Press. “He can’t go to the bathroom alone. We’re all sleeping together, except my husband, who has gone into another room because we don’t all fit.”

As a result, she said, her family retained a lawyer because they don’t know what the real impact _ financial or otherwise _ of the trauma will be. She said her family simply isn’t able to make such decisions now.

“We are having a very, very hard time,” she said.

Costa’s offer, which covers compensation for lost baggage and psychological trauma, was the result of negotiations with several consumer groups who say they are representing 3,206 passengers from 61 countries who suffered no physical harm when the massive cruise ship hit a reef off the island of Giglio.

It’s not clear, though, how many of those passengers will take the deal, even though they’re guaranteed payment within a week of signing on.

In addition to the lump-sum indemnity, Costa, a unit of the world’s biggest cruise operator, Miami-based Carnival Corp., said it would reimburse uninjured passengers the full costs of their cruise, their return travel expenses and any medical expenses they sustained after the grounding.

Costa said the euro11,000 figure is higher than current indemnification limits provided for by law, and added that it wouldn’t deduct anything that insurance companies might kick in.

The deal does not apply to the hundreds of crew on the ship, many of whom have lost their jobs, the roughly 100 people who were injured in the chaotic evacuation, or the families who lost loved ones.

Sixteen bodies have already been recovered from the disaster and another 16 people who were on board are missing and presumed dead.

On Friday, the first known lawsuit was filed against Costa and Carnival by one of the Concordia’s crew members, Gary Lobaton of Peru. The suit, filed in Chicago federal court, accuses Carnival and Costa of negligence because of an unsafe evacuation and is seeking class-action status.

In Italy, some consumer groups have already signed on as injured parties in the criminal case against the Concordia’s captain, Francesco Schettino, who is accused of manslaughter, causing a shipwreck and abandoning the ship before all those aboard were evacuated.

Schettino, who is under house arrest, deviated from the ship’s charted course to bring the Concordia closer to Giglio, gashing the hull on a reef a few hundred meters offshore. He has said the reef wasn’t on his nautical charts.

In addition, Codacons, one of Italy’s best-known consumer groups, has teamed up with two U.S. law firms to launch a class-action lawsuit against Costa and Carnival in Miami, claiming that it expects to get anywhere from euro125,000 ($164,000) to euro1 million ($1.3 million) per passenger.

German attorney Hans Reinhardt, who currently represents 15 Germans who survived the accident and is in talks to represent families who lost loved ones, said he is advising his clients not to take the settlement.

Instead, he along with Codacons is working with one of the U.S. law firms to pursue the class-action suit in Miami.

“What they have lost is much more than euro11,000,” he said of his clients.

But Roberto Corbella, who represented Costa in the negotiations with consumer groups that led to the offer, said the deal provides passengers with quick and “generous” restitution that with all the reimbursements could amount to some euro14,000 ($18,500) per passenger, even non-paying children.

“The big advantage that they have is an immediate response, no legal expenses, and they can put this whole thing behind them,” he told AP.

Melissa Goduti, of Wallingford, Connecticut, is trying to do just that but hasn’t quite been able to. The 28-year-old, who was traveling with her mother aboard the Concordia, says she can’t sleep at night _ “nothing works, even meds” _ and has been diagnosed with post-traumatic stress disorder.

She said Costa had offered to pay for three to five counseling sessions for the PTSD, but that she’ll need more.

“That will not fix my problem,” she said in an email. “No one is going to get over this tragic event in 3-5 counseling sessions.”

Passenger Ophelie Gondelle of Marseille, France, said euro11,000 was paltry “especially considering the psychological” trauma she endured. She said she and her boyfriend are taking part in a French class-action effort underway instead.

Urru, the Sardinian mother of two, said her family was so traumatized by the grounding that when it came time to go home the day after, they flew to Sardinia from Rome rather than take the ferry because everyone was too terrified to go near a ship.

“It was impossible,” to go by boat, she said.

For the past several days, she has kept busy by preparing a box of goods to send to a resident on the island of Giglio who let her family and their friends _ a total of 10 people _ stay in a holiday apartment the night of the grounding.

Urru said she was sending seven sweaters and two blankets to make up for the things that her family took from the apartment, since they had nothing to guard against the freezing Tuscan chill. She said she was also sending the homeowner some cheese and salami and typical Sardinian sweets.

“Inside this apartment, it was so warm, so welcoming. They gave us everything that was inside the house,” Urru said. “They were truly, truly wonderful.”

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The number of Americans filing for new jobless benefits dropped to a near four-year low last week, pointing to some building up of momentum in the labor market and the economy.

But the upbeat economic outlook was dampened by other data on Thursday showing a drop in new residential construction in December after hefty gains the prior month.

Initial claims for state unemployment benefits plunged 50,000 to a seasonally adjusted 352,000, the lowest level since April 2008, the Labor Department said.

That was the largest drop since September 2005 and took claims within spitting distance of the 350,000 mark that economists say would signal strong job growth.

The four-week moving average of claims, considered to be a better measure of labor market trends, dropped 3,500 to 379,000 last week. Analysts had expected initial claims to fall only to 385,000.

“We have to see if there are some seasonality issues involved here, but on the surface this number looks to be very positive and is pretty much consistent with other data we’ve seen recently that suggest improvement in underlying fundamentals in the U.S.,” said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange.

U.S. stock futures added to gains after the data, while Treasury debt prices widened losses.

Last week’s claims data covered the survey period for January nonfarm payrolls and claims dropped by 14,000 between the December and January survey periods.

Payrolls increased 200,000 in December, with the unemployment rate dropping to a near three-year low of 8.5 percent.

The claims data builds on a rash of stronger-than-expected economic signals and could further temper expectations among some economists that the Federal Reserve could launch a fresh round of bond buying to spur the recovery.

The Fed meets next week and no policy action is expected, outside from the possibility the central bank may signal it will keep overnight rates pressed to zero for longer than had previously been expected.

But with continued signs of stress in the housing market, the U.S. central bank will stay very much in the picture.

Housing starts fell 4.1 percent to a seasonally adjusted annual rate of 657,000 units in December, the Commerce Department said in a separate report guaranteed payday loans. Economists had expected housing starts to fall to a 680,000-unit rate.

Permits for future home construction slipped 0.1 percent to an annual rate of 679,000 units last month.

“Housing continues to bounce along at the bottom, suggesting that housing is not going to recover for several years to come. If we are relying on housing to drive this recovery it seems we will continue on this tepid path for a very long time,” said Lindsey Piegza, an economist at FTN Financial in New York.

INFLATION STILL MUTED

In another report, the Labor Department said its Consumer Price Index was unchanged in December for a second straight month.

Core CPI - excluding food and energy - inched up 0.1 percent after rising up 0.2 percent in November. That was in line with economists’ expectations.

Last month, overall inflation was held back by gasoline prices, which fell 2.0 percent - declining for a third straight month. Food prices rose a modest 0.2 percent after nudging up 0.1 percent in November.

Overall consumer prices rose 3.0 percent year-on-year after increasing 3.4 percent in November. That was in line with economists’ expectations.

Core consumer prices were last month dampened by new motor vehicle costs, which fell 0.2 percent - the third straight month of declines. Prices for used cars and trucks dropped 0.9 percent, falling a fourth month in a row.

Apparel prices slipped 0.1 percent, indicating discounting by retailers to attract holiday shoppers. Apparel prices rose 0.6 percent in November.

But housing costs held up, with owners’ equivalent rent rising 0.2 percent last month, reflecting the rising demand for rental apartments as the weak housing market pushes Americans away from home ownership. This category rose 0.1 percent in November.

In the 12 months to December, core CPI increased 2.2 percent after rising by the same margin in November. This measure has rebounded from a record low of 0.6 percent in October.

The Fed would like to see core inflation at 2 percent or a little under, although the price measure its follows most closely tends to run below the core CPI.

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As with fast payday loans, this recently used to be the case, but competitive lenders and higher demand has taken this loan type to mainstay levels.

Workers at Top Form International Ltd.

CALGARY

Former Missouri Gov. Roger Wilson is out as chief executive of Missouri Employers Mutual Insurance Co., the state’s largest workers’ compensation provider, and a search is under way to replace him.

Wilson had been on administrative leave since May 13.

The departure comes as MEM, which was created in 1993 by the Missouri Legislature to provide insurance for small businesses, faces turmoil over criminal charges filed against two former members of the insurer’s board of directors.

The Columbia, Mo.-based insurer issued a statement Thursday announcing its board of directors decided to make a leadership change, and Wilson is no longer employed by MEM.

Wilson, who lives in Columbia, joined MEM’s board in January 2009 and became its acting president in June 2009. He was named CEO in January 2010.

MEM is not disclosing why Wilson was on leave or why he was removed.

“Since this is a personnel matter, we will not be making any additional comments regarding Mr. Wilson,” MEM’s statement read.

In a separate statement, Wilson said he was proud of his work at MEM. “I wish them very continued success in building on the strong record we compiled together,” Wilson’s statement read. Through a spokesman, Wilson declined to comment further.

Wilson was lieutenant governor of Missouri for two terms, beginning in 1992. He became governor upon the death of Gov. Mel Carnahan in 2000 and served for three months.

MEM’s leadership has gone through a shake-up in recent months. Douglas Morgan, a longtime MEM board member who was named chairman last fall, was indicted in April on charges that he allegedly defrauded Commercial Bank of St. Louis and owes the bank $1.5 million. Morgan also was charged with wire fraud in connection with efforts to build a casino in the Spanish Lake area while he was chairman of the St. Louis County Planning Commission. Morgan, who was removed as MEM’s chairman and resigned from the board on May 30, has pleaded not guilty to the charges.

Attorney Jim Owen of Chesterfield succeeded Morgan as board chairman. Owen is now serving as interim president and CEO of MEM.

Owen said MEM is looking for a chief executive with insurance industry leadership experience and financial expertise.

“Obviously, we want to fill this position as quickly as possible,” Owen said Thursday.

Another former MEM board member, Karen Pletz, was indicted in March on embezzlement charges. Prosecutors allege Pletz fabricated documents over several years authorizing more than $1.4 million in payments from the Kansas City University of Medicine and Biosciences, while she was the school’s president. Pletz was fired from the medical school in 2009.

Pletz, who resigned from MEM’s board in March 2010, has pleaded not guilty to the charges.

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Ladue-based McCarthy Building Cos. Inc. topped out a new 134-bed, 359,000-square-foot replacement hospital and broke ground on a 141,000-square-foot medical office building for Good Samaritan Regional Health Center in Mount Vernon, Ill.

The $140 million hospital project doubles the size of the existing facility and is about 30 percent complete. It also includes eight observation beds, and all rooms are private. The medical office building is connected to the hospital and includes a surgery center and outpatient diagnostic services instant credit report. Both buildings are scheduled to be ready for use late next year.

McCarthy and Jefferson County-based partner Shores Builders and Lipps Construction broke ground on the hospital project in April 2010. McCarthy broke ground on the medical office building March 15.

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Stocks climbed for a third straight day on Monday, the longest stretch of gains the market has had in nearly a month.

Major indexes opened mixed but moved higher in midday trading, putting the market further away from its longest weekly losing streak since 2002. Last week stocks eked out tiny gains, giving the Dow Jones industrial average and the Standard & Poor’s 500 index their first rises after a six-week slump.

The downturn, which began in early May, brought the S&P 500 close to its average level over the prior 200 days. So long as the index doesn’t sink far below that level, many technical traders see it as a sign to start buying stocks again. The S&P is now 6 percent below the 2011 high it reached on April 29.

“In the short term, stocks have been oversold, and you’re going to get some sort of bounce, whether justified or not, just for technical reasons,” said Paul Simon, chief investment officer for Tactical Allocation Group, which has $1.5 billion in assets under advisement.

The S&P 500 index is up 7 points, 0.6 percent, at 1,278. The Dow Jones industrial average is up 71 points, or 0.6 percent, to 12,076. The Nasdaq is up 16, or 0.6 percent, to 2,632.

European leaders failed over the weekend to agree on releasing more financial aid to Greece, saying the country must first agree to more budget cuts. Greece’s recent efforts to slash spending have led to street protests and political turmoil in Athens. The Greek government faces a confidence vote on Tuesday.

Prime Minister George Papandreou’s newly-reshuffled government is expected to prevail in the vote, and officials say they expect Greece to get its next installment of emergency loans in July. If Greece were to default, it could trigger losses for the banks that hold Greek bonds and more turmoil in financial markets personal loans for people with bad credit.

Investors are also looking ahead to the Federal Reserve’s two-day policy meeting, which begins Tuesday, and the next round of corporate earnings reports that begin in July, said Oliver Pursche, president of Gary Goldberg Financial Services.

“There’s a little fatigue about hearing about the same problems, and there’s no shock factor anymore,” he said. “So now you’re going to start looking ahead. Earnings season is going to start in three weeks or so.”

Analysts expect operating earnings per share for companies in the S&P 500 index rose 14 percent in the second quarter. They also expect the Fed to keep interest rates at nearly zero, a record low.

Fertilizer producer Agrium Inc. raised its forecast for second-quarter earnings after record crop prices pushed up demand for its products. Its stock rose 2.8 percent.

Nabors Industries Ltd., a driller for oil and gas, warned that its pressure pumping and international businesses have been weaker than it expected. The stock lost 2.2 percent.

PNC Financial Services Group Inc. fell 1.9 percent after saying it would buy the U.S. retail operations of Royal Bank of Canada for $3.45 billion. The deal will make PNC the fifth biggest U.S. bank with 2,870 branches. The deal follows Capital One Financial Corp.’s $9 billion purchase last week of ING’s U.S. online bank.

Greece has been at the center of Europe’s debt worries, but other countries are also facing troubles. Moody’s warned that it may cut Italy’s credit rating because of its mounting debt and sluggish growth prospects.

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SAN FRANCISCO

NEW YORK

Wholesale costs in the U.S. rose more than forecast in April, led by higher prices for food and fuel.

The 0.8 percent increase in the producer-price index compares with the 0.6 percent median estimate of economists surveyed by Bloomberg News, Labor Department figures showed today in Washington. The core measure, which excludes volatile food and energy costs, climbed 0.3 percent, more than projected.

Rising costs may lead businesses such as Whole Foods Market Inc. (WFMI) to increase prices, boosting the cost of living for American consumers. At the same time, Federal Reserve Chairman Ben S. Bernanke said he expects commodity prices to moderate.

“Inflation really shouldn’t be much of a concern beyond food and energy prices, and that’s going to be more of a near- term phenomenon,” said Sean Incremona, a senior economist at 4Cast Inc. in New York who accurately forecast the gains. “The core is very gradually moving higher, but it doesn’t look to be running away anytime soon.”

A separate report today from the Commerce Department showed that retail sales rose 0.5 percent in April, reflecting gains at service stations and grocery stores. The increase was the smallest since July and followed a 0.9 percent March gain that was more than double the previous estimate. Sales excluding automobiles and gasoline increased 0.2 percent.

Treasuries, Stocks

Stock-index futures held earlier losses after the reports. The contract on the Standard & Poor’s 500 Index fell 0.5 percent to 1,332.2 at 8:51 a.m. in New York. Treasury securities fell, sending the yield on the benchmark 10-year note up to 3.17 percent from 3.16 percent late yesterday.

Estimates for producer prices were based on forecasts from 72 economists in a Bloomberg survey. Projections ranged from gains of 0.3 percent to 1.3 percent, after a 0.7 percent rise in March.

Another Labor Department report today showed fewer Americans filed first-time claims for unemployment insurance last week. Applications for jobless benefits fell 44,000 in the week ended May 7 to 434,000.

Wholesale prices excluding volatile food and energy costs were projected to rise 0.2 percent from the prior month, the Bloomberg survey showed. The core index rose 0.3 percent in March.

Compared with a year earlier, companies paid 6.8 percent more for goods last month, the most since September 2008, after a 5.8 percent rise in March.

Core wholesale prices climbed 2.1 percent in the 12 months ended in April, the most since August 2009.

Energy Costs

Energy costs rose 2.5 percent as gasoline prices climbed 3.6 percent. Companies were charged 0.6 percent more for light motor trucks, while prices for passenger cars increased 0.5 percent.

The cost of food increased 0.3 percent, led by dairy products, after a 0.2 percent decline in March.

Producer prices are calculated based on costs on the Tuesday of the week containing the 13th of the month, which may influence month-to-month changes.

Expenses for intermediate goods rose 1.3 percent from the prior month, while prices of crude goods increased 4 percent.

“Increases in commodity prices are in turn boosting overall consumer inflation,” Bernanke said last month at a press conference in Washington. “However, measures of underlying inflation, though having increased modestly in recent months, remain subdued, and longer-term inflation expectations have remained stable.”

Preferred Gauge

The central bank’s preferred price gauge, which excludes food and fuel, rose 0.9 percent in March from a year earlier. Fed policy makers aim for long-run overall inflation of 1.7 percent to 2 percent.

Prices may continue to climb later this year, according to A.C. Gallo, president and chief operating officer of Whole Foods, the largest U.S. natural-goods grocer. Beef, dairy, corn and soy are major among commodities experiencing inflation, said the executive of the Austin, Texas-based company.

“We have been able to pass some of them through,” Gallo said in a May 4 earnings call with analysts, referring to cost increases. “There is some uncertainty based on not quite understanding what kind of inflation we’ll be seeing in our costs and what will be able to pass through.”

Producer prices are one of three monthly inflation gauges reported by the Labor Department. Prices of goods imported into the U.S. climbed 2.2 percent in April from the prior month, data showed this week. Imported food costs were up 20 percent from a year earlier, the biggest 12-month increase since records began in 1977.

Consumer prices, the broadest of the three measures, rose 0.4 percent in April and the core index had a 0.2 percent gain, according to the median forecasts of economists surveyed by Bloomberg before a Labor Department report tomorrow.

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