The other Washington gridlock: Traffic jams

Drivers in Washington D.C. survey a traffic jam. The city had the worst traffic in the nation according to rankings released Tuesday.

NEW YORK (CNNMoney)

The capital beats out Los Angeles, San Francisco and New York for the dubious title of most congested metropolitan area, according to an annual survey of traffic problems by Texas A&M's Transportation Institute.

The study found that drivers trying to get around the nation's capital spend an extra 67 hours caught in traffic during the course of a year. The congestion increased their commuting time by the equivalent of more than eight work days, and cost the average Washington-area driver about $1,400 a year.

The average time caught in traffic for residents of the nation's largest metropolitan areas nationwide is 52 hours a week, or an extra hour a week, with an average out-of-pocket cost of $1,128.

Conditions are better in the smaller metropolitan areas, but even when averaging in all 498 areas tracked in the study, drivers suffer through an average delay of 38 hours a year and spend $818 a year due to that congestion. That totals up to 5.5 billion hours of delay and $121.2 billion in total costs to all drivers.

The congestion isn't just costing drivers time when traffic is bad. They also are also being forced to allow for more time to make their trips, especially when driving to high-priority events, such as an airline departure, medical appointments, important social commitments or, in the case of truckers, just-in-time shipments.

Related: You're getting stuck in traffic less

"As bad as traffic jams are, it's even more frustrating that you can't depend on traffic jams being consistent from day to day," said Bill Eisele, an institute researcher and report co-author. "This unreliable travel is costly for commuters and truck drivers moving goods."

The report says that if drivers in a major metropolitan area want to be relatively certain they won't be late, they have to leave four times as much time to make a trip than it would take during a period of light traffic. That means allowing an hour to make a trip that would take only 15 minutes if there was no congestion.

In the Washington metro area, it's worse -- drivers must leave nearly an hour and a half of travel time if they want to make sure they can arrive on time for what would be a 15 minute trip without traffic.

Related: Insurers charge (some) drivers higher rates

Traffic congestion has improved somewhat since 2005, a couple of years before the recession, when more people where working and thus clogging the roads during rush hours. But congestion is a little worse than it was in 2000 and causes more than twice the delays that were experienced on average in the major markets in 1982.

The study released Tuesday was based on 2011 data, the most recent available to researchers.

First Published: February 5, 2013: 2:08 PM ET

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CBO: Spending cuts and tax increases slowing growth

NEW YORK (CNNMoney)

But the economy is likely to pick up steam in 2014, pushing unemployment down and setting the stage for a rise in interest rates and inflation.

Those are key takeaways from the annual budget and economic outlook released Tuesday by the Congressional Budget Office, the nonpartisan scorekeeper for lawmakers.

Deficits: The CBO estimates that this year's deficit will fall to $845 billion, or 5.3% of the size of the economy, in part because of the so-called sequester -- the blunt, automatic spending cuts across defense and nondefense programs set to take effect March 1.

If that happens, 2013 would mark the first time since 2008 that the annual deficit comes in below $1 trillion.

And the downward trend would continue for the next two years, when the deficit in 2015 falls to 2.4% of GDP.

But then deficits would start to go up again. The CBO lays out the reasons -- "an aging population, rising health care costs, an expansion of federal subsidies for health insurance and growing interest payments on the federal debt."

CNN: Obama calls for short-term budget

Debt: For the decade, the CBO expects the country to add $7 trillion in debt. By 2023, the debt held by the public would rise to 77% of GDP up from 76% today. That's the largest percentage since 1950 and almost double the 39% average over the past 40 years.

Debt could rise to 87% of GDP by 2023 if Congress makes legislative changes that undo planned spending cuts or tax increases.

"We have a large budget imbalance. Small changes will not be sufficient to put the budget on a sustainable path," CBO director Douglas Elmendorf said Tuesday.

At the same time, Elmendorf cautioned that trying to reach a balanced budget within the next 10 years would require very large changes to significant parts of the government, even if spending cuts were mixed with revenue increases.

Related: Biggest budget busters

Economy: The CBO estimates that the U.S. economy will grow at a slow, inflation-adjusted rate of 1.4% this year.

Without this year's fiscal tightening (spending cuts and tax increases combined) growth could have been 1.5 percentage points higher. Among the policies slowing growth are the sequester, the expiration of the payroll tax cut and the higher rates on wealthy households.

Unemployment: The CBO expects the unemployment rate will fall from 7.9% this year to 5.3% by 2023. But it won't dip below 7.5% until 2015.

"If that happens, 2014 would be the sixth consecutive year with unemployment exceeding 7.5% -- the longest such period in the past 70 years," the CBO report said.

Interest costs: The rate on the 10-year Treasury is projected to rise from 1.9% currently to 5.2% by the end of the decade. The expected increase in rates will mean the government will pay more in interest on its debt.

Annual interest payments will more than double over the decade, jumping from 1.4% of GDP to 3.3% by 2023, when interest payments will total $857 billion for that year alone.

--CNN's Lisa Desjardins contributed to this report.

First Published: February 5, 2013: 3:37 PM ET

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Earnings with Friends: Zynga posts surprise profit

NEW YORK (CNNMoney)

Zynga (ZNGA) earned 1 cent per share, or $6.9 million, on sales of $311 million last quarter. Analysts polled by Thomson Reuters expected a loss of 3 cents per share and $212 million in revenue.

Shares jumped 5% in after-hours trading, as the numbers weren't as bad as analysts feared. But that doesn't mean its all good news for Zynga.

The tally of daily active users rose just 3% over the year, to 56 million in the fourth quarter of 2012. That means Zynga added only 2 million new daily active users over the past 12 months.

Perhaps more worrisome: The number of daily active users fell 6% from the third quarter to the fourth.

On the positive side, five of the top 10 Facebook (FB) games at the end of last year were Zynga titles: existing games Words With Friends and Zynga Poker, as well as three new games: Bubble Safari, ChefVille and FarmVille 2. Zynga cited tracking firm AppData for the Facebook stats.

Another bright spot is mobile, where Zynga said it averages 72 million users per month. According to comScore data that Zynga cited, mobile gamers spent more time on Zynga titles in December than on the next five game companies combined.

On a post-earnings conference call with analysts, Zynga executives said the company now has more teams devoted to mobile than to Web games.

Zynga launched six new titles in the fourth quarter, including two mobile versions of games that were previously Web-only.

But Zynga is also shuttering three games: CityVille 2, The Friend Game and Party Place. The company said on the conference call with analysts that it will "take a more disciplined approach in managing our game portfolio."

That's not much of a surprise: Since October, Zynga has shuttered about 15 games including FishVille, Treasure Isle, PetVille and Mafia Wars 2. Zynga seems to be admitting its slate of titles was bloated, and it's hoping a streamlined approach will boost its bottom line.

Beyond Zynga's standard mobile and Web games, some investors have expressed hopes that Zynga's steps into legal gambling could pay off. In December, Zynga filed an application for a gaming license in Nevada. Zynga had previously announced a partnership with bwin.party, a British gaming company that specializes in online sports betting, poker and bingo.

Related story: How King.com crushed Zynga

But the payoff on Zynga's new approaches won't be quick. For the first quarter of 2013, Zynga expects a net loss of about 4 cents per share on sales of about $260 million.

New Zynga COO David Ko said in the release that "2013 will be a pivotal transition year," alluding to the fact that 2012 was extremely tough for the company.

The last few months for Zynga were particularly troublesome. In early October, Zynga shares plunged after the company scaled back its 2012 outlook and warned it would take a massive writedown on its purchase of "Draw Something" maker OMGPOP.

Later that month, layoffs hit: Zynga cut 5% of its employees, closed its Boston outpost and proposed closures of its Japan and U.K. offices. That's also when Zynga announced it would be shuttering about a dozen games.

Then came the executive shakeup. In November Zynga CFO Dave Wehner quit and joined Facebook. Later that month, Facebook (FB) and Zynga significantly revised the terms of a five-year deal they signed in late 2010. The new arrangement relaxes restrictions on both companies.

This year kicked off with another spot of bad news: Zynga's chief game designer, Brian Reynolds, resigned in January.

First Published: February 5, 2013: 4:39 PM ET

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Gas prices take bigger bite of Americans' income

Gasoline took a bigger bite out of Americans' incomes, as gas prices soared to record levels in 2012.

NEW YORK (CNNMoney)

The Energy Department said on Monday that U.S. households spent an average of $2,912 on gasoline last year, the highest level in four years.

The percentage reached similar levels in 2008, when a red-hot global economy and panic over dwindling supplies sent gas prices through the roof. But before then, the percentage hadn't reached these levels in nearly three decades.

Related: Check gas prices in your state

Another report put out by the Oil Price Information Service showed that Americans spent a record $479 billion in gasoline last year, up from $471 billion a year earlier. This is more than two and a half times what the nation's annual fuel bill was ten years earlier.

Even though Americans are spending more money -- and a bigger chunk of their budgets -- on fuel, overall, the Energy Department said that Americans are actually buying less gasoline than they have in the past. That's because Americans are heading to the pumps less often as cars become more fuel efficient.

Related: Cheapest cars to fuel

But gas prices have been soaring, and that's why the percentage of Americans' incomes devoted to gasoline has increased. The average price of gasoline rose to its highest-ever level in 2012, as hurricanes, refinery outages and tensions in the Middle East put pressure on supply, according to AAA.

The nationwide average price for a gallon of regular gas hit $3.60 last year, up 9 cents from the previous record set in 2011.

First Published: February 4, 2013: 3:37 PM ET

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Standard & Poor's says it will face Justice Dept suit over subprime ratings

Shares of S&P parent McGraw-Hill fell sharply on news of the looming suit.

NEW YORK (CNNMoney)

The ratings agency said in a statement that the Department of Justice "has informed the company that it intends to file a civil lawsuit against S&P focusing on its ratings in 2007 of certain U.S. collateralized debt obligations," investments based on pools of mortgages.

S&P called the potential lawsuit "entirely without factual or legal merit." The firm said that it "deeply regrets" the fact that its ratings "failed to fully anticipate the rapidly deteriorating conditions in the U.S. mortgage market," but that it relied on the same data as U.S. government officials and other analysts who failed to predict the housing bust.

News of the looming lawsuit was reported earlier by The Wall Street Journal. A spokeswoman for the Department of Justice declined to comment.

S&P is a division of McGraw-Hill (MHP, Fortune 500), shares of which dropped sharply on the news, closing down 13.8%. Shares of fellow ratings agency Moody's (MCO) fell 10.7%.

A Moody's spokesman declined to comment. A spokesman for Fitch, the other of the big three ratings agencies, said the firm has "no reason to believe Fitch is a target of any such action."

Related: U.S. credit ratings test is yet to come

Analysts have long pointed to ratings agencies as key culprits in the financial crisis.

Wall Street firms and other investors rely on the agencies to analyze risk and give debt a "grade" that reflects the borrower's ability to pay the underlying loans. The safest investments are rated "AAA."

Some investors, including pension funds and insurance companies, operate under guidelines that require them to hold a certain percentage of highly rated securities in their portfolios.

In the years preceding the meltdown in 2008, large numbers of mortgage-backed securities received AAA ratings, only to fail as the housing market collapsed. Critics say that because the major ratings agencies are paid by banks and other issuers of securities rather than investors, they succumbed to a conflict of interest in giving their seals of approval to dubious investments.

"Credit rating agencies allowed Wall Street to impact their analysis, their independence and their reputation for reliability," U.S. Senator Carl Levin said in a 2010 hearing. "And they did it for the money."

A 2011 Senate report on the financial crisis said the agencies "weakened their standards as each competed to provide the most favorable rating to win business and greater market share."

First Published: February 4, 2013: 3:47 PM ET

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Texas to California businesses: Move here!

Texas Governor Rick Perry, right, wants to lure businesses from California, after its governor, Jerry Brown, pushed through a tax hike.

NEW YORK (CNNMoney)

Perry has launched a high-profile battle for California companies, running radio ads in California touting the Lone Star State's low taxes and favorable business climate. The ads will be heard in San Francisco, Sacramento, Los Angeles, San Diego and the Inland Empire area east of Los Angeles.

"Building a business is tough, but I hear building a business in California is next to impossible. This is Texas Gov. Rick Perry, and I have a message for California businesses: Come check out Texas," starts the 30-second spot.

Perry notes that his state has won the Best State for Business title from Chief Executive magazine for eight years running. He noted that the cost of doing business in California is 6.3% above the national average and Texas' is 4.6% below it.

This is not the first time Texas has looked to raid California for businesses. The governor has made several scouting trips and has written letters to California companies in the past. And, according to the governor's office, nearly three dozen California companies have relocated or expanded in Texas during California Gov. Jerry Brown's term.

Texas isn't the only one knocking on California companies' doors. Several states have courted Golden State businesses in recent years, particularly during California's budget turmoil.

But Perry sees a new opening with California's recent tax hikes, which he says "increases California's already excessive income and sales tax." He pointed out that Texas has no state income tax and a low business tax cut.

Related: The truth behind Mickelson's taxes

Perry even reminded golfer Phil Mickelson, who recently complained about taxes in California, about that fact. "Hey Phil....Texas is home to liberty and low taxes...we would love to have you as well !!" Perry tweeted last month.

A spokesman for Brown did not immediately return a request for comment.

Are you looking to leave California because of the recent tax increase? If so, email tami.luhby@turner.com. You could be profiled in an upcoming story.

First Published: February 4, 2013: 4:02 PM ET

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Dutch bank rescue shows Europe's problems continue

Dutch finance minister Jeroen Dijsselbloem said the rescue will increase government debt

LONDON (CNNMoney)

The Dutch government was forced to rescue SNS REALL to protect savers' deposits after the banking and insurance group racked up huge losses on real estate lending. Attempts to find a private buyer or investor failed.

"I therefore had to use the instrument of last resort, which is nationalization," said Finance Minister Jeroen Dijsselbloem, in a statement. "Nationalization would safeguard financial stability and prevent serious damage to the economy."

The government's intervention comes a day after two of Europe's biggest banks -- Santander and Deutsche Bank -- announced huge writedowns in a bid to reduce their exposure to the region's economic woes and move on from past mistakes.

More banks cleaned house Friday. Spain's second biggest lender BBVA reported a 44% drop in earnings in 2012 due to hefty real estate provisions and rival CaixaBank's earnings fell 78%. France's Credit Agricole announced a €2.7 billion impairment charge, including €852 million related to retail banking in Italy.

Related: Jury still out on eurozone - Draghi

While the investments of shareholders and subordinated creditors at SNS REALL will be wiped out, the rescue will still cost the Dutch state about €3.7 billion in capital injections and writedowns, pushing its budget deficit further above EU targets.

That will embarrass Dijsselbloem as he takes over as chairman of the group of finance ministers charged with policing fiscal policy among the 17 eurozone nations, and anger taxpayers who paid for a €40-billion bailout of the Dutch financial sector in 2008.

"I can well understand the aversion many people will feel because once again, a large sum of taxpayers' money is required," Dijsselbloem said. "This is why I want the private sector to contribute as much as possible."

A one-time levy of €1 billion will be imposed on Dutch banks in 2014 to help pay for the rescue.

Dijsselbloem said the EU needed to legislate to ensure that banks could be broken up more easily and that the cost of future rescues be borne largely by the private sector.

Related: Scandal at world's oldest bank

A working group led by European Central Bank governing council member Erkki Liikanen last October recommended separating investment and retail banking activities to protect taxpayers and savers.

But France has since countered with its own proposal that would stop short of forcing legal separation. So far, the EU has made only small steps toward a banking union -- agreement on a eurozone mechanism for winding up failing banks and protecting depositors is probably years away.

The EU, U.S. and U.K. are all discussing different ways to regulate banks to avoid costly bailouts in the future, leading some industry figures to warn that policymakers are creating unnecessary complexity, and potentially risk, with a confused approach.

UBS Chairman Axel Weber said last week the industry needed a global standard on the issue of separating customer deposits from trading activities.

First Published: February 1, 2013: 2:17 PM ET

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Stocks: Will Dow stay above 14,000?

Click the chart for more stock market data.

NEW YORK (CNNMoney)

But in the coming week, only a handful of economic reports and corporate earnings will trickle through to guide them.

U.S. manufacturing will be in focus, with factory orders, productivity, unit labor costs, ISM services and wholesale inventories on tap. Overall, economists surveyed by Briefing.com are expecting disappointing numbers.

The sector has stalled over the last year, vacillating between barely expanding and contracting. That's because demand has pulled back in recent months on slow economic growth overseas and worries over the federal budget mess in Washington.

The slowdown hurt manufacturing jobs, the latest report from the Bureau of Labor Statistics showed.

After generating nearly a quarter million jobs since the recession ended, the industry has seen zero job growth since the middle of last year.

Worldwide manufacturing has also shown a mixed picture in recent months. Activity in China, which is considered a barometer for global growth since it is the world's biggest exporter, revealed positive signs of a pick up last month, but reports hinted at continued weakness in export markets.

Investors will also get more data on how Americans are faring with their finances this week, with a consumer credit report out on Thursday.

Related: Fear & Greed Index

In corporate news, several key tech companies will report earnings this week, including Sony (SNE), Sprint Nextel (S, Fortune 500) and AOL (AOL).

Yum! Brands (YUM, Fortune 500), Time Warner (TWC, Fortune 500)and News Corp (NWS) are also on tap.

Despite the Dow's big gains on Friday, stocks ended last week only modestly higher. The Dow gained 0.8%, the S&P 500 increased 0.6% and the Nasdaq climbed 0.9%.

First Published: February 3, 2013: 12:07 PM ET

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Super Bowl showdown: SodaStream v. Pepsi and Coke

SodaStream says it was rejected from airing an ad during the Super Bowl that called out big soda companies, claiming that 500 million plastic bottles would be used during game time alone.

NEW YORK (CNNMoney)

Apparently, they never get to hit the air.

SodaStream (SODA) learned that the hard way. The home soda maker had prepared to air an ad during the NFL showdown that took on soft drink giants Coca-Cola (CCE, Fortune 500) and Pepsi (PEP, Fortune 500). In the ad, SodaStream touts its reusable bottle by showing Pepsi and Coke deliverymen in such a rush to get into the supermarket that dozens of soda bottles pop and create a sticky mess. The ad then cuts to a man using a SodaStream, with a voice over saying, "With SodaStream, we could have saved 500 million bottles on game day alone."

But the ad won't be aired. SodaStream claims television network CBS (CBS, Fortune 500) rejected it for directly attacking two big beverage companies who are also its big advertisers. Pepsico is sponsoring this year's halftime show and has said it will air ads during commercial breaks, as has Coke.

CBS did not respond to requests to comment on the story. Pepsi and Coke also did not return requests.

"Our ad confronts the beverage industry and its arguably outdated business model," SodaStream's CEO Daniel Birnbaum said in a statement. "One day we will look back on plastic soda bottles the way we now view cigarettes."

Birnbaum said plastic bottles cause untold damage to the environment, and the ad showed that there is a more eco-friendly alternative.

Advertisers are paying big bucks for Super Bowl commercials this year. The price of a 30-second spot hit a record high of at least $4 million, blowing past last year's record of $3.5 million.

Related: Why football is still a money machine

Each year, many viewers tune in just to see the spots rather than the big game. Some ads create enough noise to be replayed and rehashed for days.

In years past, other rejected ads from Bud Light to PETA, have turned their airtime loss into publicity by posting the would-be commercials online for millions to see.

SodaStream doesn't want to miss out either.

Though its commercial won't air on TV, the company posted it online under the headline, "Watch the SodaStream commercial they wouldn't let you see during the big game." The ad has gotten more than 2 million views on YouTube.

"We understand that the...ad may be uncomfortable to the big soda companies, but we are proud of the ad and the truth that it brings to the American consumer," Ilan Nacasch, SodaStream's chief marketing officer, said.

First Published: February 3, 2013: 4:40 PM ET

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Dutch bank rescue shows Europe's problems continue

Dutch finance minister Jeroen Dijsselbloem said the rescue will increase government debt

LONDON (CNNMoney)

The Dutch government was forced to rescue SNS REALL to protect savers' deposits after the banking and insurance group racked up huge losses on real estate lending. Attempts to find a private buyer or investor failed.

"I therefore had to use the instrument of last resort, which is nationalization," said Finance Minister Jeroen Dijsselbloem, in a statement. "Nationalization would safeguard financial stability and prevent serious damage to the economy."

The government's intervention comes a day after two of Europe's biggest banks -- Santander and Deutsche Bank -- announced huge writedowns in a bid to reduce their exposure to the region's economic woes and move on from past mistakes.

More banks cleaned house Friday. Spain's second biggest lender BBVA reported a 44% drop in earnings in 2012 due to hefty real estate provisions and rival CaixaBank's earnings fell 78%. France's Credit Agricole announced a €2.7 billion impairment charge, including €852 million related to retail banking in Italy.

Related: Jury still out on eurozone - Draghi

While the investments of shareholders and subordinated creditors at SNS REALL will be wiped out, the rescue will still cost the Dutch state about €3.7 billion in capital injections and writedowns, pushing its budget deficit further above EU targets.

That will embarrass Dijsselbloem as he takes over as chairman of the group of finance ministers charged with policing fiscal policy among the 17 eurozone nations, and anger taxpayers who paid for a €40-billion bailout of the Dutch financial sector in 2008.

"I can well understand the aversion many people will feel because once again, a large sum of taxpayers' money is required," Dijsselbloem said. "This is why I want the private sector to contribute as much as possible."

A one-time levy of €1 billion will be imposed on Dutch banks in 2014 to help pay for the rescue.

Dijsselbloem said the EU needed to legislate to ensure that banks could be broken up more easily and that the cost of future rescues be borne largely by the private sector.

Related: Scandal at world's oldest bank

A working group led by European Central Bank governing council member Erkki Liikanen last October recommended separating investment and retail banking activities to protect taxpayers and savers.

But France has since countered with its own proposal that would stop short of forcing legal separation. So far, the EU has made only small steps toward a banking union -- agreement on a eurozone mechanism for winding up failing banks and protecting depositors is probably years away.

The EU, U.S. and U.K. are all discussing different ways to regulate banks to avoid costly bailouts in the future, leading some industry figures to warn that policymakers are creating unnecessary complexity, and potentially risk, with a confused approach.

UBS Chairman Axel Weber said last week the industry needed a global standard on the issue of separating customer deposits from trading activities.

First Published: February 1, 2013: 2:17 PM ET

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