SAN FRANCISCO (AP) — Google Inc.’s methods for recommending websites are being reviewed by Texas’ attorney general in an investigation spurred by complaints that the company has abused its power as the Internet’s dominant search engine.

The antitrust inquiry disclosed by Google late Friday is just the latest sign of the intensifying scrutiny facing the company as its enters its adolescence. Since its inception in a Silicon Valley garage 12 years ago, Google has gone from a quirky startup to one of the world’s most influential businesses with annual revenue approaching $30 billion.

A spokesman for Texas Attorney General Greg Abbott confirmed the investigation, but declined further comment.

The review appears to be focused on whether Google is manipulating its search results to stifle competition.

The pecking order of those results can make or break websites because Google’s search engine processes about two-thirds of the search requests in the U.S. and handles even more volume in some parts of the world.

That dominance means a website ranking high on the first page of Google’s results will likely attract more traffic and generate more revenue, either from ads or merchandise sales.

On the flip side, being buried in the back pages of the results, or even at the bottom of the first page, can be financially devastating and, in extreme cases, has been blamed for ruining some Internet companies.

European regulators already have been investigating complaints alleging that Google has been favoring its own services in its results instead of rival websites.

Several lawsuits filed in the U.S. also have alleged Google’s search formula is biased. Google believes Abbott is the first state attorney general to open an antitrust review into the issue.

“We look forward to answering (Abbott’s) questions because we’re confident that Google operates in the best interests of our users,” Don Harrison, Google’s deputy general counsel, wrote in a Friday blog post.

Harrison said that Abbott has asked Google for information about several companies, including: Foundem, an online shopping comparison site in Britain; SourceTool, which runs an e-commerce site catering to businesses; and MyTriggers, another shopping comparison site.

All of those companies offer features that Google includes in its search engine or in other parts of its website. Foundem, SourceTool and MyTriggers have previously filed lawsuits or regulatory complaints against Google.

“Given that not every website can be at the top of the results, or even appear on the first page of our results, it’s unsurprising that some less relevant, lower quality websites will be unhappy with their ranking,” Harrison wrote.

Google says its closely guarded search formula strives to recommend websites that are most likely to satisfy the needs of each user’s request. If it didn’t keep its users happy, Google argues that people would become disgruntled and switch to other search engines offered by Yahoo Inc., Microsoft Corp. and IAC/InterActiveCorp’s Ask.com.

Regulators and lawmakers in the U.S. and Europe also have been looking into Google’s privacy practices and its acquisitions as the company tries to fortify its power.

WASHINGTON (AP) — Unemployment is stuck at high levels even though some companies are hiring. The problem, government data show, is that too few jobs are being created for the growing number of people looking for work.

Private employers added a net total of 67,000 jobs in August. But the unemployment rate rose to 9.6 percent from 9.5 percent, the Labor Department said Friday, because the number of job-seekers overwhelmed the number of openings.

The unemployment rate has exceeded 9 percent for 16 straight months and is all but sure to extend that streak into next year. If it does, it would break a record of 19 straight months above 9 percent, set from 1982-83, after a severe recession.

Nearly 15 million people are unemployed this Labor Day weekend, and the sluggish economy is putting pressure on President Barack Obama and the Democrats ahead of the November midterm elections. Obama said Friday that he intends to unveil a new package of proposals that will likely include tax cuts and spending to spark job growth.

On top of the jobs that companies created last month, both July and June’s private-sector job figures were upwardly revised. Overall, the economy lost 54,000 jobs last month as 114,000 temporary census positions ended.

The Labor Department report hardly suggests the economy is out of danger, but the figures were not as bleak as some economists had predicted.

Wall Street embraced the news, and stocks surged within seconds of its release. The Dow Jones industrial average closed up 127 points.

“When the bar is low, it isn’t hard to exceed it,” said Diane Swonk, an economist at Mesirow Financial. The report “alleviates the sense that the economy is falling off a cliff.”

Even with August’s gains, job growth has weakened in recent months and isn’t enough to keep the unemployment rate from rising. Private employers have added only 78,000 jobs per month, on average, in the past three months. It would take at least 200,000 jobs a month to keep up with population growth and rehire millions of unemployed Americans.

Many economists don’t expect that pace of job growth until next year. As a result, the unemployment rate could exceed 9 percent for many more months.

The November midterm elections are already shaping up to be a referendum on Democrats’ handling of the economy. Many expect the majority party to lose many seats and possibly control of the House and Senate.

Obama called the latest employment figures positive news but acknowledged that much more job creation is needed to help restore the 8.4 million jobs lost during the downturn.

“It reflects the steps we’ve already taken to break the back of this recession,” Obama said. “But it’s not nearly good enough.”

The president urged Congress to extend the Bush administration’s tax cuts only for middle-class Americans and to pass a bill that would increase lending and reduce taxes for small businesses.

Republicans in Congress want to extend the tax cuts for all Americans, including the wealthy. That’s a position more rank-and-file Democrats are beginning to embrace because the economy has not improved fast enough.

There were 14.9 million unemployed Americans last month, the department said. But including people working part-time who would prefer full-time work and those who have given up looking for jobs, 26.2 million people were “underemployed.” The underemployment rate rose from 16.5 percent in July to 16.7 percent in August.

Persistently high unemployment and a growing economy are not necessarily incompatible, economists said.

Average hourly earnings rose last month. That extra income is likely to help sustain the recovery, said Neil Dutta, an economist at Bank of America-Merrill Lynch. But it could also produce a “two-tiered” work force, where millions are still jobless but those working see their incomes rise, he said.

Still, Sadie Simpson, a 30-year old marketing manager in San Francisco, did notice an uptick in job postings this summer. She was laid off in January from her full-time job as a real estate marketing manager in Washington D.C.

She couldn’t find similar jobs, so moved to the West Coast to search for better opportunities. Her sister, who has worked in the wine industry for 20 years, helped Simpson land an interview, and she started her job this month as marketing manager, promoting pinot grigio rather than luxury condos.

“The only way to get a job these days, it’s who you know and how you can get in the door,” she said.

After dropping for several months, the work force grew by more than a half-million people, the Labor Department said. Those out of work are not counted among the unemployed unless they are searching for work.

The fact that more out-of-work people resumed their job searches in August reflected desperation more than it did confidence in the job market, economists said. Many of those who entered the labor force last month were 45 and older, said Sophia Koropeckyj, an economist Moody’s Analytics.

They are likely resuming their job searches as their savings are depleted, she said.

When companies have open positions to fill, the demand is high. Kia Motor Manufacturing had about 600 open jobs earlier this year as it moved production of a sport utility vehicle to Georgia from a Hyundai plant in Alabama. The company got more than 44,000 applications by May, when the hiring window closed, said company spokeswoman Corinne Hodges.

But many companies are nervous about expanding as long as the economy looks so weak.

Carpet Barn Carpet One Floor & Home, which sells carpet, wood floors and window treatments, expanded with a new location in Hyannis, Mass., last month but is keeping a lid on hiring and expenses.

The 39-year-old, family-run business is bringing back two workers it laid off last year and has hired one part-time employee to help out. But it’s holding off on adding more workers until the economy picks up.

“The key is to keep your operating expenses low,” said Linda Alferes Martinho, who owns the business with her sister and brother.

Associated Press writers Erica Werner in Washington, Christopher Leonard in St. Louis and Anne D’Innocenzio in New York contributed to this report.

, On Friday September 3, 2010, 5:30 pm EDT

Introduction
The Morningstar approach to options is focused on using company and economic fundamentals to interpret and estimate the value of the uncertainty around market prices, as reflected in implied volatility in the options market.

A Few Positive Data Points Strung Together
After weeks of dithering back and forth between encouraging and discouraging news, the latter half of this week saw a few positive reports in a row that led the market to believe the economy will avoid a double-dip recession. Despite these data points, the market’s uncertainty seems to remain focused on broad macroeconomic issues, based on the market’s reaction to every granule of macroeconomic data and as evidenced by a continued elevated level of anticipated correlation.

Monday showed continued gloom as personal income data fell short of estimates at 0.2%growth, and inflation adjusted disposable income fell for the first time since January.

Tuesday continued the malaise when the Institution for Supply Management’s business barometer fell to 56.7 in August from 62.3 in July, just shy of the median of economists’ forecasts of 57.

Wednesday, however, brought a few data points that indicated the economy is turning the corner, despite weak auto sales that appear to be the worst August in 28 years. The Institute for Supply Management’s factory index rose to 56.3 from 55.5 in July, solidly besting economists’ median forecast decline to 52.8. This news generated a 3% pop in the S&P 500 after the announcement that showed the market ignored a General Motors report of a 25% drop in auto sales from the 2009 August numbers, which were inflated by Cash for Clunkers.

A confirmation of economic recovery came in the form of Thursday’s initial jobless claims, which fell by 6,000 to 472,000 for the week ending Aug. 28. Continuing claims also fell by 23,000 for the week. The National Association of Realtors also reported that pending home sales rose 5.2% from June levels, which further encouraged equity markets. A number of retailers also reported significant same-store sales growth for the month, exceeding expectations and easing concerns over a consumer willingness to spend.

The confirmations continued on Friday when private payrolls were reported as climbing by 67,000, in excess of the forecast 40,000 increase, and July’s payroll numbers were revised upward to 107,000. Temporary workers also rose by 16,800.

In aggregate, equity markets rose enough from Wednesday through Friday to ease uncertainty about the future. The S&P rose by 3.4% from its previous close, and the VIX index of market uncertainty fell by 12.2%.

The Numbers
The VIX index of S&P 500 implied volatility hit a high on Tuesday morning of 27.7% and ended the week at a low of 23.4%, approaching the long-run average of about 20%.

Small-Stock Uncertainty
The spread between implied volatility on the Russell 2000 Index of small stocks (RVX) and the VIX index of implied volatility on the large-cap S&P 500 eased about 1 percentage point to 7.5%, with the market remaining significantly more concerned about the uncertain future of small stocks than of large stocks.

Uncertainty About Next Quarter vs. This Quarter
The spread between the implied volatility of the three-month options on the S&P 500 Index (VXV) relative to the implied volatility of the one-month options represented by the VIX rose by 10 basis points to 4 percentage points, as the market is incorporating next quarter’s earnings into its three-month view of the future.

Expected Correlation
The S&P 500 implied correlation index (JCJ) measures the expected correlation between the stocks in the S&P 500 until January 2011. Implied correlations remained high, though moving consistently with the VIX, leading us to believe macroeconomic issues still dominate the market’s concerns. Implied correlation continued a second week of decline, closing at 69.0%, down a 3 percentage points from the previous week’s close.

Philip Guziec is co-editor and portfolio manager of the Morningstar OptionInvestor online newsletter and research service, and is co-author of the Morningstar Investor Training course on Option Investing. For more about Morningstar’s fundamental approach to investing in options, please use the link below to download our free guide to option investing: http://option.morningstar.com/OptionReg/OptionFreeDL1.aspx