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‘MODEST PACE’ FOR GROWTH
Also, signs Americans are decreasing debt BY NEIL IRWIN
The U.S. economy continued
growing this summer, but “with widespread signs of decelera- tion,” according to a new report on business conditions around the country. The Federal Reserve’s “beige
book,” an eight-times-a-year compilation of anecdotal infor- mation fromcompanies in the 12 Fed districts, offers a portrait of an uncertain economic moment in which growth has slowed in much of the United States. “Economic growth at amodest
pacewas themost common char- acterization of overall condi- tions,” said the report, released Wednesday afternoon and based on interviews with businesspeo- ple from mid-July through the end of August. But five of the regional Fed banks east of the Mississippi River “highlighted mixed conditions or deceleration in overall economic activity.” AlsoWednesday, newevidence
pointed to American consumers continuing to reduce their in- debtedness, though at a slower pace than forecast. Consumer credit declined by $3.6 billion in July, the Fed said, comparedwith the $4.7 billion decline that ana- lysts had forecast. The drop was steepest in re-
volving debt, suggesting that people were paying down their credit card bills. The decline in debt is helping Americans adjust their finances to a more sustain- able position, but usingmoney to reduce debts also is a drain on economic activity in the near term. The Labor Department on
Wednesday released detailed in- formation on the job market in July. The number of open posi- tions rose by 178,000 thatmonth, reflecting a slowimprovement in
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‘Beige book’ highlights What the Federal Reserve reported for its 12 districts.
9 Minneapolis 12 San Francisco 7 10 Kansas City
Chicago St. Louis 8
4 Cleveland 5 Richmond
Atlanta 6
2 3
1
New York Boston
Philadelphia
Washington Board of Governors
FILE PHOTO
D.C. tourism up, spending down. 7
“Te transportation industry
remained a source of growth with auto and heavy truck production holding steady.”
8 “Firms in the transportation,
Alaska and Hawaii are part of District 12. 1
“Back-to-school sales were
modest, with the consumer focused on buying for immediate needs only.”
2 “Tourism activity in New York
City has been steady at a strong level since the last report. . . . Business travel has reportedly increased in recent months, accounting for a growing share of revenues.”
3 “Slower activity was reported
in most of the major manufactur- ing sectors. . . . However, produc- ers of wood products, food products, industrial materials, and measuring and testing equipment reported increased demand.”
SOURCE: Federal Reserve
conditions for people looking for work. But the survey of job openings
and labor turnover also revised down its estimate of the number of job openings in June. The anecdotal information
contained in the beige book is consistent with a slew of eco- nomic reports showing that the burst of growth in late 2009 and early 2010 has not persisted through the summer, as the im- pact of businesses rebuilding their inventories and fiscal stim- ulus fades. Overall economic activity, as
measured by gross domestic product, rose at a 1.6 percent annual rate in the April-June quarter, too slow to push down
the unemployment rate. Fore- casts for the third quarter, which ends this month, are not much better. According to the beige book,
consumer spending seems to be rising slowly. Most Fed districts reported
that retail sales excluding auto- mobiles rose, but the Atlanta Fed “reported a decline in the level of sales, and Richmond noted that sales ‘sputtered’ in August, while New York and Dallas reported that growth in retail sales slowed.” Spending on big-ticket items
such as consumer electronics was weak, according to Fed banks in Philadelphia, Rich- mond and Dallas, and most dis-
4 “Te market for business
lending remains soſt, with bankers generally characterizing the demand for new commercial and industrial loans as steady or slowly improving.”
5 “Reports from Baltimore,
Washington, and Charleston, S.C. indicated that, while tourism picked up, stays were shorter and spending was lower than in the past.”
6 “While the long-term impact
of the oil spill on labor markets is still unknown, businesses along the Gulf coast noted that, so far, job losses have been largely offset by hiring in clean-up and mitigation efforts.”
business support, telecommunica- tions, and government services industries expanded existing operations and hired new employees. . . . In contrast, contacts in the business support services and janitorial services industries reported plans to decrease operations and lay off workers.”
9 “Contacts from the legal sector
reported that billings during July were up from a year ago, especially for firms that deal with bankruptcies.”
10 “Te prospect of higher capital
gains taxes in 2011 has prompted some farm owners to consider selling their farms before year-end.”
11 “Petrochemical producers were
mostly optimistic, noting domestic orders were strong and growing.”
12 “Venture capital financing
continued to be a bright spot, with contacts noting increased levels of funding, as well as heightened IPO activity.”
THE WASHINGTON POST
tricts reported that auto sales were “largely stable or up.” Manufacturing activity,mean-
while, “expanded further on bal- ance, although the pace of growth appeared to be slower than earlier in the year.” Federal Reserve officials use
the report to help decide the course ofmonetary policy, and it is released in advance of their policymakingmeetings. The Federal Open Market
Committee is scheduled to meet Sept. 21. Officials are expected to leave their interest rate target near zero and will probably weigh whether to undertake any new unconventional efforts to prop up growth.
irwinn@washpost.com
Debt, financial crisis hurtU.S. competitiveness
BY HOWARD SCHNEIDER Large deficits and a weakened
financial system have made the United States less competitive in the global economy, the World Economic Forumsaid in its annu- al reviewof thecompetitivenessof countries. TheUnited States slipped from
second to fourth in the survey, behind Switzerland, Sweden and Singapore. It had fallen fromfirst place the year before. The study includes statistical
measures as well as a survey of businessowners tocomparecoun- tries. In the United States, the entrepreneurs cited access to credit and government regulation among their chief concerns. But itwasgovernmentdebtand
the country’s overall economic outlook that pushed the United States down in the rankings, said IreneMia, senior economist at the forum, aGeneva-based think tank that sponsors the annual gather- ing of world leaders in Davos, Switzerland. “The U.S. has very important
strengths, but macroeconomic stability was a problem before- hand and the crisis exacerbated it,”Mia said. Government debt affects a
country’s competitiveness by lim- itingits ability torespondtocrises or make infrastructure and other investments that could boost fu-
ture productivity. Itmay also lead tohigher interest rates. Along with broad statistics
about each of the 139 countries included, the survey examined ar- eas such as the strength of institu- tionsandlaws, thequalityof infra- structure, public health and edu- cation, and levels of technology andinnovation. TheUnited States, for example,
scoredhighonitems relatedtothe efficiency of labor markets, inno- vation and higher education. But it received mediocre scores on how some of its institutions func- tion, ranking 55th in the strength of corporate reporting require- ments,84thinthe cost tobusiness ofcrimeandviolence,and125thin the business costs of terrorism. The impact of the recent finan-
cialcrisisandrecessionhadadeep influence on this year’s edition of the study, with countries hit by recent shocks, such asGreece, Ire- landandSpain,all tumblinginthe competitiveness rankings be- causeofhighdebtanduncertainty about future growth. Government debt and deficits
have emerged as a chief concern among developed world econo- mies, as a decline in tax receipts during the recession and an in- crease in spending on stimulus programs combined to require re- cordlevelsofgovernmentborrow- ing. Crafting an “exit strategy” — cutting annual deficits without underminingeconomicgrowthby
Competitiveness ranking for the U.S., by indicator category
Innovation Labor market Higher education Infrastructure Technology Financial market Institutions
Macroeconomic environment
Government budget balance
Government debt
National savings rate
SOURCE: Te Global Competitiveness Report 2010-11, World Economic Forum
THE WASHINGTON POST
doingsotooquickly—hasbecome a main focus of policymakers in Europe andtheUnitedStates. By contrast, several emerging
market economies jumped quick- ly in their competitiveness rat- ings, as governments kept debt down and invested in infrastruc- ture andinstitutional reform. Indonesia vaulted from54th to
44th place in the survey, and the World Economic Forum cited steady improvement in the coun- try’s schools as a prime reason.
1139
Vietnamwent from75thto59thin therankings; theforumcitedit for having one of the most efficient labor forces in the world and in- vesting comparatively large amounts in research and develop- ment. China, at 27th, was among the
87 Within macroeconomic category: 1139
most competitive of the develop- ing economies, benefitting partic- ularly from a high savings rate, rising research investment and improvements in school enroll- ment. Chad is rated the least competi-
tive of the countries surveyed, whileNigeriaandPakistanexperi- enced the largest declines in com- petitiveness. The forumnoted se- curity problems in both countries andcitedthe fact thatNigeriawas now running an annual budget deficitdespite its oilwealth. Because the study is partly
based onsurveys of business own- ers,Mia said that the general out- look or mood of a country can influence the results—turningup in times of greater confidence or downinperiods ofdoubt. There’s a cultural and political
hew as well. China, run by a com- munistpartyknownfordolingout ordenyingfavors tobusinessown- ers, has the world’s 22nd most trustworthy government, accord- ing to the forum’s survey. The United States, a democracywith a built-in skepticismof officialdom, ranks 54th.
schneiderh@washpost.com
PETER MORRISON/ASSOCIATED PRESS
Pedestrians in Belfast walk past a branch of the Anglo Irish Bank, which had the largest corporate loss in the country’s history.
TECHNOLOGY
Oracle to pay Hurd $950,000, plus bonus Oracle plans to pay newly
appointed co-President Mark Hurd a base salary of $950,000 annually and said the ousted Hewlett-Packard chief executive is eligible for a target bonus of $5 million this fiscal year. Oracle released the details of
“
Hurd’s pay package in a filing with the Securities andExchange Commission on Wednesday. It includes stock options totaling
”
ALSOINBUSINESS l Moody’s reports on write- downs: U.S. banks have taken losses on about two-thirds of the loan charge-offs expected through 2011, Moody’s Investors Service said. The banks will in- cur $744 billion of loan charge- offs between 2008 and 2011,with $476 billion already written off, Moody’s analyst Craig Emrick wrote in a report dated Tuesday. “We believe the return to ‘nor- mal’ levels of credit conditions will be slow and uneven through
10 million shares. That would come on top of a severance payment from HP that could top $40million. Hurd resigned as HP’s chief
executive last month after an internal ethics investigation. Or- acle named him as its co-presi- dentMonday, and HP sued Hurd a day later to block him from joining the rival company. — Associated Press
the next 12 to 18months,” Emrick wrote. l Vodafone loses tax appeal: An Indian court ruled Wednes- day thatVodafoneGroup is liable for an estimated $2.6 billion in taxes for its 2007 acquisition of one of India’s largest mobile phone companies. The decision sets a precedent that could effect hundreds of foreign transactions and have a chilling effect on foreign investment, tax experts say.
Faster Forward
compete.AAA PROOF1
Topic: national economy ROB PEGORARO
Excerpt from
voices.washingtonpost.com/fasterforward Artist: rivero
Run Date: 9 / 9 / 2010 Size: 11p x 7.5”
NowGoogle will searchwhile you type Google’s latest tweak to its search engine allows you to see search
results before you finish typing a query. Google Instant is the logical extension of the search engine’s “auto-
complete” feature, which suggests search queries matching what you’ve typed so far.Now when you type a query on Google’s home page, depending on your browser and whether you’re signed into Google, the site will begin displaying links from the first keystroke. For example,my typing “w” yielded links showing the weather for
the District. Extending that to “wa” caused Google to spotlight links forWal-Mart; “was” yielded links to TheWashington Post’sWeb properties. (These results, like Google’s ordinary results, are tailored to a signed-in user’s location.) . . . Instant looks more interesting when seen as a way to turn a search
into a conversation: You type a query, see what Google suggests for a match, then revise, check its suggestions again, revise further, and so on. Except instead of having to click the “back” button repeatedly, all this happens on one page. But to get any benefit out of this option (you can turn it off with a
link to the right of the search box), some of Google’s most frequent users will have to break long-standing habits. Instant doesn’t work in the search boxes that browsers provide as a shortcut forWeb queries. Google will need a fewmonths to extend Instant to there—and to its mobile search site.
— Fromnews services
CRUDE OIL $74.67 UP $0.58, 0.8%
V Fed signals ‘widespread’ slowdown
10-YEAR TREASURY DOWN$4.40 PER $1,000, 2.65% YIELD
CURRENCIES $1 = 83.91 YEN; EURO = $1.272
DIGEST BANKING
Ireland to split troubled bank, sell some assets Ireland plans to split its most
troubled financial institution, Anglo Irish Bank, as part of wider efforts to reassure interna- tional lenders that the Irish are dealing with their debt crisis. Finance Minister Brian Leni-
han said Wednesday that divid- ing Anglo, nationalized in early 2009 on the edge of insolvency, into “good” and “bad” banks would represent the least costly outcome to Irish taxpayers. The government has plowed nearly $29 billion into the spe-
cialist lender, and analysts warn that the bill could top $45 billion, a fifth of gross domestic product. Lenihan said the “good” splin-
ter of Anglo would become a deposit-only bank “completely separated from Anglo’s loan as- sets.” The bad bank would gradual-
ly dispose of Anglo’s largely dys- functional book of loans to Ire- land’s construction and property barons.
— Associated Press
THURSDAY, SEPTEMBER 9, 2010
JOHN TRAVOLTA PROFESSIONAL PILOT
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