Reports on GDP and consumers signal modest rebound
WASHINGTON (AP) _ The economy is growing modestly, with consumers too wary about spending to invigorate the recovery.
That's the picture that emerged from reports Tuesday on the economy and the confidence of consumers, who power 70 percent of it. Unemployment and tight credit have sapped shoppers' willingness and ability to spend freely as retailers enter their crucial holiday season. And Americans are expected to grow more cautious about spending next year. That would make for a plodding recovery.
The economy grew at a 2.8 percent rate last quarter. Forecasts for the current quarter are for similarly lackluster growth before a drop-off next year.
Fed: super-low rates could fuel speculative bubble
WASHINGTON (AP) _ The Federal Reserve doesn't expect the recovery will be strong enough to quickly drive down the jobless rate, and acknowledged its efforts to keep the rebound going could feed a new speculative bubble.
Record-low interest rates "could lead to excessive risk-taking in financial markets," according to documents released Tuesday of the Fed's closed-door meeting earlier this month. It also could cause consumers, investors and businesses to worry about inflation taking off.
Although Fed officials saw the current likelihood of that as "relatively low," they pledged to "remain alert to these risks."
At the Nov. 3-4 meeting, Fed Chairman Ben Bernanke and his colleagues kept the target range for its bank lending rate at zero to 0.25 percent.
Saab likely to close as GM fails to sell car brand
DETROIT (AP) _ A deal for General Motors Co. to sell Saab to a specialty carmaker has collapsed, leaving the storied Swedish brand born from jets in 1947 close to extinction.
Koenigsegg Group AB, a consortium formed by Swedish luxury sports car maker Koenigsegg Automotive AB, said Tuesday it pulled out of the deal in part because it was unable to agree with investors on how best to move the brand from mass-market to premium.
For GM, it was the third time this year that a deal to shed one of its brands fell apart as it tries to recover from a stay in bankruptcy protection by focusing on a core of four: Chevrolet, Buick, GMC and Cadillac.
Banks earn $2.8B in 3Q; FDIC says dangers persist
WASHINGTON (AP) _ The apparent end of the recession and stabilizing financial markets have not cured the banking industry, as souring and past-due loans have reached the highest levels in 26 years, the Federal Deposit Insurance Corp. said Tuesday.
Banks earned $2.8 billion in the third quarter, but nearly 40 percent of that was from a one-time accounting trick. Loan balances plummeted and the fund that insures their deposits was $8.2 billion in the red.
The number of banks on the FDIC's "problem list" rose to 552 from 416 on June 30, the highest level in 16 years. Fifty banks failed during the quarter _ the largest number since the second quarter of 1990.
Reports on consumer confidence, GDP tug at stocks
NEW YORK (AP) _ A disappointing report on consumer confidence and a more sober read on the economy pulled stocks from 13-month highs Tuesday.
Major indexes posted modest losses in light trading as drops in financial and industrial stocks were tempered by gains in health care companies. The Dow Jones industrial average fell 17 points to to 10,433.71, a day after jumping by 133.
Stocks pulled off their lows of the day after the Federal Reserve released minutes from its latest rate-setting meeting, during which it pledged to keep rates low for the foreseeable future and said inflation remained at bay. The Fed raised its expectations for economic growth during the second half of this year, but said unemployment will remain high.
Top 2 booksellers report losses, their shares fall
NEW YORK (AP) _ Barnes & Noble Inc. and Borders Group Inc., the nation's two largest brick-and-mortar book sellers, both posted quarterly losses Thursday and forecast a difficult holiday season, saying competition from discount chains and online retailers is stiffening.
Barnes & Noble, the larger of the two, also cut its forecast for annual profit, and shares of both retailers fell.
Even with online presence, traditional bookstores have had a rough time facing off against online sellers like Amazon.com as they also compete with low-price brick-and-mortar stores including Wal-Mart Stores and Target and cope with consumers cutting discretionary purchases amid tough economic times.
Heinz 2Q profit falls 16 percent
PORTLAND, Ore. (AP) _ H.J. Heinz Co.'s says its business is thriving in emerging markets but the recession continued to drag down its U.S. and European sales during the second quarter as shoppers limited spending or chose lower-priced products.
"Even though the global recession appears to be abating, there's no question that consumers and customers remain intensely focused on value, which they are more often defining as price," said Heinz CEO Bill Johnson "Consumers in particular are looking for bargains wherever they shop for food and household items."
The food maker reported Tuesday that its quarterly profit fell 16 percent from last year, when the company's results were boosted by currency shifts. But it boosted its full-year guidance, saying it will invest heavily in market to spur growth in its sluggish markets.
CPSC chief pledges swift action after crib recall
WASHINGTON (AP) _ The head of the Consumer Product Safety Commission on Tuesday promised swift action to get dangerous products off the market, acknowledging that the agency didn't move quickly enough on a record recall of more than 2 million cribs linked to four deaths.
At issue are some 2.1 million drop-side cribs made by Stork Craft Manufacturing of Canada. Four infants suffocated in the cribs.
CPSC said the recall involves 1.2 million cribs in the United States and almost 1 million in Canada. Sales of the cribs being recalled date back to 1993 and nearly 150,000 of the cribs carry the Fisher-Price logo.
Green Mountain sweetens bid for Diedrich Coffee
WATERBURY, Vt. (AP) _ Green Mountain Coffee Roasters sweetened its offer for Diedrich Coffee by $2 per share on Tuesday, matching a rival bid from Peet's Coffee & Tea.
Tuesday's bid comes two days after Peet's raised its own offer for Diedrich, hoping to get a foothold in the wholesaler's popular and growing single-serve coffee pod business.
Green Mountain's all-cash proposal of $32 per share has a total value of $265 million. Peet's second offer _ a cash-and-stock bid submitted Sunday evening _ is also valued at $265 million.
Green Mountain said its revised offer provides Diedrich shareholders with a substantial all-cash premium and greater value.
Facebook creates dual-class stock structure
NEW YORK (AP) _ Facebook has created a dual-class stock structure designed to give founder Mark Zuckerberg and other existing shareholders control over the company.
The social network said Tuesday it had no plans to go public "at this time." But the move may well be seen as laying the groundwork for it.
The dual-class structure is what Google Inc.'s founders, Larry Page and Sergey Brin, created to keep voting control over that company before it went public in 2004. Google's Class B shares, owned by Page, Brin, CEO Eric Schmidt and some directors, hold 10 times the voting power as its regular, Class A stock.
By The Associated Press
The Dow fell 17.24, or 0.2 percent, to 10,433.71.
The Standard & Poor's 500 index fell 0.59, or 0.1 percent, to 1,105.65, while the Nasdaq composite index fell 6.83, or 0.3 percent, to 2,169.18.
Benchmark crude for December delivery fell $1.54 to settle at $76.02 a barrel on the New York Mercantile Exchange.
In other Nymex trading, heating oil fell less than a penny to settle at $1.9497 a gallon. Gasoline for December delivery fell almost 4.04 cents to settle at $1.939 a gallon. Natural gas for December delivery rose 1.3 cents to settle at $4.486 per 1,000 cubic feet.
In London, Brent crude dropped $1 to settle at $76.46 on the ICE Futures exchange.