A boom in corporate profits, a bust in jobs, wages
WASHINGTON (AP) _ Strong second-quarter earnings from McDonald's, General Electric and Caterpillar on Friday are just the latest proof that booming profits have allowed Corporate America to leave the Great Recession far behind.
But millions of ordinary Americans are stranded in a labor market that looks like it's still in recession. Unemployment is stuck at 9.2 percent, two years into what economists call a recovery. Job growth has been slow and wages stagnant.
"I've never seen labor markets this weak in 35 years of research," says Andrew Sum, director of the Center for Labor Market Studies at Northeastern University.
Wages and salaries accounted for just 1 percent of economic growth in the first 18 months after economists declared that the recession had ended in June 2009, according to Sum and other Northeastern researchers.
In the same period after the 2001 recession, wages and salaries accounted for 15 percent. They were 50 percent after the 1991-92 recession and 25 percent after the 1981-82 recession.
Corporate profits, by contrast, accounted for an unprecedented 88 percent of economic growth during those first 18 months. That's compared with 53 percent after the 2001 recession, nothing after the 1991-92 recession and 28 percent after the 1981-82 recession.
Unemployment rates rose in majority of US states
WASHINGTON (AP) _ Unemployment rates rose in more than half of U.S. states in June, evidence that slower hiring is affecting many parts of the country.
The Labor Department said Friday that unemployment rates in 28 states and Washington, D.C., increased last month. Rates declined in eight states and were flat in 14. That's a change from May, when 24 states reported falling unemployment rates.
Twenty-six states reported a net gain in jobs in June, while 24 states lost jobs.
The changing trend in state unemployment rates reflects a weaker economy hampered by high gas prices and lower factory output. Nationally, employers added only 18,000 net jobs in June, the second straight month of feeble hiring. The U.S. unemployment rate ticked up to 9.2 percent.
GE second-quarter profit up 21 percent, financial arm improves
NEW YORK (AP) _ When it comes to weathering a sluggish economy, it pays to have your fingers in a lot of pies.
At least it does for General Electric Co.
The industrial and financial giant has a stake in almost every sector of the economy, from light bulbs and credit cards to windmills. Its mixed bag of business units have propped up the company at different times since the recession. When the real estate meltdown buried GE's lending arm in bad debt a few years ago, its industrial units continued to grow.
This year, it's the other way around.
A rebound at GE Capital has so far offset weaker industrial business this year. The lending unit helped GE boost profits 21 percent in the second quarter to $3.76 billion.
GE reported income amounting to 35 cents per share for the three months ended June 30. That compares with $3.11 billion, or 28 cents per share, for the same time last year. Revenue fell 4 percent to $35.6 billion, in part because of GE's sale of a majority stake in NBC Universal to Comcast in February.
GE's results beat Wall Street estimates for 32 cents per share on revenue of $34.7 billion, according to FactSet.
McDonald's sales keep rising, even with price hike
NEW YORK (AP) _ McDonald's said Friday that its net income rose 15 percent in the second quarter as it continues to entice customers to buy new menu items even as the sluggish economy forces them to cut back spending in other areas.
McDonald's Corp., the world's largest burger chain, has consistently outperformed its fast-food peers throughout the recession and its aftermath even though it raised prices this year. It's also working hard to give customers more reasons to visit it instead of rivals like Starbucks or higher-end burger restaurants.
The company is upgrading its restaurants, offering wireless access, expanding the number of locations with 24-hour service, introducing healthier food like oatmeal and smoothies, and selling fancy coffee drinks. It's also testing changes to improve customer service, such as sending an employee to walk through the drive-thru and punch orders into a hand-held device.
Verizon pulls in subscribers with iPhone; new CEO
NEW YORK (AP) _ Verizon Communications Inc. is seeing a big boost from the iPhone, adding more new subscribers on contracts in the second quarter than it has in two and half years.
Yet AT&T Inc., which has been the exclusive seller of Apple Inc.'s iconic phone in the U.S. until February, still activates three iPhones for every two Verizon does.
When posting a profit for the second quarter on Friday, Verizon also said Chief Operating Officer Lowell McAdam will take over from long-time CEO Ivan Seidenberg, 64, on Aug. 1. The company has signaled the succession for the past year. McAdam, 57, is the former head of Verizon Wireless.
Seidenberg will remain chairman of the company. He became the CEO of Bell Atlantic in 1998. It changed its named to Verizon in 2000 after a major acquisition.
Verizon added 1.26 million wireless subscribers under contract in the April to June period, a result that flies in the face of the slowdown in new subscribers across the industry in the last two years. Since nearly everyone already has a cellphone, gaining new subscribers is chiefly a matter of luring them over from other carriers. A year ago, Verizon added just 665,000 subscribers under contract.
Verizon activated 2.3 million iPhones, well below the 3.6 million AT&T reported for the same period. Verizon sells only the iPhone 4, starting at $200, while AT&T also sells the older iPhone 3GS for $49.
AP source: Apple considering Hulu bid
SAN FRANCISCO (AP) _ Apple Inc. is in talks to potentially bid for video-streaming service Hulu, a person close to the situation said Friday.
The person, who said Apple is among several companies interested in Hulu, spoke on condition of anonymity because they are not authorized to talk about the matter. In early July, search giant Google Inc. was said to be among about a dozen companies in talks to potentially buy Hulu. Yahoo Inc. is also believed to be interested.
Hulu, which is owned by Disney, News Corp., Comcast Corp. and Providence Equity Partners, started presenting its financial information to interested bidders late last month, after an unsolicited offer prompted its board to look for other offers.
The online video service streams movies and TV shows from broadcasters ABC, Fox and NBC to computers and _ for a monthly fee _ to a number of Web-connected mobile devices such as smartphones and tablet computers. It expects its paid service, Hulu Plus, to have over a million subscribers by the end of the summer and its CEO, Jason Kilar, has said it is profitable.
For Apple, an acquisition of Hulu could bolster its iTunes store, which provides videos users can rent or buy, but does not currently stream content or offer a subscription streaming service. It could also help the Cupertino-based iPhone and iPad maker as it spars with competitors such as online video pioneer Netflix Inc., which offers both a DVD-by-mail and video streaming service, and Google Inc.'s popular YouTube video streaming site, which streams free, ad-supported videos and rents movies from several major studios.
By The Associated Press(equals)
The Dow Jones industrial average fell 43.25 points, or 0.3 percent, to 12,681.16. The broader Standard & Poor's 500 index gained 1.22, or 0.1 percent, to 1,345.02. The Nasdaq composite index rose 24.40 points, or 0.9 percent, to 2,858.83.
Benchmark West Texas Intermediate crude rose 74 cents to settle at $99.87 a barrel on the New York Mercantile Exchange. Brent crude gained $1.16 to settle at $118.67 per barrel on the ICE Futures exchange in London.
In Friday trading for other Nymex contracts, heating oil rose 2.86 cents to settle at $3.1415 per gallon, gasoline futures gained 3.39 cents to settle at $3.0906 per gallon and natural gas rose less than a penny to settle at $4.370 per 1,000 cubic feet.