Small spending cuts to have little economic impact
WASHINGTON (AP) _ The first phase of a deal to raise the government's borrowing limit would pose little threat to the economy in the short term because almost none of the spending cuts would occur before 2014.
Discretionary spending, which excludes Social Security, Medicare and Medicaid, would be cut by $21 billion in 2012 and $42 billion in 2013, according to an analysis by the Congressional Budget Office. That's a small fraction of the nation's $14 trillion economy.
The first phase of cuts would reduce spending by $917 billion over 10 years. A congressional committee would decide on a second phase of cuts totaling $1.5 trillion.
The Obama administration had said the government would have run out of cash to pay its bills without an increase in the $14.3 trillion borrowing limit by Tuesday.
Manufacturing growth hits lowest level in 2 years
WASHINGTON (AP) _ Manufacturers had their weakest growth in two years in July, a sign that the economy could weaken this summer.
The Institute for Supply Management, a trade group of purchasing executives, said Monday that its index of manufacturing activity fell to 50.9 in July from 55.3 in June. The reading was the lowest since July 2009 _ one month after the recession officially ended.
Any level above 50 indicates growth. The manufacturing sector has expanded for 23 straight months.
Still, new orders shrank for the first time since the recession ended. Companies slashed their inventories after building them up in June. Output, employment, and prices paid my manufacturers all grew more slowly in July.
The disappointing report on manufacturing is the first major reading on how economy performed in July. It suggests the dismal economic growth in the first half of the year could extend into the July-September quarter.
Construction spending rises 0.2 percent
WASHINGTON (AP) _ Builders began work on more office buildings, shopping centers and hotels in June, pushing construction spending higher for a third straight month. But even with the gains, activity remains at depressed levels.
Construction spending rose 0.2 percent in June to a seasonally adjusted annual rate of $772.3 billion, the Commerce Department reported Monday. That put overall spending just 1.2 percent higher than the 11-year low hit in March. It is just half of the $1.5 trillion pace considered healthy by most economists.
In June, residential construction declined, reflecting a big drop in apartment construction, and spending on government building projects also fell. But private nonresidential activity rose to the highest level since late 2010.
Analysts believe it could be another four years before construction returns to healthy levels as the effects of a severe recession and collapse in home building linger.
Allstate second-quarter weather beaten, but a silver lining
BOSTON (AP) _ Allstate reported a second-quarter loss Monday, hammered by $2.3 billion in catastrophe losses from waves of tornadoes, wildfires and storms.
Yet Allstate's numbers were better than Wall Street had expected as the property and casualty insurer's ratio for claims paid out versus dollars taken in improved. Shares rose more than 1 percent.
The $620 million loss at the Northbrook, Ill. company amounted to $1.19 per share. That compared with a profit of $145 million, or 27 cents per share, in the same quarter a year ago.
Allstate's adjusted loss for the latest quarter was $1.23 per share. Analysts surveyed by FactSet had forecast a wider loss of $1.46 per share.
Humana beats second-quarter Wall Street estimates
LOUISVILLE, Ky. (AP) _ Humana Inc. posted a 35 percent surge in second-quarter profit Monday, easily beating Wall Street views, as more people enrolled in the health insurer's Medicare plans while existing members made less use of its health care services.
The company, which has branched out into health care delivery, also raised its earnings forecast for the full year to a range of $7.50 to $7.60 per share, up from $6.70 to $6.90 per share. Analysts polled by FactSet predict, on average, an annual profit of $7.02 per share.
Wall Street shrugged off the company's robust performance, however, sending down Humana's shares along with the rest of the market.
Louisville-based Humana credited its rosier outlook to a favorable trend in which a smaller percentage of premium dollars from its members are going to pay for medical claims, reflecting an industrywide slowdown in health care utilization.
HSBC to cut 30,000 jobs in global overhaul
LONDON (AP) _ British banking group HSBC said Monday it will cut 30,000 jobs worldwide by 2013 and sell almost half its retail bank branches in the U.S., part of a new strategy to focus on fast-growing emerging markets.
The bank, which reported a better-than-expected 3 percent increase in pretax profits to $11.5 billion in the six months to June, has already shed 5,000 jobs this year. Another 25,000 will be cut by 2013, spokesman Patrick Humphris said.
HSBC currently employs around 296,000 people worldwide.
Humphris declined to give details of where the job cuts would be but said the group is still hiring in emerging economies such as Brazil and Mexico.
The move echoes similar announcements by other global banks, such as Credit Suisse, UBS and Goldman Sachs, which in recent weeks said they needed to trim payrolls to adjust to tougher market conditions.
Coverage with no copay extended to birth control
WASHINGTON (AP) _ A half-century after the advent of the pill, the Obama administration on Monday ushered in a change in women's health care potentially as transformative: coverage of birth control as prevention, with no copays.
Services ranging from breast pumps for new mothers to counseling on domestic violence were also included in the broad expansion of women's preventive care under President Barack Obama's health care overhaul.
Officials said the women's prevention package will be available Jan. 1, 2013, in most cases, resulting in a slight overall increase in premiums. Tens of millions of women are expected to benefit initially, a number that is likely to grow with time. At first, some plans may be exempt due to an arcane provision of the health care law known as the "grandfather" clause. But those plans could face pressure from their members to include the new coverage.
Ford to recall 1.1 million pickup trucks for gas tank problem
TRAVERSE CITY, Mich. (AP) _ Ford Motor Co. is recalling 1.1 million pickup trucks because the gas tanks can fall off and cause fires.
The National Highway Traffic Safety Administration said Monday on its website that the metal straps holding the tanks can rust, allowing them to fall, rupture and catch fire.
The defect has been blamed for eight fires, three of which spread to the rest of the truck. One person was injured, suffering first- and second-degree burns, Ford spokesman Wes Sherwood said.
The recall affects certain 1997 through 2004 Ford F-150 models, as well as some 1997 through 1999 model year F-250 pickups. Also affected are Lincoln Blackwood pickups from the 2002 and 2003 model years. They were sold in cold-weather states where salt is used to clear roads. The salt corroded straps holding the tanks and they broke, NHTSA said.
By The Associated Press(equals)
The Dow Jones industrial average ended the day with a loss of 10.75 points, or 0.1 percent, to 12,132.49. The broader Standard and Poor's 500 index lost 5.34, or 0.4 percent, to 1,286.94. The Nasdaq composite fell 11.77, or 0.4 percent, to 2,744.61.
Benchmark West Texas Intermediate crude for September delivery fell 81 cents to settle at $94.89 per barrel on the New York Mercantile Exchange. It was as high as $98.60 earlier in the session. Brent crude, used to price many international oil varieties, added 7 cents to settle at $116.81 per barrel on the ICE Futures exchange in London.
In other Nymex trading for September contracts, heating oil and gasoline futures both fell less than a penny to settle at $3.0974 and $3.054 per gallon, respectively. Natural gas rose 4.3 cents to settle at $4.188 per 1,000 cubic feet.