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January 28, 2005
4th-Qtr Economic Growth Slows, Inflation Up
The U.S. economy grew at a weaker-than-expected 3.1 percent annual
pace in the final quarter last year, its slowest since the beginning of
2003 as the country’s trade performance deteriorated and inflation
picked up, a government report on Friday showed, Reuters reported. The
increase in fourth-quarter gross domestic product (GDP) was down from a
4 percent gain in the third quarter and was the weakest since a 1.9
percent pace in the first quarter of 2003. It also was below Wall Street
economists’ forecasts for a 3.5 percent rate of fourth-quarter
expansion. The Commerce Department report showed exports of goods and
services fell at the steepest rate in two years during the
October–December fourth quarter while imports rose. Despite the
softer fourth quarter, GDP in 2004 advanced 4.4 percent, up from 3
percent in 2003 and the most robust since a 4.5 percent increase during
1999.
Employment Costs Rise in 4th Quarter
U.S. employment costs rose a slightly less-than-expected 0.7 percent
in the fourth quarter of 2004, as salaries and wages grew at their
slowest rate in nearly six years, a government report showed on Friday,
Reuters reported. Wall Street had forecast the Employment Cost Index, a
broad gauge of what employers pay in wages and benefits, to rise 0.9
percent between October and December, after a 0.9 percent gain the
previous three months, the newswire reported. Salaries and wages rose
0.4 percent, posting their smallest quarterly increase since a matching
increase in the first quarter of 1999, the Labor Department said.
Benefit costs climbed 1.4 percent after advancing 1.1 percent in the
third quarter.
GAO to Release Report on the Role of SEC Office of Public Utility
Regulation
The General Accounting Office (GAO), which is investigating the
Security and Exchange Commission’s (SEC) administration and
enforcement of the Public Utility Holding Company Act, will report its
findings by June 17, according to a letter released yesterday by House
Energy and Commerce ranking member John Dingell (D–Mich.),
CongressDaily reported. Dingell said he and Rep. Edward
Markey (D–Mass.) requested the GAO study last April in response to
“troubling events” such as Enron’s collapse and the
manipulation of the Western markets. GAO said the study will assess the
extent to which the SEC’s Office of Public Utility Regulation
reviews registered holding companies and exemption claims.
WorldCom’s Ex-Controller Deals Blow to Ebbers’s
Defense
WorldCom Inc.’s former controller testified that after his
staff was ordered to make fraudulent changes to the company’s
books, then-CEO Bernard Ebbers apologized to him, the Wall Street
Journal reported. The testimony from David Myers, who has pleaded
guilty and agreed to cooperate with prosecutors in a plea for leniency,
suggests that Ebbers knew as early as late 2000 that the company’s
accounting was flawed—long before the problem led to
WorldCom’s bankruptcy, the online newspaper reported.
Yukos Receives Court Protection for $21 Million
Russian oil company Yukos should place $21 million in the custody of
a U.S. court to ensure the Russian government can’t get to it
without a court order, a judge ruled yesterday, the Associated Press
reported. The money was in one of two Texas bank accounts. One covers
Yukos CFO Bruce Misamore’s expenses in conducting his duties from
his Houston home, and the other covers the bankrupt company’s
legal fees, the newswire reported.
UAL Posts Quarterly Loss, Cites Soaring Fuel Costs
Bankrupt UAL Corp., parent of United Airlines, reported a wider
fourth-quarter net loss yesterday, citing persistently high fuel costs
and weak revenue, Reuters reported. UAL posted a net loss of $664
million, or $5.73 per share, compared with a loss of $476 million, or
$4.33 per share, a year earlier. A consensus forecast among three Wall
Street analysts was for a loss of $5.20 per share for the No. 2 U.S.
carrier, according to Reuters estimates.
U.S. Hedge Funds Pull in $73.6 Billion in ’04
The U.S. hedge fund industry grew by 19 percent last year when the
loosely regulated investment pools pulled in $73.6 billion in new
assets, according to data released yesterday, Reuters reported. Hedge
funds now manage roughly $972.6 billion in assets, according to database
group Hedge Fund Research Inc. Hedge funds that seek out companies
facing bankruptcies, mergers or acquisitions, grew at the fastest pace
in the industry, expanding 28 percent to end the year with $128.6
billion in assets, the newswire reported.
US Air Gets More Time to File Reorganization Plan
A judge yesterday gave US Airways until the end of March to file a
bankruptcy reorganization plan and approved the final piece of the
airline’s cost-cutting plan, Reuters reported. The carrier said it
still plans to submit its restructuring plan before mid-February, as
stipulated in an agreement with its largest creditor, General Electric
Co. The company sought the extra time “out of an abundance of
caution” and did not rule out seeing another extension, if
necessary, the newswire reported.
Judge OKs Grocer’s Bankruptcy Exit Plan
A federal judge Thursday set the stage for P&C Foods
supermarkets’ parent company to exit bankruptcy protection, likely
before the end of March, the Syracuse Post Standard
reported. In federal bankruptcy court in White Plains, N.Y., Judge Adlai
S. Hardin signed off on The Penn Traffic Co.’s amended disclosure
statement. The statement has been approved by secured creditors and will
now be voted on by about 6,000 unsecured creditors. If a majority of
them approve the plan, Judge Hardin will likely sign off on it at a
March 17 confirmation hearing, said William B. Murphy, restructuring
consultant to Penn Traffic for Kroll Zolfo Cooper, the Post
Standard reported. Penn Traffic, which is based in Syracuse,
N.Y., is the parent of P&C Foods and other supermarket chains,
operating 111 supermarkets in four states. It also operates five
warehouses and distribution centers. Penn Traffic has been operating
under chapter 11 protection since May 2003.