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April 29, 2005
Economic Slowdown Surprises Experts
U.S. economic growth slowed sharply in the first three months of the
year, to the weakest pace in two years, as surging energy costs caused
consumers and businesses to rein in their spending, the Washington
Post reported. The nation’s gross domestic product rose at
a 3.1 percent annual rate during the first quarter, down from a 3.8
percent rate in the final three months of last year, the Commerce
Department said yesterday. The news confirmed other recent signs of a
cooling economy. Job growth, retail sales, factory production and
consumer confidence fell in March. New orders for big-ticket
manufactured goods have declined in each of the past three months. Many
analysts were surprised the economy had slowed so quickly after
expanding 4.4 percent last year, but they said the nation is not headed
back into recession—as long as energy prices don’t go
higher, the newspaper reported.
Fed Sees Inflation as Bigger Threat Than a Slowdown
Despite signs that economic growth is slowing, the Federal Reserve
sees signs of rising inflation as a bigger threat—and is likely to
keep raising interest rates in the months ahead to curb it, the
Wall Street Journal reported. On Tuesday, the Fed likely
will raise the target for its key short-term interest rate to 3 percent
from 2.75 percent. That would be the eighth quarter-point rate increase
in as many meetings.
Work on Asbestos Bill Postponed Until May 12
The Senate Judiciary Committee was forced to postpone work yesterday
on a $140 billion asbestos compensation fund until May 12 after
procedural fights halted the panel’s meeting, Reuters reported.
Before the forced recess, the committee by 12–5 declined to expand
the fund to lung cancer sufferers who could not show their ailment was
due to asbestos, after one senator warned the fund was already in danger
of quick exhaustion from claims. By voice vote, the panel agreed to an
amendment sponsored by Sen. Dianne Feinstein (D–Calif.) regarding
judicial review, and one by Minority Whip Richard Durbin (D–Ill.)
clarifying that immediate family members of asbestos victims who died
while their claims were pending would be treated the same as other
“exigent,” or urgent claims. Judiciary Chairman Sen. Arlen
Specter had hoped to have a final vote on the asbestos bill on Thursday.
But he remained upbeat about getting final panel approval next month,
despite dozens of amendments proposed by senators in both parties and an
insufficient amount of publicly declared supporters.
Separately, the Associated Press reported that a new organization
that plans to spend $10 million to $15 million for the 2006 election
cycle is kicking off with a media buy focusing on pending asbestos
legislation. The Senate Accountability Project has purchased more than
$200,000 worth of ads in Arkansas, Montana, Nebraska and the Washington,
D.C.–area that urge opposition to the asbestos bill.
Congress Budget Deal Would Boost Pension Premiums
Premiums paid by U.S. corporations to insure employee pensions would
go up under a budget deal approved yesterday by the House of
Representatives, Reuters reported. House and Senate Republican
negotiators, who earlier in the day finalized the five-year $2.6
trillion budget blueprint and sent it to both chambers for votes, agreed
to $6.6 billion in savings for the deficit-ridden federal program that
insures corporate pensions. The House narrowly passed the budget
measure, while the Senate had yet to vote.
Judge Rejects Utilities’ Claims Vs. Enron
A federal judge in New York has rejected Nevada Power Co. and Sierra
Pacific Power Co. claims against Enron Power Marketing, a subsidiary of
the bankrupt energy company, ObviousNews.com reported. The
two utilities, subsidiaries of Reno, Nev.–based Sierra Pacific
Resources, had asked the court to reverse a federal bankruptcy
judge’s ruling throwing out their claims that Houston-based Enron
manipulated markets during the 2000–01 Western energy crisis. U.S.
District Judge Barbara Jones ruled against the Nevada companies and
affirmed the decision of bankruptcy Judge Arthur Gonzalez.
AFL-CIO Has Money Problems
AFL-CIO President John J. Sweeney, who is facing challenges from some
of the labor federation’s largest member unions, yesterday
acknowledged that the organization is having financial problems and may
have to lay off a quarter of its workforce, the Washington
Post reported.
United Flight Attendants Ask for New Management
Flight attendants for United Airlines have asked the company’s
board of directors to remove the airline’s current management
team, alleging that executives knowingly misrepresented and concealed
key details in the company’s bankruptcy case, the online
Wall Street Journal reported.
The Association of Flight Attendants, in a letter to UAL
Corp.’s (UALAQ) board of directors dated April 19, said company
managers have been unable to verify $46 million out of $112 million in
cuts the company said it had secured from its so-called salaried and
management employees. The cuts were part of a broader attempt to secure
$725 million in cost savings from all employee groups, including the
company’s unions, the newswire reported.