WASHINGTON (AP) — Treasury Secretary Henry Paulson said Friday that financial markets are "considerably calmer" now than they were two months ago. He predicted the economy will be rebounding by the second half of this year.
In a speech to business executives in Washington, Paulson said the drag from housing, which he characterized as still the biggest risk to the economy, will soon be lessened by nearly $100 billion in economic stimulus payments to U.S. households.
In his remarks, Paulson never used the word recession, although many private economists believe the country is in one.
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GE confirms plans to exit appliance business
NEW HAVEN, Conn. — General Electric Co. plans to sell or spin off the business that for a century has put appliances in American homes, a decision that could presage further asset sales, analysts said.
The industrial conglomerate, one of the world's largest companies, said in a statement Friday that the move is part of an ongoing plan to exit "slower growth and more volatile businesses."
Last year, Fairfield-based GE shed its underperforming plastics business by selling it to a Saudi Arabian company for $11.6 billion.
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Fannie Mae scraps higher downpayment requirements
WASHINGTON (AP) — Fannie Mae is doing away with higher minimum down-payment requirements for borrowers in parts of the country where home prices are dropping.
The government-sponsored mortgage finance company said Friday it will require minimum down payments of between 3 percent and 5 percent for all loans that it guarantees. That replaces a December policy that required a higher minimum if the loan was for a home in a zip code with declining real estate prices.
Washington-based Fannie says the move is part of its effort to help resuscitate the flagging mortgage market.
Fannie Mae and its smaller sibling, Freddie Mac, had been under intense pressure to relax lending policies that had been tightened in recent months as foreclosures and defaults skyrocketed.
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UN: World economy to grow by 1.8 percent in 2008
UNITED NATIONS (AP) — The world economy is "teetering on the brink" of a severe downturn and is expected to grow only 1.8 percent in 2008, the United Nations said in its mid-year economic projections Thursday.
That's down from a global growth rate of 3.8 percent in 2007, and the downturn is expected to continue with only a slightly higher growth of 2.1 percent in 2009, the U.N. report said.
The mid-year update of the U.N. World Economic Situation and Prospects 2008 blamed the downturn on further deterioration in the U.S. housing and financial sectors in the first quarter.
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California winemaking patriarch Robert Mondavi dead at 94
BERKELEY, Calif. (AP) — Robert Mondavi, the pioneering vintner who helped put California wine country on the map, died at his Napa Valley home Friday. He was 94.
Mondavi died peacefully at his home in Yountville, Robert Mondavi Winery spokeswoman Mia Malm said.
He was 52 and a winemaking veteran in 1966, when he opened the winery that would help turn the Napa Valley into a world center of the industry. Clashes with a brother that included a fistfight led him to break from the family business to carry out his ambitious plans with borrowed money.
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Macy's signs deal to put FAO Schwarz in its stores
CINCINNATI (AP) — FAO Schwarz will open toy stores in nearly 700 Macy's department stores over the next two years in a move that both stores hope will drive traffic in a tough economic environment.
The two companies announced Friday that about 75 full-size FAO Schwarz toy stores will open across the country in the fall, along with about 200 smaller shops that will be up to 300 square feet.
Macy's CEO Terry Lundgren told shareholders that FAO Schwarz will open stores in up to 275 of Macy's stores this fall, and the companies plan to expand over the next two years to include 685 Macy's stores that have children's departments.
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Abercrombie profit edges up on sales increase
COLUMBUS, Ohio (AP) — Teen retailer Abercrombie & Fitch Co. said Friday that its first-quarter earnings rose 3 percent from a year ago on stronger sales.
Abercrombie said it earned $62.1 million, or 69 cents per share, in the three months ended May 3 compared with profits of $60.1 million, or 65 cents a share, a year ago.
Sales rose 8 percent to $800.1 million from $742.4 million last year. But sales at stores open at least a year, considered a key indicator of a retailer's strength, fell 3 percent.
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By The Associated Press
The Dow Jones industrial average slipped 5.86, or 0.05 percent, Friday, closing at 12,986.80. For the week, the Dow rose 1.89 percent.
The Nasdaq composite index fell 4.88, or 0.19 percent, to 2,528.85 Friday, but still jumped 3.41 percent for the week. The S&P 500 and Nasdaq remain at five-month highs.
Light, sweet crude for June delivery jumped $2.17 to settle at record close of $126.29 on the New York Mercantile Exchange. Earlier in the session, prices surged to $127.82 a barrel, also a new high.
Gasoline futures jumped to a record $3.2438 a gallon on the Nymex before easing slightly to settle at $3.2235, up 5.777 cents.
In other Nymex trading, heating oil futures rose 8.04 cents to settle at $3.7028 a gallon. Natural gas futures fell 30.5 cents to settle at $11.094 per 1,000 cubic feet.
In London, July Brent crude surged $2.36 to settle at $124.99 a barrel on the ICE Futures exchange.
