STATE

LOCAL GOVERNMENTS TO SEE PENSION COSTS GO DOWN SLIGHTLY

New York’s local governments, battered by rising pension payments, will see costs drop by 10% in 2006, state Comptroller Alan Hevesi said yesterday. Mr. Hevesi said a stronger stock market has helped sweeten the state’s pension fund, allowing the state to reduce the percentage paid by local governments to 10.7% of payroll in February 2006, compared to 12% of payroll on February 1, 2005. For police and fire employees, the contribution rate will be about 15%, down from the 16.3% due this coming February. A Hevesi spokesman said the contribution rate for state government will also fall to 10.7% of payroll, down from 12%. Local government officials have complained lately about rapidly rising pension costs because of the pressure it puts on local property taxes. Through much of the 1990s, local pension fund contributions fell, reaching zero at one point as the stock market boomed and the holdings of the state pension fund grew dramatically. But once the stock-market doldrums hit after the September 11 terrorist attacks in 2001, pension fund losses meant local governments were forced to begin contributing to the fund as they had in earlier years. Mr. Hevesi noted that between 1970 and 1990, the average annual contribution rate was 16.4% of payroll.

– Associated Press

NATIONAL

HURRICANES, FUEL COSTS LEAD JETBLUE TO LOWER OUTLOOK

JetBlue Airways Corp. yesterday lowered its third-quarter earnings estimates despite a sharp jump in August traffic, citing the impact of two hurricanes in Florida and higher-than-expected fuel prices.

The Kew Gardens, N.Y.-based discount airline said August traffic surged to 1.53 billion revenue passenger miles from 1.17 billion a year ago. A revenue passenger mile is one paying passenger flown one mile.

Load factor, or the percentage of seats filled, fell to 89.3% from 91.6% last August, hurt by the effects of Hurricane Charley in Florida. The company, one of the few American airlines to remain profitable in recent quarters, said the hurricane that passed through in mid-August caused numerous flight delays and 50 cancellations.

JetBlue expects Hurricane Frances to hurt September operations. Frances, which caused 262 flights to be canceled, killed at least two people in the Bahamas and 14 in Florida and Georgia.

Concerns about a possible new hurricane have also resulted in weak near-term bookings, the airline said.

Though results are expected to be below its earlier expectations, JetBlue said it expects a solidly profitable third quarter. JetBlue, based in New York’s JFK International Airport, operates more than 100 flights per day, serving 18 cities in nine states. It had 2003 revenue of $998.3 million.

– Associated Press

CONSUMER CREDIT GREW BY $10.9 BILLION IN JULY, FED SAYS

American consumers more than doubled their pace of borrowing through charge cards and installment loans in July, adding $10.9 billion to non-mortgage debt, the Federal Reserve reported in Washington. The increase, the largest since January, followed a gain of $4.3 billion in June and brought the level of outstanding credit to $2.04 trillion. Measured at an annual rate, borrowing rose 6.4% in July after rising 2.6% in June. The more rapid growth in debt coincides with a rebound in consumer spending, which accounts for two-thirds of the American economy. Alan Greenspan, chairman of the Federal Reserve, said yesterday that the economy has “regained some traction” after the weakest quarterly growth in more than a year. The auto industry “rolled out incentives again,” said Roger Kubarych, senior economic adviser at HVB Group in New York, before the report. All spending should advance because the consumer “is in pretty good shape.” Spending on automobiles contributed to the July increase in outstanding debt. Non-revolving credit, which includes auto loans, rose by $5.3 billion in July after rising by $4.4 billion in June. Revolving credit, which includes charge cards, rose by $5.6 billion in July after five consecutive monthly declines. Borrowing in this category fell $118 million in June. The July increase was the largest since borrowing rose by $26.1 billion. The Fed’s monthly report doesn’t track loans secured by real estate, such as home-equity lines of credit, which have grown in popularity over the past decade.

– Bloomberg News

INTERNATIONAL

WTO RULES AGAINST E.U. SUGAR, U.S. COTTON SUPPORT, BACKING BRAZIL

The World Trade Organization ruled as much as half of European Union sugar exports are illegal and separately confirmed that $3 billion in American cotton subsidies violate WTO rules, handing Brazil two victories in its fight against rich-nation farm aid. The disputes are part of efforts by developing and food exporting nations to push wealthy governments to slash spending on farmers. In an outline accord for a global trade agreement reached in Geneva last month, the WTO’s 147 members agreed to scrap agricultural export aid by a date to be set, dismantle import tariffs, and cut domestic farm subsidies. “We didn’t bring these cases to interfere with the WTO negotiations, but without them,” the E.U. and America “would never change their policies,” Brazil’s ambassador to the WTO, Luiz Felipe de Seixas Correa, said in a telephone interview. “The cases are an important element for pressure,” he said.

– Bloomberg News