Business Desk

This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.

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ECONOMY


INFLATION ROSE LESS THAN FORECAST American inflation was less than forecast in August and Philadelphia-area manufacturing slowed this month, suggesting the Federal Reserve won’t accelerate the pace of interest-rate increases.


“The inflationary situation looks much more benign than it did earlier this year,” said the chief U.S. economist at Barclays Capital Inc. in New York, Henry Willmore. The consumer price index rose 2.7% for the year ended in August, down from 3% in July, the Labor Department said in Washington.


The index rose 0.1% in August on an overall basis, and excluding food and energy, higher costs for crude oil and raw materials aren’t passing through to other goods and services to hurt consumer spending.


The Fed Bank of Philadelphia’s manufacturing index fell to 13.4, less than forecast, in September from 28.5 in August.


The price report bears out Fed Chairman Alan Greenspan’s comments to Congress on September 8 that “inflation and inflation expectations have eased in recent months.”


The Fed raised its benchmark rate from 1%, the lowest since 1958, by a quarter point in June and August in keeping with what it called a “measured” pace of rate increases. Mr. Greenspan said in July he expected energy prices to have a “transitory” effect.


Fed Governor Edward Gramlich said yesterday that rising oil prices make temporary jumps in inflation and unemployment “virtually inevitable” and that the “worst possible outcome” would be for the Fed to let inflation get out of control. Central bankers are forecast to raise the overnight bank lending rate by a quarter-point to 1.75% Tuesday, based on the median forecast in a Bloomberg News survey.


– Bloomberg News


AMERICAN HOUSEHOLD NET WORTH RISES TO RECORD $45.91 TRILLION


American households saw their total net worth rise 1.4% to a record $45.91 trillion in the second quarter of 2004, the Federal Reserve said Thursday.


The Fed’s quarterly “flow of funds” data also showed that U.S. nonfinancial debt grew at a 7.7% rate in the second quarter.


This was down from a revised 9.1% rate in the first quarter, initially reported as an 8.6% growth rate. “The slowdown in debt growth last quarter was distributed broadly across all of the major nonfinancial sectors in the United States,” the Fed said.


Nonfinancial debt includes borrowing by all sectors of the economy except banks, thrifts, finance companies and other financial service providers.


Household net worth rose for the seventh consecutive quarter. The record $45.91 trillion posted in the second quarter surpassed the first quarter’s revised $45.27 trillion. The first-quarter figure was initially reported as $45.15 trillion, the previous record high.


Net worth as a percentage of disposable personal income held steady at about 5.4% in the second quarter, the same as the revised first-quarter ratio and up from 5.1% in the year-earlier second quarter. Household net worth is a measure of total assets, such as houses and pensions, minus total liabilities, such as mortgages and credit card debt.


– Dow Jones Newswires


HEDGE FUNDS


SOROS HEDGE FUND CHIEF JACOB GOLDFIELD RESIGNS Jacob Goldfield has resigned as chief investment officer of George Soros’ $8.3 billion hedge fund to start his own investment management company. Robert Soros, son of the famed investor, will replace Goldfield, 45, as head of the Quantum Endowment Fund. Robert Soros, 41, is deputy chairman of the New York investment advisory firm Soros Fund Management. According to a memo to employees from Soros Fund Management Chief Executive Mark Schwartz, Goldfield stepped down from his post effective September 14.


“Jacob plans to create his own investment management company and Soros Fund Management plans to invest with his new firm,” Schwartz wrote in the memo.


– Dow Jones Newswires


EARNINGS


SONY’S HOME ELECTRONICS 3RD-QTR PROFIT WON’T IMPROVE Sony Corp., the world’s second-largest consumer electronics maker, doesn’t expect third-quarter profit from home electronic products to improve much because of the shift to flat-panel televisions with lower margins and a shrinking audio market, said Sony’s president, Kunitake Ando.


“Our home products business is not in a situation where profit will grow by much from the year-ago period,” Mr. Ando told reporters at a dealers convention in Tokyo, where the company is based. Profitability will also depend on how much the company spends on restructuring, he said.


Unlike most of its Japanese rivals, which introduced new models ahead of the Summer Olympics, Sony will begin selling new products this month. The fiscal third quarter ending December 31 includes the yearend shopping season, the biggest selling opportunity for Sony, the maker of WEGA televisions.


Sony had higher profit margins with traditional cathode-ray tube televisions than flat-panel televisions, Mr. Ando said. Research and development costs are higher for the flat-panel equipment.


The shrinking global audio market, which includes stereo sets for home use, is also responsible for little-changed earnings, he said.


Sony shares fell 9 cents to $35.14 in New York Stock Exchange trading. They have fallen 5% in the past year.


– Bloomberg News

NY Sun
NEW YORK SUN CONTRIBUTOR

This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.


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