ECONOMY

CONSUMERS HELP FUEL 3.5% FIRST-QUARTER GROWTH

Consumer spending and a trade deficit that narrowed in March helped the economy expand at a 3.5% annual rate in the first quarter, faster than the government previously estimated.

The growth in the total of goods and services produced in America compares with the April 28 estimate of 3.1%, which was the slowest in two years, the Commerce Department said yesterday in Washington. Initial jobless claims rose 1,000 to 323,000, close to this year’s average, the Labor Department said. Consumers spent more than estimated from January through March, overcoming higher energy costs with wages and salaries that expanded more in the final three months of 2004 than the government first reported. Higher demand may encourage companies to boost production to build inventories.

-Bloomberg News

IN THE COURTS

SCRUSHY JURORS DEADLOCKED ON KEY CHARGE; JUDGE URGES MORE WORK

BIRMINGHAM, Ala. – Confused and deadlocked on a key count in their sixth day of deliberations, jurors in the trial of former HealthSouth chief Richard Scrushy got a judge’s okay yesterday to move on to other charges.

U.S. District Judge Karon Bowdre also encouraged the jury – which has been deliberating from 9 a.m. to 2:30 p.m. daily, lunch included – to consider working longer days as members try to reach a decision in a trial that began Jan. 25.

Judge Bowdre’s comments came in response to a sixth handwritten note from the jury, which recessed until Friday morning. It is considering the first 36 counts in the indictment, which accuses Mr. Scrushy of directing a huge accounting fraud at the medical services chain.

While previous notes were written by the foreperson, the latest note came from another member of the panel, Judge Bowdre said.

The note said: “We cannot reach a unanimous decision on Count One Conspiracy.” The word “cannot” was underlined for emphasis.

– Associated Press

FOREIGN EXCHANGE

EURO DROPS BELOW $1.25 AS POLLS SHOW FRENCH MAY REJECT E.U. TREATY

The euro dropped below $1.25 for the first time in seven months as three opinion polls showed increasing French opposition to the European Union constitution before a referendum on May 29. Europe’s common currency also weakened against the yen, Swiss franc, and British pound after TNS-Sofres said opposition rose 1 percentage point to 54%.Two separate surveys by Ipsos SA and CSA showed 55% of French voters would sink the proposal, up from 53% earlier this week.

“People are waking up and realizing that the French are probably going to vote no and questioning what that means for Europe,” said Hugh Walsh, a currency trader in New York at Fortis (USA) Financial Markets, a unit of Belgium’s biggest financial-services company. “How do you have a united currency and monetary policy without having a united political front?”

– Bloomberg News

INSURANCE

PRESIDENT OF TOP BROKERAGE QUITS AMID PROBE

HARTFORD, Conn. – The president of one of the nation’s largest insurance brokerage firms has resigned in connection with an investigation into contract steering, the company said yesterday.

Robert B. Lockhart resigned from Hilb, Rogal & Hobbs, another employee was fired, and a third was placed on leave, company officials said in a memo to employees obtained by The Associated Press yesterday.

Company Chairman Martin Vaughan III told employees that the company’s Hartford office may have illegally given or received money as part of deals to place three clients with insurance companies.

Companies hire insurance brokers to connect them with firms that sell insurance. Federal agents and officials in New York and Connecticut have been investigating whether several firms accepted money to steer clients to specific companies.

The memo said the company had turned over documents to prosecutors.

– Associated Press