BUSINESS BRIEFS
Alcoa suspends buybacks as profits fall 52%
Associated Press
PITTSBURGH— Alcoa Inc., the world's third-largest aluminum producer, reported a 52 percent drop in third quarter profit and said it would conserve cash by suspending its stock buyback program and all non-critical capital projects.
Alcoa, the first component of the Dow Jones industrial average to report third-quarter earnings, said results were hurt by sharply lower aluminum prices, weaker demand and a charge from curtailing production at a Texas smelter.
As a global economic slowdown crimps demand for virtually every commodity, aluminum prices have fallen 32 percent from an all-time high of about $3,380 per metric ton on July 11. Copper, lead, nickel and other metals have also tumbled.
Other companies facing the difficult market conditions include Moscow-based Rusal, the world's top aluminum producer, and Rio Tinto Ltd., the mining giant, which acquired Canada-based Alcan Inc. last year.
MINUTES REVEAL OUTLOOK ON RISK
WASHINGTON— Even in the midst of a severe meltdown on Wall Street, Federal Reserve officials at their September meeting believed the risks from weaker growth and higher inflation were roughly equal.
The Fed officials discussed the financial turmoil during their closed-door meeting on Sept. 16, according to minutes released yesterday. The meeting occurred a day investment bank Lehman Brothers collapsed — the largest bankruptcy in U.S. history. It was also hours before the Fed announced it was extending an $85 billion loan to rescue American International Group, the world's largest insurance company.
While concluding that it would not change interest rates at the September meeting, the minutes showed some members said a policy response from the central bank might be needed.Fed Chairman Ben Bernanke and his colleagues left the federal funds rate unchanged at 2 percent.
BORROWING DOWN 3.7% IN AUGUST
WASHINGTON— Consumer borrowing fell in August for the first time in more than a decade as households, battered by rising job layoffs and the decaying economy, cut back sharply on their use of credit.
The Federal Reserve said consumer borrowing fell at an annual rate of 3.7 percent in August, before the financial crisis became acute in September, forcing the government to approve a $700 billion rescue of the financial industry.
August's decline in consumer credit was the first time that borrowing had fallen since a 4.3 percent rate of decline in January 1998.The weakness reflected a decline of 5.4 percent at an annual rate in the category that includes auto loans and an 0.8 percent rate of decline in the credit card category.
The 3.7 percent rate of decline for overall borrowing followed a 2.4 percent rate of increase in borrowing in July.
Consumer borrowing, which the Fed defines as all loans not secured by real estate, totaled $2.58 trillion at an annual rate in August, down by $7.88 billion from the July level.
U.S. ECONOMY MOST COMPETITIVE
GENEVA- The U.S. still has the world's most competitive economy, despite the recent turmoil that has seen some Wall Street giants tumble and others turn to the Federal Reserve for financial bailouts, according to a survey released today.
In a poll of more than 12,000 business figures conducted by the Geneva-based World Economic Forum, the U.S. ranked ahead of Switzerland, Denmark, Sweden and Singapore. Researchers defended the survey's accuracy despite the fact that it was conducted before the U.S. government announced a $700 billion rescue package to save companies from collapse.
"In the context of the current crisis the index rather measures the ability of economies to limit the impact of the shock waves on the real economy and to bounce back quickly based on sound economic fundamentals," said Margareta Drzeniek Hanouz, one of the authors of the report.
