Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!news.media.mit.edu!americast.com!americast.com!usa-post Newsgroups: usa-today.banks From: usa-post@AmeriCast.Com Organization: American Cybercasting Approved: usa-post@AmeriCast.com Subject: banks Wed, Jul 15 1992 Date: Wed, 15 Jul 92 05:08:08 EDT Message-ID: 05-17 0000 DECISIONLINE: Banking & Economy USA TODAY Update July 15, 1992 Source: USA TODAY:Gannett National Information Network ECONOMY SEEN IMPROVING SLOWLY: The economy isn't expected to get better anytime soon. Employment inches up one month, plunges the next; consumer spending is rising but at an agonizingly slow pace; factory orders see-saw from month to month; exports are flat. Experts say this is about as good as things will get until 1994 or maybe 1995 - despite short-term interest rates that haven't been this low since 1963. (For more, see special Economy package below.) MEDICAL-CARE COSTS' RISE SLOWS: The sluggish economy has slowed the rise of medical-care costs, which rose just 0.4% in June from May, says the Bureau of Labor Statistics in its report on consumer prices. It was the smallest monthly increase since November 1988. Medical-care costs rose 7.5% the last 12 months, the bureau says. That's the slowest annual rate of growth since 1988 if it finished the year at that rate. STOCKS BROADLY HIGHER: The stock market rose broadly Tuesday despite as-expected government economic data indicating a lackluster recovery. The Dow Jones average of 30 industrials rose 21.08 points to 3358.39. Positive corporate earnings reports and two benign readings on the economy lent the market a positive bias, but the modest gains soared in the last hour of trading, fueled by program-trading. AUTO SALES SLUMP: A downshift in rental car orders and light truck sales push auto sales by five major automakers in the USA down 8.5% in early July from a year ago. Ford posted the only sales gain in the July 1-10 period, up 8.7%. GM slid 15.6%. Chrysler doesn't report 10-day sales but Ward's Automotive Reports estimates Chrysler sales fell 13.5%. Honda sales were off 28.5% and Toyota slipped 1%. REAL EARNINGS FALL: The Labor Department says U.S. workers' purchasing power declined in June. Average weekly earnings, after adjusting for inflation, fell 1% in June from May. In current dollars, weekly earnings averaged $362.89 in June vs. $365.38 in May. Real earnings in June were up 2% from a year earlier. MEXICO TO OPEN FINANCE INDUSTRY: Mexico has agreed to open its financial services industry to U.S. and Canadian companies. Mexico has long shielded its financial services from foreign ownership. Securities and insurance firms are only allowed 30% foreign ownership, while banks are allowed 49%. Under a tentative agreement, those caps will be removed by 2000. SEC APPROVES FUND RULES: Mutual fund investors could see lower fees and sales charges next year, thanks to a rule approved Tuesday by the Securities and Exchange Commission. Already, the maximum up-front sales charge, or load, is 8.5%. But some funds also have annual marketing fees, called 12b-1 fees. The rule will make some funds that charge 12b-1 fees reduce their loads. PRECIOUS METALS RISE: Gold and silver prices were up. On the Commodity Exchange, gold for current delivery was quoted at $351.10 per troy ounce, up $2.00. Republic National Bank quoted the metal at $350.60, up $1.90. Gold rose in overseas. Silver bullion fell in London to $3.94 from $3.93 but on the Comex, silver was quoted at $3.938, up by nearly 2 cents. PRICES MIXED: Oil futures prices finished mixed, with gasoline finally gaining ground on home heating oil. Light sweet crude oil for delivery in August settled at $21.46 a barrel, up 10 cents. Unleaded gasoline for delivery in August settled at 59.03 cents a gallon, up .93 cent. Home heating oil for delivery in August settled at 59.90 cents a gallon, down .15 cent. SPECIAL PACKAGE ON ECONOMY: INFLATION THE ONLY GOOD NEWS: Unemployment is expected to remain at above 7% for a year or more and gross domestic product is seen growing no better than the current weak annual rate of 2% to 3%. Inflation is the good news: It is just about dead and won't be rising soon. Consumer prices rose just 0.3% last month, the Labor Department said Tuesday. For the next two years, prices will likely increase about 3% a year. RECOVERY TO FELL LIKE RECESSION: "We're in the midst of a depressing period of slow, steady, rather boring economic growth" that will feel like a recession to many people, says Jeffrey Rosensweig, an economist and finance professor at Emory University in Atlanta. "We're just going to have to get used to it." COMPETITION TO PROMPT LAYOFFS: Economists expect the nation's unemployment rate to stay above 7% through next year because workers still will lose their jobs as companies continue to cut costs. Businesses will be forced to keep cutting costs, or at least hold the line, because of slack demand and intense competition at home and abroad. If competition were less intense, firms might be able to avoid cuts by hiking prices. RATES TO REMAIN LOW: Interest rates probably will remain low and change very little, just like the economy. Economists at the National Association of Manufacturers expect yields on 30-year Treasury bonds to average 7.3% next year after averaging 7.6% this year. Low interest rates will continue to prop the stock market a year or so, economists say, because the market could be the only place to make money. (End of package.) DOW JONES OPENS ON UPSWING: The Dow Jones average of 30 industrials opens Wednesday at 3358.39 after closing up 21.08 Tuesday. The New York Stock Exchange composite opens at 229.51, up 1.47. The American Stock Exchange market value opens at 386.08, up 2.94. The NASDAQ OTC composite opens at 575.21, up 4.99. DOLLAR OPENS UP OVERSEAS: The dollar opens up on Wednesday. It opens at 0.5210 British pounds, up from 0.5187; 5.0030 French francs, up from 4.9890; 1.4832 German marks, up from 1.4770; and 125.05 Japanese yen, up from 124.89. (As of 3 p.m. Tuesday. Source: First American Bank of New York.) 24-HOUR TELEPHONE INFORMATION: USA TODAY Money Hot Line. 95 cents a minute. 1-900-555-5555. Banking & Economy Editor: William Snoddy. (1-919-855-3491) Making copies of USA TODAY Update (Copyright, 1992) for further distribution purposes violates federal law. This article is copyright 1992 Gannett News Service. Redistribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM