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 Mon, Jul 13 1992 Date: Mon, 13 Jul 92 05:08:08 EDT Message-ID: 07-13 0000 DECISIONLINE: Banking & Economy USA TODAY Update July 13, 1992 Source: USA TODAY:Gannett National Information Network VIEWS ON RECESSION CHANGE: A jump in unemployment and a cut in interest rates helped change some economists views about the economy's chances of slipping back into recession. Seventy-seven percent of economists responding to a USA TODAY:CNBC economic survey conducted July 2-7 say those chances are low. A USA TODAY:CNBC survey a week earlier - June 24-29 - showed that 89% believed the odds of another recession were low. (For more, see special Economy package below.) RALLY SLOWS BUT CONTINUES: Banking, retailing and technology stocks helped Wall Street to extend a modest rally Friday, but trading was sluggish amid worries about upcoming corporate earnings. The Dow Jones industrial average rose 6.48 points to close at 3330.56. For the week, the Dow rose 0.27 point. The quarterly results to be announced beginning this week could be a disappointment, analysts have warned. WHOLESALE PRICES STEADY: Wholesale prices rose a modest 0.2% last month, the Labor Department says, more evidence that the weak recovery has tamed inflation. The producer price index, which measures prices charged by producers of finished goods to their customers, rose 0.4% in May. Excluding volatile food and energy prices, the core rate of inflation dropped 0.1% in June, its first drop since February 1987. MANUFACTURERS SEE 2.5% GROWTH: Growing exports and increased spending on business equipment will be the engines that drive the economy in the second half of 1992, the National Association of Manufacturers predicts. President Jerry Jasinowski says NAM is forecasting economic growth of 2.5% this year and 2.6% in 1993, as measured by the gross domestic product - the nation's total output of goods and services. STOCKS RISE TO END ELECTION YR.: The stock market has risen in each of the last three months of a national election year, says money-management consultant Budge Collins. Covering the past 16 national elections - 1928 through 1988 - the market, as measured by the Standard & Poor's 500-stock index, averaged gains of 0.9% in October, 1.7% in November and 1.9% in December. ANALYST SEES ANOTHER RATE CUT: Shearson Lehman Bros. analyst Chuck Lewis, who has made some excellent interest-rate calls, expects another cut in the discount rate by September - from 3% to 2.5%. If he's right, it would be the eighth consecutive cut in the rate the Fed charges banks to borrow overnight. His rationale: "It's a Fed insurance policy to get the economy cracking, and it could help give Bush the election." KEATING DAMAGES ASSESSED: A federal jury has ordered former Lincoln Savings and Loan chairman Charles Keating and three co-defendants to pay $2.1 billion in damages for swindling thousands of elderly investors. In the class-action suit, Keating and his co-defendants were found guilty of selling junk bonds that they claimed were government insured. The bonds became worthless when Lincoln Savings collapsed. GOLD DROPS; SILVER ENDS MIXED: Gold fell, and silver was mixed Friday. On the Commodity Exchange, gold bullion for current delivery fell 40 cents to close at $348.30. Republic National Bank quoted gold down 30 cents at $348. Silver bullion rose in London to $3.94 from $3.91 and on the Comex, silver settled at $3.920, down from $3.926. CRUDE DOWN FOR DAY, WEEK: Crude oil futures settled lower Friday, weakened by a late bout of pre-weekend selling that eroded earlier gains. The near-month price of benchmark light sweet crude oil fell to close at $21.28 a barrel. For the week, light sweet crude was down 82 cents. Unleaded gasoline for August delivery, which was hurt most of the week by oversupply fears, lost 4.49 cents for the week. SPECIAL PACKAGE ON ECONOMY: DOUBTS ABOUT RECOVERY MOUNT: Doubts about the strength of the recovery are mounting among economists. The mounting gloom can be traced to declines in home sales, orders for durable goods and manufacturing. And the Labor Department said July 2 that unemployment last month surged to 7.8% and businesses shed 117,000 jobs. The same day, the Fed decided to try to boost the economy by lowering short-term interest rates. GDP ESTIMATES REVISED: "Sure, the recovery is at risk," says economist Donald Ratajczak of Georgia State University. In the July survey, his estimate of second-quarter growth in gross domestic product was revised to a 1% annual rate from 2.3% in June. The consensus for second-quarter GDP growth was revised to a 2.1% annual rate, vs. 2.5% in June - well below the first quarter's 2.7%. REVISIONS CALLED `OVERREACTION': "There's enough momentum to keep the recovery going, but it will be very, very sluggish," says Kim Rupert, an economist at MMS International. Not all economists are pessimistic. "All this hand wringing is an enormous overreaction to one bad number," says James Smith, an economist at the University of North Carolina's Graduate School of Business. (End of package.) DOW JONES OPENS ON UPSWING: The Dow Jones average of 30 industrials opens Monday at 3330.56 after closing up 6.48 Friday. The New York Stock Exchange composite opens at 227.88, up 0.33. The American Stock Exchange market value opens at 382.32, up 0.48. The NASDAQ OTC composite opens at 567.80, up 0.54. 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