May 26, 2017

Home Prices Gained in June, Survey Shows

Separate data released on Tuesday showed consumer confidence rebounded in August. Consumers were more upbeat about the future even though their assessment of their current standing fell.

Home prices rose 0.9 percent on a seasonally adjusted basis, according to the SP/Case Shiller composite index of 20 metropolitan areas. Economists had expected them to match May’s 1 percent gain.

The data is not likely to alter economists’ expectations that the housing recovery will continue, keeping it a sweet spot for an economy that grew just 1.7 percent in the second quarter.

But mortgage rates have climbed more than a percentage point since late May, largely on expectations that the Federal Reserve will soon start withdrawing its support for the economy by purchasing fewer bonds. Those monthly bond buys had kept long-term interest rates low.

Analysts said that suggests gains in home price gains may continue to slow in the months ahead, particularly since the sharpest rise in rates came in late June and early July, likely after many June contracts were already signed.

“We know housing prices tend to lag. You’re going to see mortgage applications fall first and then starts and permits will move. It will take time to show up in prices,” said Michael Hanson, U.S. economist at Bank of America Merrill Lynch.

Recent data has already shown a decline in mortgage applications and less demand to refinancing existing loans, while a report last week showed sales of new single-family homes fell sharply in July to their lowest level in nine months.

The SP/Case Shiller index showed prices in all 20 cities rose on a yearly basis, led by a 24.9 percent surge in Las Vegas. But only in six did they rise at a faster clip than in the previous month, down from 10 in May.

“Overall the report shows that housing prices are rising but the pace may be slowing,” David Blitzer, chairman of the index committee at SP Dow Jones Indices, said in a statement.

Without seasonal adjustment, prices rose 2.2 percent in June and on a national average were back at their spring 2004 levels. Prices remain well below their 2006 peak, which preceded a far-reaching collapse that helped plunge the U.S. economy into its deepest recession since the 1930s.

Compared to last June, prices rose a healthy 12.1 percent, just shy of the previous month’s 12.2 percent gain.

Still, U.S. consumers’ mood improved this month despite higher borrowing costs. The Conference Board, an industry group, said its index of consumer attitudes rose to 81.5 from 80.3, and the expectations outlook rose to 88.7 form 86.0. Polling ended on August 15.

Worries about building tension in Syria kept market reaction to the data subdued, with U.S. Treasury bond prices trimming gains slightly after the stronger-than-expected confidence data and the back-up in bond yields supporting the dollar. Major U.S. stock indexes were lower.

The confidence data contrasted with an earlier Thomson Reuters/University of Michigan consumer survey showing sentiment slipped in August.

“There is definitely sentiment building that the economy is going to get better, but it’s a bit puzzling to see confidence accelerate when current growth is rather weak,” said Thomas Simons, money market economist at Jefferies Co., adding growth over the past three quarters “has been just barely 1 percent.”

Jim O’Sullivan, chief U.S. economist at High Frequency Economics, said the level of the Conference Board’s expectations index is consistent with a roughly 3 percent rate of growth in real consumer spending, “which would be a pickup from around 2 percent currently.”

Economists expect growth to be stronger in the second half, a view shared by the Federal Reserve, which has based its projected reduction of stimulus on its economic outlook.

Markets largely expect the Fed will begin scaling back its bond purchases next month and possibly end them altogether by mid-2014, though some uncertainty over this remains.

If mortgage rates continue to climb, putting more pressure on housing, the outlook could get cloudier.

Still, rates remain low by historical standards and most economists do not expect the higher costs to end the recovery altogether. In the short-term, it could also spur potential buyers to act before rates rise further.

“It probably wouldn’t be a bad thing if home prices started slowing down a bit from double-digit rates of growth, and I think rising mortgage rates will be offset by the improving economic backdrop, as reflected in the pretty decent consumer confidence number,” O’Sullivan said.

(Editing by Chizu Nomiyama)

Article source: http://www.nytimes.com/reuters/2013/08/27/business/27reuters-usa-economy-homes-index.html?partner=rss&emc=rss

Home Depot Credits Housing Recovery for 17% Jump in Earnings

The chief financial officer, Carol Tomé, said the company projected that “we are in the early stages of housing recovery” as it reported a 17 percent increase in earnings, to $1.8 billion. Sales in the second quarter grew 9.5 percent, to $22.5 billion.

Yet not all retailers saw lively home departments. J. C. Penney, which also reported earnings on Tuesday, said revenue dropped almost 12 percent for the quarter, in part because of lackluster sales in its recently revamped home departments. Its loss came in at $2.66 a share, far worse than analyst estimates of a loss of $1.22 a share.

The home departments at Penney are left over from the former chief executive Ron Johnson, who was terminated in April. Penney went ahead with his plans for upscale home boutiques, unveiling them in June, but said on Tuesday that they had performed badly.

Costly items like a $2,895 Jonathan Adler sofa and $72 Michael Graves wine decanters failed to provide a draw to the specially designed areas. And Mr. Johnson’s strategy had counted on Martha Stewart home boutiques as a major attraction — a notion that is still tied up in a legal battle among Penney, Macy’s and Martha Stewart Living Omnimedia.

“The merchandising strategy was not resonating well with our core customer, and performance has been weaker than we had hoped,” the chief executive, Myron E. Ullman III, told investors on Tuesday. Sales at stores open at least a year, an important performance indicator, slid 11.9 percent in the quarter; Mr. Ullman said they would have declined only 9.5 percent were it not for the home stores.

“We expected home to improve, obviously, when the new store shops had opened, and quite the opposite happened,” he said. “We actually have less productivity in the new home stores than we do in the stores that didn’t get a home store.”

At Home Depot, every department posted positive comparable sales in the quarter, from gardening to maintenance to décor to kitchens.

Professionals — Home Depot’s term for contractors — and consumers both seemed to increase spending at the same rate, Ms. Tomé said.

“With home prices up, people are starting to view their homes as more of an investment and not an expense,” she said.

Some economists have suggested that only middle- and higher-income consumers, and investors buying properties, are experiencing the lift in the housing market. Ms. Tomé said that Home Depot’s customers tended to be wealthier by dint of the fact that they are homeowners.

She noted that investors, too, were probably spending at Home Depot.

“If you’re an investor group, be it a private equity firm or someone coming in from outside the United States, you’re not buying that property to sit on it, you’re buying that property to rent it — and you can’t rent it if it’s not in good shape.”

To that point, Home Depot’s installation business grew in the double digits in the quarter, she said. While that increase was not all investors, “the blanket comment that these investor groups wouldn’t spend money at Home Depot isn’t true.”

She said that one indicator — the number of items bought per visit — also increased, which suggested confidence.

“Items in a basket suggest a couple of things: one, that you’re not just living hand-to-mouth if you’re a pro, because we saw pros coming in and getting exactly what they need” in quarters past, she said. “For consumers, it means a bigger project, so I’m not just going to paint my room, but I’m going to paint my room and refloor my room.”

Penney executives vowed that they were moving on from the Ron Johnson era.

“We know where the problems are,” Mr. Ullman said. “There are no quick fixes to correct the errors of the past.”

While he said there were promising signs in back-to-school sales, Penney’s traffic was down 5.5 percent compared with the same quarter a year ago, which suggests that Mr. Ullman’s early efforts in the last few months at restoring private labels and promotions are still not attracting customers.

The company has been leaning heavily on promotions. It increased circular counts by 150 percent in the first six weeks of the back-to-school period (defined as June 30 through Aug. 10) this year versus last year, and increased the number of products promoted via e-mail by about the same amount, according to the advertising analysis firm Market Track.

Another faltering retailer, Best Buy, turned in better-than-expected results on Tuesday, which were attributed to aggressive cost-cutting. Earnings came in at $266 million, up from $12 million a year earlier. Same-store sales were down 0.6 percent in the United States, and Best Buy said those would have been flat to slightly up were it not for the construction and introduction of specialized Samsung and Windows shops.

Revenue decreased slightly, to $9.3 billion, from $9.4 billion in the same quarter last year. And online sales grew 10.5 percent from a year ago, which analysts said was encouraging.

“The ongoing increases in online sales signal to us that the investments Best Buy has made are driving better performance,” Alan M. Rifkin, a Barclays analyst, wrote in a note to clients.

Article source: http://www.nytimes.com/2013/08/21/business/home-depot-earnings-jump-17-fueled-by-housing-recovery.html?partner=rss&emc=rss

New York Times Company Swings to a Profit

The company reported on Thursday that net income rose to $20.1 million, or 13 cents a share, from a loss of $87.6 million, or 58 cents a share, in the period a year earlier.

Last year’s second-quarter results were hurt by write-downs related to the sales of About.com and the company’s regional newspaper group. Excluding those items, income from continuing operations was $20.1 million, compared with $38.1 million in the period a year earlier.

Total revenue for the quarter declined less than 1 percent, to $485.4 million, from $489.8 million in the second quarter of 2012. Circulation revenue rose 5.1 percent, to $245.1 million, from $233.3 million. But that gain was largely offset by a 5.8 percent decline in advertising revenue, to $207.5 million.

Print advertising at the company’s newspapers, which include The New York Times, The Boston Globe and The International Herald Tribune, declined 6.8 percent, and digital advertising fell 2.7 percent. Digital advertising now accounts for 24.7 percent of the company’s total advertising revenue.

Operating costs declined 3.1 percent, to $431.9 million, from $445.7 million, mainly because of lower compensation and benefits costs, according to the company.

“Our improved results in the second quarter were an organizationwide effort — with contributions from more favorable revenue trends and strong cost performance,” Mark Thompson, the company’s president and chief executive, said in a statement.

The number of paid subscribers to the Web site, e-reader and other digital editions of The Times and The International Herald Tribune grew to 699,000, a jump of more than 35 percent from the period a year earlier. Digital subscriptions to The Boston Globe and BostonGlobe.com rose to 39,000, an increase of nearly 70 percent from 23,000 a year earlier.

Alexia S. Quadrani, an analyst at JPMorgan Chase, said that while she was pleased with the results, she was also aware of the challenges newspapers were facing.

“As nice it is to see slightly better-than-expected numbers, the fact that we are many years into these declines and they still persist just shows you the secular challenges this industry is facing,” said Ms. Quadrani. “The New York Times has a successful digital platform to help offset some of the ongoing newspaper advertising weakness. It’s still a headwind you’re going to try to offset every day.”

Since Mr. Thompson joined The Times in November, he has focused on rebranding The Times as a global operation. In February, the company announced it would sell the New England Media Group, which includes The Boston Globe, Boston.com, The Worcester Telegram Gazette and Globe Direct, a direct-mail marketing company. Bids for the properties were due in July but a sale has not been announced.

The Times also announced in February that it would rename The International Herald Tribune, its 125-year-old newspaper based in Paris, The International New York Times. It also will unveil a new Web site for international audiences in the coming months.

The company has also continued to increase its plans to charge readers for content. In June, the company started to charge nonsubscribers who want to read more than three articles a day on The New York Times apps for mobile devices.

“We are making good progress and are on track with our strategic growth initiatives,” Mr. Thompson said. “In particular, we are well under way in the ramp-up for the fall rebrand of The International Herald Tribune as The International New York Times and with the development work related to our new paid products.”

Article source: http://www.nytimes.com/2013/08/02/business/media/new-york-times-company-swings-to-a-profit.html?partner=rss&emc=rss

Strong Quarter for Netflix, but Investors Hit Pause

Netflix’s subscriber gains — an improvement over last year’s performance during what is traditionally its weakest quarter of the year — and overall profits were well within projections, but some investors, hoping for more, sent the stock down about 8 percent in after-hours trading before rebounding somewhat. That result alludes to one of the challenges Netflix faces: maintaining the enthusiasm of both investors and subscribers to its video-streaming services.

Looking ahead, Netflix projected that it would add 690,000 to 1.49 million subscribers in the United States in the third quarter, continuing a growth trajectory that has made it one of the most closely tracked companies in the media and technology industries. Analysts say that Reed Hastings, Netflix’s chief executive, and his colleagues are under pressure to prove that they can keep adding members to what feels more and more like a Netflix club, with insiders who can watch the service’s original shows and outsiders who cannot.

On a first-of-its-kind video conference call between Netflix executives and two interviewers on Monday evening, the executives said that the original shows — including “House of Cards,” which was nominated for nine Emmy Awards last week — are only slightly affecting the bottom line now, but will ultimately add significantly to the company’s subscriber totals and revenues.

“If we do it right, these will turn into real franchises,” Mr. Hastings said.

Ted A. Sarandos, the company’s chief content officer, reminded investors that traditional networks like HBO and Showtime worked for many years to gain widespread recognition. In Netflix’s case, he said, “the brand is starting to mean something to viewers, already.”

In the second quarter, Netflix revenue topped $1 billion for only the second time ever, totaling $1.07 billion, in line with analysts’ expectations. Netflix reported earnings of 49 cents a share, beating the consensus expectations for 40 cents a share. It returned to positive cash flow for the first time in a year, because of a one-time decline in payments to content providers and overall profit growth.

Outside the United States, Netflix added 610,000 streaming subscribers in markets like Britain and Brazil. The international business continued to operate at a loss, but it was lower than expected.

“We’re feeling quite good about the business,” Mr. Hastings said during the Google-powered video conference call, which was set up as an alternative to the phone calls that many companies set up on a quarterly basis.

In their quarterly letter to investors, Mr. Hastings and Netflix’s chief financial officer, David Wells, attributed some of the second-quarter subscriber gains to “Arrested,” writing, “This show already had a strong brand and fan base, generating a small but noticeable bump in membership when we released it.” But they cautioned investors not to expect a similar bump from other new shows, like “Orange Is the New Black,” which came onto the service this month. “Other great shows don’t have that noticeable effect in their first season because they are less established,” they wrote.

In a hint of the company’s plans for more original programming, Mr. Hastings and Mr. Wells said Netflix would be expanding to “include broadly appealing feature documentaries and stand-up comedy specials.”

Over all, original shows like “House of Cards” remain just a sliver of subscribers’ viewing; Netflix’s menu of TV shows and films that have already had their premieres elsewhere “accounts for the bulk of viewing and leads to a lot of member enjoyment,” Mr. Hastings and Mr. Wells wrote. They cited a revealing statistic on Monday: three-fourths of the hours streamed on Netflix are spurred by the algorithms that recommend specific shows and movies based on a subscriber’s past viewing.

Sensing industrywide trends that are making hit shows and films cost more to license, Netflix increasingly wants to be known not as a service that has everything people want to watch, but instead has a selection of exclusive shows that cannot be seen anywhere else. In the second quarter, a deal with Viacom’s MTV Networks expired, resulting in the loss of shows like “SpongeBob SquarePants.” Netflix subsequently announced a deal for original programming from DreamWorks Animation.

Michael Pachter, a managing director at Wedbush Securities, who has been a Netflix skeptic, said on Monday that “I think that they probably gained a lot of new subscribers from ‘Arrested Development,’ and probably lost a lot because of the loss of Starz, SpongeBob, James Bond and MTV content.”

He added, “I think that their guidance suggests this will persist, and I’m pessimistic that they will hit the high end of their domestic streaming subscriber growth.”

Article source: http://www.nytimes.com/2013/07/23/business/media/netflix-revenue-tops-1-billion-for-the-quarter.html?partner=rss&emc=rss

Debut of ‘New Day’ Fails to Increase CNN’s Morning Audience

CNN introduced its new morning program, “New Day,” with a bit of fanfare Monday, and won mostly positive reviews for the revamping of the format and the new cast of anchors.

But the new show went little noticed by the viewing public. In fact, CNN fared worse on Monday that it has in recent months with the programming the new show replaced.

On its first day, “New Day” attracted 247,000 total viewers, and 95,000 among the group that news advertisers pay to reach, viewers ages 25 to 54.

In both cases, that left “New Day” trailing its cable news competitors. “New Day” also still trailed its sister network, HLN, in the 25-54 group, though it did edge ahead into third — instead of fourth — place among the cable morning shows in total viewers. (Still, those numbers are minuscule compared with what the traditional network morning shows like “Today” and “Good Morning America” attract.)

The audiences for Monday on the cable competition during the same time period, 6 a.m. to 9 a.m., were: “Fox and Friends” on the Fox News Channel, 1.06 million total viewers, with 262,000 in the 25-54 category; “Morning Joe” on MSNBC, 355,000 total viewers, 132,000 in the advertiser-preferred group; HLN’s morning show had 215,000 total viewers, with 121,000 in the 25-54 audience.

News shows sometimes start out with a flourish because of a surge of publicity, but then slide until they can (or cannot) build up a following. “New Day” apparently will have to settle in for a long haul, at its outset trailing what CNN has been averaging in those hours.

For the second quarter of 2013, CNN averaged 371,000 viewers in those hours, and 147,000 viewers in the 25-54 group. Of course, those numbers include the inflated ratings for heavy news stories during the last several months, which always stoke the CNN results.

A week ago, however, CNN had more viewers on what was a more typical Monday: 265,000. But “New Day” did improve this week over the performance in the 25-54 category, growing to 95,000 from 80,000.

Article source: http://www.nytimes.com/2013/06/19/business/media/debut-of-new-day-fails-to-increase-cnns-morning-audience.html?partner=rss&emc=rss

Euro Watch: Euro Zone Economy’s Slide Accelerates, Data Show

An index of euro zone purchasing managers by Markit Economics fell in March to 46.5 from 47.9 in February, with the rate of decline worsening for the second month in a row.

The purchasing managers composite index has fallen in every month but one since September 2011. An index above 50.0 suggests economic expansion, while a level below that suggests contraction.

The economy of the 17-nation euro zone, which accounts for nearly three-quarters of the overall E.U. gross domestic product, shrank for a fifth straight quarter at the end of 2012, and indications suggest that trend will continue in January through March period.

A record jobless rate of 11.9 percent and government budget-balancing measures have hurt household spending across most of Europe, even as the United States continues to grow modestly.

Separate Markit reports showed both the German and French economies, the two largest in the euro zone, losing steam. The German composite index came in Thursday at 51.0 for March, down from 53.3 in February. The French composite index was worse, falling to 42.1 for March from 43.1 in February, as service and manufacturing activity declined.

Martin van Vliet, an economist at ING Bank in Amsterdam, said the report Thursday “pours cold water on hopes of an imminent end to the euro zone recession,” as it showed domestic demand remaining weak across Europe.

Mr. van Vliet said he had “penciled in a return to growth” for the euro zone in the second quarter, led by a German rebound, after a small January-March contraction. But with Germany now apparently slowing and Cyprus struggling to work out a bailout, he said, both the first and second quarters may now disappoint expectations. Mr. van Vliet said it was also looking increasingly likely that his forecast for a 0.3 percent contraction of the euro zone this year would turn out to be too optimistic.

The data contrast with a continuing uptick in euro zone economic sentiment. The European Commission said in February that its economic and business confidence indicator in the 17 countries using the euro had improved for the fourth straight month last month, as industrial orders rose.

Article source: http://www.nytimes.com/2013/03/22/business/global/daily-euro-zone-watch.html?partner=rss&emc=rss

Barnes & Noble’s Nook Loss Deepens as Book Sales Slow

Shares slid 9.6 percent to $14.51 in mid-day trade.

The top U.S. bookstore chain also said on Thursday that sales growth in its core bookselling business slowed in the quarter and declined over the Thanksgiving weekend, as the benefits from last year’s liquidation of rival Borders Group waned.

In one bit of sunlight, the company reported that quarterly sales of its high-margin digital books and periodicals soared.

Nook segment revenue rose 6 percent for the three months ended October 27, largely on the strength of a 38 percent jump in sales of digital books, newspapers and applications.

But the company, which operates 689 stores, sold fewer Nook units at its owns stores.

The Nook business has been a driver of revenue since it was first introduced in 2009 as readers buy more digital books but product development and marketing costs to keep the devices competitive with Amazon’s Kindle have made it an expensive project.

Chief Executive William Lynch told investors on a conference call that he stuck by his forecast that the Nook segment’s loss would narrow this fiscal year.

Halfway through the fiscal year, the loss has increased 6.1 percent to $108.1 million as the company invested in developing the devices and prepared for its first international expansion to Britain.

The new Nook HD and Nook HD+ tablets were launched after its fiscal second quarter ended October 27, and are taking on the Amazon Kindle devices and Apple’s new mini iPad.

Barnes Noble said Nook device sales over the four-day Thanksgiving weekend – one of the busiest times of the year for U.S. retailers – doubled from last year, helped by promotions by Wal-Mart Stores Inc and Target Corp.

Both stopped selling Kindles this year. Amazon reported similar growth for its devices.

“Barnes Noble is holding on to market share at the expense of profit,” said Morningstar analyst Peter Wahlstrom. The investments to keep pace with rivals will make it hard for the Nook unit to turn a profit, he said.

Lynch said Barnes Noble has hung on to its 25-30 percent share of the U.S. e-books market.

Nook accounts for 8.5 percent of total revenue. In August, early in the quarter, Barnes Noble lowered prices on several Nook devices.

In another worrisome sign longer term, Wahlstrom noted that same-store sales for books fell over the holiday weekend.

Overall revenue in the quarter slipped 0.4 percent to $1.88 billion, while retail sales, still its biggest segment by far, fell 2.9 percent to $996 million, hurt by flat same-store sales and a drop in sales on its website.

Revenue at its college bookstore chain, which generates much of the cash needed to fund Nook, edged up 0.4 percent to $773 million while same-store sales fell. Barnes Noble expects growth in this business to come in part from landing new accounts.

On a net basis, Barnes Noble reported quarterly income of $2.2 million versus a loss of $6.6 million a year ago.

Factoring in preferred stock dividends and accretion of dividends on preferred stock, it posted a net loss of 4 cents a share, compared with a loss of 17 cents a year earlier. On that basis, analysts expected a loss of 6 cents, according to Thomson Reuters I/B/E/S.

(Reporting by Martinne Geller and Phil Wahba in New York; Editing by Maureen Bavdek and Leslie Gevirtz)

Article source: http://www.nytimes.com/reuters/2012/11/29/business/29reuters-barnesandnoble-results.html?partner=rss&emc=rss

Tivo’s Quarterly Revenue Rises on Higher Subscriptions

(Reuters) – Tivo Inc reported a higher quarterly revenue as subscriptions of its trademark digital video recorders rose 41 percent.

Revenue rose 7 percent to $65.3 million.

Net loss widened to $27.7 million, or 23 cents per share, in the second quarter, from $19.6 million or 17 cents per share, a year earlier.

(Reporting by Chandni Doulatramani in Bangalore; Editing by Sriraj Kalluvila)

Article source: http://www.nytimes.com/reuters/2012/08/29/technology/29reuters-tivo-results.html?partner=rss&emc=rss

DealBook: Second-Quarter Profit Fell 42 Percent at Société Générale

Séverin Cabannes, left, and Frédéric Oudéa of Société Générale. The bank said it was hurt by slowing growth in Europe.Jacques Brinon/Associated PressSéverin Cabannes, left, and Frédéric Oudéa of Société Générale. The bank said it was hurt by slowing growth in Europe.

PARIS — Société Générale, the big French bank, reported second-quarter results on Wednesday that fell short of analysts’ estimates as it struggled against a downturn in Europe.

Net profit in the second quarter fell 42 percent, to 433 million euros ($530 million), compared with 747 million euros in the period a year earlier. Analysts were expecting the bank to earn 764 million euros in the latest quarter. The bank also said it was making progress in bolstering its capital cushion.

“Despite a challenging environment, the Société Générale Group has progressed, quarter after quarter, with its transformation strategy, in line with its objectives,” Frédéric Oudéa, the bank’s chief executive, said in a statement.

Société Générale took a series of write-downs related to past acquisitions, including 250 million euros on Rosbank in Russia and 200 million euros on TCW Group, a fund firm in Los Angeles. Analysts are waiting to see whether Société Générale sells TCW as part of a broader plan to raise money.

Like the results of its peers, the report raised concerns that financial weakness could persist as the debt crisis drags on.

The bank said growth in Europe slowed significantly in the second quarter, crimping some of its profitability from retail operations. Its international retail banking revenue fell nearly 2 percent, to 1.24 billion euros.

The bank signaled that it also continued to face financial challenges with its Greek subsidiary, Geniki Bank. In a statement, Société Générale said its operations in Central and Eastern Europe “excluding Greece” did well, but it did not provide figures for the Greek unit. Société Générale has recently cut financing to Geniki to a minimum as the Greek economy shrinks.

French banks have been reducing their exposure to Greece by selling much of the nation’s sovereign debt, and those with subsidiaries there are scrambling to figure out how to cope with the worsening situation. One of Société Générale’s French rivals, Crédit Agricole, said recently that it was in talks to sell its Greek subsidiary, Emporiki Bank, as soon as possible.

The debt crisis is also wreaking havoc on the investment banking business. The bank said customers remain reticent as policy makers struggle to find “durable solutions to the sovereign debt crisis.” Corporate and investment banking revenue fell more than 30 percent, to 1.22 billion euros.

Société Générale also noted deteriorating conditions in France, which has the largest economy in the euro zone after Germany’s. So far, France has avoided the worst of the debt crisis that first engulfed Greece and now Spain. But the economy has been softening, and the government’s share of the bill for cleaning up the crisis is likely to grow.

The bank’s French retail operations remained flat at 2.04 billion euros.

Shares of Société Générale rose 0.5 percent in Paris, to 18.11 euros.

Article source: http://dealbook.nytimes.com/2012/08/01/societe-generale-profit-falls-42-on-weak-economy/?partner=rss&emc=rss

Economic Growth in U.S., Though Still Modest, Speeds Up

Total output grew at an estimated annual rate of 2.5 percent from July to September, still modest but almost double the 1.3 percent rate in the second quarter, the department reported.

The pace, however, wasnot brisk enough to recover the ground lost in the economic bust, lower unemployment or even substantially dispel fears of a second recession. Still, the report offered a small helping of reassurance.

“It ain’t brilliant, but at least it’s heading in the right direction,” said Ian Shepherdson, the chief United States economist for High Frequency Economics, a data analysis firm. “I want to see 4 percent, but given that people were talking about a new recession, I’ll take 2.5 or 3, thanks very much.”

The consensus forecast of economists shows continued growth at about a 2 percent rate for the rest of this year and all of 2012. That would be an improvement over the first half of this year, but a strong recovery would require a rate closer to 4 percent. In the 25 years prior to the recession, the United States economy grew at about 3.25 percent a year, though demographic changes have led to lower expectations for future growth even in a healthy economy.

This economy is still a flurry of mixed signals. Real income has declined, but so has the number of people filing for unemployment, a trend that continued in the number of new claims announced Thursday morning.

The stock market has rallied but consumer confidence has plummeted to levels last seen in 2008. That sentiment helped push pending sales of existing U.S. homes down for a third successive month during September, the National Association of Realtors reported on Thursday.

The economy may be growing, but Americans cannot feel it.

“For most people, they’re unable to really make a distinction between a recession and just 2 percent growth, which means the economy is growing so weakly it can’t hire enough people to make a dent in unemployment,” said Bernard Baumohl, the chief economist for the Economic Outlook Group.

Thursday’s numbers showed a larger than expected increase in consumer spending, fueled by purchases of durable recreational goods like televisions. Personal spending increased by 2.4 percent, accounting for the lion’s share of the growth.

But business investment, which has been strong throughout the recovery, continued to grow as well, with a 13.3 percent increase in non-residential building and a 17.4 percent increase in equipment and software purchases.

Growth in residential construction slowed, but spending on furniture and appliances picked up. Government spending stayed flat, with a reduction in state, local and federal non-military spending canceled out by an increase in defense spending.

The growth rate was weighed down by a meager increase in inventories, which Mr. Shepherdson said he expected would turn out to have been higher than believed. The initial G.D.P. report is based on estimates and is subject to multiple revisions.The growth that economists expected in the first part of the year was dampened by shocks like blizzards, a spike in gasoline prices and the earthquake in Japan, which disrupted the global supply chain. Those effects were fading away by the third quarter, economists said.

But other risks still loom, from Europe’s debt crisis to the possibility that President Obama’s proposal for renewed stimulus measures, including a payroll tax cut, could fail to get through Congress.

“The better growth performance in the third quarter doesn’t mean that the economy can’t ‘double-dip’ back into recession,” wrote Nigel Gault, an economist with IHS Global Insight, ahead of the report. “But it suggests that it has more momentum than there seemed to be just a month or two ago, and underscores that the primary recession risks are from external shocks, with Europe the biggest wild card.”

On the domestic front, analysts seemed to be betting that the payroll tax cut would continue, but were divided on the odds that extended unemployment benefits would be renewed. The two programs together represent spending power equal to about 1 percent of G.D.P., though some of that money may go into savings or be spent on imported goods.

More pessimistic economists fear that the third-quarter growth will be unsustainable because housing values remain low and consumers, whose spending accounts for more than 70 percent of G.D.P., have little reason to expect that their financial situation will improve. The increase in consumer spending was accompanied by a drop in the savings rate and an inching upward of credit card debt, possibly to accommodate purchases that could no longer be delayed.

“That is unlikely to continue if the economy grows weakly because Americans are much more conscious about adding on a lot of debt to their balance sheet,” said Kathy Bostjancic, director for macroeconomic analysis at the Conference Board, which tracks consumer and executive sentiment. The negative outlook was beginning to spread to businesses, Ms. Bostjancic said.

“C.E.O. confidence is starting to melt away, along with consumer confidence levels, which have always been low,” she said.

This article has been revised to reflect the following correction:

Correction: October 27, 2011

An earlier version of this article gave an incorrect name of the company where Nigel Gault works.  It is IHS Global Insight, not HIS Global Insight. 

Article source: http://www.nytimes.com/2011/10/28/business/economy/us-economy-shows-modest-growth.html?partner=rss&emc=rss