Home building fails to meet predictions
Home building fails to meet predictions
Residential construction rose less than expected last month, and consumer sentiment ebbed in August, potentially dimming hopes of an acceleration in economic activity in the third quarter.
The data on Friday suggested that a recent spike in interest rates, in anticipation of the Federal Reserve tapering its massive bond purchases as early as next month, was starting to have an impact on households.
The Thomson Reuters/University of Michigan’s preliminary reading on the overall index on consumer sentiment slipped to 80.0 from July’s six-year high of 85.1. August’s reading was the lowest in four months.
“People have been shocked by how much mortgage rates have risen in the past couple of months,” said Christopher Low, chief economist at FTN Financial in New York. “I think we will see an increasingly cautious consumer in the second half.”
Rising borrowing costs also appear to be making builders cautious about breaking ground on new projects.
Housing starts rose 5.9 percent to a seasonally adjusted annual rate of 896,000 units, the Commerce Department said in a separate report. While that was a recovery from June’s decline, it was below economists’ forecasts of a 900,000-unit rate.
Long-term interest rates have risen by more than a full percentage point over the past three months on the view that the Fed soon will start trimming the
$85 billion in monthly bond purchases that it has been making to keep borrowing costs low and stimulate the economy.
Interior: Keystone could harm parks
Building the Keystone XL pipeline would lead to more man-made light and noise in sparsely populated regions, which may harm natural resources, wildlife and visitors to national parks, the Interior Department said.
In comments submitted to the State Department as part of an environmental review, Interior warned that developer
TransCanada isn’t adequately dealing with risks to “cultural soundscapes” and “high quality night skies” from disturbances during construction and from pumping stations that keep oil flowing along the route.
“The cumulative effects of the project could adversely impact the quality of the night skies and the overall photic environment,” Willie R. Taylor, director of the office of environmental policy at Interior, wrote in a letter April 29. The State Department posted the letter on its Web site this week as it releases 1.2 million comments received about the project.
The State Department is reviewing Keystone, which would transport bitumen from Alberta to refineries along the Gulf of Mexico, because it would cross an international border.
The Interior Department focused on the pipeline’s impact on U.S. national parks and other public lands managed by the agency.
The pipeline will cross the popular Lewis and Clark National Historic Trail, which stretches across 11 states, and the Missouri National Recreational River in South Dakota and Nebraska, which combined draw an average of more than 386,000 visitors a year, according to Park Service data. Interior also mentions impacts on the Niobrara National Scenic River in northern Nebraska, which gets about 68,000 visitors a year.
— Bloomberg News
Also in Business
l A Delaware judge dealt a blow Friday to activist investor Carl Icahn’s effort to stop chief executive and founder Michael Dell’s $24.8 billion buyout offer for the struggling computer maker. Delaware Court of Chancery Judge Leo E. Strine Jr. refused to fast-track proceedings on Icahn’s claims that Dell directors have betrayed their duties to shareholders in trying to win support for Michael Dell’s bid.
l AOL is laying off up to half of the workforce at its Patch local news Web sites and shuttering or consolidating about 150 of the 900 sites while looking for partners for others. Up to 500 of Patch’s 1,000 employees will go in the layoffs. On Friday, 350 people got pink slips.
U.S. securities regulators approved IntercontinentalExchange’s acquisition of NYSE
Euronext, bringing the company one step closer to taking over some of the biggest stock and derivatives exchanges in the United States and Europe. The companies still require approval from individual countries’ regulators in Europe. IntercontinentalExchange agreed Dec. 20 to acquire NYSE Euronext for cash and stock totaling $8.2 billion.
l Merrill Lynch, the 99-year-old firm known for its “thundering herd” of brokers pitching stocks to Main Street, may cease to exist as a legal entity more than four years after being acquired by Bank of America. While the bank will keep the Merrill Lynch brand for its retail brokerage and investment bank, it plans to dissolve the subsidiary as early as the fourth quarter, according to an Aug. 2 filing. The bank will assume all of Merrill Lynch’s obligations and debt.
JPMorgan Chase will pay
$23 million to settle a class-
action lawsuit with pension funds that accused the bank of breaching its fiduciary duty by investing their money in Lehman Brothers Holdings notes. JPMorgan and the lead plaintiff, the Board of Trustees of the Operating Engineers Pension Trust, filed a proposed settlement agreement Friday in federal court in Manhattan. Lehman’s bankruptcy filing in September 2008 helped spark a credit crisis that plunged the nation into its deepest recession since the Great Depression. A U.S. district court must approve the settlement before it is final.
l General Motors said it will recall about 293,000 Chevrolet Cruze compact sedans to fix a brake problem. The automaker said the 2011 and 2012 model-year Cruzes can experience an intermittent loss of brake assist. The condition is found in vehicles with the combination of the turbocharged 1.4-liter dual overhead cam gasoline and GM’s 6T40 automatic transmission. Other engine and transmission combinations in the Cruze are not involved, GM said.
— From news services