AP Business Highlights

Surprisingly strong jobs data, based on substantial fudged numbers no longer looking for work and fake numbers, signal turning point for more intense b**l s**t.

WASHINGTON (AP) -- It's the clearest sign yet the recession is finally ending: Employers laid off far fewer workers in July, the jobless rate dipped for the first time in 15 months and workers' hours and pay edged upward.

Those are the kind of figures that could give Americans the psychological boost necessary for recovery to take root after the worst recession since World War II.

A net total of 247,000 jobs were lost last month, the fewest in a year and a drastic improvement from the 443,000 that vanished in June.

The Labor Department's report Friday showed that the unemployment rate dropped a notch to 9.4 percent in July, from 9.5 percent the previous month. Together with slight increases in the average workweek and wages, the new figures suggested the economy is in a transition from recession to recovery.

AIG reports 2Q profit, first since 2007

American International Group Inc. said it had its first profitable quarter since 2007 -- and warned that it still has plenty of repair work to do.

The troubled insurer said Friday it earned $1.82 billion in the April-June quarter as some of its soured assets regained value.

But its core insurance business deteriorated sharply amid the recession. And AIG cautioned that unwinding its $1.3 trillion worth of derivatives will take a long time, and that future results will be volatile as it accounts for its restructuring.

Its big plan to pay back the government loan keeping it alive is to sell some of its businesses. But that plan has been revised "to take into account the deterioration of global market conditions," and it now plans to "maximize the value of its businesses over a longer time frame," the company wrote in a filing.

AIG didn't give details, but the message was clear that it's not going to pull off any quick sales.

Freddie Mac avoids more gov't aid

WASHINGTON (AP) -- Freddie Mac escaped the second fiscal quarter without asking the government for any new financial aid, but still expects to need more federal help in the future.

The government-controlled mortgage finance company posted a quarterly loss of $374 million, or 11 cents a share, including $1.1 billion in dividends paid to the government.

Excluding those payments, the company would have earned $768 million. In the year-ago period Freddie lost $1.05 billion, or $1.63 a share. Revenue totaled $7.5 billion versus $1.6 billion.

Investors finally find good news on unemployment

NEW YORK (AP) -- The economy's most vexing problem, unemployment, is showing the first signs of easing. And Wall Street is celebrating.

Major stock indexes barreled higher by more than 1 percent Friday after the government said the nation's unemployment rate unexpectedly fell in July for the first time in 15 months and that employers cut fewer jobs. Bond prices fell, driving yields higher as investors left the safety of Treasurys.

The Labor Department report handed investors the best evidence yet that the economy could be climbing out of the recession. Analysts widely consider unemployment the biggest obstacle to a recovery in the economy, which is driven by consumer spending.

The surprise figures injected new life in a monthlong rally and provided validation for traders who have been betting since March that the economy is healing. The Dow Jones industrial average rose 114 points to cap its fourth straight weekly gain. The Dow is at its highest level since early November.

Berkshire Hathaway's 2Q profit jumps 14 percent

OMAHA, Neb. (AP) -- Warren Buffett's company reported a 14 percent jump in second-quarter profit as the improving stock market boosted the value of Berkshire Hathaway Inc.'s derivative contracts and its investments.

On Friday, the Omaha-based company reported $3.3 billion in net income, or $2,123 per share, for the quarter ending June 30. That's up from $2.88 billion, or $1,859 per share, in the same period a year ago.

The three analysts surveyed by Thomson Reuters on average expected Berkshire to report earnings per share of $1,238.38.

Berkshire generated revenue of $29.61 billion in the quarter, down slightly from $30.03 billion a year ago.

Berkshire owns more than 60 subsidiaries and it has major investments in such companies as Coca-Cola Co. and Wells Fargo & Co.

Consumers cut debt for 5th straight month

WASHINGTON (AP) -- Consumers paid down their credit cards and cut other debt in June for the fifth straight month as they rebuild savings battered by the recession.

Outstanding U.S. consumer debt fell by $10.3 billion, or 4.9 percent at an annual rate, to $2.5 trillion, the Federal Reserve said. That's a much steeper cut than the $4.7 billion analysts expected, according to Thomson Reuters.

June's reduction follows a 2.6 percent cut in May and a steep 8.2 percent drop in April, when consumers reduced their borrowing by $17.4 billion. That was the most in dollar terms on records dating back to 1943.

'Cash-for-clunkers' program gets $2B refill

WASHINGTON (AP) -- Car shoppers caught up in the frenzy of the "cash-for-clunkers" program now have more time and a $2 billion reason to trade in their old gas guzzlers.

President Barack Obama signed into law Friday a measure tripling the budget of the $1 billion incentive program that has drawn big crowds to formerly deserted showrooms. The Senate on Thursday passed the legislation extending the two-week-old program into Labor Day and preventing it from running out of money.

The extra money, approved by the House last week, is aimed at helping automakers and spurring the economy while removing the some of the least fuel-efficient vehicles from the road.

Delta will cut more management jobs

ATLANTA (AP) -- Delta Air Lines Inc., the world's biggest airline operator, is planning to cut more management and administrative jobs, but isn't saying how many, according to a recorded message and a memo from top executives.

Chief Executive Richard Anderson said in a recorded message to employees Thursday that Delta has seen its revenue stream decline by billions of dollars because of the weak economy and the drop-off in demand for air travel.

Atlanta-based Delta is cutting more capacity and has previously hinted that more frontline employee positions may have to be cut.

Merck, Schering-Plough shareholders OK $41B deal

TRENTON, New Jersey (AP) -- Shareholders of drugmakers Merck & Co. and Schering-Plough Corp. on Friday both overwhelmingly backed a $41.1 billion tie-up to create the world's No. 2 pharmaceutical company.

The acquisition of smaller Schering-Plough allows Merck, the world's eighth-biggest drugmaker by prescription medicine sales, to leapfrog to No. 2 worldwide, just behind Pfizer Inc. The new Merck would have about $42.4 billion in annual sales.

CIT draws down credit, suspends preferred divs

NEW YORK (AP) -- Commercial lender CIT Group Inc., which is trying to avoid filing for bankruptcy protection, said Friday that it has received the remaining $1 billion available under a $3 billion credit agreement and is suspending preferred dividend payments.

The company, which is one of the nation's largest lenders to small and midsize businesses, said it will use a substantial portion of the new borrowing to support its small and middle market customers.

Suspending the dividends on four series of preferred stock will improve liquidity and preserve capital during its restructuring, CIT said.

Colonial BancGroup faces federal investigation

MONTGOMERY, Ala. (AP) -- Colonial BancGroup said Friday it is under criminal investigation by the Department of Justice over alleged accounting irregularities at its mortgage warehouse lending unit.

The company said the probe involves one year's worth of financial statements and that it intends to cooperate. The company was notified of the official investigation on Thursday.

The announcement follows a raid by federal agents on Monday at Colonial BancGroup Inc.'s branch in Orlando, Fla., where the mortgage warehouse lending unit is located.

By The Associated Press

The Dow Jones industrial average rose 113.81, or 1.2 percent, to 9,370.07.

The broader S&P 500 index gained 13.40, or 1.3 percent, to 1,010.48, while the Nasdaq composite index rose 27.09, or 1.4 percent, to 2,000.25.

Benchmark crude for September delivery gave up $1.01 to settle at $70.93 a barrel on the New York Mercantile Exchange.

In other Nymex trading, gasoline for September delivery fell 5.26 cents to settle at $2.0081 a gallon and heating oil dropped 2.45 cents to settle at $1.9122 a gallon. Natural gas for September delivery lost 6.9 cents to settle at $3.674 per 1,000 cubic feet.

In London, Brent prices gave up $1.24 to settle at $73.59 a barrel on the ICE Futures exchange.

 

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