AP
Business Highlights
Friday January 30, 6:29 pm ET

Economy's new plunge is worst in quarter-century

WASHINGTON (AP) -- The economy shrank at a 3.8 percent pace at the end of 2008, the worst showing in a quarter-century, as the deepening recession forced consumers and businesses to throttle back spending.

Although the initial result was better than economists expected, the figure is likely to be revised even lower in the months ahead. Some believe the economy is contracting in the current quarter at a pace of around 5 percent. The current January-March period, they said, will probably turn out to be the worst quarter for the recession.

American consumers and businesses cut back everywhere in the final three months of 2008. Shoppers chopped spending on cars, furniture, appliances, clothes and other items. Businesses dropped the ax on equipment and software, home building and commercial construction. And overseas sales of U.S.-made goods and services tanked as foreign buyers grappled with their own economic woes.

Exxon Mobil shatters US record for annual profit

HOUSTON (AP) -- Exxon Mobil Corp. on Friday reported a yearly profit of $45.2 billion for 2008, breaking its own record for a U.S. company, even as its fourth-quarter earnings fell 33 percent from a year ago.

The previous record for annual profit was $40.6 billion, which the world's largest publicly traded oil company set in 2007.

The extraordinary full-year profit wasn't a surprise given crude's triple-digit price for much of 2008, peaking near an unheard of $150 a barrel in July. Since then, however, prices have fallen roughly 70 percent amid a deepening global economic crisis.

Irving, Texas-based Exxon said net income slid sharply to $7.8 billion, or $1.55 a share, in the October-December period. That compared with $11.7 billion, or $2.13 a share, in the same period a year ago, when Exxon set a U.S. record for quarterly profit. It has since topped that mark twice, first in last year's second quarter and then with earnings of $14.83 billion in the third quarter.

Stocks stumble as investors fear worsening economy

NEW YORK (AP) -- Stocks slumped for a second straight day Friday as investors, already on edge about the worsening economy, were further rattled by a report that Washington's plans to help banks may have hit a snag.

The Dow Jones industrials dropped 4.5 percent over two sessions; broader stock indexes are down more than 5 percent since Wednesday.

Uncertainty about when the economy will improve has investors looking to Washington for answers. With the market particularly worried about the prospects of a big bank failure, investors have been hopeful that the government will soon release details of a wide-reaching plan to help banks rid themselves of their toxic assets. But a CNBC report late Friday cast doubt on the so-called 'bad bank' idea, citing an unnamed industry source as saying the plan has hit significant snags. The news sent stocks down sharply lower in late afternoon trading.

P&G cuts outlook, says sales slowing

CINCINNATI (AP) -- Even Procter & Gamble Co., the world's largest consumer products maker, is getting dragged down by the spreading recession that has households around the globe looking for ways to tighten their budgets.

P&G reported Friday that its second-quarter profit jumped 53 percent, but that was boosted by the sale of its Folgers coffee business last year. The current outlook isn't so robust, and P&G stock tumbled 6 percent Friday to close at a 52-week low.

The company dropped its earning projections for the full year, and expects total sales to fall in the current quarter and possibly for the year.

Congressional leaders propose new financial reins

WASHINGTON (AP) -- Congressional leaders are proposing new government oversight over Wild West corners of the financial markets that operate largely in secrecy and have been pinned as potential threats to stability. Fresh targets are hedge funds and the $60 trillion global market in credit default swaps -- a form of insurance against loan defaults.

But powerful financial interests, representing industries battered by the crisis though still deep-pocketed, already are pushing back against new restrictions.

New proposals for financial regulation are coming from all corners, including the Obama administration, lawmakers, state securities regulators and the congressionally chartered panel overseeing the government's $700 billion bailout program.

Obama touts middle-class task force led by Biden

WASHINGTON (AP) -- President Barack Obama signed a series of executive orders Friday that he said should "level the playing field" for labor unions in their struggles with management.

Obama also used the occasion at the White House to announce formally a new White House task force on the problems of middle-class Americans. He named Vice President Joe Biden as its chairman.

Union officials say the new orders by Obama will undo Bush administration policies that favored employers over workers.

Gannett 4Q earnings fall on weak ad revenue

NEW YORK (AP) -- USA Today publisher Gannett Co. reported lower preliminary fourth-quarter earnings Friday, but even those profits will be wiped out once the company takes pretax write-downs of as much as $5.9 billion to reflect the declining value of its newspapers.

Shares fell more than 16 percent Friday.

Gannett, the nation's largest newspaper publisher, said preliminary net income fell to $158 million, or 69 cents per share, in the fourth quarter, down 36 percent from a year ago, as advertising revenue continues to take a beating because of the recession.

To realign costs with reduced revenue, Gannett slashed the work force at most of its U.S. newspapers by 10 percent and cut newsroom jobs at USA Today by about 5 percent late last year. Those moves, which preceded a one-week unpaid furlough that Gannett is imposing in the first quarter of 2009, resulted in pretax charges of $56 million.

Caterpillar to cut another 2,110 production jobs

PITTSBURGH (AP) -- Heavy equipment maker Caterpillar Inc. announced 2,110 new job cuts Friday as it scales back production amid a world economic slowdown.

The world's largest maker of mining and construction machinery said the layoffs at three Illinois plants -- in Aurora, Decatur and East Peoria -- and other cost-cutting measures were needed to maintain competitiveness. Like other big manufacturers, Caterpillar has seen demand for its large equipment fall as customers cut back spending.

The new layoffs came on top of 20,000 job cuts announced earlier this week, when the Peoria, Ill.-based company reported a 32 percent drop in fourth-quarter profit. Results fell as slumping commodity prices, tight credit markets and a decline in construction hurt orders for Caterpillar's backhoes, tractors and other machines.

Oil halts decline with GDP not as bad as feared

NEW YORK (AP) -- Energy prices perked up Friday as an economic report suggested that the nation's economy did not shrink as much feared, which could give more meaning to production cuts by major oil producers.

For the last seven months, OPEC and other oil producing nations have been unable to cut supply fast enough as a global economic crisis sapped energy demand.

On Friday, oil prices rose after the Commerce Department reported the economy shrank at a 3.8 percent pace at the end of 2008, which was not as bad as economists had expected. However, many analysts believe the economy has been contracting even faster this year.

Light, sweet crude for March rose 24 cents to settle at $41.68 a barrel on the New York Mercantile Exchange.

By The Associated Press

The Dow Jones industrial average fell 148.55, or 1.82 percent, to 8,000.46. The Standard & Poor's 500 index fell 19.26, or 2.28 percent, to 825.88, and the Nasdaq composite index fell 31.42, or 2.08 percent, to 1,476.42.

Light, sweet crude for March rose 24 cents to settle at $41.68 a barrel on the New York Mercantile Exchange.

In other Nymex trading, gasoline futures rose 3.8 cents to settle at $1.2689 a gallon. Heating oil gained 2.55 cents to settle at $1.4538 a gallon while natural gas for March delivery fell 15.9 cents to settle at $4.417 per 1,000 cubic feet.

In London, the March Brent contract rose 48 cents to settle at $45.88 on the ICE Futures exchange.