Consumer spending flat
Consumer spending barely rose and inflation was tame in July, offering a cautionary note on the economy as the Federal Reserve weighs cutting back its massive bond-buying program. Spending, which accounts for more than two-thirds of the nation’s economic activity, could struggle to regain momentum as other data on Friday showed consumer sentiment fell this month. The reports added to a number of signs that have suggested a loss of steam in the economy early in the third quarter. The Department of Commerce said consumer spending ticked up 0.1 percent, restrained by weak outlays on utilities and automobiles. Adjusted for inflation, spending was flat.
Union calls for strike
The nation’s main public sector trade union, Adedy, launched a call on Friday for a two-day strike this month in protest against job lay-offs included in an economic overhaul demanded by the country’s creditors. Adedy, in a statement, criticized the government’s “submission” to proposals from the EU and IMF that would “destroy the public sector and the welfare state.” The strike action was called for Sept. 18 and Sept. 19. Greece has agreed to put 12,500 civil servants on a redeployment scheme by the end of this month, as part of a general restructuring of its public sector, in return for the next installment of its EU-IMF rescue loans. Workers have to accept new posts or spend eight months on reduced salaries as alternative posts are found, with the risk of losing their jobs altogether. The government redeployed 4,000 civil servants at the end of July, mostly teaching staff.
GE to spin off lending
General Electric Co (GE) plans to spin off the US consumer lending business of its finance arm with an initial public offering (IPO) of stock that could come early next year, according to the Wall Street Journal. The newspaper also said on Friday that the Fairfield, Connecticut, conglomerate is considering smaller spinoffs or asset sales, but it has started preliminary work on the IPO. The paper cited unnamed sources familiar with the matter. The consumer finance business provides store credit cards to about 55 million people for retailers like Wal-Mart Stores Inc. It accounts for US$50 billion of GE Capital’s US$274 billion in outstanding loans, according to the report.
Reforms bore fruit: Hollande
President Francois Hollande indicated he was more optimistic over the nation’s economic outlook next year, though he stopped short of committing his government to a new target. Hollande told the daily Le Monde that a series of reforms conducted since he took office 15 months ago were producing positive effects on the economy and would keep building momentum. The government’s growth forecast for next year is currently 1.2 percent, but Les Echos newspaper has reported that it has been working with an unpublished estimate about 0.8 percent as it drafts its budget for next year. Hollande is fighting to kickstart growth through tax credits for companies while battling to bring down record joblessness, but his efforts are being complicated by EU-imposed belt-tightening aimed at shrinking the public deficit.