Fed chairman outlines plan to tighten credit
WASHINGTON — Federal Reserve Chairman Ben Bernanke yesterday began to outline the central bank's strategy for reeling in stimulus money once the economic recovery is more firmly rooted.
Bernanke said the Fed likely will start to tighten credit by boosting the interest rate it pays banks on money they leave at the central bank.
Doing so would raise rates tied to commercial banks' prime rate and affect many consumer loans. Companies and ordinary Americans would pay more to borrow.
Bernanke's remarks on the Fed's eventual pullback of economic aid come amid signs that the global recovery remains fragile.
TRADE DEFICIT JUMPS SHARPLY
WASHINGTON — The U.S. trade deficit surged to a larger-than-expected $40.18 billion in December, the biggest imbalance in 12 months. The wider deficit reflected a rebounding economy that is pushing up demand for oil and other imports.
The Commerce Department said the December deficit was 10.4 percent higher than the November imbalance. It was much larger than the $36 billion deficit that economists had expected with much of the increase coming from a big jump in oil imports.
For December, exports of goods and services rose for an eighth consecutive month.
GOOGLE TO FILL NEED FOR GREATER SPEED
WASHINGTON — Google Inc. plans to build a handful of experimental, ultra-fast broadband networks around the country to connect consumers to the Internet and ensure that tomorrow's systems can keep up with online video and other advanced applications that the search company will want to deliver.
The Google project, announced yesterday, is also intended to provide a platform for outside developers to create and try out all sorts of cutting-edge applications that will require far more bandwidth than today's networks offer.
The company said its testbed fiber-optic networks will deliver speeds of 1 gigabit per second to as many as 500,000 Americans. The systems will be many times faster than the DSL, cable and fiber-optic networks that connect most U.S. homes to the Internet today, at speeds typically ranging from 3 megabits to 20 megabits per second.
TIMES PROFIT RISES AS AD SLUMP EASES
New York Times Co. posted its highest quarterly profit in 2 1/4 years as the advertising drought eased at the end of 2009 and a steadily shrinking work force saved the newspaper publisher more money.
The publisher of The New York Times, The Boston Globe and 16 other daily newspapers disappointed investors, however, by offering a tepid outlook. Times Co. shares plunged 9 percent yesterday.
Ad sales, the main source of the Times Co.'s income, had fallen between 27 percent and 30 percent during the first three quarters of 2009. In the fourth quarter, the decline was not as steep: 15 percent.
CONSUMER SPENDING MODEST IN JANUARY
NEW YORK — Americans backed off from their holiday spending pace in January, but retail sales rose for a third month in a row compared with a year earlier, largely because of higher gas prices, according to figures released yesterday.
Analysts expect the modest spending pace to improve in coming months, though it will be far from robust as high unemployment and tight credit show little sign of disappearing.
Including goods from food to clothing to gasoline — but excluding cars — U.S. retail sales rose 3.6 percent from January 2009, according to MasterCard Advisor's SpendingPulse, which estimates spending in all forms including cash.